G.R. No.

187587

June 5, 2013

NAGKAKAISANG MARALITA NG SITIO MASIGASIG, INC., Petitioner,

vs.
MILITARY SHRINE SERVICES - PHILIPPINE VETERANS AFFAIRS OFFICE, DEPARTMENT OF
NATIONAL DEFENSE, Respondent.
x-----------------------x
G.R. No. 187654
WESTERN BICUTAN LOT OWNERS ASSOCIATION, INC., represented by its Board of
Directors, Petitioner,
vs.
MILITARY SHRINE SERVICES - PHILIPPINE VETERANS AFFAIRS OFFICE, DEPARTMENT OF
NATIONAL DEFENSE, Respondent.
DECISION
SERENO, CJ.:
Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court assailing the
Decision1promulgated on 29 April 2009 of the Court of Appeals in CA-G.R. SP No. 97925.
THE FACTS
The facts, as culled from the records, are as follows:
On 12 July 1957, by virtue of Proclamation No. 423, President Carlos P. Garcia reserved parcels of land
in the Municipalities of Pasig, Taguig, Paraaque, Province of Rizal and Pasay City for a military
reservation. The military reservation, then known as Fort William McKinley, was later on renamed Fort
Andres Bonifacio (Fort Bonifacio).
On 28 May 1967, President Ferdinand E. Marcos (President Marcos) issued Proclamation No. 208,
amending Proclamation No. 423, which excluded a certain area of Fort Bonifacio and reserved it for a
national shrine. The excluded area is now known as Libingan ng mga Bayani, which is under the
administration of herein respondent Military Shrine Services Philippine Veterans Affairs Office (MSSPVAO).
Again, on 7 January 1986, President Marcos issued Proclamation No. 2476, further amending
Proclamation No. 423, which excluded barangaysLower Bicutan, Upper Bicutan and Signal Village from
the operation of Proclamation No. 423 and declared it open for disposition under the provisions of
Republic Act Nos. (R.A.) 274 and 730.
At the bottom of Proclamation No. 2476, President Marcos made a handwritten addendum, which reads:
"P.S. This includes Western Bicutan
(SGD.) Ferdinand E. Marcos"2
The crux of the controversy started when Proclamation No. 2476 was published in the Official Gazette 3 on
3 February 1986, without the above-quoted addendum.
Years later, on 16 October 1987, President Corazon C. Aquino (President Aquino) issued Proclamation
No. 172 which substantially reiterated Proclamation No. 2476, as published, but this time excluded Lots 1
and 2 of Western Bicutan from the operation of Proclamation No. 423 and declared the said lots open for
disposition under the provisions of R.A. 274 and 730.
Memorandum Order No. 119, implementing Proclamation No. 172, was issued on the same day.
Through the years, informal settlers increased and occupied some areas of Fort Bonifacio including
portions of the Libingan ng mga Bayani. Thus, Brigadier General Fredelito Bautista issued General Order
No. 1323 creating Task Force Bantay (TFB), primarily to prevent further unauthorized occupation and to
cause the demolition of illegal structures at Fort Bonifacio.
On 27 August 1999, members of petitioner Nagkakaisang Maralita ng Sitio Masigasig, Inc. (NMSMI) filed
a Petition with the Commission on Settlement of Land Problems (COSLAP), where it was docketed as
COSLAP Case No. 99-434. The Petition prayed for the following: (1) the reclassification of the areas they
occupied, covering Lot 3 of SWO-13-000-298 of Western Bicutan, from public land to alienable and
disposable land pursuant to Proclamation No. 2476; (2) the subdivision of the subject lot by the Director of

Lands; and (3) the Land Management Bureaus facilitation of the distribution and sale of the subject lot to
its bona fide occupants.4
On 1 September 2000, petitioner Western Bicutan Lot Owners Association, Inc. (WBLOAI) filed a Petitionin-Intervention substantially praying for the same reliefs as those prayed for by NMSMI with regard to the
area the former then occupied covering Lot 7 of SWO-00-001302 in Western Bicutan. 5
Thus, on 1 September 2006, COSLAP issued a Resolution 6 granting the Petition and declaring the
portions of land in question alienable and disposable, with Associate Commissioner Lina Aguilar-General
dissenting.7
The COSLAP ruled that the handwritten addendum of President Marcos was an integral part of
Proclamation No. 2476, and was therefore, controlling. The intention of the President could not be
defeated by the negligence or inadvertence of others. Further, considering that Proclamation
No. 2476 was done while the former President was exercising legislative powers, it could not be
amended, repealed or superseded, by a mere executive enactment. Thus, Proclamation No. 172 could
not have superseded much less displaced Proclamation No. 2476, as the latter was issued on October
16, 1987 when President Aquinos legislative power had ceased.
In her Dissenting Opinion, Associate Commissioner Lina AguilarGeneral stressed that pursuant to Article
2 of the Civil Code, publication is indispensable in every case. Likewise, she held that when the provision
of the law is clear and unambiguous so that there is no occasion for the court to look into legislative intent,
the law must be taken as it is, devoid of judicial addition or subtraction. 8 Finally, she maintained that the
Commission had no authority to supply the addendum originally omitted in the published version of
Proclamation No. 2476, as to do so would be tantamount to encroaching on the field of the legislature.
Herein respondent MSS-PVAO filed a Motion for Reconsideration, 9 which was denied by the COSLAP in
a Resolution dated 24 January 2007.10
MSS-PVAO filed a Petition with the Court of Appeals seeking to reverse the COSLAP Resolutions dated 1
September 2006 and 24 January 2007.
Thus, on 29 April 2009, the then Court of Appeals First Division rendered the assailed Decision granting
MSS-PVAOs Petition, the dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED. The Resolutions dated
September 1, 2006 and January 24, 2007 issued by the Commission on the Settlement of Land Problems
in COSLAP Case No. 99-434 are hereby REVERSED and SET ASIDE. In lieu thereof, the petitions of
respondents in COSLAP Case No. 99-434 are DISMISSED, for lack of merit, as discussed herein.
Further, pending urgent motions filed by respondents are likewise
DENIED. SO ORDERED.11 (Emphasis in the original)
Both NMSMI12 and WBLOAI13 appealed the said Decision by filing their respective Petitions for Review
with this Court under Rule 45 of the Rules of Court.
THE ISSUES
Petitioner NMSMI raises the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT
PROCLAMATION NO. 2476 DID NOT INCLUDE ANY PORTION OF WESTERN BICUTAN AS THE
HANDWRITTEN NOTATION BY PRESIDENT MARCOS ON THE SAID PROCLAMATION WAS NOT
PUBLISHED IN THE OFFICIAL GAZETTE.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT
PROCLAMATION NO. 172 LIKEWISE EXCLUDED THE PORTION OF LAND OCCUPIED BY MEMBER
OF HEREIN PETITIONER.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT
THE HON. COSLAP HAS BROAD POWERS TO RECOMMEND TO THE PRESIDENT >INNOVATIVE
MEASURES TO RESOLVE EXPEDITIOUSLY VARIOUS LAND CASES.14

