G.R. No.

115849

January 24, 1996

FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the Philippines) and
MERCURIO RIVERA, petitioners,
vs.
COURT OF APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO,respondents.
DECISION
PANGANIBAN, J.:
In the absence of a formal deed of sale, may commitments given by bank officers in an exchange of letters
and/or in a meeting with the buyers constitute a perfected and enforceable contract of sale over 101 hectares of
land in Sta. Rosa, Laguna? Does the doctrine of "apparent authority" apply in this case? If so, may the Central
Bank-appointed conservator of Producers Bank (now First Philippine International Bank) repudiate such
"apparent authority" after said contract has been deemed perfected? During the pendency of a suit for specific
performance, does the filing of a "derivative suit" by the majority shareholders and directors of the distressed
bank to prevent the enforcement or implementation of the sale violate the ban against forum-shopping?
Simply stated, these are the major questions brought before this Court in the instant Petition for review
oncertiorari under Rule 45 of the Rules of Court, to set aside the Decision promulgated January 14, 1994 of the
respondent Court of Appeals1 in CA-G.R CV No. 35756 and the Resolution promulgated June 14, 1994 denying
the motion for reconsideration. The dispositive portion of the said Decision reads:
WHEREFORE, the decision of the lower court is MODIFIED by the elimination of the damages awarded
under paragraphs 3, 4 and 6 of its dispositive portion and the reduction of the award in paragraph 5
thereof to P75,000.00, to be assessed against defendant bank. In all other aspects, said decision is
hereby AFFIRMED.
All references to the original plaintiffs in the decision and its dispositive portion are deemed, herein and
hereafter, to legally refer to the plaintiff-appellee Carlos C. Ejercito.
Costs against appellant bank.
The dispositive portion of the trial court's2 decision dated July 10, 1991, on the other hand, is as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against
the defendants as follows:
1. Declaring the existence of a perfected contract to buy and sell over the six (6) parcels of land situated
at Don Jose, Sta. Rosa, Laguna with an area of 101 hectares, more or less, covered by and embraced in
Transfer Certificates of Title Nos. T-106932 to T-106937, inclusive, of the Land Records of Laguna,
between the plaintiffs as buyers and the defendant Producers Bank for an agreed price of Five and One
Half Million (P5,500,000.00) Pesos;
2. Ordering defendant Producers Bank of the Philippines, upon finality of this decision and receipt from
the plaintiffs the amount of P5.5 Million, to execute in favor of said plaintiffs a deed of absolute sale over
the aforementioned six (6) parcels of land, and to immediately deliver to the plaintiffs the owner's copies
of T.C.T. Nos. T-106932 to T- 106937, inclusive, for purposes of registration of the same deed and
transfer of the six (6) titles in the names of the plaintiffs;
3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A. Janolo and Demetrio Demetria
the sums of P200,000.00 each in moral damages;
4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of P100,000.00 as exemplary
damages ;
5. Ordering the defendants, jointly and severally, to pay the plaintiffs the amount of P400,000.00 for and
by way of attorney's fees;

6. Ordering the defendants to pay the plaintiffs, jointly and severally, actual and moderate damages in
the amount of P20,000.00;
With costs against the defendants.
After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply to sur-rejoinder, the petition was
given due course in a Resolution dated January 18, 1995. Thence, the parties filed their respective memoranda
and reply memoranda. The First Division transferred this case to the Third Division per resolution dated October
23, 1995. After carefully deliberating on the aforesaid submissions, the Court assigned the case to the
undersigned ponente for the writing of this Decision.
The Parties
Petitioner First Philippine International Bank (formerly Producers Bank of the Philippines; petitioner Bank, for
brevity) is a banking institution organized and existing under the laws of the Republic of the Philippines.
Petitioner Mercurio Rivera (petitioner Rivera, for brevity) is of legal age and was, at all times material to this
case, Head-Manager of the Property Management Department of the petitioner Bank.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age and is the assignee of original
plaintiffs-appellees Demetrio Demetria and Jose Janolo.
Respondent Court of Appeals is the court which issued the Decision and Resolution sought to be set aside
through this petition.
The Facts
The facts of this case are summarized in the respondent Court's Decision3 as follows:
(1) In the course of its banking operations, the defendant Producer Bank of the Philippines acquired six
parcels of land with a total area of 101 hectares located at Don Jose, Sta. Rose, Laguna, and covered by
Transfer Certificates of Title Nos. T-106932 to T-106937. The property used to be owned by BYME
Investment and Development Corporation which had them mortgaged with the bank as collateral for a
loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted to purchase the property and
thus initiated negotiations for that purpose.
(2) In the early part of August 1987 said plaintiffs, upon the suggestion of BYME investment's legal
counsel, Jose Fajardo, met with defendant Mercurio Rivera, Manager of the Property Management
Department of the defendant bank. The meeting was held pursuant to plaintiffs' plan to buy the property
(TSN of Jan. 16, 1990, pp. 7-10). After the meeting, plaintiff Janolo, following the advice of defendant
Rivera, made a formal purchase offer to the bank through a letter dated August 30, 1987 (Exh. "B"), as
follows:
August 30, 1987
The Producers Bank of the Philippines
Makati, Metro Manila
Attn. Mr. Mercurio Q. Rivera
Manager, Property Management Dept.
Gentleman:
I have the honor to submit my formal offer to purchase your properties covered by titles listed hereunder
located at Sta. Rosa, Laguna, with a total area of 101 hectares, more or less.
TCT NO.

AREA

T-106932

113,580 sq. m.

T-106933

70,899 sq. m.

T-106934

52,246 sq. m.

T-106935

96,768 sq. m.

T-106936

187,114 sq. m.

T-106937

481,481 sq. m.

My offer is for PESOS: THREE MILLION FIVE HUNDRED THOUSAND (P3,500,000.00) PESOS, in
cash.
Kindly contact me at Telephone Number 921-1344.
(3) On September 1, 1987, defendant Rivera made on behalf of the bank a formal reply by letter which is
hereunder quoted (Exh. "C"):
September 1, 1987
JP M-P GUTIERREZ ENTERPRISES
142 Charisma St., Doa Andres II
Rosario, Pasig, Metro Manila
Attention: JOSE O. JANOLO
Dear Sir:
Thank you for your letter-offer to buy our six (6) parcels of acquired lots at Sta. Rosa, Laguna (formerly
owned by Byme Industrial Corp.). Please be informed however that the bank's counter-offer is at P5.5
million for more than 101 hectares on lot basis.
We shall be very glad to hear your position on the on the matter.
Best regards.
(4) On September 17, 1987, plaintiff Janolo, responding to Rivera's aforequoted reply, wrote (Exh. "D"):
September 17, 1987
Producers Bank
Paseo de Roxas
Makati, Metro Manila
Attention: Mr. Mercurio Rivera
Gentlemen:
In reply to your letter regarding my proposal to purchase your 101-hectare lot located at Sta. Rosa,
Laguna, I would like to amend my previous offer and I now propose to buy the said lot at P4.250 million
in CASH..
Hoping that this proposal meets your satisfaction.
(5) There was no reply to Janolo's foregoing letter of September 17, 1987. What took place was a
meeting on September 28, 1987 between the plaintiffs and Luis Co, the Senior Vice-President of
defendant bank. Rivera as well as Fajardo, the BYME lawyer, attended the meeting. Two days later, or
on September 30, 1987, plaintiff Janolo sent to the bank, through Rivera, the following letter (Exh. "E"):
The Producers Bank of the Philippines
Paseo de Roxas, Makati
Metro Manila
Attention: Mr. Mercurio Rivera

Re: 101 Hectares of Land

in Sta. Rosa, Laguna
Gentlemen:
Pursuant to our discussion last 28 September 1987, we are pleased to inform you that we are accepting
your offer for us to purchase the property at Sta. Rosa, Laguna, formerly owned by Byme Investment, for
a total price of PESOS: FIVE MILLION FIVE HUNDRED THOUSAND (P5,500,000.00).
Thank you.
(6) On October 12, 1987, the conservator of the bank (which has been placed under conservatorship by
the Central Bank since 1984) was replaced by an Acting Conservator in the person of defendant Leonida
T. Encarnacion. On November 4, 1987, defendant Rivera wrote plaintiff Demetria the following letter
(Exh. "F"):
Attention: Atty. Demetrio Demetria
Dear Sir:
Your proposal to buy the properties the bank foreclosed from Byme investment Corp. located at Sta.
Rosa, Laguna is under study yet as of this time by the newly created committee for submission to the
newly designated Acting Conservator of the bank.
For your information.
(7) What thereafter transpired was a series of demands by the plaintiffs for compliance by the bank with
what plaintiff considered as a perfected contract of sale, which demands were in one form or another
refused by the bank. As detailed by the trial court in its decision, on November 17, 1987, plaintiffs
through a letter to defendant Rivera (Exhibit "G") tendered payment of the amount of P5.5 million
"pursuant to (our) perfected sale agreement." Defendants refused to receive both the payment and the
letter. Instead, the parcels of land involved in the transaction were advertised by the bank for sale to any
interested buyer (Exh, "H" and "H-1"). Plaintiffs demanded the execution by the bank of the documents
on what was considered as a "perfected agreement." Thus:
Mr. Mercurio Rivera
Manager, Producers Bank
Paseo de Roxas, Makati
Metro Manila
Dear Mr. Rivera:
This is in connection with the offer of our client, Mr. Jose O. Janolo, to purchase your 101-hectare lot
located in Sta. Rosa, Laguna, and which are covered by TCT No. T-106932 to 106937.
From the documents at hand, it appears that your counter-offer dated September 1, 1987 of this same
lot in the amount of P5.5 million was accepted by our client thru a letter dated September 30, 1987 and
was received by you on October 5, 1987.
In view of the above circumstances, we believe that an agreement has been perfected. We were also
informed that despite repeated follow-up to consummate the purchase, you now refuse to honor your
commitment. Instead, you have advertised for sale the same lot to others.
In behalf of our client, therefore, we are making this formal demand upon you to consummate and
execute the necessary actions/documentation within three (3) days from your receipt hereof. We are
ready to remit the agreed amount of P5.5 million at your advice. Otherwise, we shall be constrained to
file the necessary court action to protect the interest of our client.
We trust that you will be guided accordingly.

(8) Defendant bank, through defendant Rivera, acknowledged receipt of the foregoing letter and stated,
in its communication of December 2, 1987 (Exh. "I"), that said letter has been "referred . . . to the office
of our Conservator for proper disposition" However, no response came from the Acting Conservator. On
December 14, 1987, the plaintiffs made a second tender of payment (Exh. "L" and "L-1"), this time
through the Acting Conservator, defendant Encarnacion. Plaintiffs' letter reads:
PRODUCERS BANK OF
THE PHILIPPINES
Paseo de Roxas,
Makati, Metro Manila
Attn.: Atty. NIDA ENCARNACION
Central Bank Conservator
We are sending you herewith, in - behalf of our client, Mr. JOSE O. JANOLO, MBTC Check No. 258387
in the amount of P5.5 million as our agreed purchase price of the 101-hectare lot covered by TCT Nos.
106932, 106933, 106934, 106935, 106936 and 106937 and registered under Producers Bank.
This is in connection with the perfected agreement consequent from your offer of P5.5 Million as the
purchase price of the said lots. Please inform us of the date of documentation of the sale immediately.
Kindly acknowledge receipt of our payment.
(9) The foregoing letter drew no response for more than four months. Then, on May 3, 1988, plaintiff,
through counsel, made a final demand for compliance by the bank with its obligations under the
considered perfected contract of sale (Exhibit "N"). As recounted by the trial court (Original Record, p.
656), in a reply letter dated May 12, 1988 (Annex "4" of defendant's answer to amended complaint), the
defendants through Acting Conservator Encarnacion repudiated the authority of defendant Rivera and
claimed that his dealings with the plaintiffs, particularly his counter-offer of P5.5 Million are unauthorized
or illegal. On that basis, the defendants justified the refusal of the tenders of payment and the noncompliance with the obligations under what the plaintiffs considered to be a perfected contract of sale.
(10) On May 16, 1988, plaintiffs filed a suit for specific performance with damages against the bank, its
Manager Rivers and Acting Conservator Encarnacion. The basis of the suit was that the transaction had
with the bank resulted in a perfected contract of sale, The defendants took the position that there was no
such perfected sale because the defendant Rivera is not authorized to sell the property, and that there
was no meeting of the minds as to the price.
On March 14, 1991, Henry L. Co (the brother of Luis Co), through counsel Sycip Salazar Hernandez and
Gatmaitan, filed a motion to intervene in the trial court, alleging that as owner of 80% of the Bank's
outstanding shares of stock, he had a substantial interest in resisting the complaint. On July 8, 1991, the
trial court issued an order denying the motion to intervene on the ground that it was filed after trial had
already been concluded. It also denied a motion for reconsideration filed thereafter. From the trial court's
decision, the Bank, petitioner Rivera and conservator Encarnacion appealed to the Court of Appeals
which subsequently affirmed with modification the said judgment. Henry Co did not appeal the denial of
his motion for intervention.
In the course of the proceedings in the respondent Court, Carlos Ejercito was substituted in place of Demetria
and Janolo, in view of the assignment of the latters' rights in the matter in litigation to said private respondent.
On July 11, 1992, during the pendency of the proceedings in the Court of Appeals, Henry Co and several other
stockholders of the Bank, through counsel Angara Abello Concepcion Regala and Cruz, filed an action
(hereafter, the "Second Case") purportedly a "derivative suit" with the Regional Trial Court of Makati,
Branch 134, docketed as Civil Case No. 92-1606, against Encarnacion, Demetria and Janolo "to declare any
perfected sale of the property as unenforceable and to stop Ejercito from enforcing or implementing the sale"4 In
his answer, Janolo argued that the Second Case was barred by litis pendentia by virtue of the case then pending
in the Court of Appeals. During the pre-trial conference in the Second Case, plaintiffs filed a Motion for Leave of
Court to Dismiss the Case Without Prejudice. "Private respondent opposed this motion on the ground, among
others, that plaintiff's act of forum shopping justifies the dismissal of both cases, with prejudice."5 Private
respondent, in his memorandum, averred that this motion is still pending in the Makati RTC.
In their Petition6 and Memorandum7, petitioners summarized their position as follows:

I.
The Court of Appeals erred in declaring that a contract of sale was perfected between Ejercito (in
substitution of Demetria and Janolo) and the bank.
II.
The Court of Appeals erred in declaring the existence of an enforceable contract of sale between the
parties.
III.
The Court of Appeals erred in declaring that the conservator does not have the power to overrule or
revoke acts of previous management.
IV.
The findings and conclusions of the Court of Appeals do not conform to the evidence on record.
On the other hand, petitioners prayed for dismissal of the instant suit on the ground8 that:
I.
Petitioners have engaged in forum shopping.
II.
The factual findings and conclusions of the Court of Appeals are supported by the evidence on record
and may no longer be questioned in this case.
III.
The Court of Appeals correctly held that there was a perfected contract between Demetria and Janolo
(substituted by; respondent Ejercito) and the bank.
IV.
The Court of Appeals has correctly held that the conservator, apart from being estopped from
repudiating the agency and the contract, has no authority to revoke the contract of sale.
The Issues
From the foregoing positions of the parties, the issues in this case may be summed up as follows:
1) Was there forum-shopping on the part of petitioner Bank?
2) Was there a perfected contract of sale between the parties?
3) Assuming there was, was the said contract enforceable under the statute of frauds?
4) Did the bank conservator have the unilateral power to repudiate the authority of the bank officers
and/or to revoke the said contract?
5) Did the respondent Court commit any reversible error in its findings of facts?
The First Issue: Was There Forum-Shopping?
In order to prevent the vexations of multiple petitions and actions, the Supreme Court promulgated Revised
Circular No. 28-91 requiring that a party "must certify under oath . . . [that] (a) he has not (t)heretofore

commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no such action or proceeding is
pending" in said courts or agencies. A violation of the said circular entails sanctions that include the summary
dismissal of the multiple petitions or complaints. To be sure, petitioners have included a
VERIFICATION/CERTIFICATION in their Petition stating "for the record(,) the pendency of Civil Case No. 921606 before the Regional Trial Court of Makati, Branch 134, involving a derivative suit filed by stockholders of
petitioner Bank against the conservator and other defendants but which is the subject of a pending Motion to
Dismiss Without Prejudice.9
Private respondent Ejercito vigorously argues that in spite of this verification, petitioners are guilty of actual
forum shopping because the instant petition pending before this Court involves "identical parties or interests
represented, rights asserted and reliefs sought (as that) currently pending before the Regional Trial Court,
Makati Branch 134 in the Second Case. In fact, the issues in the two cases are so interwined that a judgement
or resolution in either case will constitute res judicata in the other." 10
On the other hand, petitioners explain 11 that there is no forum-shopping because:
1) In the earlier or "First Case" from which this proceeding arose, the Bank was impleaded as
a defendant, whereas in the "Second Case" (assuming the Bank is the real party in interest in a
derivative suit), it wasplaintiff;
2) "The derivative suit is not properly a suit for and in behalf of the corporation under the circumstances";
3) Although the CERTIFICATION/VERIFICATION (supra) signed by the Bank president and attached to
the Petition identifies the action as a "derivative suit," it "does not mean that it is one" and "(t)hat is a
legal question for the courts to decide";
4) Petitioners did not hide the Second Case at they mentioned it in the said
VERIFICATION/CERTIFICATION.
We rule for private respondent.
To begin with, forum-shopping originated as a concept in private international law.12, where non-resident litigants
are given the option to choose the forum or place wherein to bring their suit for various reasons or excuses,
including to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets,
or to select a more friendly venue. To combat these less than honorable excuses, the principle of forum non
conveniens was developed whereby a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded from seeking remedies
elsewhere.
In this light, Black's Law Dictionary 13 says that forum shopping "occurs when a party attempts to have his action
tried in a particular court or jurisdiction where he feels he will receive the most favorable judgment or verdict."
Hence, according to Words and Phrases14, "a litigant is open to the charge of "forum shopping" whenever he
chooses a forum with slight connection to factual circumstances surrounding his suit, and litigants should be
encouraged to attempt to settle their differences without imposing undue expenses and vexatious situations on
the courts".
In the Philippines, forum shopping has acquired a connotation encompassing not only a choice of venues, as it
was originally understood in conflicts of laws, but also to a choice of remedies. As to the first (choice of venues),
the Rules of Court, for example, allow a plaintiff to commence personal actions "where the defendant or any of
the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of
the plaintiff" (Rule 4, Sec, 2 [b]). As to remedies, aggrieved parties, for example, are given a choice of pursuing
civil liabilities independently of the criminal, arising from the same set of facts. A passenger of a public utility
vehicle involved in a vehicular accident may sue on culpa contractual, culpa aquiliana or culpa criminal each
remedy being available independently of the others although he cannot recover more than once.
In either of these situations (choice of venue or choice of remedy), the litigant actually shops for a
forum of his action, This was the original concept of the term forum shopping.
Eventually, however, instead of actually making a choice of the forum of their actions, litigants, through
the encouragement of their lawyers, file their actions in all available courts, or invoke all relevant