On the other hand, petitioner WBLOAI raises this sole issue:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
SUBJECT PROPERTY WAS NOT DECLARED ALIENABLE AND DISPOSABLE BY VIRTUE OF
PROCLAMATION NO. 2476 BECAUSE THE HANDWRITTEN ADDENDUM OF PRESIDENT
FERDINAND E. MARCOS INCLUDING WESTERN BICUTAN IN PROCLAMATION NO. 2476 WAS NOT
INCLUDED IN THE PUBLICATION.15
Both Petitions boil down to the principal issue of whether the Court of Appeals erred in ruling that the
subject lots were not alienable and disposable by virtue of Proclamation No. 2476 on the ground that the
handwritten addendum of President Marcos was not included in the publication of the said law.
THE COURTS RULING
We deny the Petitions for lack of merit.
Considering that petitioners were occupying Lots 3 and 7 of Western Bicutan (subject lots), their claims
were anchored on the handwritten addendum of President Marcos to Proclamation No. 2476. They allege
that the former President intended to include all Western Bicutan in the reclassification of portions of Fort
Bonifacio as disposable public land when he made a notation just below the printed version of
Proclamation No. 2476.
However, it is undisputed that the handwritten addendum was not included when Proclamation No. 2476
was published in the Official Gazette.
The resolution of whether the subject lots were declared as reclassified and disposable lies in the
determination of whether the handwritten addendum of President Marcos has the force and effect of law.
In relation thereto, Article 2 of the Civil Code expressly provides:
ART. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official
Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication.
Under the above provision, the requirement of publication is indispensable to give effect to the law, unless
the law itself has otherwise provided. The phrase "unless otherwise provided" refers to a different
effectivity date other than after fifteen days following the completion of the laws publication in the Official
Gazette, but does not imply that the requirement of publication may be dispensed with. The issue of the
requirement of publication was already settled in the landmark case Taada v. Hon. Tuvera, 16 in which we
had the occasion to rule thus:
Publication is indispensable in every case, but the legislature may in its discretion provide that the usual
fifteen-day period shall be shortened or extended. An example, as pointed out by the present Chief
Justice in his separate concurrence in the original decision, is the Civil Code which did not become
effective after fifteen days from its publication in the Official Gazette but "one year after such publication."
The general rule did not apply because it was "otherwise provided."
It is not correct to say that under the disputed clause publication may be dispensed with altogether. The
reason is that such omission would offend due process insofar as it would deny the public knowledge of
the laws that are supposed to govern it. Surely, if the legislature could validly provide that a law shall
become effective immediately upon its approval notwithstanding the lack of publication (or after an
unreasonably short period after publication), it is not unlikely that persons not aware of it would be
prejudiced as a result; and they would be so not because of a failure to comply with it but simply because
they did not know of its existence. Significantly, this is not true only of penal laws as is commonly
supposed. One can think of many non-penal measures, like a law on prescription, which must also be
communicated to the persons they may affect before they can begin to operate.
xxxx
The term "laws" should refer to all laws and not only to those of general application, for strictly speaking
all laws relate to the people in general albeit there are some that do not apply to them directly. An
example is a law granting citizenship to a particular individual, like a relative of President Marcos who was
decreed instant naturalization. It surely cannot be said that such a law does not affect the public although
it unquestionably does not apply directly to all the people. The subject of such law is a matter of public
interest which any member of the body politic may question in the political forums or, if he is a proper
party, even in the courts of justice. In fact, a law without any bearing on the public would be invalid as an
intrusion of privacy or as class legislation or as an ultra vires act of the legislature. To be valid, the law
must invariably affect the public interest even if it might be directly applicable only to one individual, or
some of the people only, and not to the public as a whole.
We hold therefore that all statutes, including those of local application and private laws, shall be published
as a condition for their effectivity, which shall begin fifteen days after publication unless a different
effectivity date is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly delegated by the legislature or, at present,
directly conferred by the Constitution. Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a valid delegation.
xxxx
Accordingly, even the charter of a city must be published notwithstanding that it applies to only a portion
of the national territory and directly affects only the inhabitants of that place. All presidential decrees must
be published, including even, say, those naming a public place after a favored individual or exempting him
from certain prohibitions or requirements. The circulars issued by the Monetary Board must be published
if they are meant not merely to interpret but to "fill in the details" of the Central Bank Act which that body is
supposed to enforce.
xxxx
We agree that the publication must be in full or it is no publication at all since its purpose is to inform the
public of the contents of the laws. As correctly pointed out by the petitioners, the mere mention of the
number of the presidential decree, the title of such decree, its whereabouts (e.g., "with Secretary
Tuvera"), the supposed date of effectivity, and in a mere supplement of the Official Gazette cannot satisfy
the publication requirement.1wphi1 This is not even substantial compliance. This was the manner,
incidentally, in which the General Appropriations Act for FY 1975, a presidential decree undeniably of
general applicability and interest, was "published" by the Marcos administration. The evident purpose was
to withhold rather than disclose information on this vital law.
xxxx
Laws must come out in the open in the clear light of the sun instead of skulking in the shadows with their
dark, deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding
unless their existence and contents are confirmed by a valid publication intended to make full disclosure
and give proper notice to the people. The furtive law is like a scabbarded saber that cannot feint, parry or
cut unless the naked blade is drawn. (Emphases supplied)
Applying the foregoing ruling to the instant case, this Court cannot rely on a handwritten note that was not
part of Proclamation No. 2476 as published. Without publication, the note never had any legal force and
effect.
Furthermore, under Section 24, Chapter 6, Book I of the Administrative Code, "the publication of any law,
resolution or other official documents in the Official Gazette shall be prima facie evidence of its authority."
Thus, whether or not President Marcos intended to include Western Bicutan is not only irrelevant but
speculative. Simply put, the courts may not speculate as to the probable intent of the legislature apart
from the words appearing in the law.17 This Court cannot rule that a word appears in the law when,
evidently, there is none. In Pagpalain Haulers, Inc. v. Hon. Trajano, 18 we ruled that "under Article 8 of the
Civil Code, 'judicial decisions applying or interpreting the laws or the Constitution shall form a part of the
legal system of the Philippines.' This does not mean, however, that courts can create law. The courts exist
for interpreting the law, not for enacting it. To allow otherwise would be violative of the principle of
separation of powers, inasmuch as the sole function of our courts is to apply or interpret the laws,
particularly where gaps or lacunae exist or where ambiguities becloud issues, but it will not arrogate unto
itself the task of legislating." The remedy sought in these Petitions is not judicial interpretation, but another
legislation that would amend the law to include petitioners' lots in the reclassification.
WHEREFORE, in view of the foregoing, the instant petitions are hereby DENIED for lack of merit. The
assailed Decision of the Court of Appeals in CA-G.R. CV No. 97925 dated 29 April 2009 is AFFIRMED in
toto. Accordingly, this Court's status quo order dated 17 June 2009 is hereby LIFTED. Likewise, all
pending motions to cite respondent in contempt is DENIED, having been rendered moot. No costs.
SO ORDERED.

G.R. No. 192117

September 18, 2012

ASSOCIATION OF SOUTHERN TAGALOG ELECTRIC COOPERATIVES, INC.

(ASTEC), BATANGAS I ELECTRIC COOPERATIVE, INC. (BATELEC I), QUEZON
I ELECTRIC COOPERATIVE, INC. (QUEZELCO I), and QUEZON II ELECTRIC
COOPERATIVE, INC. (QUEZELCO II), Petitioners,
vs.
ENERGY REGULATORY COMMISSION, Respondent.
x-----------------------x

G.R. No. 192118

CENTRAL LUZON ELECTRIC COOPERATIVES ASSOCIATION, INC. (CLEA) and
PAMPANGA RURAL ELECTRIC SERVICE COOPERATIVE, INC.
(PRESCO), Petitioners,
vs.
ENERGY REGULATORY COMMISSION, Respondent.
DECISION
CARPIO, J.:
The Case
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. The
petition assails the 23 December 2008 Decision2 and 26 April 2010 Resolution3 of
the Court of Appeals in the consolidated cases, including CA-G.R. SP Nos. 99249
and 99253.4 The Court of Appeals affirmed the Orders of the Energy Regulatory
Commission (ERC) directing various rural electric cooperatives to refund their overrecoveries arising from the implementation of the Purchased Power Adjustment
(PPA) Clause under Republic Act (R.A.) No. 7832 or the Anti-Electricity and Electric
Transmission Lines/Materials Pilferage Act of 1994.
The Facts
Petitioners Batangas I Electric Cooperative, Inc. (BATELEC I), Quezon I Electric
Cooperative, Inc. (QUEZELCO I), Quezon II Electric Cooperative, Inc. (QUEZELCO
II) and Pampanga Rural Electric Service Cooperative, Inc. (PRESCO) are rural
electric cooperatives established under Presidential Decree (P.D.) No. 269 or the
National Electrification Administration Decree. 5 BATELEC I, QUEZELCO I and
QUEZELCO II are members of the Association of Southern Tagalog Electric
Cooperatives, Inc. (ASTEC). PRESCO is a member of the Central Luzon Electric
Cooperatives Association, Inc. (CLECA). Petitioners are engaged in the distribution
of electricity "on a non-profit basis for the mutual benefit of its members and
patrons."6
On 8 December 1994, R.A. No. 7832 was enacted. The law imposed a cap on the
recoverable rate of system loss7 that may be charged by rural electric cooperatives
to their consumers. Section 10 of R.A. No. 7832 provides:
Section 10. Rationalization of System Losses by Phasing out Pilferage Losses as
Component Thereof. There is hereby established a cap on the recoverable rate of
system losses as follows:
xxxx
(b) For rural electric cooperatives:
(i) Twenty-two percent (22%) at the end of the first year following the
effectivity of this Act;
(ii) Twenty percent (20%) at the end of the second year following the
effectivity of this Act;
(iii) Eighteen percent (18%) at the end of the third year following the
effectivity of this Act;
(iv) Sixteen percent (16%) at the end of the fourth year following the
effectivity of this Act; and