remedies simultaneously. This practice had not only resulted to (sic) conflicting adjudications among
different courts and consequent confusion enimical (sic) to an orderly administration of justice. It had
created extreme inconvenience to some of the parties to the action.
Thus, "forum shopping" had acquired a different concept which is unethical professional legal
practice. And this necessitated or had given rise to the formulation of rules and canons discouraging or
altogether prohibiting the practice. 15
What therefore originally started both in conflicts of laws and in our domestic law as a legitimate device for
solving problems has been abused and mis-used to assure scheming litigants of dubious reliefs.
To avoid or minimize this unethical practice of subverting justice, the Supreme Court, as already mentioned,
promulgated Circular 28-91. And even before that, the Court had prescribed it in the Interim Rules and
Guidelines issued on January 11, 1983 and had struck down in several cases 16 the inveterate use of this
insidious malpractice. Forum shopping as "the filing of repetitious suits in different courts" has been condemned
by Justice Andres R. Narvasa (now Chief Justice) in Minister of Natural Resources, et al., vs. Heirs of Orval
Hughes, et al.,"as a reprehensible manipulation of court processes and proceedings . . ." 17 when does forum
shopping take place?
There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a
favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with
respect to suits filed in the courts but also in connection with litigations commenced in the courts while an
administrative proceeding is pending, as in this case, in order to defeat administrative processes and in
anticipation of an unfavorable administrative ruling and a favorable court ruling. This is specially so, as in
this case, where the court in which the second suit was brought, has no jurisdiction.18
The test for determining whether a party violated the rule against forum shopping has been laid dawn in the
1986 case of Buan vs. Lopez 19, also by Chief Justice Narvasa, and that is, forum shopping exists where the
elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the
other, as follows:
There thus exists between the action before this Court and RTC Case No. 86-36563 identity of parties,
or at least such parties as represent the same interests in both actions, as well as identity of rights
asserted and relief prayed for, the relief being founded on the same facts, and the identity on the two
preceding particulars is such that any judgment rendered in the other action, will, regardless of which
party is successful, amount to res adjudicata in the action under consideration: all the requisites, in fine,
of auter action pendant.
xxx

xxx

xxx

As already observed, there is between the action at bar and RTC Case No. 86-36563, an identity as
regards parties, or interests represented, rights asserted and relief sought, as well as basis thereof, to a
degree sufficient to give rise to the ground for dismissal known as auter action pendant or lis pendens.
That same identity puts into operation the sanction of twin dismissals just mentioned. The application of
this sanction will prevent any further delay in the settlement of the controversy which might ensue from
attempts to seek reconsideration of or to appeal from the Order of the Regional Trial Court in Civil Case
No. 86-36563 promulgated on July 15, 1986, which dismissed the petition upon grounds which appear
persuasive.
Consequently, where a litigant (or one representing the same interest or person) sues the same party against
whom another action or actions for the alleged violation of the same right and the enforcement of the same relief
is/are still pending, the defense of litis pendencia in one case is bar to the others; and, a final judgment in one
would constitute res judicata and thus would cause the dismissal of the rest. In either case, forum shopping
could be cited by the other party as a ground to ask for summary dismissal of the two 20 (or more) complaints or
petitions, and for imposition of the other sanctions, which are direct contempt of court, criminal prosecution, and
disciplinary action against the erring lawyer.
Applying the foregoing principles in the case before us and comparing it with the Second Case, it is obvious that
there exist identity of parties or interests represented, identity of rights or causes and identity of reliefs sought.
Very simply stated, the original complaint in the court a quo which gave rise to the instant petition was filed by
the buyer (herein private respondent and his predecessors-in-interest) against the seller (herein petitioners) to

enforce the alleged perfected sale of real estate. On the other hand, the complaint 21 in the Second Case seeks
to declare such purported sale involving the same real property "as unenforceable as against the Bank", which is
the petitioner herein. In other words, in the Second Case, the majority stockholders, in representation of the
Bank, are seeking to accomplish what the Bank itself failed to do in the original case in the trial court. In brief, the
objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner Bank
to escape from the obligation to sell the property to respondent. In Danville Maritime, Inc. vs. Commission on
Audit. 22, this Court ruled that the filing by a party of two apparently different actions, but with the same
objective,constituted forum shopping:
In the attempt to make the two actions appear to be different, petitioner impleaded different respondents
therein PNOC in the case before the lower court and the COA in the case before this Court and
sought what seems to be different reliefs. Petitioner asks this Court to set aside the questioned letterdirective of the COA dated October 10, 1988 and to direct said body to approve the Memorandum of
Agreement entered into by and between the PNOC and petitioner, while in the complaint before the
lower court petitioner seeks to enjoin the PNOC from conducting a rebidding and from selling to other
parties the vessel "T/T Andres Bonifacio", and for an extension of time for it to comply with the paragraph
1 of the memorandum of agreement and damages. One can see that although the relief prayed for in the
two (2) actions are ostensibly different, the ultimate objective in both actions is the same, that is,
approval of the sale of vessel in favor of petitioner and to overturn the letter-directive of the COA of
October 10, 1988 disapproving the sale. (emphasis supplied).
In an earlier case 23 but with the same logic and vigor, we held:
In other words, the filing by the petitioners of the instant special civil action for certiorari and prohibition in
this Court despite the pendency of their action in the Makati Regional Trial Court, is a species of forumshopping. Both actions unquestionably involve the same transactions, the same essential facts and
circumstances. The petitioners' claim of absence of identity simply because the PCGG had not been
impleaded in the RTC suit, and the suit did not involve certain acts which transpired after its
commencement, is specious. In the RTC action, as in the action before this Court, the validity of the
contract to purchase and sell of September 1, 1986, i.e., whether or not it had been efficaciously
rescinded, and the propriety of implementing the same (by paying the pledgee banks the amount of their
loans, obtaining the release of the pledged shares, etc.) were the basic issues. So, too, the relief was the
same: the prevention of such implementation and/or the restoration of the status quo ante. When the
acts sought to be restrained took place anyway despite the issuance by the Trial Court of a temporary
restraining order, the RTC suit did not become functus oficio. It remained an effective vehicle for
obtention of relief; and petitioners' remedy in the premises was plain and patent: the filing of an amended
and supplemental pleading in the RTC suit, so as to include the PCGG as defendant and seek
nullification of the acts sought to be enjoined but nonetheless done. The remedy was certainly not the
institution of another action in another forum based on essentially the same facts, The adoption of this
latter recourse renders the petitioners amenable to disciplinary action and both their actions, in this Court
as well as in the Court a quo, dismissible.
In the instant case before us, there is also identity of parties, or at least, of interests represented. Although the
plaintiffs in the Second Case (Henry L. Co. et al.) are not name parties in the First Case, they represent the
same interest and entity, namely, petitioner Bank, because:
Firstly, they are not suing in their personal capacities, for they have no direct personal interest in the matter in
controversy. They are not principally or even subsidiarily liable; much less are they direct parties in the assailed
contract of sale; and
Secondly, the allegations of the complaint in the Second Case show that the stockholders are bringing a
"derivative suit". In the caption itself, petitioners claim to have brought suit "for and in behalf of the Producers
Bank of the Philippines" 24. Indeed, this is the very essence of a derivative suit:
An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he
holdsstock in order to protect or vindicate corporate rights, whenever the officials of the corporation
refuse to sue, or are the ones to be sued or hold the control of the corporation. In such actions, the suing
stockholder is regarded as a nominal party, with the corporation as the real party in interest. (Gamboa v.
Victoriano, 90 SCRA 40, 47 [1979]; emphasis supplied).
In the face of the damaging admissions taken from the complaint in the Second Case, petitioners, quite
strangely, sought to deny that the Second Case was a derivative suit, reasoning that it was brought, not by the

minority shareholders, but by Henry Co et al., who not only own, hold or control over 80% of the outstanding
capital stock, but also constitute the majority in the Board of Directors of petitioner Bank. That being so, then
they really represent the Bank. So, whether they sued "derivatively" or directly, there is undeniably an identity of
interests/entity represented.
Petitioner also tried to seek refuge in the corporate fiction that the personality Of the Bank is separate and
distinct from its shareholders. But the rulings of this Court are consistent: "When the fiction is urged as a means
of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention
of statutes, the achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the
veil with which the law covers and isolates the corporation from the members or stockholders who compose it
will be lifted to allow for its consideration merely as an aggregation of individuals." 25
In addition to the many cases 26 where the corporate fiction has been disregarded, we now add the instant case,
and declare herewith that the corporate veil cannot be used to shield an otherwise blatant violation of the
prohibition against forum-shopping. Shareholders, whether suing as the majority in direct actions or as the
minority in a derivative suit, cannot be allowed to trifle with court processes, particularly where, as in this case,
the corporation itself has not been remiss in vigorously prosecuting or defending corporate causes and in using
and applying remedies available to it. To rule otherwise would be to encourage corporate litigants to use their
shareholders as fronts to circumvent the stringent rules against forum shopping.
Finally, petitioner Bank argued that there cannot be any forum shopping, even assuming arguendo that there is
identity of parties, causes of action and reliefs sought, "because it (the Bank) was the defendant in the (first)
case while it was the plaintiff in the other (Second Case)",citing as authority Victronics Computers, Inc.,
vs. Regional Trial Court, Branch 63, Makati, etc. et al., 27 where Court held:
The rule has not been extended to a defendant who, for reasons known only to him, commences a new
action against the plaintiff instead of filing a responsive pleading in the other case setting forth
therein, as causes of action, specific denials, special and affirmative defenses or even counterclaims,
Thus, Velhagen's and King's motion to dismiss Civil Case No. 91-2069 by no means negates the charge
of forum-shopping as such did not exist in the first place. (emphasis supplied)
Petitioner pointed out that since it was merely the defendant in the original case, it could not have chosen the
forum in said case.
Respondent, on the other hand, replied that there is a difference in factual setting between Victronics and the
present suit. In the former, as underscored in the above-quoted Court ruling, the defendants did not file
anyresponsive pleading in the first case. In other words, they did not make any denial or raise any defense or
counter-claim therein In the case before us however, petitioners filed a responsive pleading to the complaint
as a result of which, the issues were joined.
Indeed, by praying for affirmative reliefs and interposing counterclaims in their responsive pleadings, the
petitioners became plaintiffs themselves in the original case, giving unto themselves the very remedies they
repeated in the Second Case.
Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation
caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule
on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating
the possibility of conflicting decisions being rendered by the different fora upon the same issue. In this case, this
is exactly the problem: a decision recognizing the perfection and directing the enforcement of the contract of sale
will directly conflict with a possible decision in the Second Case barring the parties front enforcing or
implementing the said sale. Indeed, a final decision in one would constitute res judicata in the other 28.
The foregoing conclusion finding the existence of forum-shopping notwithstanding, the only sanction possible
now is the dismissal of both cases with prejudice, as the other sanctions cannot be imposed because petitioners'
present counsel entered their appearance only during the proceedings in this Court, and the Petition's
VERIFICATION/CERTIFICATION contained sufficient allegations as to the pendency of the Second Case to
show good faith in observing Circular 28-91. The Lawyers who filed the Second Case are not before us; thus the
rudiments of due process prevent us from motu propio imposing disciplinary measures against them in this
Decision. However, petitioners themselves (and particularly Henry Co, et al.) as litigants are admonished to
strictly follow the rules against forum-shopping and not to trifle with court proceedings and processes They are
warned that a repetition of the same will be dealt with more severely.

Having said that, let it be emphasized that this petition should be dismissed not merely because of forumshopping but also because of the substantive issues raised, as will be discussed shortly.
The Second Issue: Was The Contract Perfected?
The respondent Court correctly treated the question of whether or not there was, on the basis of the facts
established, a perfected contract of sale as the ultimate issue. Holding that a valid contract has been
established, respondent Court stated:
There is no dispute that the object of the transaction is that property owned by the defendant bank as
acquired assets consisting of six (6) parcels of land specifically identified under Transfer Certificates of
Title Nos. T-106932 to T-106937. It is likewise beyond cavil that the bank intended to sell the property.
As testified to by the Bank's Deputy Conservator, Jose Entereso, the bank was looking for buyers of the
property. It is definite that the plaintiffs wanted to purchase the property and it was precisely for this
purpose that they met with defendant Rivera, Manager of the Property Management Department of the
defendant bank, in early August 1987. The procedure in the sale of acquired assets as well as the nature
and scope of the authority of Rivera on the matter is clearly delineated in the testimony of Rivera himself,
which testimony was relied upon by both the bank and by Rivera in their appeal briefs. Thus (TSN of July
30, 1990. pp. 19-20):
A: The procedure runs this way: Acquired assets was turned over to me and then I published it in
the form of an inter-office memorandum distributed to all branches that these are acquired assets
for sale. I was instructed to advertise acquired assets for sale so on that basis, I have to entertain
offer; to accept offer, formal offer and upon having been offered, I present it to the Committee. I
provide the Committee with necessary information about the property such as original loan of the
borrower, bid price during the foreclosure, total claim of the bank, the appraised value at the time
the property is being offered for sale and then the information which are relative to the evaluation
of the bank to buy which the Committee considers and it is the Committee that evaluate as
against the exposure of the bank and it is also the Committee that submit to the Conservator for
final approval and once approved, we have to execute the deed of sale and it is the Conservator
that sign the deed of sale, sir.
The plaintiffs, therefore, at that meeting of August 1987 regarding their purpose of buying the property,
dealt with and talked to the right person. Necessarily, the agenda was the price of the property, and
plaintiffs were dealing with the bank official authorized to entertain offers, to accept offers and to present
the offer to the Committee before which the said official is authorized to discuss information relative to
price determination. Necessarily, too, it being inherent in his authority, Rivera is the officer from whom
official information regarding the price, as determined by the Committee and approved by the
Conservator, can be had. And Rivera confirmed his authority when he talked with the plaintiff in August
1987. The testimony of plaintiff Demetria is clear on this point (TSN of May 31,1990, pp. 27-28):
Q: When you went to the Producers Bank and talked with Mr. Mercurio Rivera, did you ask him
point-blank his authority to sell any property?
A: No, sir. Not point blank although it came from him, (W)hen I asked him how long it would take
because he was saying that the matter of pricing will be passed upon by the committee. And
when I asked him how long it will take for the committee to decide and he said the committee
meets every week. If I am not mistaken Wednesday and in about two week's (sic) time, in effect
what he was saying he was not the one who was to decide. But he would refer it to the
committee and he would relay the decision of the committee to me.
Q Please answer the question.
A He did not say that he had the authority (.) But he said he would refer the matter to the
committee and he would relay the decision to me and he did just like that.
"Parenthetically, the Committee referred to was the Past Due Committee of which Luis Co was the Head,
with Jose Entereso as one of the members.
What transpired after the meeting of early August 1987 are consistent with the authority and the duties of
Rivera and the bank's internal procedure in the matter of the sale of bank's assets. As advised by Rivera,
the plaintiffs made a formal offer by a letter dated August 20, 1987 stating that they would buy at the

price of P3.5 Million in cash. The letter was for the attention of Mercurio Rivera who was tasked to
convey and accept such offers. Considering an aspect of the official duty of Rivera as some sort of
intermediary between the plaintiffs-buyers with their proposed buying price on one hand, and the bank
Committee, the Conservator and ultimately the bank itself with the set price on the other, and considering
further the discussion of price at the meeting of August resulting in a formal offer of P3.5 Million in cash,
there can be no other logical conclusion than that when, on September 1, 1987, Rivera informed
plaintiffs by letter that "the bank's counter-offer is at P5.5 Million for more than 101 hectares on lot basis,"
such counter-offer price had been determined by the Past Due Committee and approved by the
Conservator after Rivera had duly presented plaintiffs' offer for discussion by the Committee of such
matters as original loan of borrower, bid price during foreclosure, total claim of the bank, and market
value. Tersely put, under the established facts, the price of P5.5 Million was, as clearly worded in
Rivera's letter (Exh. "E"), the official and definitive price at which the bank was selling the property.
There were averments by defendants below, as well as before this Court, that the P5.5 Million price was
not discussed by the Committee and that price. As correctly characterized by the trial court, this is not
credible. The testimonies of Luis Co and Jose Entereso on this point are at best equivocal and
considering the gratuitous and self-serving character of these declarations, the bank's submission on this
point does not inspire belief. Both Co ad Entereso, as members of the Past Due Committee of the bank,
claim that the offer of the plaintiff was never discussed by the Committee. In the same vein, both Co and
Entereso openly admit that they seldom attend the meetings of the Committee. It is important to note that
negotiations on the price had started in early August and the plaintiffs had already offered an amount as
purchase price, having been made to understand by Rivera, the official in charge of the negotiation, that
the price will be submitted for approval by the bank and that the bank's decision will be relayed to
plaintiffs. From the facts, the official bank price. At any rate, the bank placed its official, Rivera, in a
position of authority to accept offers to buy and negotiate the sale by having the offer officially acted
upon by the bank. The bank cannot turn around and later say, as it now does, that what Rivera states as
the bank's action on the matter is not in fact so. It is a familiar doctrine, the doctrine of ostensible
authority, that if a corporation knowingly permits one of its officers, or any other agent, to do acts within
the scope of an apparent authority, and thus holds him out to the public as possessing power to do those
acts, the corporation will, as against any one who has in good faith dealt with the corporation through
such agent, he estopped from denying his authority (Francisco v. GSIS, 7 SCRA 577, 583-584; PNB v.
Court of Appeals, 94 SCRA 357, 369-370; Prudential Bank v. Court of Appeals, G.R. No. 103957, June
14, 1993). 29
Article 1318 of the Civil Code enumerates the requisites of a valid and perfected contract as follows: "(1)
Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the
obligation which is established."
There is no dispute on requisite no. 2. The object of the questioned contract consists of the six (6) parcels of
land in Sta. Rosa, Laguna with an aggregate area of about 101 hectares, more or less, and covered by Transfer
Certificates of Title Nos. T-106932 to T-106937. There is, however, a dispute on the first and third requisites.
Petitioners allege that "there is no counter-offer made by the Bank, and any supposed counter-offer which
Rivera (or Co) may have made is unauthorized. Since there was no counter-offer by the Bank, there was nothing
for Ejercito (in substitution of Demetria and Janolo) to accept." 30 They disputed the factual basis of the
respondent Court's findings that there was an offer made by Janolo for P3.5 million, to which the Bank counteroffered P5.5 million. We have perused the evidence but cannot find fault with the said Court's findings of fact.
Verily, in a petition under Rule 45 such as this, errors of fact if there be any - are, as a rule, not reviewable.
The mere fact that respondent Court (and the trial court as well) chose to believe the evidence presented by
respondent more than that presented by petitioners is not by itself a reversible error. In fact, such findings merit
serious consideration by this Court, particularly where, as in this case, said courts carefully and meticulously
discussed their findings. This is basic.
Be that as it may, and in addition to the foregoing disquisitions by the Court of Appeals, let us review the
question of Rivera's authority to act and petitioner's allegations that the P5.5 million counter-offer was
extinguished by the P4.25 million revised offer of Janolo. Here, there are questions of law which could be drawn
from the factual findings of the respondent Court. They also delve into the contractual elements of consent and
cause.
The authority of a corporate officer in dealing with third persons may be actual or apparent. The doctrine of
"apparent authority", with special reference to banks, was laid out in Prudential Bank vs. Court of Appeals31,
where it was held that:

Conformably, we have declared in countless decisions that the principal is liable for obligations
contracted by the agent. The agent's apparent representation yields to the principal's true representation
and the contract is considered as entered into between the principal and the third person (citing National
Food Authority vs. Intermediate Appellate Court, 184 SCRA 166).
A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course
of dealings of the officers in their representative capacity but not for acts outside the scape of
their authority (9 C.J.S., p. 417). A bank holding out its officers and agents as worthy of
confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in
the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such
frauds even though no benefit may accrue to the bank therefrom (10 Am Jur 2d, p. 114).
Accordingly, a banking corporation is liable to innocent third persons where the representation is
made in the course of its business by an agent acting within the general scope of his authority
even though, in the particular case, the agent is secretly abusing his authority and attempting to
perpetrate a fraud upon his principal or some other person, for his own ultimate benefit (McIntosh
v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021).
Application of these principles is especially necessary because banks have a fiduciary relationship with
the public and their stability depends on the confidence of the people in their honesty and efficiency.
Such faith will be eroded where banks do not exercise strict care in the selection and supervision of its
employees, resulting in prejudice to their depositors.
From the evidence found by respondent Court, it is obvious that petitioner Rivera has apparent or implied
authority to act for the Bank in the matter of selling its acquired assets. This evidence includes the following:
(a) The petition itself in par. II-i (p. 3) states that Rivera was "at all times material to this case, Manager
of the Property Management Department of the Bank". By his own admission, Rivera was already the
person in charge of the Bank's acquired assets (TSN, August 6, 1990, pp. 8-9);
(b) As observed by respondent Court, the land was definitely being sold by the Bank. And during the
initial meeting between the buyers and Rivera, the latter suggested that the buyers' offer should be no
less than P3.3 million (TSN, April 26, 1990, pp. 16-17);
(c) Rivera received the buyers' letter dated August 30, 1987 offering P3.5 million (TSN, 30 July 1990,
p.11);
(d) Rivera signed the letter dated September 1, 1987 offering to sell the property for P5.5 million (TSN,
July 30, p. 11);
(e) Rivera received the letter dated September 17, 1987 containing the buyers' proposal to buy the
property for P4.25 million (TSN, July 30, 1990, p. 12);
(f) Rivera, in a telephone conversation, confirmed that the P5.5 million was the final price of the Bank
(TSN, January 16, 1990, p. 18);
(g) Rivera arranged the meeting between the buyers and Luis Co on September 28, 1994, during which
the Bank's offer of P5.5 million was confirmed by Rivera (TSN, April 26, 1990, pp. 34-35). At said
meeting, Co, a major shareholder and officer of the Bank, confirmed Rivera's statement as to the finality
of the Bank's counter-offer of P5.5 million (TSN, January 16, 1990, p. 21; TSN, April 26, 1990, p. 35);
(h) In its newspaper advertisements and announcements, the Bank referred to Rivera as the officer
acting for the Bank in relation to parties interested in buying assets owned/acquired by the Bank. In fact,
Rivera was the officer mentioned in the Bank's advertisements offering for sale the property in question
(cf. Exhs. "S" and "S-1").
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals, et. al.32, the Court, through Justice
Jose A. R. Melo, affirmed the doctrine of apparent authority as it held that the apparent authority of the officer of
the Bank of P.I. in charge of acquired assets is borne out by similar circumstances surrounding his dealings with
buyers.

To be sure, petitioners attempted to repudiate Rivera's apparent authority through documents and testimony
which seek to establish Rivera's actual authority. These pieces of evidence, however, are inherently weak as
they consist of Rivera's self-serving testimony and various inter-office memoranda that purport to show
his limited actual authority, of which private respondent cannot be charged with knowledge. In any event, since
the issue is apparent authority, the existence of which is borne out by the respondent Court's findings, the
evidence of actual authority is immaterial insofar as the liability of a corporation is concerned 33.
Petitioners also argued that since Demetria and Janolo were experienced lawyers and their "law firm" had once
acted for the Bank in three criminal cases, they should be charged with actual knowledge of Rivera's limited
authority. But the Court of Appeals in its Decision (p. 12) had already made a factual finding that the buyers had
no notice of Rivera's actual authority prior to the sale. In fact, the Bank has not shown that they acted as its
counsel in respect to any acquired assets; on the other hand, respondent has proven that Demetria and Janolo
merely associated with a loose aggrupation of lawyers (not a professional partnership), one of whose members
(Atty. Susana Parker) acted in said criminal cases.
Petitioners also alleged that Demetria's and Janolo's P4.25 million counter-offer in the letter dated September
17, 1987 extinguished the Bank's offer of P5.5 million 34 .They disputed the respondent Court's finding that "there
was a meeting of minds when on 30 September 1987 Demetria and Janolo through Annex "L" (letter dated
September 30, 1987) "accepted" Rivera's counter offer of P5.5 million under Annex "J" (letter dated September
17, 1987)", citing the late Justice Paras35, Art. 1319 of the Civil Code 36 and related Supreme Court rulings
starting with Beaumont vs. Prieto 37.
However, the above-cited authorities and precedents cannot apply in the instant case because, as found by the
respondent Court which reviewed the testimonies on this point, what was "accepted" by Janolo in his letter dated
September 30, 1987 was the Bank's offer of P5.5 million as confirmed and reiterated to Demetria and Atty. Jose
Fajardo by Rivera and Co during their meeting on September 28, 1987. Note that the said letter of September
30, 1987 begins with"(p)ursuant to our discussion last 28 September 1987 . . .
Petitioners insist that the respondent Court should have believed the testimonies of Rivera and Co that the
September 28, 1987 meeting "was meant to have the offerors improve on their position of P5.5.
million."38However, both the trial court and the Court of Appeals found petitioners' testimonial evidence "not
credible", and we find no basis for changing this finding of fact.
Indeed, we see no reason to disturb the lower courts' (both the RTC and the CA) common finding that private
respondents' evidence is more in keeping with truth and logic that during the meeting on September 28, 1987,
Luis Co and Rivera "confirmed that the P5.5 million price has been passed upon by the Committee and could no
longer be lowered (TSN of April 27, 1990, pp. 34-35)"39. Hence, assuming arguendo that the counter-offer of
P4.25 million extinguished the offer of P5.5 million, Luis Co's reiteration of the said P5.5 million price during the
September 28, 1987 meeting revived the said offer. And by virtue of the September 30, 1987 letter accepting
thisrevived offer, there was a meeting of the minds, as the acceptance in said letter was absolute and
unqualified.
We note that the Bank's repudiation, through Conservator Encarnacion, of Rivera's authority and action,
particularly the latter's counter-offer of P5.5 million, as being "unauthorized and illegal" came only on May 12,
1988 or more than seven (7) months after Janolo' acceptance. Such delay, and the absence of any
circumstance which might have justifiably prevented the Bank from acting earlier, clearly characterizes the
repudiation as nothing more than a last-minute attempt on the Bank's part to get out of a binding contractual
obligation.
Taken together, the factual findings of the respondent Court point to an implied admission on the part of the
petitioners that the written offer made on September 1, 1987 was carried through during the meeting of
September 28, 1987. This is the conclusion consistent with human experience, truth and good faith.
It also bears noting that this issue of extinguishment of the Bank's offer of P5.5 million was raised for the first
time on appeal and should thus be disregarded.
This Court in several decisions has repeatedly adhered to the principle that points of law, theories,
issues of fact and arguments not adequately brought to the attention of the trial court need not be, and
ordinarily will not be, considered by a reviewing court, as they cannot be raised for the first time on
appeal (Santos vs. IAC, No. 74243, November 14, 1986, 145 SCRA 592).40

. . . It is settled jurisprudence that an issue which was neither averred in the complaint nor raised during
the trial in the court below cannot be raised for the first time on appeal as it would be offensive to the
basic rules of fair play, justice and due process (Dihiansan vs. CA, 153 SCRA 713 [1987]; Anchuelo vs.
IAC, 147 SCRA 434 [1987]; Dulos Realty & Development Corp. vs. CA, 157 SCRA 425 [1988]; Ramos
vs. IAC, 175 SCRA 70 [1989]; Gevero vs. IAC, G.R. 77029, August 30, 1990).41
Since the issue was not raised in the pleadings as an affirmative defense, private respondent was not given an
opportunity in the trial court to controvert the same through opposing evidence. Indeed, this is a matter of due
process. But we passed upon the issue anyway, if only to avoid deciding the case on purely procedural grounds,
and we repeat that, on the basis of the evidence already in the record and as appreciated by the lower courts,
the inevitable conclusion is simply that there was a perfected contract of sale.
The Third Issue: Is the Contract Enforceable?
The petition alleged42:
Even assuming that Luis Co or Rivera did relay a verbal offer to sell at P5.5 million during the meeting of
28 September 1987, and it was this verbal offer that Demetria and Janolo accepted with their letter of 30
September 1987, the contract produced thereby would be unenforceable by action there being no
note, memorandum or writing subscribed by the Bank to evidence such contract. (Please see article
1403[2], Civil Code.)
Upon the other hand, the respondent Court in its Decision (p, 14) stated:
. . . Of course, the bank's letter of September 1, 1987 on the official price and the plaintiffs' acceptance of
the price on September 30, 1987, are not, in themselves, formal contracts of sale. They are however
clear embodiments of the fact that a contract of sale was perfected between the parties, such contract
being binding in whatever form it may have been entered into (case citations omitted). Stated simply, the
banks' letter of September 1, 1987, taken together with plaintiffs' letter dated September 30, 1987,
constitute in law a sufficient memorandum of a perfected contract of sale.
The respondent Court could have added that the written communications commenced not only from September
1, 1987 but from Janolo's August 20, 1987 letter. We agree that, taken together, these letters constitute sufficient
memoranda since they include the names of the parties, the terms and conditions of the contract, the price
and a description of the property as the object of the contract.
But let it be assumed arguendo that the counter-offer during the meeting on September 28, 1987 did constitute a
"new" offer which was accepted by Janolo on September 30, 1987. Still, the statute of frauds will not apply by
reason of the failure of petitioners to object to oral testimony proving petitioner Bank's counter-offer of P5.5
million. Hence, petitioners by such utter failure to object are deemed to have waived any defects of the
contract under the statute of frauds, pursuant to Article 1405 of the Civil Code:
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of article 1403, are ratified by
the failure to object to the presentation of oral evidence to prove the same, or by the acceptance of
benefits under them.
As private respondent pointed out in his Memorandum, oral testimony on the reaffirmation of the counter-offer of
P5.5 million is a plenty and the silence of petitioners all throughout the presentation makes the evidence
binding on them thus;
A Yes, sir, I think it was September 28, 1987 and I was again present because Atty. Demetria told me to
accompany him we were able to meet Luis Co at the Bank.
xxx

xxx

xxx

Q Now, what transpired during this meeting with Luis Co of the Producers Bank?
A Atty. Demetria asked Mr. Luis Co whether the price could be reduced, sir.
Q What price?

A The 5.5 million pesos and Mr. Luis Co said that the amount cited by Mr. Mercurio Rivera is the final
price and that is the price they intends (sic) to have, sir.
Q What do you mean?.
A That is the amount they want, sir.
Q What is the reaction of the plaintiff Demetria to Luis Co's statement (sic) that the defendant Rivera's
counter-offer of 5.5 million was the defendant's bank (sic) final offer?
A He said in a day or two, he will make final acceptance, sir.
Q What is the response of Mr. Luis Co?.
A He said he will wait for the position of Atty. Demetria, sir.
[Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
Q What transpired during that meeting between you and Mr. Luis Co of the defendant Bank?
A We went straight to the point because he being a busy person, I told him if the amount of P5.5 million
could still be reduced and he said that was already passed upon by the committee. What the bank
expects which was contrary to what Mr. Rivera stated. And he told me that is the final offer of the bank
P5.5 million and we should indicate our position as soon as possible.
Q What was your response to the answer of Mr. Luis Co?
A I said that we are going to give him our answer in a few days and he said that was it. Atty. Fajardo and
I and Mr. Mercurio [Rivera] was with us at the time at his office.
Q For the record, your Honor please, will you tell this Court who was with Mr. Co in his Office in
Producers Bank Building during this meeting?
A Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.
Q By Mr. Co you are referring to?
A Mr. Luis Co.
Q After this meeting with Mr. Luis Co, did you and your partner accede on (sic) the counter offer by the
bank?
A Yes, sir, we did.? Two days thereafter we sent our acceptance to the bank which offer we accepted,
the offer of the bank which is P5.5 million.
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
Q According to Atty. Demetrio Demetria, the amount of P5.5 million was reached by the Committee and
it is not within his power to reduce this amount. What can you say to that statement that the amount of
P5.5 million was reached by the Committee?
A It was not discussed by the Committee but it was discussed initially by Luis Co and the group of Atty.
Demetrio Demetria and Atty. Pajardo (sic) in that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. 14-15.]
The Fourth Issue: May the Conservator Revoke
the Perfected and Enforceable Contract.

It is not disputed that the petitioner Bank was under a conservator placed by the Central Bank of the Philippines
during the time that the negotiation and perfection of the contract of sale took place. Petitioners energetically
contended that the conservator has the power to revoke or overrule actions of the management or the board of
directors of a bank, under Section 28-A of Republic Act No. 265 (otherwise known as the Central Bank Act) as
follows:
Whenever, on the basis of a report submitted by the appropriate supervising or examining department,
the Monetary Board finds that a bank or a non-bank financial intermediary performing quasi-banking
functions is in a state of continuing inability or unwillingness to maintain a state of liquidity deemed
adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a
conservator to take charge of the assets, liabilities, and the management of that institution, collect all
monies and debts due said institution and exercise all powers necessary to preserve the assets of the
institution, reorganize the management thereof, and restore its viability. He shall have the power to
overrule or revoke the actions of the previous management and board of directors of the bank or nonbank financial intermediary performing quasi-banking functions, any provision of law to the contrary
notwithstanding, and such other powers as the Monetary Board shall deem necessary.
In the first place, this issue of the Conservator's alleged authority to revoke or repudiate the perfected contract of
sale was raised for the first time in this Petition as this was not litigated in the trial court or Court of Appeals.
As already stated earlier, issues not raised and/or ventilated in the trial court, let alone in the Court of Appeals,
"cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and
due process."43
In the second place, there is absolutely no evidence that the Conservator, at the time the contract was perfected,
actually repudiated or overruled said contract of sale. The Bank's acting conservator at the time, Rodolfo Romey,
never objected to the sale of the property to Demetria and Janolo. What petitioners are really referring to is the
letter of Conservator Encarnacion, who took over from Romey after the sale was perfected on September 30,
1987 (Annex V, petition) which unilaterally repudiated not the contract but the authority of Rivera to make a
binding offer and which unarguably came months after the perfection of the contract. Said letter dated May
12, 1988 is reproduced hereunder:
May 12, 1988
Atty. Noe C. Zarate
Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
Ayala Avenue, Makati, Metro-Manila
Dear Atty. Zarate:
This pertains to your letter dated May 5, 1988 on behalf of Attys. Janolo and Demetria regarding the six
(6) parcels of land located at Sta. Rosa, Laguna.
We deny that Producers Bank has ever made a legal counter-offer to any of your clients nor perfected a
"contract to sell and buy" with any of them for the following reasons.
In the "Inter-Office Memorandum" dated April 25, 1986 addressed to and approved by former Acting
Conservator Mr. Andres I. Rustia, Producers Bank Senior Manager Perfecto M. Pascua detailed the
functions of Property Management Department (PMD) staff and officers (Annex A.), you will immediately
read that Manager Mr. Mercurio Rivera or any of his subordinates has no authority, power or right to
make any alleged counter-offer. In short, your lawyer-clients did not deal with the authorized officers of
the bank.
Moreover, under Sec. 23 and 36 of the Corporation Code of the Philippines (Bates Pambansa Blg. 68.)
and Sec. 28-A of the Central Bank Act (Rep. Act No. 265, as amended), only the Board of
Directors/Conservator may authorize the sale of any property of the corportion/bank..
Our records do not show that Mr. Rivera was authorized by the old board or by any of the bank
conservators (starting January, 1984) to sell the aforesaid property to any of your clients. Apparently,
what took place were just preliminary discussions/consultations between him and your clients, which
everyone knows cannot bind the Bank's Board or Conservator.