(v) Fourteen percent (14%) at the end of the fifth year following the
effectivity of this Act.
Provided, That the ERB is hereby authorized to determine at the end of the fifth year
following the effectivity of this Act, and as often as is necessary, taking into account
the viability of rural electric cooperatives and the interest of the consumers, whether
the caps herein or theretofore established shall be reduced further which shall, in no
case, be lower than nine percent (9%) and accordingly fix the date of the effectivity
of the new caps.
xxxx
The Implementing Rules and Regulations (IRR) of R.A. No. 7832 required every
rural electric cooperative to file with the Energy Regulatory Board (ERB), on or
before 30 September 1995, an application for approval of an amended PPA Clause
incorporating the cap on the recoverable rate of system loss to be included in its
schedule of rates.8 Section 5, Rule IX of the IRR of R.A. No. 7832 provided for the
following guiding formula for the amended PPA Clause:
Section 5. Automatic Cost Adjustment Formula.
xxxx
The automatic cost adjustment of every electric cooperative shall be guided by the
following formula:
Purchased Power Adjustment Clause
A
(PPA) =

-E
B-(C + D)

Where:
A=

Cost of electricity purchased and generated for the previous month

B=

Total Kwh purchased and generated for the previous month

C = The actual system loss but not to exceed the maximum recoverable rate of
system loss in Kwh plus actual company use in Kwhrs but not to exceed 1% of total
Kwhrs purchased and generated
D=

Kwh consumed by subsidized consumers

E = Applicable base cost of power equal to the amount incorporated into their
basic rate per Kwh
In compliance with the IRR of R.A. No. 7832, various associations of rural electric
cooperatives throughout the Philippines filed on behalf of their members applications
for approval of amended PPA Clauses. On 8 February 1996, ASTEC filed on behalf
of its members (including BATELEC I, QUEZELCO I and QUEZELCO II) a verified
petition for the approval of the amended PPA Clause. The verified petition of ASTEC
was docketed as ERB Case No. 96-35.9 On 9 February 1996, CLECA also filed on
behalf of its members (including PRESCO) a verified petition for the approval of the
amended PPA Clause. The verified petition of CLECA was docketed as ERB Case
No. 96-37.10
The ERB issued Orders on 19 February 199711 and 25 April 199712 provisionally
authorizing the petitioners and the other rural electric cooperatives to use and

implement the following PPA formula, subject to review, verification and confirmation
by the ERB:
A
(PPA) =

-E
B-(C + CI + D)

Where:
A = Cost of Electricity purchased and generated for the previous month less
amount recovered from pilferages, if any
B=

Total Kwh purchased and generated for the previous month

C = Actual system loss but not to exceed themaximum recoverable rate of system
loss in Kwh
C1 = Actual company use in Kwhrs but not to exceed 1% of total Kwhrs
purchased and generated
D=

Kwh consumed by subsidized consumers

E = Applicable base cost of power equal to the amount incorporated into their
basic rate per Kwh
The ERB further directed petitioners to submit relevant documents regarding the
monthly implementation of the PPA formula for review, verification and confirmation.
The Orders dated 19 February 1997 and 25 April 1997 commonly provide:
Accordingly, all electric cooperatives are hereby directed to submit to the Board
within ten (10) days from notice hereof their monthly implementation of the PPA
formula from the February, 1996 to January, 1997 for the Boards review, verification
and confirmation. The submission should include the following documents:
1. PPA computation following the formula provided above
2. Monthly NPC bill or such other power bill purchased or generated not yet
forwarded to ERB from January 1995 onward
3. Monthly Financial and Statistical Report (MFSRs) not yet forwarded to ERB from
January 1995 onward
4. Sample bills for the month subject to confirmation for different types of customers.
Thereafter, (from February 1997 and onward) all electric cooperatives are hereby
directed to submit on or before the 20th day of the current month, their
implementation of the PPA formula of the previous month for the same purposes as
indicated above.13
On 8 June 2001, R.A. No. 9136 or the Electric Power Industry Reform Act of 2001
(EPIRA) was enacted. Section 38 of the EPIRA abolished the ERB, and created the
Energy Regulatory Commission (ERC). The ERC is an independent and quasijudicial regulatory body mandated to "promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the
restructured electricity industry."14 The powers and functions of the ERB not
inconsistent with the provisions of the EPIRA were transferred to the ERC, together
with the applicable funds and appropriations, records, equipment, property and
personnel of the ERB.15

As a result, ERB Case No. 96-35 involving ASTEC and its members (including
BATELEC I, QUEZELCO I and QUEZELCO II) was renamed and renumbered as
ERC Case No. 2001-338.16 ERB Case No. 96-37 involving CLECA and its members
(including PRESCO) was also renamed and renumbered as ERC Case No. 2001340.17The records further show that these two cases were consolidated, together
with the other cases previously consolidated with then ERB Case No. 96-35. 18
Subsequently, the ERC issued an Order dated 17 June 2003. The ERC noted
therein "that the PPA formula which was approved by the ERB was silent on whether
the calculation of the cost of electricity purchased and generated in the formula
should be gross or net of discounts."19 The cost of electricity is computed at "gross"
if the discounts extended by the power supplier to the rural electric cooperative are
not passed on to end-users, while the cost of electricity is computed at "net" if the
discounts are passed on to end-users.20 The ERC ruled:
To attain uniformity in the implementation of the PPA formulae, the Commission has
resolved that:
1. In the confirmation of past PPAs, the power cost shall still be based on "gross";
and
2. In the confirmation of future PPAs, the power cost shall be based on "net".
Relative thereto, petitioners are directed to implement their respective PPA using the
power cost based on net at the next billing cycle upon receipt of this Order until such
time that their respective rates have already been unbundled.
Petitioners are hereby directed to submit to the Commission on or before the 20th
day of the following month, their implementation of the PPA formula for review,
verification and confirmation by the Commission.21
On 29 March 2004, the ERC issued an Order in the consolidated cases resolving
the motions for reconsideration filed by several rural electric cooperatives. In the
said Order, the ERC explained the general framework of the new PPA confirmation
scheme to be adopted by the regulatory body. The ERC stated:
Majority of the issues raised in the motions for reconsideration can be properly
addressed by the new PPA confirmation scheme to be adopted by this Commission.
Under this scheme, the electric cooperatives shall be allowed to collect/refund the
true cost of power due them vis-a-vis the amount already collected from their endusers. In turn, the end-users shall only be charged the true cost of power consumed.
The Commission recognizes that the electric cooperatives implemented their PPA in
the manner by which majority of them were implementing the same. Thus, they had
no alternative but to adopt the most recent available data for the respective billing
months which were based on estimates due to time lag differences. Under the new
scheme, the actual data for the billing month shall be adopted as they are available
at the time the verification is undertaken.
In this regard, all the other issues raised by the electric cooperatives shall be
properly addressed in the confirmation of their respective PPAs. 22
Several rural electric cooperatives subsequently filed motions for clarification and/or
reconsideration with respect to the ERCs process of computation and confirmation
of the PPA. The rural electric cooperatives advanced the following allegations:
1. They are non-profit organizations and their rate components do not include any
possible extra revenue except the discounts; and