We are, therefore, constrained to refuse any tender of payment by your clients, as the same is patently
violative of corporate and banking laws. We believe that this is more than sufficient legal justification for
refusing said alleged tender.
Rest assured that we have nothing personal against your clients. All our acts are official, legal and in
accordance with law. We also have no personal interest in any of the properties of the Bank.
Please be advised accordingly.
Very truly yours,
(Sgd.) Leonida T. Encarnacion
LEONIDA T. EDCARNACION
Acting Conservator
In the third place, while admittedly, the Central Bank law gives vast and far-reaching powers to the conservator
of a bank, it must be pointed out that such powers must be related to the "(preservation of) the assets of the
bank, (the reorganization of) the management thereof and (the restoration of) its viability." Such powers,
enormous and extensive as they are, cannot extend to the post-facto repudiation of perfected transactions,
otherwise they would infringe against the non-impairment clause of the Constitution 44. If the legislature itself
cannot revoke an existing valid contract, how can it delegate such non-existent powers to the conservator under
Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to revoke contracts that are, under
existing law, deemed to be defective i.e., void, voidable, unenforceable or rescissible. Hence, the conservator
merely takes the place of a bank's board of directors. What the said board cannot do such as repudiating a
contract validly entered into under the doctrine of implied authority the conservator cannot do either.
Ineluctably, his power is not unilateral and he cannot simply repudiate valid obligations of the Bank. His authority
would be only to bring court actions to assail such contracts as he has already done so in the instant case. A
contrary understanding of the law would simply not be permitted by the Constitution. Neither by common sense.
To rule otherwise would be to enable a failing bank to become solvent, at the expense of third parties, by simply
getting the conservator to unilaterally revoke all previous dealings which had one way or another or come to be
considered unfavorable to the Bank, yielding nothing to perfected contractual rights nor vested interests of the
third parties who had dealt with the Bank.
The Fifth Issue: Were There Reversible Errors of Facts?
Basic is the doctrine that in petitions for review under Rule 45 of the Rules of Court, findings of fact by the Court
of Appeals are not reviewable by the Supreme Court. In Andres vs. Manufacturers Hanover & Trust
Corporation, 45, we held:
. . . The rule regarding questions of fact being raised with this Court in a petition for certiorari under Rule
45 of the Revised Rules of Court has been stated in Remalante vs. Tibe, G.R. No. 59514, February 25,
1988, 158 SCRA 138, thus:
The rule in this jurisdiction is that only questions of law may be raised in a petition for certiorari under
Rule 45 of the Revised Rules of Court. "The jurisdiction of the Supreme Court in cases brought to it from
the Court of Appeals is limited to reviewing and revising the errors of law imputed to it, its findings of the
fact being conclusive " [Chan vs. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737,
reiterating a long line of decisions]. This Court has emphatically declared that "it is not the function of the
Supreme Court to analyze or weigh such evidence all over again, its jurisdiction being limited to
reviewing errors of law that might have been committed by the lower court" (Tiongco v. De la Merced, G.
R. No. L-24426, July 25, 1974, 58 SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28,
1983, 121 SCRA 865; Baniqued vs. Court of Appeals, G. R. No. L-47531, February 20, 1984, 127 SCRA
596). "Barring, therefore, a showing that the findings complained of are totally devoid of support in the
record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings
must stand, for this Court is not expected or required to examine or contrast the oral and documentary
evidence submitted by the parties" [Santa Ana, Jr. vs. Hernandez, G. R. No. L-16394, December 17,
1966, 18 SCRA 973] [at pp. 144-145.]
Likewise, in Bernardo vs. Court of Appeals 46, we held:

The resolution of this petition invites us to closely scrutinize the facts of the case, relating to the
sufficiency of evidence and the credibility of witnesses presented. This Court so held that it is not the
function of the Supreme Court to analyze or weigh such evidence all over again. The Supreme Court's
jurisdiction is limited to reviewing errors of law that may have been committed by the lower court. The
Supreme Court is not a trier of facts. . . .
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goldrock Construction and Development
Corp. 47:
The Court has consistently held that the factual findings of the trial court, as well as the Court of Appeals,
are final and conclusive and may not be reviewed on appeal. Among the exceptional circumstances
where a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly
absurd, mistaken or impossible; when there is grave abuse of discretion in the appreciation of facts;
when the judgment is premised on a misapprehension of facts; when the findings went beyond the
issues of the case and the same are contrary to the admissions of both appellant and appellee. After a
careful study of the case at bench, we find none of the above grounds present to justify the re-evaluation
of the findings of fact made by the courts below.
In the same vein, the ruling of this Court in the recent case of South Sea Surety and Insurance Company
Inc. vs.Hon. Court of Appeals, et al. 48 is equally applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate court, . . . (I)t is not the
function of this Court to assess and evaluate all over again the evidence, testimonial and documentary,
adduced by the parties, particularly where, such as here, the findings of both the trial court and the
appellate court on the matter coincide. (emphasis supplied)
Petitioners, however, assailed the respondent Court's Decision as "fraught with findings and conclusions which
were not only contrary to the evidence on record but have no bases at all," specifically the findings that (1) the
"Bank's counter-offer price of P5.5 million had been determined by the past due committee and approved by
conservator Romey, after Rivera presented the same for discussion" and (2) "the meeting with Co was not to
scale down the price and start negotiations anew, but a meeting on the already determined price of P5.5 million"
Hence, citing Philippine National Bank vs. Court of Appeals 49, petitioners are asking us to review and reverse
such factual findings.
The first point was clearly passed upon by the Court of Appeals 50, thus:
There can be no other logical conclusion than that when, on September 1, 1987, Rivera informed
plaintiffs by letter that "the bank's counter-offer is at P5.5 Million for more than 101 hectares on lot basis,
"such counter-offer price had been determined by the Past Due Committee and approved by the
Conservator after Rivera had duly presented plaintiffs' offer for discussion by the Committee . . . Tersely
put, under the established fact, the price of P5.5 Million was, as clearly worded in Rivera's letter (Exh.
"E"), the official and definitive price at which the bank was selling the property. (p. 11, CA Decision)
xxx

xxx

xxx

. . . The argument deserves scant consideration. As pointed out by plaintiff, during the meeting of
September 28, 1987 between the plaintiffs, Rivera and Luis Co, the senior vice-president of the bank,
where the topic was the possible lowering of the price, the bank official refused it and confirmed that the
P5.5 Million price had been passed upon by the Committee and could no longer be lowered (TSN of
April 27, 1990, pp. 34-35) (p. 15, CA Decision).
The respondent Court did not believe the evidence of the petitioners on this point, characterizing it as "not
credible" and "at best equivocal and considering the gratuitous and self-serving character of these declarations,
the bank's submissions on this point do not inspire belief."
To become credible and unequivocal, petitioners should have presented then Conservator Rodolfo Romey to
testify on their behalf, as he would have been in the best position to establish their thesis. Under the rules on
evidence 51, such suppression gives rise to the presumption that his testimony would have been adverse, if
produced.

The second point was squarely raised in the Court of Appeals, but petitioners' evidence was deemed insufficient
by both the trial court and the respondent Court, and instead, it was respondent's submissions that were
believed and became bases of the conclusions arrived at.
In fine, it is quite evident that the legal conclusions arrived at from the findings of fact by the lower courts are
valid and correct. But the petitioners are now asking this Court to disturb these findings to fit the conclusion they
are espousing, This we cannot do.
To be sure, there are settled exceptions where the Supreme Court may disregard findings of fact by the Court of
Appeals 52. We have studied both the records and the CA Decision and we find no such exceptions in this case.
On the contrary, the findings of the said Court are supported by a preponderance of competent and credible
evidence. The inferences and conclusions are seasonably based on evidence duly identified in the Decision.
Indeed, the appellate court patiently traversed and dissected the issues presented before it, lending credibility
and dependability to its findings. The best that can be said in favor of petitioners on this point is that the factual
findings of respondent Court did not correspond to petitioners' claims, but were closer to the evidence as
presented in the trial court by private respondent. But this alone is no reason to reverse or ignore such factual
findings, particularly where, as in this case, the trial court and the appellate court were in common agreement
thereon. Indeed, conclusions of fact of a trial judge as affirmed by the Court of Appeals are conclusive
upon this Court, absent any serious abuse or evident lack of basis or capriciousness of any kind, because the
trial court is in a better position to observe the demeanor of the witnesses and their courtroom manner as well as
to examine the real evidence presented.
Epilogue.
In summary, there are two procedural issues involved forum-shopping and the raising of issues for the first time
on appeal [viz., the extinguishment of the Bank's offer of P5.5 million and the conservator's powers to repudiate
contracts entered into by the Bank's officers] which per se could justify the dismissal of the present case. We
did not limit ourselves thereto, but delved as well into the substantive issues the perfection of the contract of
sale and its enforceability, which required the determination of questions of fact. While the Supreme Court is not
a trier of facts and as a rule we are not required to look into the factual bases of respondent Court's decisions
and resolutions, we did so just the same, if only to find out whether there is reason to disturb any of its factual
findings, for we are only too aware of the depth, magnitude and vigor by which the parties through their
respective eloquent counsel, argued their positions before this Court.
We are not unmindful of the tenacious plea that the petitioner Bank is operating abnormally under a governmentappointed conservator and "there is need to rehabilitate the Bank in order to get it back on its feet . . . as many
people depend on (it) for investments, deposits and well as employment. As of June 1987, the Bank's overdraft
with the Central Bank had already reached P1.023 billion . . . and there were (other) offers to buy the subject
properties for a substantial amount of money." 53
While we do not deny our sympathy for this distressed bank, at the same time, the Court cannot emotionally
close its eyes to overriding considerations of substantive and procedural law, like respect for perfected contracts,
non-impairment of obligations and sanctions against forum-shopping, which must be upheld under the rule of
law and blind justice.
This Court cannot just gloss over private respondent's submission that, while the subject properties may
currently command a much higher price, it is equally true that at the time of the transaction in 1987, the price
agreed upon of P5.5 million was reasonable, considering that the Bank acquired these properties at a
foreclosure sale for no more than P3.5 million 54. That the Bank procrastinated and refused to honor its
commitment to sell cannot now be used by it to promote its own advantage, to enable it to escape its binding
obligation and to reap the benefits of the increase in land values. To rule in favor of the Bank simply because the
property in question has algebraically accelerated in price during the long period of litigation is to reward
lawlessness and delays in the fulfillment of binding contracts. Certainly, the Court cannot stamp its imprimatur on
such outrageous proposition.
WHEREFORE, finding no reversible error in the questioned Decision and Resolution, the Court hereby DENIES
the petition. The assailed Decision is AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in
forum-shopping and WARNED that a repetition of the same or similar acts will be dealt with more severely.
Costs against petitioners.
SO ORDERED.

G.R. No. 156104

June 29, 2004

R.P. DINGLASAN CONSTRUCTION, INC., petitioner,

vs.
MARIANO ATIENZA and SANTIAGO ASI, respondents.
DECISION
PUNO, J.:
This is an appeal from the decision1 and resolution2 of the Court of Appeals, dated January 17, 2001 and
October 30, 2002, respectively, upholding the finding of constructive dismissal against petitioner.
Petitioner R.P. Dinglasan Construction, Inc. provided janitorial services to Pilipinas Shell Refinery
Corporation (Shell Corporation) in Batangas City. Private respondents Mariano Atienza and Santiago Asi
served as petitioners janitors assigned with Shell Corporation since 1962 and 1973, respectively.
Private respondents claim that on July 7, 1994, petitioner called for a meeting and informed private
respondents and three (3) other employees that their employment with Shell Corporation would be
terminated effective July 15, 1994. They were told that petitioner lost the bidding for janitorial services with
Shell. Petitioner notified respondents that they may reapply as helpers and redeployed in other companies
where petitioner had subsisting contracts but they would receive only a minimum wage. Private respondents
refused as the offer would be a form of demotion --- they would lose their seniority status and would not be
guaranteed to work at regular hours.
In December 1994, private respondents filed a complaint against petitioner for non-payment of salary with
the district office of the Department of Labor and Employment (DOLE) in Batangas City. In February 1995,
during the conciliation proceedings with the DOLE, petitioner sent notices to respondents informing them
that they would be reinstated with Shell Corporation as soon as they submit their barangay clearance,
medical certificate, picture and information sheet as per the new identification badge requirements of Shell
Corporation. Thereafter, petitioner again met with private respondents, who were then accompanied by the
barangay captain and a councilor, and the latter confirmed to the former their willingness to be reinstated.
Private respondents duly submitted the documents required for their reinstatement.
In May 1995, respondents demanded the payment of their backwages starting from July 15, 1994. On June
1, 1995, petitioner notified private respondents that they have been declared absent without leave (AWOL)
as they allegedly failed to signify their intention to return to work and submit the badge requirements for
their reinstatement. On June 13, 1995, private respondents wrote petitioner and insisted that they had
complied with the badge requirements. Accompanied by the barangay officials, private respondents
attempted to meet with the officers of petitioner but the latter refused to dialogue with them. As proof of
their compliance with the Shell requirements, private respondents submitted to the DOLE their x-ray results,
dated May 17 and 19, 1995 and their barangay certification, dated May 13, 1995.
The case was eventually referred to the National Labor Relations Commission (NLRC) for compulsory
arbitration. Private respondents amended their complaint charging petitioner with illegal dismissal and nonpayment of 13th month pay, with a claim for payment of attorneys fees and litigation expenses, and a
prayer for reinstatement with payment of full backwages from July 15, 1994.
Petitioner gave a different version of the incident. It allegedly informed respondents and the other affected
employees that they would be deployed to petitioners other principal companies but that their work would
be different. Except for private respondents, all the affected employees accepted its offer of redeployment
and reported back to work. Respondents failed to submit a resignation letter to signify their intention not to
return to work.

Thereafter, during the pendency of the labor case, petitioner in two (2) separate notices,3 informed private
respondents that they could be reinstated at Shell Corporation with no diminution in their salary provided
that they submit the documents for the new identification badge requirement of Shell Corporation. Private
respondents, however, refused to return to work until they were paid their backwages. Consequently,
petitioner was constrained to consider them as having abandoned their work and to terminate their
employment on September 19, 1995. Petitioner, thus, justified the dismissal of private respondents on the
grounds of gross and habitual neglect of duties and abandonment of work.
On September 3, 1998, labor arbiter Andres Zavalla rendered a decision4 finding that private respondents
were illegally dismissed from service and ordering their reinstatement. The dispositive portion reads:
WHEREFORE, premises considered, the following orders are hereby entered:
1. declaring that the complainants were illegally dismissed from their employment;
2. ordering the respondent to pay complainants the aggregate amount of P755,942.15
representing their full backwages and benefits from July 15, 1994 up to the promulgation of
this decision; separation pay in lieu of reinstatement; 13th month pay for 1994 and attorneys
fees equivalent to 10% of the total monetary award due complainants, broken down as
follows:
Mariano Atienza - P366,594.67
Santiago Asi -

P320,625.50

Attorneys fees -

P 68,722.02

3. dismissing the claims for litigation expenses for lack of basis.

SO ORDERED.
On appeal, the decision of the labor arbiter was affirmed by the NLRC.5 Without moving for
reconsideration, petitioner immediately filed a petition for certiorari before the Court of Appeals but
petitioner suffered the same fate. On the procedural aspect, the Court of Appeals ruled that the petition could
not prosper as petitioner failed to move for a reconsideration of the NLRC decision. On the substantive
issues, the appellate court upheld the findings of the labor arbiter and the NLRC that: (1) private respondents
were constructively dismissed as petitioners offer of reassignment involved a diminution in pay and
demotion in rank that made their continued employment unacceptable; and, (2) private respondents could
not be considered to have abandoned their work.6
As petitioners motion for reconsideration was denied,7 petitioner filed this appeal and assigned the
following errors:
I
THE COURT OF APPEALS, CONTRARY TO APPLICABLE DECISIONS OF THIS
HONORABLE SUPREME COURT, ERRED IN RULING THAT A MOTION FOR
RECONSIDERATION OF THE DECISION OF THE NLRC IS A CONDITION SINE QUA NON
TO THE INSTITUTION OF A SPECIAL CIVIL ACTION OF (sic) CERTIORARI, AS THE
INSTANT CASE FALLS UNDER THE EXCEPTIONS.
II