2. They are burdened with expenses in their continuing expansion programs of rural
electrification to the remotest barangays and sitios of their respective franchise
areas and could not give any benefit or incentive to their employees. 23
On 14 January 2005, the ERC issued an Order addressing the motions for
clarification and/or reconsideration filed by the rural electric cooperatives. In the said
Order, the ERC expounded on the general framework of the new PPA confirmation
scheme. The ERC stated that "the new PPA scheme creates a venue where both
the electric cooperatives can recover and the end-users can be charged the true
cost of power."24 The ERC stressed that "the purchased power cost is a pass
through cost to customers and as such, the same should be revenue neutral." 25 In
other words, rural electric cooperatives should only recover from their members and
patrons the actual cost of power purchased from power suppliers. 26
In the same Order, the ERC clarified certain aspects of the new PPA confirmation
scheme. With respect to the data to be utilized in the confirmation of the PPA, the
ERC stated:
All electric cooperatives were directed to implement the PPA in the manner the then
Energy Regulatory Board (ERB) had prescribed. In calculating their respective
PPAs, the electric cooperatives had no alternative but to adopt the most available
data for the respective billing months, i.e. the previous month, due to time lag
differences. Under the new PPA confirmation scheme, the actual data for the billing
month shall be adopted primarily because they reflect the true cost of power, they
are available at the time the confirmation is undertaken and they have already been
charged to the end-users. Thus, the new PPA scheme creates a venue where both
the electric cooperatives can recover and the end-users can be charged the true
cost of power. There will also be proper matching of revenue and cost. 27
As regards the cap on the recoverable rate of system loss, the ERC explained:
The caps on the recoverable system loss provided in R.A. 7832 were established to
encourage distribution utilities to operate efficiently. Since the PPA is merely a cost
recovery mechanism, the electric cooperatives are not supposed to earn revenue
nor suffer losses therefrom. To allow them to adopt the caps even in cases where
the system losses are actually lower would be contrary to the underlying principle of
a recovery mechanism.28
Finally, with respect to the Prompt Payment Discount (PPD) extended by power
suppliers to rural electric cooperatives, the ERC reiterated that rural electric
cooperatives should only recover the actual costs of purchased power.29 Thus, any
discounts extended to rural electric cooperatives must necessarily be extended to
end-users by charging only the "net" cost of purchased power.
In light of the foregoing clarifications, the ERC outlined the following directives in the
said Order:
A. The computation and confirmation of the PPA prior to the Commissions Order
dated June 17, 2003 shall be based on the approved PPA formula;
B. The computation and confirmation of the PPA after the Commissions Order dated
June 17, 2003 shall be based on the power cost "net" of discount; and
C. If the approved PPA formula is silent on the terms of discount, the computation
and confirmation of the PPA shall be based on the power cost at "gross", subject to
the submission of proofs that said discounts are being extended to the end-users. 30
Subsequently, the ERC issued the following Orders:

1. 22 March 2006 Order in ERC Case No. 2001-338 regarding the monthly PPA
implementation of BATELEC I;
2. 16 February 2007 Order in ERC Case No. 2001-338 regarding the monthly PPA
implementation of QUEZELCO I;
3. 7 December 2005 Order in ERC Case No. 2001-338 regarding the monthly PPA
implementation of QUEZELCO II; and
4. 27 March 2006 Order in ERC Case No. 2001-340 regarding the monthly PPA
implementation of PRESCO.
In the said Orders, the ERC clarified its policy on the PPA confirmation scheme
previously adopted in its Order dated 14 January 2005. For the distribution utilities to
recover only the actual costs of purchased power, the ERC stated the following
principles governing the treatment of the PPD granted by power suppliers to
distribution utilities including rural electric cooperatives:
I. The over-or-under recovery will be determined by comparing the Allowable Power
Cost with the Distribution Utilitys Actual Revenue (AR) billed to end-users.
II. Calculation of the Allowable Power Cost as prescribed in the PPA Formula:
a. For a Distribution Utility which PPA formula explicitly provides the manner by
which discounts availed from the power supplier/s shall be treated, the allowable
power cost will be computed based on the specific provision of the formula, which
may either be at "net" or "gross"; and
b. For a Distribution Utility which PPA formula is silent in terms of discounts, the
allowable power cost will be computed at "net" of discounts availed from the power
supplier/s, if there is any.
III. Calculation of the Distribution Utilitys Actual Revenues/Actual Amount Billed to
End-users.
a. On Actual PPA Computed at Net of Discounts Availed from Power Supplier/s:
a.1. If a Distribution Utility bills at net of discounts availed from the power supplier/s
(i.e. Gross power cost minus discounts from power supplier/s) and the Distribution
Utility is not extending discounts to end-users, the actual revenue should be equal to
the allowable power cost; and
a.2. If a Distribution Utility bills at net of discounts availed from the power supplier/s
(i.e. Gross power cost minus discounts from power supplier/s) and the Distribution
Utility is extending discounts to end-users, the discount extended to end-users will
be added back to actual revenue.
b. On Actual PPA Computed at Gross
b.1. If a Distribution Utility bills at gross (i.e. Gross power cost not reduced by
discounts from power supplier/s) and the Distribution Utility is extending discounts to
end-users, the actual revenue will be calculated as: Gross Power Revenue less
Discounts extended to end-users. The result will then be compared to the allowable
power cost; and
b.2. If a Distribution Utility bills at gross (i.e. Gross power cost not reduced by
discounts from power supplier/s) and the distribution utility is not extending
discounts to end-users, the actual revenue will be taken as is which shall be
compared to the allowable power cost.

IV. In calculating the Distribution Utilitys actual revenues, in no case shall the
amount of discounts extended to end-users be higher than the discounts availed by
the Distribution Utility from its power supplier/s. 31
The ERC then directed petitioners to refund their respective over-recoveries to endusers arising from the implementation of the PPA Clause under R.A. No. 7832 and
its IRR, as follows:
1. 22 March 2006 Order32
In the Order dated 22 March 2006, the ERC evaluated the monthly PPA
implementation of BATELEC I covering the period from February 1996 to September
2004. The verification and confirmation of the PPA implementation was based on the
monthly implementation reports, documents and information submitted by BATELEC
I in compliance with the Order dated 19 February 1997 issued by the ERB. The ERC
determined that there were over-recoveries amounting to Fifty Nine Million Twenty
One Thousand Nine Hundred Five Pesos (P59,021,905.00) equivalent to
P0.0532/kWh. The ERC outlined the following bases for the over-recoveries:
1. For the period August 1998 to May 1999, NPC made an erroneous reading on
BATELEC Is meter which resulted to the application of PPA charges at higher sales
volume vis-a-vis those utilized in the PPA computation. The system loss adopted in
the PPA formula was the running average of the preceding twelve (12) months,
which is the period when the erroneous meter reading had not yet occurred. As a
result, the PPA formulas denominator which represents the sales volume was lower
than the actual sales for the period when the PPA was implemented and the impact
of the different "E" (basic charge power cost component) on the said period resulted
to a net over-recovery of PhP38,317,933.00;
2. For the period July 2003 to August 2004, BATELEC I erroneously added back the
Power Act Reduction amounting to PhP 20,565,981.00 to its total power cost; and
3. The new grossed-up factor mechanism adopted by the Commission which
provided a true-up mechanism that allows the distribution utilities to recover the
actual cost of purchased power.33
The ERC confirmed the PPA of BATELEC I covering the period from February 1996
to September 2004, and directed BATELEC I "to refund the amount of P0.0532/kWh
starting on the next billing cycle from receipt of this Order until such time that the full
amount shall have been refunded."34
2. 16 February 2007 Order35
In the Order dated 16 February 2007, the ERC evaluated the monthlyPPA
implementation of QUEZELCO I for the period from January 1999 to April 2004.
QUEZELCO I previously submitted its monthly implementation reports, documents
and information for review, verification and confirmation pursuant to the Order dated
19 February 1997 issued by the ERB. The ERC determined that there were overrecoveries amounting to Twenty Million Twenty Seven Thousand Five Hundred Fifty
Two Pesos (P 20,027,552.00) equivalent to P0.0486/kWh. The ERC outlined the
following bases for the over-recoveries:
1. For the period July 2003 to April 2004, QUEZELCO Is power cost was not
reduced by the PPD availed from its suppliers resulting to an over-recovery of
PhP 8,457,824.00;
2. QUEZELCO I failed to comply with the Implementing Rules and Regulations (IRR)
of Republic Act No. 7832 x x x which provides that the pilferage recoveries should
be deducted from the total purchased power cost used in the PPA computation.