THE COURT OF APPEALS, CONTRARY TO EXISTING LAW, ERRED IN DISMISSING THE

PETITION FOR CERTIORARI AND AFFIRMING THE DECISION OF THE NLRC INSOFAR
AS THE MONETARY AWARD IS CONCERNED.
We find no merit in the petition.
On the first issue, petitioner faults the Court of Appeals for dismissing its appeal for its failure to move for a
reconsideration of the NLRC Decision. Petitioner contends that its filing would have been purely pro forma
and a clear exercise in futility as the issues of illegal dismissal and abandonment heard and passed upon by
the NLRC were the same issues it brought on appeal to the Court of Appeals.
Indeed, the well-established rule is that a motion for reconsideration of the decision of the NLRC is
necessary before an appeal may be allowed.8 The rule on exhaustion of administrative remedies intends to
afford the tribunal or agency the first opportunity to rectify the errors it may have committed before resort to
courts of justice can be had.9 Nonetheless, strict and rigid application of technical rules of procedure,
without regard to the merits of the case, is not encouraged as it will only frustrate rather than promote
substantial justice. Rules of procedure should be viewed as tools designed to facilitate the dispensation of
justice.10
In the case at bar, however, we note that the Decision of the Court of Appeals dismissing petitioners
appeal was not grounded solely on a procedural lapse, i.e., failure of the petitioner to move for a
reconsideration of the NLRC Decision. The records clearly show that after ruling against petitioner on this
procedural issue, the Court of Appeals proceeded to discuss the substantive aspect of the case, i.e., whether
petitioner validly dismissed private respondents due to abandonment of work. Hence, it is not accurate to
state that the Court of Appeals dismissed the petition solely on the basis of a strict application of technical
rules.
We now resolve the substantive issue.
Petitioner justifies its dismissal of private respondents on the ground that they failed to report back to the
office and thus abandoned their work. This allegation, however, is not supported by the evidence.
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an
employee is for a valid cause.11 In the case at bar, petitioner failed to discharge its burden. It failed to
establish that private respondents deliberately and unjustifiably refused to resume their employment without
any intention of returning to work.
To constitute abandonment of work, two (2) requisites must concur: first, the employee must have failed to
report for work or must have been absent without justifiable reason; and second, there must have been a
clear intention on the part of the employee to sever the employer-employee relationship as manifested by
overt acts.12 Abandonment as a just ground for dismissal requires deliberate, unjustified refusal of the
employee to resume his employment. Mere absence or failure to report for work, after notice to return, is not
enough to amount to abandonment.13
In the case at bar, the evidence of private respondents negates petitioners theory that they abandoned
their work. Firstly, private respondents reported back to petitioners office a number of times expressing
their desire to continue working for petitioner without demotion in rank or diminution of salary. This fact
was established by the corroborating testimony of barangay councilman Valentin Clerigo who, together
with the barangay captain, accompanied private respondents to petitioners office at least ten (10)
times to negotiate their redeployment on more acceptable terms. Secondly, in seeking reinstatement,
private respondents also sought the intervention of the DOLE to arbitrate the labor issue between the parties.
Thirdly, private respondents submitted the barangay clearances and x-ray results required from them by
petitioner for their reinstatement as witnessed by the barangay officials. Lastly, the records would bear that
private respondents lost no time and sought their reinstatement by filing an illegal dismissal case against
petitioner, which act is clearly inconsistent with a desire to sever employer-employee relations and abandon

their work. All these overt acts on the part of private respondents negate petitioners claim of abandonment
of work and prove beyond doubt their steadfast desire to continue their employment with petitioner and be
reinstated to their former position. Moreover, petitioner failed to explain why it waited for 14 months from
the time private respondents allegedly did not return to work before it dismissed them for being AWOL.
We hold that private respondents were constructively dismissed by petitioner. Constructive dismissal is
defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the
offer of employment involves a demotion in rank and diminution of pay.14 In the case at bar, petitioner
committed constructive dismissal when it offered to reassign private respondents to another company but
with no guaranteed working hours and payment of only the minimum wage. The terms of the redeployment
thus became unacceptable for private respondents and foreclosed any choice but to reject petitioners offer,
involving as it does a demotion in status and diminution in pay. Thereafter, for six (6) months, private
respondents were in a floating status. Interestingly, it was only after private respondents filed a complaint
with the DOLE that petitioner backtracked in its position and offered to reinstate private respondents to their
former job in Shell Corporation with no diminution in salary. Eventually, however, petitioner unilaterally
withdrew its offer of reinstatement, refused to meet with the private respondents and instead decided to
dismiss them from service.
On the second issue, petitioner cannot impugn for the first time the computation of the monetary award
granted by the labor arbiter to private respondents. The settled rule is that issues not raised or ventilated
in the court a quo cannot be raised for the first time on appeal as to do so would be offensive to the
basic rules of fair play and justice.15 The computation of monetary award granted to private
respondents is a factual issue that should have been posed at the arbitration level when the award was
first granted by the labor arbiter who received and evaluated the evidence of both parties, or, at the
latest, raised by petitioner in its appeal with the NLRC. Petitioner omitted to do any of these. All
throughout the proceedings below, from the labor arbiter to the NLRC, and even in its petition before the
Court of Appeals, petitioner repeatedly pounded only on the sole issue of the validity of its dismissal of
private respondents. Thus, at this late stage of the proceedings, it cannot ask the Court to review the bases
and verify the correctness of the labor arbiters computation of the monetary award which it never assailed
below. A first-hand evaluation of the evidence of the parties upon which the monetary award is based
belongs to the labor arbiter. This Court is not a trier of facts and factual issues are improper in a petition for
review on certiorari.16 Likewise, the Court notes that in seeking reinstatement and payment of their
monetary claims, private respondents have traversed a long and difficult path. This case has passed the
DOLE, the labor arbiter, the NLRC, the Court of Appeals and now this Court, with the finding of illegal
dismissal having been consistently affirmed in each stage. Private respondents had been rendering janitorial
services as early as 1962 and, at the time of their dismissal, were receiving a measly P4,000.00 monthly
salary. It is time to put a period to private respondents travail. If there is anything that frustrates the search
for justice by the poor, it is the endless search for it.
IN VIEW WHEREOF, the petition is DISMISSED and the impugned decision and resolution of the Court
of Appeals, dated January 17, 2001 and October 30, 2002, respectively, are AFFIRMED in toto. No
pronouncement as to costs.
SO ORDERED.
Quisumbing, Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

G.R. No. 98185 December 11, 1992

SIBAGAT TIMBER CORPORATION, petitioner,
vs.
ADOLFO B. GARCIA, USIPHIL, INC. and STRONGHOLD INSURANCE CO., INC., respondents.

GRIO-AQUINO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated February 15,
1991 in CA-G.R. No. 20799 entitled, "Sibagat Timber Corp. vs. Adolfo B. Garcia, et al.," affirming
the decision of the Regional Trail Court which dismissed the petitioner's petition for certiorari,
prohibition and injunction with restraining order and writ of preliminary injunction and damages
(Spl. Case No. 548, RTC, Branch I, Butuan City).
On August 30, 1988, respondent Sheriff Adolfo B. Garcia, who was entrusted with the
implementation of the writ of execution issued by the Regional Trial Court, Branch 147, Makati,
Metro Manila in Civil Case No. 7180 entitled, "USIPHIL, INC. vs. Del Rosario and Sons Logging
Enterprises, Inc.," levied on the following personal properties of Del Rosario & Sons, Inc.:
One (1) Unit CAT Grader with SN 99E-5016.
One (1) Unit Generating Set with Cummins Engine No. 1074304
Model V-855QC and Generator 125 KVA No. HA-90071 1720-1
and Panel Switch Board.
One (1) Generating Set with CAT D-311 Series H No. 51B4241
w/ Generator No. 30TH 211 1800 RPM, 60 Cycles, 30KVA
One (1) pc. Engine Block CAT D-4600.
One (1) TD-25B w/ Hyster D988, Triple Drum Model BY B14
SN-9PI55E
One (1) TD-25A w/ No. Engine Number, w/ Radiator and X-2
Triple Drum Model 142 Yarder and blade.
which he scheduled for sale at public auction on September 7, 1988 at 10:00 o'clock in the
morning. He also levied on:
One (1) Unit Reo Logging Truck (5) tonner not in running
condition; and
One (1) Unit White Logging (5) tonner not in running condition.
which he scheduled for sale at public auction on September 8, 1988.
On the same date (August 30, 1988) that levy was made by the sheriff, the petitioner herein,
through Mariano Rana, filed a third-party claim alleging that it is the lawful owner of the levied
machinery and equipment, by virtue of deeds of sale executed in its favor by Del Rosario & Sons
Logging Enterprises, Inc.

Pursuant to Section 17, Rule 39 of the Rules of Court, an indemnity bond was posted by the
judgment creditor, USIPHIL, Inc., to indemnify the respondent sheriff against the claim of the thirdparty claimant.
On September 6, 1988, at 2:00 P.M., petitioner filed in the Regional Trial Court of Butuan City, a
petition for "Certiorari, Prohibition and Injunction with Restraining Order & Writ of Preliminary
Injunction and Damages" in Special Civil Case No. 548. A temporary restraining order was issued
on September 6, 1988 by the Executive Judge of that court.
On September 7, 1988, at 11:10 A.M., the court employees who were deputized to serve the
restraining order arrived at the place where the auction sale was to be held. However, they were
told by sheriff Garcia that the auction sale was finished at 10:30 A.M. yet, and that a certificate of
sale for each of the personal properties to be auctioned on that day had already been issued to
USIPHIL, INC., the judgment creditor, as the only bidder and purchaser.
After the hearing on the application for preliminary injunction was held on September 15, 1988, the
parties were directed to submit simultaneous memoranda. Thereafter the case was deemed
submitted for resolution. In the meantime, respondent USIPHIL, INC., filed a formal motion to
dismiss the petition which the trial court granted on February 28, 1990.
On March 9, 1990, the petitioner appealed the order of dismissal to the Court of Appeals (CA G.R.
No. 20799). On February 15, 1991, the Court of Appeals dismissed the appeal.
Petitioner's motion for reconsideration was denied by the Court of Appeals. Hence, this petition for
review under Rule 45 of the Rules of Court.
The main issue raised by the petitioner is the supposed error of the Court of Appeals in piercing
the veil of corporate entity and in holding that the third-party claimant, herein petitioner Sibagat
Corporation, is not a separate and distinct entity from the judgment debtor, Del Rosario & Sons
Logging Enterprises, Inc.
As pointed out by the Court of Appeals in its decision:
Gleaned from the records of this case, Mariano Rana, the third-party claimant for
and in behalf of petitioner testified, among others, that he is the office manager of
Sibagat Timber Corporation (p. 58, Record); that he is the administrative manager of
Del Rosario and Sons Logging Enterprises, Inc. in a concurrent capacity (p. 50, id. );
that the officers of the Sibagat Timber Corporation are: Mr. Policarpio C. Del
Rosario, President and General Manager; Miss Conchita C. Del Rosario, VicePresident and General Manager (p. 60, Id.); and the Directors are: Policarpio Del
Rosario, Jr., Cristina Del Rosario, Mrs. Jasmin Del Rosario, and Vicente C. Cel
Rosario (pp. 61-63, id.). On the part of Del Rosario and Sons Logging Enterprises,
Inc., the officers of the company are: Mr. Policarpio C. Cel Rosario, President; Miss
Conchita Del Rosario, Vice-President/General Manager/Director and Treasurer; Mrs.
Jasmin A. Del Rosario, Querubin Del Rosario, and Cristeta Del Rosario,
respectively. (p. 29, Rollo.)
The circumstances that: (1) petitioner and Del Rosario & Sons Logging Enterprises, Inc. hold
office in the same building; (2) the officers and directors of both corporations are practically the
same; and (3) the Del Rosarios assumed management and control of Sibagat and have been
acting for and managing its business (p. 30, Rollo), bolster the conclusion that petitioner is an alter
ego of the Del Rosario & Sons Logging Enterprises, Inc.
The rule is that the veil of corporate fiction may be pierced when made as a shield to perpetrate
fraud and/or confuse legitimate issues (Jacinto vs. CA, 198 SCRA 211). The theory of corporate

entity was not meant to promote unfair objectives or otherwise, to shield them (Villanueva vs.
Adre, 172 SCRA 876). Likewise, where it appears that two business enterprises are owned,
conducted, and controlled by the same parties, both law and equity will, when necessary to protect
the rights of third persons, disregard the legal fiction that two corporations are distinct entities, and
treat them as identical (Phil. Veterans Investment Development Corp. vs. CA, 181 SCRA 669).
The petitioner further contends that the Court of Appeals erroneously disregarded the decision of
this Court in G.R. No. 84497 entitled, "Alfonso Escovilla, Jr., Cecilio M. Meris and Cuison
Engineering and Machinery Co., Inc., Petitioner vs. The Hon. Court of Appeals, Sibagat Timber
Corporation and Conchita del Rosario, Respondents," wherein this Court held that private
respondents (herein petitioner) are the actual owners of the properties subject of execution by
virtue of a sale in their favor by Del Rosario & Sons Logging Enterprises, Inc.
That allegation has no merit. The issue raised in that case was "whether or not an action for
prohibition will prosper as a remedy for acts already accomplished." It was a procedural question,
not the ownership of the properties subject of the execution.
The issue of ownership being raised now by the petitioner involves a factual question requiring an
assessment of the evidence. This may not be in a petition for review under Rule 45 for it is not the
function of this Court to examine and weigh evidence already considered in the proceedings
below. Our jurisdiction is limited to reviewing only errors of law that may have been committed by
the lower courts (Navarra vs. CA, 204 SCRA 850).
Assuming arguendo that this Court in G.R. No. 84497 held that petitioner is the owner of the
properties levied under execution, that circumstance will not be a legal obstacle to the piercing of
the corporate fiction. As found by both the trial and appellate courts, petitioner is just a conduit, if
not an adjunct of Del Rosario & Sons Logging Enterprises, Inc. In such a case, the real ownership
becomes unimportant and may be disregard for the two entities may/can be treated as only one
agency or instrumentality.
The corporate entity is disregarded where a corporation is the mere alter ego, or
business conduit of a person or where the corporation is so organized and controlled
and its affairs are so conducted, as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation. (Aguedo F. Agbayani Commercial Laws of
the Philippines, Vol. 3, 1984 Ed., p. 30, citing decided cases.)
WHEREFORE, the petition for review is DENIED and the decision of the Court of Appeals is
AFFIRMED.
SO ORDERED

G.R. No. 88113 October 23, 1992

SPOUSES TITUS L. ENDAYA and GLENDA TRINIDAD; SPOUSES RICO L. ENDAYA and NANETTE
AQUINO; and SPOUSES JOSEPHINE L. ENDAYA and LEANDRO BANTUG, petitioners,
vs.
COURT OF APPEALS and PEDRO FIDELI, respondents.

ROMERO, J.:
Assailed in this petition for review on certiorari is the decision of the Court of Appeals in CA-.G.R. No. 15724
dated April 26, 1989 1 reversing the judgment of the Regional Trial Court of Tanauan, Batangas (Branch 6) in Civil
Case No. T-430 2 and holding that private respondent is an agricultural lessee in the land of petitioner whose security
of tenure must be respected by the latter.

The antecedent facts are as follows:

The Spouses Natividad Trinidad and Cesar San Diego owned a piece of agricultural land consisting of 20,200
square meters situated at San Pioquinto, Malvar, Batangas, devoted to rice and corn. As far back as 1934,
private respondent Fideli has been cultivating this land as a tenant of the Spouses respondent Fideli has been
cultivating this land as a tenant of the Spouses San Diego under a fifty-fifty (50-50) sharing agreement. This fact,
petitioners do not dispute.
On May 2, 1974, a lease contract was executed between the Spouses San Diego and one Regino Cassanova
for a period of four years from May 1974 up to May 1978. 3 The lease contract obliged Cassanova to pay P400.00
per hectare per annum and gave him the authority to oversee the planting of crops on the land. 4 Private respondent
signed this lease contract as one of two witnesses. 5

The lease contract was subsequently renewed to last until May 1980 but the rental was raised to P600.00.
Again, private respondent signed the contract as witness. 6
During the entire duration of the lease contract between the Spouses San Diego and Cassanova, private
respondent continuously cultivated the land, sharing equally with Cassanova the net produce of the harvests.
On January 6, 1980, the Spouses San Diego sold the land to petitioners for the sum of P26,000.00. The sale
was registered with the Register of Deeds of Batangas and a Transfer Certificate of Title was duly issued on
January 7, 1981. 7 Private respondent continued to farm the land although petitioners claim that private respondent
was told immediately after the sale to vacate the land.

8 In any case, it is undisputed that private respondent deposited with the Luzon
9
Development Bank an amount of about P8,000.00 as partial payment of the landowner's share in the harvest for the years 1980 until 1985.

Due to petitioners persistent demand for private respondent to vacate the land, private respondent filed in April
1985 a complaint 10 with the Regional Trial Court of Tanauan, Batangas praying that he be declared the agricultural
tenant of petitioners.

After trial, the trial court decided in favor of petitioners by holding that private respondent is not an agricultural
lessee of the land now owned by petitioners. The dispositive portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered dismissing plaintiff's complaint to be declared a
tenant of the landholding consisting of 20,200 square meters, located at San Pioquinto, Malvar,
Batangas, and owned by the defendants; ordering Pedro Fideli to vacate the landholding deliver
possession thereof to the defendants; and ordering the amount of P8,000.00 deposited under
Account No. 2940029826 Civil Case No. T-430 to be withdrawn and delivered to the defendants,
No. pronouncement as to costs.
On appeal, the Court of Appeals reversed the RTC decision and declared private respondent to be the
agricultural lessee of the subject landholding. Hence, this petition wherein private respondent's status as an
agricultural lessee and his security of tenure as such are being disputed by petitioners.

Petitioners impugn the Court of Appeals' declaration that private respondent is an agricultural lessee of the
subject landholding contending that when the original landowners, the Spouses San Diego, entered into a lease
contract with Regino Cassanova, the agricultural leasehold relationship between the Spouses San Diego and
private respondent, the existence of which petitioners do not dispute, was thereby terminated. Petitioners argue
that a landowner cannot have a civil law lease contract with one person and at the same time have an
agricultural leasehold agreement with another over the same land. It is further argued that because private
respondent consented to the lease contract between the Spouses San Diego and Cassanova, signing as he did
the lease agreement and the renewal contract as witness thereof, private respondent has waived his rights as an
agricultural lessee.
These contentions are without merit.
R.A. No. 3844 (1963), as amended By R.A. No. 6839 (1971), which is the relevant law governing the events at
hand, abolished share tenancy throughout the Philippines from 1971 and established the agricultural leasehold
system by operation of law. 11 Section 7 of the said law gave agricultural lessees security of tenure by providing the
following: "The agricultural leasehold relation once established shall confer upon the agricultural lessee the right to
continue working on the landholding until such leasehold relation is extinguished. The agricultural lessee shall be
entitled to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the Court for
causes herein provided." 12The fact that the landowner entered into a civil lease contract over the subject landholding
and gave the lessee the authority to oversee the farming of the land, as was done in this case, is not among the
causes provided by law for the extinguishment of the agricultural leasehold relation. 13 On the contrary, Section 10 of
the law provides:

Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. The
agricultural leasehold relation under this code shall not be extinguished by mere expiration of the
term or period in a leasehold contract nor by the sale, alienation or transfer of the legal
possession of the landholding. In case the agricultural lessor sells, alienates or transfers the legal
possession of the landholding, the purchaser or transferee thereof shall be subrogated to the
rights and substituted to the obligations of the agricultural lessor.
Hence, transactions involving the agricultural land over which an agricultural leasehold subsists resulting in
change of ownership, e.g., sale, or transfer of legal possession, such as lease, will not terminate the right of the
agricultural lessee who is given protection by the law by making such rights enforceable against the transferee
or the landowner's successor in interest. 14
Illustrative of the legal principles outlined above is Catorce v. Court of Appeals 15 where the person holding a
mortgage over the farm land subject of an agricultural leasehold took possession thereof pursuant to the mortgage
and ousted the agricultural lessee. Upon complaint for reinstatement filed by the agricultural lessee, the then Court of
Agrarian Relations ordered the mortgagee to deliver possession over the land to the agricultural lessee but his
decision was reversed by the Court of Appeals. In reversing the Court of Appeals' judgment and reinstating the
Agrarian Court's decision, the Court, through Justice Melencio-Herrera, noted, among other considerations, that
"tenants are guaranteed security of tenure, meaning, the continued enjoyment and possession of their landholding
except when their dispossession had been authorized by virtue of a final and executory judgment, which is not so in
the case at bar." 16 Implicit in the decision is the recognition that the transfer of possession to the mortgage did not
terminate the agricultural leasehold nor prejudice the security of tenure of the agricultural lessee.

Closer, to although not identical with the factual setting of the case at bar is Novesteras v. Court of
Appeals. 17Petitioner in said case was a share tenant of the respondent over two parcels of land. Respondent entered
into a contract of civil lease with Rosenda Porculas for a term of three years. Porculas did not farm the land himself
but left it to petitioner to till the land. After the expiration of the lease between respondent and Porculas, petitioner
entered into an agreement denominated as a contract of civil lease with respondent. On expiration of this lease
contract, respondent denied petitioner possession over the land. Resolving the rights and obligations of the parties,
the Court, through Justice Paras, held that the petitioner therein became an agricultural tenant of respondent by virtue
of R.A. No. 3844 (1963), as amended by R.A. No 6839 (1971). The lease contract between the respondent and
Porculas did not terminate the agricultural leasehold relationship between petitioner and respondent. If at all, the said
lease agreement, coupled by the fact that Porculas allowed petitioner to continue cultivating in his capacity as tenant
of the subject landholding, served to strengthen petitioner's security of tenure as an agricultural tenant of the farmland
in question. Accordingly, the subsequent contract between petitioner and respondent denominated as a contract of
civil lease was held by the Court to be in fact an agricultural leasehold agreement.

Again, in Coconut Cooperative Marketing Association, Inc. (COCOMA) v. Court of Appeals, 18 it was held that the
agricultural leasehold is preserved, notwithstanding the transfer of the legal possession of the subject landholding,
with the transferee, COCOMA in that case, being accountable to the agricultural lessees for their rights. The Court,
through Justice Padilla, summarized the rule as follows:

There is also no question that, in this case, there was a transfer of the legal possession of the
land from one landholder to another (Fule to petitioner COCOMA). In connection therewith,
Republic Act 3844, Sec. 10 states:
Sec. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of
Period, etc. The agricultural leasehold relation under this Code shall not be
extinguished by mere expiration of the term or period in a leasehold contract nor
by the sale, alienation or transfer of the legal possession of the landholding. In
case the agricultural lessor sells, alienates or transfers the legal possession of
the landholding, purchaser or transferee thereof shall be subrogated to the rights
and substituted to the obligations of the agricultural lessor.
Further, in several cases, this Court sustained the preservation of the landholder-tenant
relationship, in cases of transfer of legal possession:
. . . in case of transfer or in case of lease, as in the instant case, the tenancy
relationship between the landowner and his tenant should be preserved in order
to insure the well-being of the tenant or protect him from being unjustly
dispossessed by the transferee or purchaser of the land; in other words, the
purpose of the law in question is to maintain the tenants in the peaceful
possession and cultivation of the land or afford them protection against unjustified
dismissal from their holdings. (Primero v. CAR, 101 Phil. 675);
It is our considered judgment, since the return by the lessee of the leased
property to the lessor upon the expiration of the contract involves also a transfer
of legal possession, and taking into account the manifest intent of the lawmaking
body in amending the law, i.e., to provide the tenant with security of tenure in all
cases of transfer of legal possession, that the instant case falls within and is
governed by the provisions of Section 9 of Republic Act 1199, as amended by
Republic Act 2263. (Joya v. Pareja, 106 Phil, 645).
. . . that the tenant may proceed against the transferee of the land to enforce
obligation incurred by the former landholder such obligation . . . falls upon the
assignee or transferee of the land pursuant to Sec. 9 abovementioned. Since
respondent are in turn free to proceed against the former landholder for
reimbursement, it is not iniquitous to hold them responsible to the tenant for said
obligations. Moreover, it is the purpose of Republic Act 1199, particularly Sec. 9
thereof, to insure that the right of the tenant to receive his lawful share of the
produce to receive this lawful share of the produce of the land is unhampered by
the transfer of said land from one landholder to another. (Almarinez v.
Potenciano, 120 Phil.
1154.). 19
In the instant case, private respondent has been cultivating the subject farm landholding with a fifty-fifty (50-50)
sharing arrangement with the Spouses San Diego, petitioners' predecessors-in-interest. The passage of R.A.
6839 in 1971, amending R.A. 3844 (1963), secured to private respondent all the rights pertaining to an
agricultural lessee. The execution of a lease agreement between the Spouses San Diego and Regino
Cassanova in 1974 did not terminate private respondent's status as an agricultural lessee. The fact that private
respondent knew of, and consented to, the said lease contract by signing as witness to the agreement may not
be construed as a waiver of his rights as an agricultural lessee. On the contrary, it was his right to know about
the lease contract since, as a result of the agreement, he had to deal with a new person instead of with the
owners directly as he used to. No provision may be found in the lease contract and the renewal contract even
intimating that private respondent has waived his rights as an agricultural lessee. Militating against petitioners'
theory that the agricultural leasehold was terminated or waived upon the execution of the lease agreement
between the San Diegos and Cassanova is the fact the latter desisted from personally cultivating the land but left
it to private respondent to undertake the farming, the produce of the land being shared between Cassanova and
private respondent, while the former paid P400.00 and later P600.00 per hectare per annum to the San Diegos,
as agreed upon in the lease contract.
Petitioners, however, insist that private respondent can no longer be considered the agricultural lessee of their
farm land because after they purchased the land from the Spouses San Diego in 1980, private respondent did
not secure their permission to cultivate the land as agricultural lessee.

It is true that the Court has ruled that agricultural tenancy is not created where the consent the true and lawful
owners is absent. 20 But this doctrine contemplates a situation where an untenanted farm land is cultivated without
the landowner's knowledge or against her will or although permission to work on the farm was given, there was no
intention to constitute the worker as the agricultural lessee of the farm land. 21 The rule finds no application in the case
at bar where the petitioners are successors-in-interest to a tenanted land over which an agricultural leasehold has
long been established. The consent given by the original owners to constitute private respondent as the agricultural
lessee of the subject landholding binds private respondents whom as successors-in-interest of the Spouses San
Diego, step into the latter's shows, acquiring not only their rights but also their obligations. 22

Contradicting their position that no agricultural leasehold exists over the land they acquired from the Spouses
San Diego, petitioners also pray for the termination of the tenancy of private respondent allegedly due to: (a)
non-payment of the agricultural lease rental; and (b) animosity between the landowners and the agricultural
lessee. The Court, however, observes that nowhere in the petitioners' Answer to private respondent's Complaint
or in the other pleadings filed before the trial court did petitioners allege grounds for the termination of the
agricultural leasehold. Well-settled is the rule that issues not raised in the trial court cannot be raised for the first
time on appeal. 23
In fine, the Court, after a painstaking examination of the entire records of the case and taking into account the
applicable law, as well as the relevant jurisprudence, rules that private respondent is the agricultural lessee over
the land owned by petitioners. As such, private respondent's security of tenure must be respected by petitioners.
The Court, however, notes from the records of the case that private respondent has unilaterally decided to pay
only 25% of the net harvests to petitioners. 24 Since the agreement of private respondent with the Spouses San
Diego, the original owners, was for a fifty-fifty (50-50) sharing of the net produce of the land, the same sharing
agreement should be maintained between petitioners and private respondents, without prejudice to a renegotiation of
the terms of the leasehold agreement.

WHEREFORE, premises considered, the Petition is DISMISSED and the decision of the Court of Appeals
AFFIRMED. Private respondent is hereby ordered to pay the back rentals from 1980 until 1992 plus interest at
the legal rate. An accounting of the production of the subject landholding is to be made by private respondent to
the Regional Trial Court of Tanauan, Batangas which shall determine the amount due to petitioners based on
the rate ordered above.
SO ORDERED.
Gutierrez, Jr., Bidin, Davide, Jr. and Melo, JJ., concur.

G.R. No. L-35861 October 18, 1979

MUNICIPALITY OF DAET, petitioner,
vs.
COURT OF APPEALS and LI SENG GIAP & CO., INC., respondent.

GUERRERO, J.:
The judgment of the respondent Court of Appeals, subject of the instant petition to review on certiorari, "fixing
the fair market value of the property sought to be expropriated at P200.00 per square meter or for of FIVE
HUNDRED FORTY THREE THOUSAND FOUR HUNDRED (P543,400.00) PESOS, and the value of the
improvement thereon at THIRTY SIC THOUSAND FIVE HUNDRED (P36,500.00) PESOS, Philippine Currency,
both amounts to bear legal interest from and after the date of the actual taking of possession by the Municipality
of Daet, Camarines Norte until the full amount is paid, with costs against plaintiff-appellant," must be affirmed in
the light of the unusual, unique and abnormal circumstances obtaining in this case where the complaint for
condemnation was filed on August 9, 1962 or seventeen (17) years ago but up to the present, the petitioner
Municipality of Daet has failed to make the deposit required to take possession of the property sought to be
expropriated.
The Municipality of Daet instituted condemnation proceedings against private respondent Li Seng Giap & Co.
Inc. on August 9, 1962 before the Court of Firs Instance of Camarines Norte for the purpose of acquiring and
subsequently converting the following described property owned by private respondent as a public park:
A parcel of land (Lot No. 3 Plans PSU-57331 situated in the Poblacion, Municipality of Daet,
bounded on the North-East by a provincial road known as Vinzons Avenue; on the South-East,
by Felipe II Street; on the South, by Ildefonso Moreno Street, and on the West, by J. Lukban
Street, covering an area of TWO THOUSAND SEVEN HUNDRED AND SEVENTEEN (2,717 sq.
meters) SQUARE METERS, more or less and assessed by TRANSFER CERTIFICATE OF
TITLE NO. 207 in the name of Li Seng Giap & Co. 1
On August 20, 1962, private respondent, having been served with summons through counsel, filed a "Motion to
Dismiss" on the following grounds:
1. The proposed expropriation has not been duly authorized as provided by law, principally
because it has not been approved by the Office of the President as required by Section 2245 of
the Revised Administrative Code;
2. There is no genuine necessity for the proposed expropriation of the defendant's property;
3. The proposed park should be put up in a different site which would entail less expense to the
plaintiff;
4. The present expropriation proceeding instituted by the herein plaintiff against the defendant is
discriminatory;
5. The plaintiff does not have sufficient funds to push through its project of constructing a park
and to allow the plaintiff to expropriate defendant's property this time would be only to needlessly
deprive the latter of the use of its property. 2
On February 8, 1963, the trial court rendered a decision dismissing the expropriation proceedings mainly on the
grounds that there is no "genuine need" for the petitioner to convert the aforestated lot into a park nor necessity
to widen the streets and that even if there is genuine necessity for the proposed expropriation, still the petitioner
cannot, in this case, exercise the power of eminent domain as it has no funds to pay the reasonable value of the
land and the building thereon. 3
On February 12, 1963, petitioner filed a motion for reconsideration which was denied on February 27, 1963.
Petitioner then appealed to the Court of Appeals, which appeal was docketed as CA-G.R. No. 32-259-R. On
April 14, 1968, the Court of Appeals rendered a decision reversing the trial court's decision, the dispositive
portion of which is as follows:

WHEREFORE, the appealed "decision" (order) in Civil Case No. 1436 for expropriation is hereby
reversed and set aside, and, in lieu thereof, another one is hereby rendered denying defendant Li
Seng Gia & Company's motion for dismiss; declaring that plaintiff Municipality of Daet has a
lawful right to take the property sought to be condemned, for the public use described in the
complaint, upon payment of just compensation to be determined as of the date of the filing of the
complaint; directing the court a quo to promptly fix the provisional value of the property sought to
be condemned for the purposed of the motion of plaintiff Municipality of Daet to take immediate
possession of said property under Sec. 2 of Rules 67 (formerly Sec. 3 of Rules 69) of the Rules
of Court; and remanding the case to the court a quo for further proceedings consistent with this
decision, the costs in this appeal to be taxed against plaintiff Municipality of Daet in accordance
with Sec. 12 of Rule 67 (formerly Sec. 13 of Rule 69) of the Rules of Court; ... 4
On March 20, 1969, after the records of the case were remanded to the trial court, private respondent filed a
"Motion for Appointment of Commissioners to Fix Just Compensation for the Property Sought to be Taken."
On April 15, 1969, the trial court issued twin orders: (1) fixing the provisional value of the land at P129,99 per
square meter and the value of the improvement at P30,000.00 totalling P356,040.00 and require the Municipality
to deposit with the Provincial Treasurer in cash or in security which should be payable on demand and upon
deposit being effected, the Clerk of Court was ordered to issue the necessary writ of place the Municipality in
possession of the property; and (2) appointing Atty. Ernesto de Jesus, Provincial Assessor, as chairman; Atty.
Jose V. Jamito, PNB Branch Attorney and Dr. Mateo Aquino, a resident of the municipality, as members of the
committee on appraisal. The committee members proceeded to qualify by taking their oaths of office and then
held three sessions on May 10, May 17, and May 24, 1969. On May 28, 1969, the committee filed t he following
report:
COMMISSIONERS' REPORT
In compliance with the order of this Honorable Court dated April 15, 1969, and pursuant to the
provisions of Sec. 6. Rule 67 of the Rules of Court, the undersigned commissioners, with due
notice to the counsels of both parties, convened in the morning of May 10, 1969, for the purpose
of finding ways and means by which the commissioners could ascertain the fair market value of
the property subject of this proceeding. There are two basic approaches used in the appraisal of
land sought to be condemned the sale approach, and the income approach. The
commissioners as well as the counsels of both parties agreed to use the sale approach. In order
to enable the counsels of both parties, as well as the commissioners, to gather or secure
documents regarding transaction of real property which the commissioners might use as guide in
determining the fair market value, the parties agreed to postpone the hearing to May 17, 1969, at
6:30 in the morning.
Hearing was resumed in the morning of May 17, forthwith, the counsel for the plaintiff presented
documents which were submitted as Exhibits, to wit:
1. Exh. "A" Deed of absolute sale executed by Lydia Moreno in favor of Jaime R. Alegre,
entered as Doc. No. 160: Page No. 33: Book No. IV; Series of 1962. (The consideration was
about P13.00 per square meter).
2. Exh. "B" Deed of absolute sale executed by Jesus Villafranca y Aules in favor of Sourthern
Products Import and Export Corporation, entered as Doc. No. 314; Page No. 64; Book No. II;
Series of 1962. (The consideration was around P14.00 per square meter).
3 Exh. "C" Deed of absolute sale executed by Julio Curva, et al. in favor of Felicidad Vinzons
Pajarillo, entered as Doc. No. 186; Page No. 39; Book No. 1; Series of 1958. (The consideration
was P 15.00 per square meter).
4. Exh. "D" Deed of Absolute Sale executed by Clao Dy Kim To in favor of Concepcion
Fonacier-Abao, entered as Doc. No. 133; Page No. 88; Book No. V; Series of 1948. (The
consideration was about P8.57 per square meter).
5. Exh. "E" Deed of sale with mortgage executed by Dr. Agustin F. Cuevas and Leticia Lopez,
in favor of the Camarines Norte Teachers Cooperative Credit Union, Inc., entered as Doc. No.
117; Page No. 56; Book NO. VIII; Series of 1961. (The consideration was P57,000.00 the lot
with an area of 972 square meters, and a three-storey concrete building assessed at P16,000.00

under Tax Dec. No. 7083. If we will exclude the value of the building, the consideration for the
land will be about P43.00 per square meter).
After the submission of the aforementioned exhibits, upon motion of the counsel for the
defendant, the hearing was postponed to May 24, 1969, at 8:30 in the morning. Upon resumption
of the hearing on said hour and date, the counsel for the defendant presented Exh. 1, which the
deed of sale executed by the Municipality of Daet in favor of the Development Bank of the
Philippines; the document was executed on January 30, 1969; Exh. "1-A", the consideration in
the amount of P205,600.00; Exh. "1-B", the area of 2,056 square meters; and Exh. "2", the letter
of Tomas Cootauco to Li Seng Giap & Co., dated July 21, 1962. In addition to the
aforementioned evidence, the counsel for the defendant presented as witness Lo Chin who
testified that sometime in July, 1962. In addition to the aforementioned evidence, the counsel for
the defendant presented as witness Lo Chin who testified that sometime in July, 19 1962 (after
the fire), he was instructed by his son-in-law, Mr. Jesus Ty Poco, to see Mr. Jose Ong, the
representative of Mr. William Lee, for the purpose of making an offer to buy the land subject of
this proceeding for a price of P120.00 per square meter, and P30,000.00 for the structure
thereon; that he had talked with Mr. William Lee, for the purpose of making an offer to buy the
land subject of this proceeding for a price of P120.00 per square meter, and P30,000.00 for the
structure thereon; that he had talked with Mr. Jose Ong, for the same purpose, on several
occasions 5 or 6 times, the last was sometime in the first week of May, this year wherein he
offered to pay as high as P150.00 per square meter, and P50,000,00 for the structure thereon;
and that Mr. Ty Poco, having been born in Mercedes, and resided here since birth, was desirous
of buying said property because he intends to build a memorial thereon. Counsel likewise
presented Mr. Jose Ong as witness to corroborate the testimony of Lo Chin.
After the hearing held by the commissioners, Atty. Ernesto de Jesus, who is the incumbent
provincial assessor, dig up the records in his office for the purpose of finding, in addition to the
exhibits already presented, other documents covering transactions of properties located within
the areas near the land sought to be condemned, but failed to locate even a single document
Hence, the commissioners have no other recourse but to base their appraisal of the value of the
land under consideration from the Exhibits submitted by the parties.
Under Sec. 4, Rule 67, of the Rules of Court, just compensation is to be determined as of the
date of the filing of the complaint. The above-entitled complaint was filed in August, 1962; hence,
Exh. "1", Exh. "1-B" and Exh. "1-C" could not be taken into consideration, the same having been
executed in the year 1969 seven years after the filing of the complaint. The offer of Mr. Jesus
Ty Poco could not also be considered because the same was made by one who was under an
imperative necessity of buying the property.
After all the exhibits submitted by the plaintiff had been examined by the commissioners, and
upon a conscientious and analytical study of the sales of land near the land subject of this
proceeding, and after serious deliberations on the matter, the commissioners agreed that, in the
year 1962, the reasonable or fair market value of the land subject of this proceeding should be
P60.00 per square meter; and the structure remaining thereon at P15,000.00
Attached hereto is the map of the commercial center of Daet wherein the land subject of this
case is shown. The lands described in the Exhibits submitted by the plaintiff are also indicated
thereon.
Daet, Camarines Norte, May 28, 1969.
Respectfully
submitted,
(Sgd.) Ernesto de Jesus (Sgd.) Jose V. Jamito
Commissioner Commissioner
(Sgd.) Mateo D. Aquino
Commissioner 5