Thus, QUEZELCO Is actual PPA should have been reduced by the pilferage
recoveries amounting to PhP 580,855.00;
3. QUEZELCO I failed to reflect the power cost adjustments on its PPA as a result of
the billing adjustments of NPC under the Credit Memo for the month of June 2003
amounting to PhP4,210,855.00;
4. QUEZELCO Is power supply agreement with Camarines Norte Electric
Cooperative, Inc. (CANORECO) was not approved by the Commission. Thus, the
Commission pegged CANORECOs power cost at NPCs total average rate which
resulted to an over-recovery of PhP 849,324.00;
5. In computing its PPA, QUEZELCO I included the subsidized consumptions of
2,051,753 kWh which resulted to an over-recovery of PhP 1,611,036.00;
6. The new grossed-up factor mechanism adopted by the Commission which
provides a true-up mechanism to allow the DUs to recover the actual costs of
purchased power.36
The PPA of QUEZELCO I for the period of January 1999 to April 2004 was
confirmed by the ERC. In light of the over-recovery, QUEZELCO I was directed "to
refund the amount of P0.0486/kWh starting the next billing cycle from receipt of this
Order until such time that the full amount shall have been refunded." 37
3. 7 December 2005 Order38
In the Order dated 7 December 2005, the ERC reviewed and verified the monthly
PPA implementation of QUEZELCO II covering the period from January 2000 to
November 2003, based on the monthly implementation reports, documents and
information submitted by the rural electric cooperative. The ERC established that
there were over-recoveries amounting to Five Million Two Hundred Forty Eight
Thousand Two Hundred Eighty Two Pesos (P 5,248,282.00) equivalent to
P0.1000/kWh.
The bases of the over-recoveries are as follows:
1. QUEZELCO II treated the penalty on excess/below contracted demand in April
2000 as a discount;
2. For the period May 2000 to November 2000, QUEZELCO II overstated its power
cost due to accounts payable for fuel oil consumption from November 1999 to June
2000;
3. The new grossed-up factor scheme adopted by the Commission which provided a
different result vis-a-vis the originally approved formula; and
4. The Purchased Power Cost was reduced by the Prompt Payment Discount
availed from the power suppliers.39
The ERC confirmed the PPA of QUEZELCO II for the period of January 2000 to
November 2003, and directed QUEZELCO II "to refund the amount of P0.1000/kWh
starting on the next billing cycle from receipt of this Order until such time that the full
amount shall have been refunded."40
4. 27 March 2006 Order41
In the Order dated 27 March 2006, the ERC evaluated the monthly PPA
implementation of PRESCO covering the period of February 1996 to June 2004.
PRESCO previously submitted its monthly PPA implementation reports, documents
and information for review, verification and confirmation pursuant to the Order dated

25 April 1997 issued by the ERB. The ERC determined that there were overrecoveries amounting to Eighteen Million Four Hundred Thirty Eight Thousand Nine
Hundred Six Pesos (P 18,438,906.00) equivalent to P0.1851/kWh. The overrecoveries were based on the following:
1. In its PPA computation, PRESCO excluded its subsidized consumers in the
components of the kWh sales despite that these consumers where being charged
with PPA;
2. Since PRESCO sources its power from the National Power Corporation (NPC)
and Angeles Power Incorporated (API), the Commission used PRESCOs actual
power cost from API for the years 1998, 1999 (except August), 2000, 2001 and 2002
(January to April only) being lower than NPCs rate. However, for the years 2002
(May to December), 2003 and 2004, the Commission applied NPCs rate being
lower than API. x x x x
3. For the period February 1996 to April 1999, PRESCO utilized the 1.4 multiplier
scheme which is roughly equivalent to 29% system loss which resulted to an overrecovery of PhP 5,701,173.00; and
4. The Commission computed PRESCOs allowable power cost at "net" of the Power
Factor Discount (PFD) and Prompt Payment Discount (PPD) availed from NPC at
PhP 2,185,812.00. PRESCO did not extend the discounts to the end users. Thus,
the Commission considered PRESCOs actual revenue.42
The ERC confirmed the PPA of PRESCO for the period of February 1996 to June
2004, and directed PRESCO "to refund the amount of P0.1851/kWh starting the next
billing cycle from receipt of this Order until such time that the full amount shall have
been refunded."43
Petitioners thereafter filed their respective motions for reconsideration of the
foregoing Orders. On 9 May 2007, the ERC issued Orders denying the motions for
reconsideration filed by the petitioners.44
On 28 June 2007, BATELEC I, QUEZELCO I and QUEZELCO II filed with the Court
of Appeals a Petition for Review under Rule 43 of the Rules of Court, assailing the
22 March 2006 Order, 16 February 2007 Order and 7 December 2005 Order of the
ERC directing the rural electric cooperatives to refund their respective overrecoveries. The petition also assailed the 9 May 2007 Orders of the ERC denying
the motions for reconsideration of BATELEC I, QUEZELCO I and QUEZELCO II.
The case was docketed as CA-G.R. SP No. 99249. On the same date, PRESCO
also filed with the Court of Appeals a Petition for Review under Rule 43 of the Rules
of Court, assailing the 27 March 2006 Order of the ERC directing the rural electric
cooperative to refund its over-recoveries. The petition likewise assailed the 9 May
2007 Order of the ERC denying the motion for reconsideration of PRESCO. The
case was docketed as CA-G.R. SP No. 99253. The Court of Appeals subsequently
consolidated these cases with the petitions filed by other rural electric cooperatives
and their associations in relation to the refund of their respective over-recoveries.
The consolidated cases include CA-G.R. SP Nos. 99249,
99250,45 99251,46 99252,47 99253,
99267,48 99269,49 99270,50 99271,51 99272,52 99273,5399323,54 99462,55 99782,56 1006
71,57 and 100822.58
The rural electric cooperatives similarly raised the following issues in the
consolidated cases:
1. Whether the system loss caps prescribed under Section 10 of R.A. 7832 are
arbitrary and violative of the non-impairment clause, therefore, invalid and
unconstitutional;

2. Whether the system loss caps should still be imposed even after the effectivity of
R.A. 9136;
3. Whether the ERC may validly issue rules and regulations for the implementation
of the provisions of R.A. No. 7832 by way of Orders or Decisions with retroactive
effect;
4. Whether petitioners were denied due process of law by the non-disclosure and
non-issuance of guidelines or rules in the implementation of the alleged "Gross Up
Factor Mechanism" in the "confirmation process";
5. Whether the ERC observed the proper issuance of orders and resolutions;
6. Whether the denial of petitioners motions for reconsideration of the assailed
Orders with only one Commissioner affixing his signature thereto is valid;
7. Whether the ERC has legal and factual bases to charge petitioners with overrecoveries and to order the refund thereof for having (1) implemented an "E" that is
different from that imposed in the ERB formula and (2) used the multiplier scheme
originally approved by the NEA;
8. Whether the prompt payment discount and other discounts extended to
petitioners by their power supplier, the NPC, may validly be refunded to the
consumers;
9. Whether the alleged over-recoveries were arrived at without giving petitioners the
opportunity to be heard.59
The Ruling of the Court of Appeals
In its 23 December 2008 Decision, the Court of Appeals denied the petitions for
review of the rural electric cooperatives, and affirmed the Orders of the ERC
directing the various rural electric cooperatives to refund their respective overrecoveries. At the outset, the Court of Appeals stated that "to the extent that the
administrative agency has not been arbitrary or capricious in the exercise of its
power, the time-honored principle is that courts should not interfere." 60
With respect to the constitutionality of Section 10 of R.A. No. 7832, the Court of
Appeals ruled that the challenge amounts to a collateral attack that is prohibited by
public policy.61
With regard to the imposition of the system loss caps after the effectivity of the
EPIRA, the Court of Appeals recognized the amendment to Section 10 of R.A. No.
7832. Section 43 (f) of the EPIRA provides that "the cap on the recoverable rate of
system losses prescribed in Section 10 of Republic Act No. 7832, is hereby
amended and shall be replaced by caps which shall be determined by the ERC
based on load density, sales mix, cost of service, delivery voltage and other
technical considerations it may promulgate." The Court of Appeals, however, stated:
While the EPIRA had already specifically amended the system loss caps mandated
under Section 10 of R.A. No. 7832, respondent ERC still had to go through the
tedious process of determining the technical considerations in order to come up with
the rate-setting methodology that shall promote the efficiency of distribution utilities
as envisioned by the law. Before they could be replaced, however, the caps used in
the ERB formula remain, as asserted by the OSG. For this reason, petitioners
cannot insist that the reinforcement of said system loss caps be discontinued after
the passage of the EPIRA on June 8, 2001. In fact, as already stated, it was only in
October, 2004 that respondent ERC was able to promulgate the AGRA or the
Automatic Adjustment of Generation Rates and System Loss Rates by Distribution
Utilities, which could effectively replace the PPA. Thus, for the periods covered by

the ERC confirmation (February 1996 to September 2004), respondent ERC did not
abuse its discretion in using the system loss caps in the ERB formula. 62
The Court of Appeals likewise rejected the contention of petitioners that the ERC
issued rules and regulations for the implementation of the provisions of R.A. No.
7832 by way of orders or decisions with retroactive effect. According to the Court of
Appeals, the confirmation process of the ERC encompassed PPA implementation
periods after the effectivity of R.A. No. 7832, particularly from February 1996 to
September 2004.63 Thus, the Court of Appeals concluded that there was no
retroactive application of the law.
The Court of Appeals further rejected the claim of denial of due process. The Court
of Appeals ruled:
Petitioners likewise failed to show to Our satisfaction that the guidelines contained in
the assailed Orders of respondent ERC went beyond merely providing for the means
that can facilitate or render less cumbersome the implementation of the law.
Interpretative rules give no real consequence more than what the law itself has
already prescribed, and are designed merely to provide guidelines to the law which
the administrative agency is in charge of enforcing. 64
As regards the validity of the denial of petitioners motions for reconsideration, the
Court of Appeals noted that the Orders specifically indicated that the signature of the
Commissioner was "FOR AND BY AUTHORITY OF THE COMMISSION."65 The
Court of Appeals stated that the ERC examined the motions for reconsideration as a
collegial body.66 It further emphasized that the interests of substantial justice prevail
over the strict application of technical rules. 67
The Court of Appeals further ruled that the ERC had legal and factual bases in
charging petitioners with over-recoveries. The Court of Appeals stated:
Prior to the enactment of R.A. No. 7832, petitioners used the Multiplier Scheme
implemented by the NEA [National Electrification Administration] to recover
incremental costs in the power purchased from NPC the sole agency authorized to
generate electric power before the enactment of the EPIRA and consequent
system losses that are not included in their respective approved basic rates. With
the use of multipliers ranging from 1.2 to 1.4, depending on their actual system
losses, petitioners were allowed to automatically adjust their rates when cost of
power purchased from NPC changes, thus:
1.2 Multiplier For ECs with system loss of 15% and below;
1.3 Multiplier For ECs with system loss ranging from 16% to 22%;
and
1.4 Multiplier For ECs with system loss ranging from 23% and above.
The NEA likewise approved the inclusion in the basic rates of a separate item for
Loss Levy Charge for those electric cooperatives (ECs) whose loan covenants with
financial institutions such as the Asian Development Bank (ADB) limit their
recoverable system loss to 15%.
Thus, petitioners charged their consumers "System Loss Levy" for system losses in
excess of 15%.
Petitioners admitted having continued to use the pricing mechanisms authorized by
the NEA even after the passage of R.A. No. 7832, which repealed the same.
Needless to say, the use of said mechanisms allowed the recovery of system losses
beyond the caps set by the said law. Petitioners cannot, therefore, successfully

argue that respondent ERC had no basis in charging them of over-recoveries as a

result of their failure to comply with the law.68
With respect to the PPD and other discounts extended by power suppliers, the Court
of Appeals emphasized that rural electric cooperatives may only recover the actual
cost of purchased power. The Court of Appeals stated:
No error can likewise be attributed to respondent ERC in directing the
implementation of the respective PPA of the petitioners using the power cost net of
discounts. As held in the case of National Power Corporation vs. Philippine Electric
Plant Owners Associaton (PEPOA), Inc., discounts are not amounts paid or charged
for the sale of electricity, but are reductions in rates. Moreover, We emphasized here
that rate fixing calls for a technical examination and specialized review of specific
details which the courts are ill-equipped to enter, hence, such matters are primarily
entrusted to the administrative or regulating authority. Towards this end, the
administrative agency, respondent ERC in this case, possesses the power to issue
rules and regulations to implement the statute which it is tasked to enforce, and
whatever is incidentally necessary to a full implementation of the legislative intent
should be upheld as germane to the law. Respondent ERC is mandated to prescribe
a rate-setting methodology "in the public interest" and "to promote efficiency", hence
its goal of fixing purchased power at actual cost should be upheld. 69
The Court of Appeals further rejected the claim that petitioners were deprived of the
opportunity to be heard. The Court of Appeals gave credence to the assertion of the
Office of the Solicitor General that "petitioners were allowed to justify their PPA
charges through the documents that they were required to file; that the technical
staff of the ERC conducted exit conferences with petitioners representatives to
discuss preliminary figures and they were authorized to go over the working papers
to check out inaccuracies; and that petitioners were allowed to file their respective
motions for reconsideration after the issuance of the PPA confirmation Orders." 70
The rural electric cooperatives thereafter filed their respective motions for
reconsideration of the 23 December 2008 Decision of the Court of Appeals. In its 26
April 2010 Resolution, the Court of Appeals denied the motions for reconsideration.
The Court of Appeals observed that the issues raised in the motions for
reconsideration were "mere reiterations" of the issues addressed in the 23
December 2008 Decision.71 The Court of Appeals further stated:
Nonetheless, We find that the following disquisition of the Office of the Solicitor
General amply supports the affirmance of the assailed Decision, thus:
"12. Notably, respondent did not impose rules to set new rates, rather, it merely
confirmed whether petitioners have faithfully complied with the requirements of
recoveries under the provisionally approved PPA formula. There is therefore nothing
new or novel about the confirmation policies of respondent as to give any occasion
to retroactivity.
13. Equally significant, it should be underscored that from the beginning, petitioners
authority to recover their losses based on the PPA formula were PROVISIONAL,
that is, the authority granted to petitioners for recoveries and the mode of its
implementation is subject to further reconfirmation by respondent ERC. The
erstwhile ERB earlier allowed electric cooperatives to implement their PPA based on
the PPA formula that the ERB provisionally approved. As spelled out in the Order of
approval, however, such authorization was provisional and temporary, that is, it is
subject to regulation and post hoc review, verification and confirmation by the ERB.
xxx
14. By its very nature, the PPA confirmation process is a post hoc review of charges
already implemented. It is therefore crystal clear from the approval of the application