Private respondent, having received copy of the commissioner's report, filed a "Motion to Admit Additional
Evidence" which was opposed by petitioner but the same was granted by the Court provided that the additional
evidence consisted of the expert testimony of a duly licensed broker. On August 20, 1969, the municipality
manifested its conformity to the commissioner's report.
Meanwhile, on July 23, 1969, Judge Gabriel V. Valero, the Presiding Judge at Branch I, issued an order
transferring this case to Judge Isidro Vera of Branch II, who proceeded to take the additional evidence of private
respondent. Said evidence consisted of the testimony of Engineer Aurelio B. Aquino, who appraised the land
involved herein at P200.00 per square meter and the improvement thereon at P36,500.00 in 1969.
On December 2, 1969, after submission of evidence for both parties, the trial court rendered a decision
disregarding the valuation made by the commissioners and using the appraisal of Engineer Aurelio B. Aquino in
1969 as the basis in determining the value of the land in 1962. The dispositive portion of said decision is quoted
herein as follows:
WHEREFORE, the Court renders judgment fixing the reasonable value of the property sought to
be expropriated at P117.00 per square meter or for a total amount of Three Hundred Seventeen
Thousand Eight Hundred Eighty Nine Pesos (P317,889.00), and the value of the improvement at
Thirty Six Thousand Five Hundred Pesos (P36,500.00), this amount to bear interest at the legal
rate from the filing of the complaint until paid with costs against the plaintiff.
SO ORDERED. 6
Both petitioner and private respondent filed their respective motions for reconsideration, the former praying that
the trial court give due course to the commissioner's report while the latter insisting that the market value of the
land be fixed at P200.00 per square meter. Upon denial of the said motions, both parties then appealed to the
Court of Appeals.
On October 18, 1972, respondent Court of Appeals rendered a decision sustaining the valuation of the property
in 1969, declaring the municipality to have a lawful right to expropriate and modified the judgment of the trial
court with respect to the interest that can be recovered which should be from and after the date of actual taking.
Petitioner's motion for reconsideration having been denied, the instant petition for review on certiorari was filed
and the following assignment of errors raised:
I. Contrary to law and jurisprudence, the Court of Appeals erred in the interpretation and
application of Section 4, Rule 67 of the Rules of Court by determining the value of the property in
condemnation proceedings at the time of the rendition of the judgment of the trial court and not at
the date of the filing of the complaint.
II. Contrary to the principle of res judicata, the Court of Appeals gravely abused its power in
modifying, disregarding and amending its own decision which has long become final and
executory (in CA-G.R. No. 32259-R).
III. Without regard to the guidelines set forth by procedural laws and jurisprudence, the Court of
Appeals erred in giving credence to an appraiser under the employ of the private respondent and
totally disregarded the findings of the commissioners appointed by the Court and the by not
declaring that the trial judge of Branch II of the Court of First Instance of Camarines Norte has
gravely abused his discretion in taking cognizance of the condemnation case.
IV. In any event, by virtue of the Presidential Decree No. 42 issued on November 9, 1972 private
respondent in estopped from claiming in valuation higher than the assessed value of the property
sought to be condemned. 7
The first assignment of error assails the respondent Court's application of Section 4, Rule 67 of the Revised
Rules of Court which states the time when the value of the land should be determined in condemnation
proceedings. The Rule provides thus:
Sec. 4. Order of condemnation. When such a motion is overruled or when any party fails to
defend as required by this rule, the court may enter an order of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for the public use or

purpose described in the complaint, upon payment of just compensation to be determined as of

the date of the filing of the complaint ...
A look into the original of this provision reveals that it is a reproduction of Section 5, Rule 69 of the Rules of
Court of July 1, 1940. In turn, the said provision in the Rules of 1940 appears to have been taken from the
ruling Manila Railroad Company vs. Caligsihan, 8 a 1919 case, where the rule that "the value of the property taken
should be fixed as of the date of the proceedings" was enunciated.

Prior to the promulgation of the Rules of 1940, however, there is another case that touched on the question of
time when valuation of the property taken should be fixed. This is the case of Provincial Government of Rizal vs.
Caro de Araullo 9 a 1938 case, where the value of the property therein involved was fixed as of the date when it was
taken in 1927 and not at the time of the filing of the complaint in 1928. This ruling was reiterated in Republic vs.
Lara, 10 a 1954 case, where it was held that the value of the lands expropriated must be reckoned as of the time of the
actual possession by the Government in 1946 and not as of the time of the filing of the complaint in 1949. Such was
the ruling notwithstanding the fact that the Rules of 1940 was already in force and effect. In explaining the ruling, the
Court therein held:

... Ordinarily, inquiry is limited to actual market values at the time of the institution of the
condemnation proceedings because under normal circumstances, the filing of the complaint
coincides or even precedes the taking of the property by the plaintiff; and Rule 69 simply fixes
this convenient date for the valuation of property sought to be expropriated. Where, however, the
actual taking or occupation by the plaintiff, with the consent of the landowner long precedes the
filing of the complaint for expropriation the rule to be followed must still be that enunciated by us
in Provincial Government of Rizal vs. Caro, supra, that "that value of the property should be fixed
as of the date when it was taken and not of the date of the filing of the proceedings." For where
property is taken ahead of the filing of the condemnation proceedings, the value thereof may be
enhanced by the public purpose for which it is taken, the entry of the plaintiff upon the property
may have depreciated its value thereby, or there may have been a natural increase in the value
of the property from the time it is taken to the time the complaint is filed, due to general economic
conditions. The owner of the private property should be compensated only for what he actually
loses, it is not intended that his compensation shall extend beyond his loss or injury. And what he
loses is only the actual value of his property at the time it is taken. This is the only way the
compensation to be paid can be truly just, i.e., "just" not only to the individual whose property is
taken, "but to the public, which is to pay for it." (18 Am. Jur. 873, 874)
Subsequent cases where the taking preceded the filing of the expropriation proceedings followed the doctrine in
the Caro case. These cases were: Republic vs. Garcellano, et al.; 11 Municipal Government of Sagay vs. Jison, et
al.;12 and Alfonso vs. Pasay City. 13 However, in the case of Republic vs. Narciso, et al., 14 where the expropriation
proceeding preceded the taking, it was held that the value of "the property to be considered are those at the
beginning of the expropriation" and not accordingly at the time of the taking of said property. For this reason, this
Court fittingly saw the need for clarify the departure of some cases from the mandate of Section 5, Rule 69 of the
Rules of Court of 1940 (now Section 4, Rule 67 of the Revised Rules of Court) in the case of Republic of the
Philippines vs. Philippine National Bank, 15 where it was held:

It is apparent from the foregoing that, when plaintiff takes possession before the institution of the
condemnation proceedings, the value should be fixed as of the time of the taking of the said
possession, not the filing of the complaint, and the latter should be the basis for the
determination of the value, when the taking of the property involved coincides with or
is subsequent to, the commencement of the proceedings. Indeed, otherwise, the provision of
Rule 69, Section 5, directing that compensation" be determined as of the date of the filing of the
complaint," would never be operative.
In Capitol Subdivision, Inc. vs. Province of Negros Occidental, 7 SCRA 60, the Court said that "Since the right of
the Province of Negros Occidental to expropriate the lot in question in the present case is not contested, the
owner of said lot is entitled to recover from said province the fair and full value of the lot, as of the time when
possession thereof was actually taken by the province, plus consequential damages including attorney's fees
from which the consequential benefits, if any, should be deducted with interest at the legal rate, on the
aggregate sum due to the owner from and after the date of actual taking." And in the case of J.M. Tuason & Co.,
INc. vs. Land Tenure Administration, 31 SCRA 413, the Court, speaking thru now Chief Justice Fernando,
reiterated the "well-settled (rule) of the property at the time of its taking. Anything beyond that is more and
anything short of that is less, than just compensation. It means a fair and full equivalent for the loss sustained,
which is the measure of the indemnity, not whatever gain would accrue to the expropriation entity."

In the case at bar, it is a fact that there has been no taking of the property prior to the institution of the
condemnation proceedings. And it cannot even be said that the filing of the complaint coincided with he taking of
the property by the plaintiff because the latter did not enter into possession of the property since it failed or did
not comply with the order of the Court requiring the municipality to make the necessary deposit of the provisional
value as fixed by the Court in its Order of April 15, 1969. Petitioner did not even move for a reconsideration of
said Order. The trial proceeded and after hearing and submission of evidence for both parties, the trial court
rendered on December 2, 1969 its decision "fixing the reasonable value of the property sought to be
expropriated at P117.00 per square meter or for a total amount of Three Hundred Seventeen Thousand Eight
Hundred Eighty Nine Pesos (P317,889.00), and the value of the improvement at Thirty Six Thousand Five
Hundred Pesos (P36,500.00), said amount ... to bear interest at the legal rate from the date of the filing of the
complaint until paid."
Still questioning the value determined by the trial court, petitioner appealed to the Court of Appeals and on
October 8, 1972, the appellate court in its judgment fixed the value of the property at P200.00 per square meter
and P36,500.00 for the improvement. Not yet satisfied, the municipality appealed to the Supreme Court and
meantime took no step to take possession of the land. While petitioner submitted a Manifestation on September
15, 1977 to this Court invoking Presidential Decree No. 42 dated November 9, 1972 and manifesting that it had
made a deposit to the Philippine National Bank in the amount of P54,370.00 as per PNB Certificate No. 9381
dated February 9, 1973, We hold that petitioner has not made the correct and proper deposit of the provisional
value as fixed by the trial court. It is elementary that Presidential Decree No. 42 of November 9, 1972 which
grants the right to take or enter upon the possession of the property sought to be expropriated if he deposits with
the Philippine National Bank an amount equivalent tot he assessed value of the property for purposes of taxation
has no application to the case at bar where the Court of Appeals had already fixed the value of the property at
P200.00 per square meter and P36,500.00 for the improvement in its decision promulgated on October 18, 1972
about three weeks earlier than the issuance of the Presidential Decree No. 42
By not complying with the orders of the trial court and the appellate court, petitioner would benefit by its noncompliance and dilly-dallying in taking possession of the property which We will not sanction or allow to the
prejudice of the private respondent landowner who should not be penalized by the protracted delay of petitioner
in taking over the property over a period of seventeen (17) years during which time private respondent was
deprived of the beneficial use of the land and the improvement thereon. Petitioner upon tiling the complaint has
the duty to make the deposit in the amount provisionally ascertained and fixed by the court (Sec. 2, Rule 67,
Rules of Court), which deposit serves the double purpose of pre- payment of the property if the same is finally
expropriated and of an indemnity for damages if the proceedings are dismissed. (Visayan Refining Co. vs.
Camus, 40 Phil. 550; Republic of the Philippines vs. Baylosis, L-13582, Sept. 30, 1960)
The records disclose that petitioner filed a Motion for Authority to Demolish Building of Private Respondent dated
June 27, 1974 for reasons therein alleged which private respondent opposed as not being the proper procedure
under the law to abate a nuisance unless petitioner deposits the amount of P36,500.00 which is the value of the
improvement. The Court resolved to deny the motion without prejudice to petitioner's taking the proper
proceedings for the abatement of the alleged nuisance pursuant to the provisions of the new Civil Code in its
Resolution of July 24, 1974.
The records further disclose that in the Petition to Cite the Mayor of the Municipality of Daet (Herein Petitioner) in
Contempt of Court filed by private respondent on February 14, 1978, this Court was informed that the petitioner
acting thru its Mayor, Engineer Jose P. Timoner, started to demolish on February 6, 1978 the building of the
private respondent, attaching thereto photographs marked Annexes 1 and 2 showing the building before and
during the demolition. Private respondent prayed that the Mayor be cited for contempt or alternatively, that the
petitioner be ordered to deposit with the Philippine National Bank the amount of P36,500.00 instead of
P28,830.00 to await the final outcome of this case.
Commenting on the petition to cite the Mayor in contempt of court, petitioner again relies on Presidential Decree
No. 42 alleging that the assessed value of the property for taxation purposes is only P18,250.00 which is less
than the amount of P28,830.00 it had already deposited with the Philippine National Bank.
The above antecedent facts and circumstances of this case are unique and abnormal such that by reason
thereof, We agree with the judgment of the Court of Appeals fixing the fair market value of the property sought to
be expropriated at P200.00 per sq. meter or for a total of FIVE HUNDRED FORTY THREE THOUSAND FOUR
HUNDRED (P543,400.00) PESOS, and the value of the improvement thereon at THIRTY SIX THOUSAND FIVE
HUNDRED (P36,500.00) PESOS, Philippine Currency, both amounts to bear legal interest from and after the
date of the actual taking of possession by the Municipality of Daet, Camarines Norte until the full amount is paid,
with costs against plaintiff-appellant.

We hold that the decision of the Court of Appeals fixing the market value of the property to be that obtaining, at
least, as of the date of the rendition of the judgment on December 2, 1969 as prayed by private respondent,
which the Court fixed at P200.00 per square meter is in conformity with doctrinal rulings herein above cited that
the value should be fixed as of the time of the taking of the possession of the property because firstly, at the time
judgment was rendered on December 2, 1969, petitioner had not actually taken possession of the property
sought to be expropriated and secondly, We find the valuation determined by the Court of Appeals to be just, fair
and reasonable.
On the second assignment of error, petitioner faults the respondent court in modifying, disregarding and
amending its own decision in CA-G.R. No. 32259-R which directed payment of just compensation to be
determined as of the date of the filing of the complaint. Petitioner claims that this decision has tong become final
and executory and it would be contrary to the doctrine of res judicata to modify, disregard and amend said
decision.
In order that there may be res judicata, the following requisites must be present: (a) the former judgment must
be final; (b) it must have been rendered by a court having jurisdiction of the subject- matter and of the parties; (c)
it must be a judgment on the merits; and (d) there must be, between the first and second actions, Identity of
parties, of subject matter, and of cause of action. 16
When, between the first case where the judgment was rendered, and the second case where such judgment is
invoked, the three Identities mentioned in paragraph (d) above, are present, the judgment on the merits
rendered in the first case constitutes an absolute bar to the subsequent action. It is final as to the claim or
demand in the controversy, including the parties and those in privity with them, not only as to every matter which
was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which
might have been offered for that purpose and of all matters that could have been adjudged in that case. 17
This is, however, not the situation in the case at bar. The only question drawn in issue before the Court of
Appeals in CA-G.R. No. 32259-R was whether petitioner had the authority to exercise the right of eminent
domain. The question regarding the amount of just compensation was expressly reserved by the Court of
Appeals for the trial court to determine. Perforce, Between the first case wherein the judgment is rendered, and
the second case wherein such judgment is invoked, there is Identity of parties but there is no Identity of causes
of action. In such a situation, the judgment is conclusive in the second case only to those matters actually and
directly controverted and determined, and not as to matters merely involved therein. To constitute res
judicata,the right to relief in one suit must rest upon the same question which in essence and substance was
litigated and determined in the first suit. 18
That phrase in the dispositive portion of the decision of the Court of Appeals in CA-G.R. No. 32259-R referring to
the time that should be considered in reckoning the just compensation, to wit "declaring that plaintiff
Municipality of Daet has the lawful right to take the Property sought to be condemned, for the public use
described in the complaint, upon payment of just compensation to be determined as of the date of the filing of
the complaint" cannot likewise constitute the law of the case, which is a doctrine closely akin to res judicata.
The law of the case, as applied to a former decision of an appellate court, merely expresses the practice of the
courts in refusing to reopen what has been decided. 19 It differs from res judicata in that the conclusiveness of the
first judgment ' is not dependent upon its finality. The first judgment is generally' if not universally, not final. 20 It relates
entirely to questions of law, and is confined in its operation to subsequent proceedings in the same case. 21 While it is
conclusive as to all matters within its scope, it cannot be invoked, except as to questions as have been actually
considered and determined in the first appeal. In the application of this rule, courts will take cognizance of such points
only as affirmatively appears in the last to have been decided in the former appeal. 22

Moreover, this case is before the Supreme Court and being the Court of last resort, it is the final arbiter of all
legal questions properly brought before it and its decision in any given case constitutes the law of this particular
case. Once Our judgment becomes final, it is binding on all inferior courts, and hence beyond their power and
authority to alter or modify. (Kabigting vs. Acting Director oil Prisons, 6 SCRA 281, 286). Petitioner's second
assignment of error is, therefore, without merit.
The first part of the third assignment of error hinges on what is the proper procedure in determining the just
compensation in proceedings.
Section 5, Rule 67 of the Revised Rules of Court calls for the appointment of not more than three (3) competent
and disinterested persons as commissioners to ascertain and report to the court the just compensation for the
property sought to be taken. As to the extent of this function and power of the commissioner, this Court held
inManila Railroad Company vs. Velasquez 23 that the commissioners' power is limited to assessing the value and

determining the amount of damages. There it stops; they can go no farther. The value and damages awarded must be
a just compensation and no more and no less. But in fixing these amounts, the commissioners are not to act ad
libitum. They are to discharge the trust reposed in them according to well-established rules and form their judgment
upon correct legal principles. To deny this is to place them where no one else in this country is placed, above the law
and beyond accountability.

Corollary to tills limitation, it has been held that reports submitted by commissioners of appraisals in
condemnation proceedings are not binding, but merely advisory in character, as far as the court is
concerned. 24An early case enunciated the rule that a Court of First Instance has the undoubted right to reject the
report of the commissioners as to the value of the land, if the report is not founded upon legal evidence. The judge has
the undoubted right also to discharge the commission and appoint a new one. He also has the right to formulate an
opinion of his own as to the value of the land in question, nevertheless, if he formulates such an opinion, he must base
it upon competent evidence.25 When the commissioners report is not in accordance with the law on the matter,
another case ruled that it cannot serve as the basis of the judicial decision but must be annulled and set aside, and
the case remanded to the court below for reopening of trial. 26 Then, in still other cases, it was held that a Court of First
Instance or on appeal, the Supreme Court may substitute its own estimate of value as gathered from the record
submitted to it, in cases where the only error of the commissioners is that they have applied illegal principles to the
evidence submitted to them; or that they have disregarded a clear preponderance of evidence; or that they have used
an improper rule of assessment in arriving at the amount of the award; provided always that the evidence be clear and
convincing and the amount allowed by the commissioners is grossly inadequate or excessive. 27

That the commissioners' report is not final and conclusive, but merely recommendatory is bolstered by the
requirement in Section 8, Rule 67 of the Revised Rules of Court of conducting a hearing thereon. Otherwise
stated, said provision requires that upon the expiration of the period of ten (10) days within which all interested
parties may file their objects to the report, or even before the expiration of such period if all interested parties
have filed their objections to the report or their statement of agreement therewith, the court must conduct a
hearing on the report.
In view of these basic provisions of the Rules of Court on eminent domain and various jurisprudence on the
function of the commissioners as limited by the Court, We hold that the respondent Court of Appeals did not err
in giving credence to the appraiser employed by private respondent and in disregarding the commissioners
report.
Respondent court found that aside from being a civil engineer, Aurelio B. Aquino is a licensed real estate broker
and appraiser of long standing, being one of the incorporators of C.M. Hoskins and Co., Inc., a corporation
engaged in real estate brokerage since October, 1938 and of which firm he is presently the Chairman of the
board of directors. With these qualifications, respondent court committed no error in concluding that he was
competent to make the appraisal of the fair market value of the parcel of land under consideration. Although he
does not maintain an office in Daet nor does he appear to have had any transactions in said locality, he is
compatent since a commercial parcel of land retains the same characteristics whether it is located in Manila or
Daet, and the criterion for making an appraisal of a parcel of land is universally applied, irrespective of the
locality where it is situated. And since the value of a parcel of land taken by eminent domain is always a matter
of opinion, the same may be proved by opinion evidence of the real estate appraiser. 28 Hence, We find
substantial basis for the court to fix the value of the land at P200-00 per square meter and the building at P36,500.00
as testified to by the broker.