of the PPA that such authorization was conditioned on subsequent review by the
regulating body. Thus, the Order did not only approve the implementation of the PPA
but also (a) directed the electric cooperatives to submit their monthly
implementation of the PPA formula for the boards review, verification and
confirmation; and (b) directed the Commission on Audit to cause an audit of all the
accounts and other records of all the electric cooperatives to aid the Board in the
determination of rates.
15. That the electric cooperatives were allowed to implement their PPA after the
provisional approval of the PPA formula did not divest the regulator of the power to
determine the reasonableness of the said charges or the electric cooperatives
entitlement thereto. Such power necessarily includes the power to adopt such
policies as would assist the regulator in its determination of the reasonableness of
such PPA charges implemented by electric cooperatives. The implementation was
provisionally approved and subject to the changes that the regulator can make, in
the exercise of its rate-setting authority and subject to the reasonableness standard
under the law x x x."
Suffice to state that with regard to rate-determination, the government is not
hidebound to apply any particular method or formula. What is a just and reasonable
rate cannot be fixed by any immutable method or formula. In other words, no public
utility has the vested right to any particular method of valuation. The administrative
agency is not duty bound to apply any one particular formula or method simply
because the same method has been previously used and applied.
The issues on the alleged retroactive application and denial of due process had
been adequately addressed in the Decision dated December 23, 2008. We reiterate
that the periods covered by the ERC confirmation subject of the petitions, spanning
from February 1996 to September 2004, fell after the effectivity of R.A. No. 7832, the
constitutionality of which petitioners continue, albeit erroneously, to assail in the
instant motions. With respect to the alleged lack of trial-type hearing, it is settled that
the essence of due process in administrative proceedings is merely the opportunity
to explain ones side or to seek reconsideration of the action or ruling complained of.
Where an opportunity to be heard is accorded, as in this case, there is no denial of
due process. Neither was there a need for the assailed Orders of the ERC to be
published as petitioners so adamantly insist. As pointed out by the OSG, said Orders
did not create a new obligation, impose a new duty, or attach a new disability on the
electric cooperatives. They merely clarified the policy guidelines adopted in the
implementation of the PPA. As We have said, interpretative rules give no real
consequence more than what the law itself has already prescribed. 72
Hence, this instant petition filed by BATELEC I, QUEZELCO I, QUEZELCO II and
PRESCO.
The Issues
Petitioners raise the following issues:
1. Whether the policy guidelines issued by the ERC on the treatment of discounts
extended by power suppliers are ineffective and invalid for lack of publication, nonsubmission to the University of the Philippines (U.P.) Law Center, and their
retroactive application; and
2. Whether the grossed-up factor mechanism implemented by the ERC in the
computation of the over-recoveries is ineffective and invalid for lack of publication,
non-submission to the U.P. Law Center, and its retroactive application.
The Ruling of the Court
The petition is partly meritorious.

I.
Petitioners assail the validity of the 22 March 2006 Order,73 16 February 2007
Order,74 7 December 2005 Order,75 and 27 March 2006 Order76 of the ERC directing
the refund of over-recoveries for having been issued pursuant to ineffective and
invalid policy guidelines. Petitioners assert that the policy guidelines on the
treatment of discounts extended by power suppliers are ineffective and invalid for
lack of publication, non-submission to the U.P. Law Center, and their retroactive
application.
Publication is a basic postulate of procedural due process. The purpose of
publication is to duly inform the public of the contents of the laws which govern them
and regulate their activities.77 Article 2 of the Civil Code, as amended by Section 1 of
Executive Order No. 200, states that "laws shall take effect after fifteen days
following the completion of their publication either in the Official Gazette or in a
newspaper of general circulation in the Philippines, unless it is otherwise provided."
Section 18, Chapter 5, Book I of Executive Order No. 292 or the Administrative Code
of 1987 similarly provides that "[l]aws shall take effect after fifteen (15) days
following the completion of their publication in the Official Gazette or in a newspaper
of general circulation, unless it is otherwise provided."
Procedural due process demands that administrative rules and regulations be
published in order to be effective.78In Taada v. Tuvera, this Court articulated the
fundamental requirement of publication, thus:
We hold therefore that all statutes, including those of local application and private
laws, shall be published as a condition for their effectivity, which shall begin fifteen
days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by
the President in the exercise of legislative powers whenever the same are validly
delegated by the legislature or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if their purpose is to
enforce or implement existing law pursuant also to a valid delegation. 79 (Boldfacing
supplied)
There are, however, several exceptions to the requirement of publication. First, an
interpretative regulation does not require publication in order to be effective. 80 The
applicability of an interpretative regulation "needs nothing further than its bare
issuance for it gives no real consequence more than what the law itself has already
prescribed."81 It "adds nothing to the law" and "does not affect the substantial rights
of any person."82 Second, a regulation that is merely internal in nature does not
require publication for its effectivity.83 It seeks to regulate only the personnel of the
administrative agency and not the general public. 84 Third, a letter of instruction
issued by an administrative agency concerning rules or guidelines to be followed by
subordinates in the performance of their duties does not require publication in order
to be effective.85
The policy guidelines of the ERC on the treatment of discounts extended by power
suppliers are interpretative regulations. The policy guidelines merely interpret R.A.
No. 7832 and its IRR, particularly on the computation of the cost of purchased
power. The policy guidelines did not modify, amend or supplant the IRR.
The policy guidelines were first enunciated by the ERC in its 17 June 2003 Order. In
the said Order, the ERC explained that the cost of electricity purchased and
generated is computed at "gross" if the discounts extended by the power supplier
are not passed on to end-users, while the cost of electricity is computed at "net" if
the discounts are passed on to end-users.86

The ERC subsequently issued its 14 January 2005 Order. It emphasized therein that
rural electric cooperatives should only recover the actual costs of purchased
power.87 Any discounts extended to rural electric cooperatives must therefore be
extended to end-users by charging only the "net" cost of purchased power. The ERC
issued the following directives in the said Order:
A. The computation and confirmation of the PPA prior to the Commissions Order
dated June 17, 2003 shall be based on the approved PPA formula;
B. The computation and confirmation of the PPA after the Commissions Order dated
June 17, 2003 shall be based on the power cost "net" of discount; and
C. If the approved PPA formula is silent on the terms of discount, the computation
and confirmation of the PPA shall be based on the power cost at "gross", subject to
the submission of proofs that said discounts are being extended to the end-users. 88
The ERC thereafter clarified its policy guidelines in the 22 March 2006 Order, 16
February 2007 Order, 7 December 2005 Order and 27 March 2006 Order. The ERC
outlined the following principles governing the treatment of the PPD extended by
power suppliers to distribution utilities including rural electric cooperatives:
I. The over-or-under recovery will be determined by comparing the Allowable Power
Cost with the Distribution Utilitys Actual Revenue (AR) billed to end-users.
II. Calculation of the Allowable Power Cost as prescribed in the PPA Formula:
a. For a Distribution Utility which PPA formula explicitly provides the manner by
which discounts availed from the power supplier/s shall be treated, the allowable
power cost will be computed based on the specific provision of the formula, which
may either be at "net" or "gross"; and
b. For a Distribution Utility which PPA formula is silent in terms of discounts, the
allowable power cost will be computed at "net" of discounts availed from the power
supplier/s, if there is any.
III. Calculation of the Distribution Utilitys Actual Revenues/Actual Amount Billed to
End-users.
a. On Actual PPA Computed at Net of Discounts Availed from Power Supplier/s:
a.1. If a Distribution Utility bills at net of discounts availed from the power supplier/s
(i.e. Gross power cost minus discounts from power supplier/s) and the distribution
utility is not extending discounts to end-users, the actual revenue should be equal to
the allowable power cost; and
a.2. If a Distribution Utility bills at net of discounts availed from the power supplier/s
(i.e. Gross power cost minus discounts from power supplier/s) and the distribution
utility is extending discounts to end-users, the discount extended to end-users will
be added back to actual revenue.
b. On Actual PPA Computed at Gross
b.1. If a Distribution Utility bills at gross (i.e. Gross power cost not reduced by
discounts from power supplier/s) and the distribution utility is extending discounts to
end-users, the actual revenue will be calculated as: Gross Power Revenue less
Discounts extended to end-users. The result will then be compared to the allowable
power cost; and
b.2. If a Distribution Utility bills at gross (i.e. Gross power cost not reduced by
discounts from power supplier/s) and the distribution utility is not extending

discounts to end-users, the actual revenue will be taken as is which shall be

compared to the allowable power cost.
IV. In calculating the Distribution Utilitys actual revenues, in no case shall the
amount of discounts extended to end-users be higher than the discounts availed by
the Distribution Utility from its power supplier/s. 89
The above-stated policy guidelines of the ERC on the treatment of discounts merely
interpret the cost of purchased power as a component of the PPA formula provided
in Section 5, Rule IX of the IRR of R.A. No. 7832. The cost of purchased power is
denominated as the variable "A" in the numerator of the PPA formula, particularly:
Section 5. Automatic Cost Adjustment Formula.
xxxx
The automatic cost adjustment of every electric cooperative shall be guided by the
following formula:
Purchased Power Adjustment Clause
A
(PPA) =