Petitioner assails the transfer of the case from Branch I of the Court of First Instance of Camarines Norte to
Branch 11 thereof, claiming that the jurisdiction of the respective branches are delineated by a controlling
department circular and thereby concluding that Branch 11 has no legal and valid authority to take over said
expropriation case.
We do not agree. Where a court of first instance is divided into several branches, each of the branches is not a
court distinct and separate from the others. Jurisdiction is vested in the court, not in the judges, so that when a
complaint or information is filed before one branch or judge, jurisdiction does not attach to said branch or judge
alone, to the exclusion of the others. Trial may be had or proceedings may continue by and before another
branch or judge. It is for this reason that Section 57 of the Judiciary Act, expressly grants the Minister of Justice,
upon recommendation of the district Judge, the administrative right or power to apportion the cases among the
different branches, both for the convenience of the parties and the coordination of the work by the different
branches, and the judges presiding each branch. The apportionment does not involve a grant or limitation or
jurisdiction; this continues to be vested in the court of first instance of the province as a whole, and trial may be
had by any judge or branch of the court. 29

We do agree, however, that the apportionment of cases must be respected by the judges in the interest of order
and coordination in the dispatch of cases. But the question of whether Branch II took cognizance of a case
properly belonging to another branch is negated by the fact, pointed out by respondents, that Administrative
Order No. 472 of the Secretary of Justice dividing the Province of Camarines Norte between Branch I and
Branch II took effect on January 1, 1971 long after Branch II had disposed of the case at bar because said case
was decided on December 2, 1969.
The fourth assignment of error is clearly untenable. Presidential Decree No. 42 issued on November 9, 1972
does not limit the just compensation in expropriation proceedings to the assessed value of the value sought to
be condemned. By its title alone, i.e., "Authorizing the Plaintiff in Eminent Domain Proceedings to Take
Possession of the Property Involved Upon Depositing the Assessed Value for Purposes of Taxation," it can
already be gleaned that said decree fixes only the provisional value of the property. As a provisional value, "it
does not necessarily represent the true and correct value of the land. The value is only "provisional" or
"tentative" to serve as the basis for the immediate occupancy of the property being expropriated by the
condemnor. 30
This decree repealed Section 2, Rule 67 of the Revised Rules of Court which imposed upon the court having
jurisdiction of the proceeding with the duty of ascertaining and fixing the provisional value of The property. As
stated in the said decree itself, the repeal was necessary inasmuch as the "existing procedure for the exercise of
the right of eminent domain is not expeditious enough to enable the plaintiff to take possession of the real
property involved as soon as possible, when needed for public purposes."
Even in Presidential Decree No. 76, "Requiring All Persons, Natural or Juridical Owning or Administering Real
Property, Including the Improvements Thereon, to File Sworn Statement of the True Value of Such Property,"
issued on December 6, 1972, it is clearly stated that the just compensation is based on the current and fair
market value and not on the assessed value. The pertinent provisions state as follows:
For purposes of just compensation in cases of private property acquired by the government for
public use, the basis shall be the current and fair market value as declared by the owner or
administrator or such market value as determined by the assessor, whichever is lower.
Under this Decree, the assessed valuation which shall be the basis for payment of real property
tax beginning the calendar year 1974 shall be fifty per centum of the current fair market value, as
determined by the assessor, in case of commercial, industrial or mineral lands; forty per centum
in the case of agricultural lands and thirty per centum in the case of lands for purely residential
purposes.
Clearly, therefore, the assessed value of a property constitutes only a percentage of its current fair market value.
It cannot, thus, be the direct basis of just compensation in expropriation proceedings.
But more importantly, this assignment of error is bereft of merit because Presidential Decree No. 42 is
inapplicable in the case at bar. As pointed out by private respondent, it is a cardinal rule of statutory construction
that laws shall have only prospective effect. The provisional value of the property in this case having already
been fixed, the deposit on February 9, 1973 of the amount of P54,370.00 representing the assessed value of the
land and the deposit on October 21, 1977 of the amount of P25,830.00 representing the assessed value of the
improvement, both pursuant to the said decree, are not sufficient. Nevertheless, said amounts should be
deducted from the total amount due to private respondent.
To elucidate and clarify the judgment of this Court in affirming the decision appealed from, We consider and hold
that the demolition of the building of private respondent standing on the land by the Municipal Mayor, Engr. Jose
P. Timoner on February 14, 1978 constituted the actual taking of possession of the property sought to be
expropriated by the Municipality of Daet. And from said date, February 14, 1978, interest at the legal rate shall
be paid by the municipality until the full amount is paid.
IN VIEW OF ALL THE FOREGOING, the judgment under review is hereby AFFIRMED in toto.
SO ORDERED.
Claudio Teehankee, took no part.

G.R. No. 80863 April 27, 1989

ANTONIO M. VILLANUEVA and FULGENCIO B. LAVAREZ, petitioners,
vs.
HONORABLE ABEDNEGO O. ADRE, Presiding Judge, Regional Trial Court, Branch 22, 11th Judicial
Region, and LUCIO VELAYO, respondents.

SARMIENTO, J.:
The central question in the petition at bar is whether or not the regular courts may stay an execution decreed by
the labor arbiters and what the consequences are of such a recourse to the courts.
The case began from a complaint, dated January 6, 1977, for recovery of unpaid thirteenth-month pay filed by
the Sarangani Marine and General Workers Union-ALU with the Department of Labor (Regional Office No. XI,
General Santos City) against the South Cotabato Integrated Port Services, Inc. (SCIPSI), a Philippine
corporation. Later, thirty-seven SCIPSI employees, non-union members apparently, filed their own complaint.
The labor arbiter consolidated the twin complaints and after hearing, ordered a dismissal on December 29, 1977.
On appeal, however, the National Labor Relations Commission, on June 9, 1981, reversed and accordingly,
ordered the private respondents, SCIPSI and its president and general, Lucio Velayo, to pay the thirteenthmonth pays demanded. The private respondents' motion for reconsideration was denied, and the decision has
since attained finality.
Thereafter, the parties, on orders of the labor arbiter, were made to appear before a corporate auditing examiner
to determine the private respondents' exact liability. On October 24, 1986, the corporate auditing examiner
submitted an accounting and found the private respondents liable in the total sum of Pl,134,000.00. Thereupon,
the private respondents interposed an objection and prayed for a revision. It appears, however, that the private
respondents never pursued their exceptions. 1
On January 16,1987, the union moved for execution and pursuant thereto, the labor arbiter issued a writ of
execution. As a result, the sheriff levied on two parcels of land, both registered in Lucio Velayo's name, with an
area of 400 and 979 square meters.
On February 14, 1987, both SCIPSI and Velayo petitioned this Court 2 on certiorari with injunction on the ground,
fundamentally that the Department of Labor's examiner erred in her determination of the private respondents
pecuniary liabilities.

On February 16,1987, Velayo alone filed a petition with the respondent court (Special Case No. 227) on a cause
of action based on an alleged irregular execution, on the ground that he "was never a party to the labor
case" 3and that "a corporation (that is, SCIPSI has a separate and distinct personality from this incorporators,
stockholders and officers." 4

On February 17, 1987, the respondent court issued a temporary restraining order enjoining execution of the
judgment in the aforementioned labor cases. On March 5, 1987, the petitioner moved for dismissal for lack of
jurisdiction and litis pendentia.
On the strength of this Court's decision in National Mines Allied Workers Union v. Vera, 5 the trial judge denied the
motion to dismiss. Reconsideration having been likewise denied, the union as well as the labor arbiter (Antonio
Villanueva) and the sheriff (Fulgencio Lavarez) themselves, on October 22, 1987, instituted these certiorari
proceedings. 6

Meanwhile, on April 27,1988, the parties (in G.R. Nos. 7730001) submitted a Compromise Agreement whereby
the private respondents agreed to pay, in installments, the reduced sum of P637,400.00 to the workers. On May
11, 1988, we issued a Resolution approving the Compromise Agreement, and considering the cases (G.R. Nos.
77300-01) closed and terminated. 7
At the same time, we issued (in this petition) a Resolution requiring the private respondents and/or counsel, Atty.
Oscar Dinipol, to show cause why they should not be held in contempt for forum-shopping. On December

9,1988, Atty. Dinopol filed a manifestation praying for dismissal "not because it has become moot and academic
in view of the compromise agreement executed by the parties in G.R. Nos. 77300-01 (but because) the subject
or cause of action (thereof) is totally different from the cause of action in the above-entitled case." 8
On whether or not this case has become moot and academic in view of the compromise reached in G.R. Nos.
77300-01, the Court rules in the affirmative. It should be noted that the instant petition has been brought as a
result of the execution of the judgment rendered below, and since the parties, by virtue of the compromise, have
spelled out the manner by which payment shall be made, execution by means of levy, the question confronting
the court herein, may no longer be carried out. Nevertheless, because of the ethical implications of the acts of
the private respondents, the Court is constrained to render its judgment if only to forestall future similar acts and
for the guidance of the bench and the bar.
We likewise render judgment notwithstanding Atty. Oscar Dinopol's pending prayer for extension of time to file
his comment to our show cause Resolution of November 7, 1988. We consider his manifestation, dated
November 29,1988, urging us not to dismiss this case for having became moot and academic but because the
petition lacks merit as his comment. We do so for one because it has been the position of the private
respondents that Special Case No. 227 and G.R. Nos. 77300-01 could stand together and for another, because
of the compelling need to dispose of labor cases with utmost dispatch. We take this as his defense to that showcause Resolution. Parenthetically, we find him mistaken for supposing that our Resolution is based on the
simultaneous commencement of Special Case No. 227 and G.R. Nos. 77300-01. This is not the act that forced
suspicions on our part of efforts by the private respondents to "shop for a friendly forum". Rather, it is the
institution of Special Case No. 227, despite the pendency of the labor proceedings below, that led us to those
suspicions. G.R. Nos. 77300-01, on the other hand, were brought primarily on the question of the exact amount
SCIPSI is liable to pay. It is on its face, a legitimate ground for certiorari, and for this reason we accepted the
parties compromise reached there, instead of dismissing it.
There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a favorable
opinion (other than by appeal or certiorari) in another. The principle applies not only with respect to suits filed in
the courts but also in connection with litigations commenced in the courts while an administrative proceeding is
pending, as in this case, in order to defeat administrative processes and in anticipation of an unfavorable
administrative ruling and a favorable court ruling. This is specially so, as in this case, where the court in which
the second suit was brought, has no jurisdiction.
Accordingly, the respondent court must be held to be in error assuming jurisdiction over Special Case No. 227. It
is well-established that the courts cannot enjoin execution of judgment rendered by the National Labor Relations
Commission. 9
The respondent Lucio Velayo's reliance upon National Mines and Allied Workers Union v. Vera 10 is not welltaken. In that case, the properties involved belonged to third persons, a development that provided a civil dimension to
the labor case, and a development that gave the courts the jurisdiction. In the case at bar, however, Velayo cannot be
said to be a stranger to the proceedings for a number of reasons. First, and as pointed out by the Solicitor General,
and as the records will amply show, he, Velayo, was a party to the proceedings below where he took part actively in
defense of his case. We quote:

... It is not true that Lucio Velayo was not a party in the labor cases. The caption of the labor
cases shows he was a respondent. The records of the labor cases show that he participated in
the proceedings therein, without raising the issue that he was not a party nor the employer of the
complainants. Thus, the Motion for Reconsideration dated August 7, 1981 attached to the
Petition as Annex B was filed by both SCIPS and Lucio Velayo. SCIPS and Velayo discussed the
merits of the cases in said motion and there was nary a mention of the allegation of Velayo now
that he not not a party in the cases nor an employer of the complainants. Likewise, the Exception
and/or Opposition to Report of Examiner dated November 13, 1986, attached to the Petition as
Annex F, was also filed by both SCIPS and Velayo and, like the Motion for Reconsideration
aforementioned, it does not mention anything about Velayo not being a party and not being an
employer of complainants. 11
Certainly, he cannot now be heard to say that he was no party to the controversy.
The fact that he was never mentioned in the pleadings before the petitioner-labor arbiter is of no moment.The
fact is that he himself had questioned the findings of the corporate auditor (in G.R. Nos. 77300-01) and this is
enough evidence that he admits personal liability, although he does not agree with the amount supposedly due
from him. His remonstrances came too late in the day.

But other than estoppel, the law itself stands as a formidable obstacle to Velayo's claims. In A.C. Ransom Labor
Union-CCLU v. NLRC 12 we held that in case of corporations. It is the president who responds personally for violation
of the labor pay laws. We quote:

Article 273 of the Code provides that:

Any person violating any of the provisions of Article 265 of this Code shall be punished by a fine
of not exceeding five hundred pesos and/or imprisonment for not less than one (1) day nor more
than six (6) months.
(b) How can the foregoing provisions be implemented when the employer is a corporation? The
answer is found in Article 212 (c) of the Labor Code which provides:
(c) 'Employer' of the Labor Code which provides: which 'Employer' includes any person acting in
the interest of an employer, directly or indirectly. The term shall not include any labor
organization or any of its officers or agents except when acting as employer.
The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is
an artificial person, it must have an officer who can be presumed to be the employer, being "the
person acting in the interest of (the) employer" RANSOM. The corporation, only in the technical
sense, is the employer.
The responsible officer of an employer corporation can be held personally, not to say even
criminally, liable for non-payment of back wages. That is the policy of the law. In the Minimum
Wage Law, Section 15(b) provided:
(b) If any violation of this Act is committed by a corporation, trust, partnership or association, the
manager or in his default, the person acting as such when the violation took place, shall be
responsible. In the case of a government corporation, the managing head shall be made
responsible, except when shown that the violation was due to an act or commission of some
other person, over whom he has no control, in which case the latter shall be held responsible.
In PD 525, where a corporation fails to pay the emergency allowance therein provided, the
prescribed penalty shall be imposed upon the guilty officer or officers of the corporation.
(c) If the policy of the law were otherwise, the corporation employer can have devious ways for
evading payment of back wages. In the instant case, it would appear that RANSOM, in 1969,
foreesing the possibility or probability of payment of back wages to the 22 strikers, organized
ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win
their case. RANSOM actually ceased operations on May 1, 1973 after the December 19, 1972
Decision of the Court of Industrial Relations was promulgated against RANSOM.
(d) The record does not clearly Identify the "officer or officers" of RANSOM directly responsible
for failure to pay the back wages of the 22 strikers. In the absence of definite proof in that regard,
we behave it should be presumed that the responsible officer is the President of the corporation
who can be deemed the chief operation officer thereof. Thus, in RA 602, criminal responsibility is
with the "Manager or in his default, the person acting as such." In RANSOM, the President
appears to be the Manager.
(e) Considering that non-payment of the back wages of the 22 strikers has been a continuing
situation, it is our opinion that the personal liability of the RANSOM President, at the time the
back wages were ordered to be paid should also be a continuing joint and several personal
liabilities of all who may have thereafter succeeded to the office of president; otherwise, the 22
striken may be deprived of their rights by the election of a president without leviable assets. 13
Accordingly, Velayo cannot be excused from payment of SCIPSI's liability by mere reason of SCIPSI's separate
corporate existence. The theory of corporate entity, in the first place, was not meant to promote unfair objectives
or otherwise, to shield them. This Court has not hesitated in penetrating the veil of corporate fiction when it
would defeat the ends envisaged by law, 14 not to mention the clear decree of the Labor Code.

And if Velayo truly had a valid objection (to the levy on his properties), he could have raised it at the earliest
hour, and in the course of the labor proceedings themselves. But, as we earlier indicated, he raised nary a finger
there, and he cannot raise it now, much less in a separate proceeding. He is not only estopped, litis pendencia is
a bar to such a separate action. 15
While the instant case has been rendered moot and academic by reason of the out-of-court settlement between
the parties, that development will not absolve Velayo and/or his counsel, Atty. Oscar Dinopol 16 from charges of
forum-shopping. In Buan v. Lopez, Jr., supra, we declared that forum- shopping is an act of malpractice that
constitutes contempt of court.

In this connection, we reject Atty. Dinopol's pretense that no Identity exists between Special Case No. 227 and
the labor case that had precipitated it. The fact remains that in Special Case No. 227, he assails the execution of
the judgment of the National Labor Relations Commission, the same relief he could have asked for in the very
labor proceeding. The fact that he likewise prayed for damages therein will not alter the essence of the petitionto stay execution-and in which the claim for damages is but an incidental relief.
Clearly, both Velayo and Atty. Dinopol must account for forum-shopping.
WHEREFORE, judgment is rendered: (1) DISMISSING the petition for having become moot and academic; (2)
ORDERING the respondent judge to dismiss Special Case No. 227; (3) DECLARING the respondent, Lucio
Velayo and Atty. Oscar Dinopol IN CONTEMPT and ORDERING them to pay a fine of Pl,000.00 each within five
(5) days from notice; and (4) SUSPENDING Atty. Oscar Dinopol, for a period of three (3) months effective from
notice, from the practice of law. Let a copy of this Decision be entered in his record.
THIS DECISION IS IMMEDIATELY EXECUTORY.
IT IS SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.

Footnotes