-E
B-(C + D)

Where:
A=

Cost of electricity purchased and generated for the previous month

B=

Total Kwh purchased and generated for the previous month

C = The actual system loss but not to exceed the maximum recoverable rate of
system loss in Kwh plus actual company use in Kwhrs but not to exceed 1% of total
Kwhrs purchased and generated
D=

Kwh consumed by subsidized consumers

E = Applicable base cost of power equal to the amount incorporated into their
basic rate per Kwh (Boldfacing supplied)
The cost of purchased power expressed as the variable "A" in the numerator of the
PPA formula is plain and unambiguous. Websters Third New International Dictionary
defines the term "cost" as "an item of outlay incurred in the operation of a business
enterprise (as for the purchase of raw materials, labor, services, supplies) including
the depreciation and amortization of capital assets." 90 Blacks Law Dictionary defines
the term "cost" as "the amount paid or charged for something; price or
expenditure."91 When the policy guidelines of the ERC directed the exclusion of
discounts extended by power suppliers in the computation of the cost of purchased
power, the guidelines merely affirmed the plain and unambiguous meaning of "cost"
in Section 5, Rule IX of the IRR of R.A. No. 7832. "Cost" is an item of outlay, and
must therefore exclude discounts since these are "not amounts paid or charged for
the sale of electricity, but are reductions in rates."92
Furthermore, the policy guidelines of the ERC uphold and preserve the nature of the
PPA formula. The nature of the PPA formula precludes an interpretation that includes
discounts in the computation of the cost of purchased power. The PPA formula is an
adjustment mechanism the purpose of which is purely for the recovery of cost. In
National Association of Electricity Consumers for Reforms (NASECORE) v. Energy
Regulatory Commission,93 this Court noted the explanation of the ERC on the nature
and purpose of an adjustment mechanism:

It is clear from the foregoing that "escalator" or "tracker" or any other similar
automatic adjustment clauses are merely cost recovery or cost "flow-through"
mechanisms; that what they purport to cover are operating costs only which are very
volatile and unstable in nature and over which the utility has no control; and that the
use of the said clauses is deemed necessary to enable the utility to make the
consequent adjustments on the billings to its customers so that ultimately its rate of
return would not be quickly eroded by the escalations in said costs of operation. The
total of all rate adjustments should not operate to increase overall rate of return for a
particular utility company above the basic rates approved in the last previous rate
case (Re Adjustment Clause in Telephone Rate Schedules, 3 PUR 4th 298, N.J. Bd.
of Pub. Util.Commrs., 1973. Affirmed 66 N.J. 476, 33 A.2d 4, 8 PUR 4th 36,
N.J.,1975).94
Rural electric cooperatives cannot therefore incorporate in the PPA formula costs
that they did not incur. Consumers must not shoulder the gross cost of purchased
power; otherwise, rural electric cooperatives will unjustly profit from discounts
extended to them by power suppliers. In the Consolidated Comment of the ERC, the
Solicitor General correctly pointed out:
34.4. Second, the ERCs PPA confirmation policies were in consonance with the rule
that electric cooperatives may only recover costs to the extent of the amount they
actually incurred in the purchase of electricity. The PPA remained to be the
difference between the electric cooperatives actual allowable power costs as
translated to PhP/kWh and the electric cooperatives approved Basic Rate. This was
also how the Cost Adjustment Formula was defined in the IRR of R.A. No. 7832.
34.5. Contrary to petitioners assertions, therefore, the policy did not deviate from the
ERBs provisionally-approved PPA formula but merely implemented the policy set
out in R.A. No. 7832, that is, it is strictly for the purpose of cost recovery only.
Obviously, if the PPA is computed without factoring the discounts given by power
suppliers to electric cooperatives, electric cooperatives will impermissibly retain or
even earn from the implementation of the PPA. 95
Thus, the policy guidelines of the ERC on the treatment of discounts extended by
power suppliers "give no real consequence more than what the law itself has already
prescribed."96 Publication is not necessary for the effectivity of the policy guidelines.
As interpretative regulations, the policy guidelines of the ERC on the treatment of
discounts extended by power suppliers are also not required to be filed with the U.P.
Law Center in order to be effective. Section 4, Chapter 2, Book VII of the
Administrative Code of 1987 requires every rule adopted by an agency to be filed
with the U.P. Law Center to be effective. However, in Board of Trustees of the
Government Service Insurance System v. Velasco,97 this Court pronounced that "not
all rules and regulations adopted by every government agency are to be filed with
the UP Law Center."98 Interpretative regulations and those merely internal in nature
are not required to be filed with the U.P. Law Center.99 Paragraph 9 (a) of the
Guidelines for Receiving and Publication of Rules and Regulations Filed with the
U.P. Law Center100 states:
9. Rules and Regulations which need not be filed with the U.P. Law Center, shall,
among others, include but not be limited to, the following:
a. Those which are interpretative regulations and those merely internal in nature,
that is, regulating only the personnel of the Administrative agency and not the public.
Petitioners further assert that the policy guidelines are invalid for having been
applied retroactively. According to petitioners, the ERC applied the policy guidelines
to periods of PPA implementation prior to the issuance of its 14 January 2005
Order.101 In Republic v. Sandiganbayan,102 this Court recognized the basic rule "that
no statute, decree, ordinance, rule or regulation (or even policy) shall be given

retrospective effect unless explicitly stated so."103 A law is retrospective if it "takes

away or impairs vested rights acquired under existing laws, or creates a new
obligation and imposes a new duty, or attaches a new disability, in respect of
transactions or consideration already past."104
The policy guidelines of the ERC on the treatment of discounts extended by power
suppliers are not retrospective. The policy guidelines did not take away or impair any
vested rights of the rural electric cooperatives. The usage and implementation of the
PPA formula were provisionally approved by the ERB in its Orders dated 19
February 1997105 and 25 April 1997.106 The said Orders specifically stated that the
provisional approval of the PPA formula was subject to review, verification and
confirmation by the ERB. Thus, the rural electric cooperatives did not acquire any
vested rights in the usage and implementation of the provisionally approved PPA
formula.
Furthermore, the policy guidelines of the ERC did not create a new obligation and
impose a new duty, nor did it attach a new disability. As previously discussed, the
policy guidelines merely interpret R.A. No. 7832 and its IRR, particularly on the
computation of the cost of purchased power.The policy guidelines did not modify,
amend or supplant the IRR.
II.
Petitioners further assail the validity of the 22 March 2006 Order, 16 February 2007
Order, 7 December 2005 Order and 27 March 2006 Order of the ERC directing the
refund of over-recoveries for having been issued pursuant to an ineffective and
invalid grossed-up factor mechanism. Petitioners claim that the grossed-up factor
mechanism implemented by the
ERC in the review, verification and confirmation of the PPA is ineffective and invalid
for lack of publication, non-submission to the U.P. Law Center, and its retroactive
application.
It does not appear from the records that the grossed-up factor mechanism was
published or submitted to the U.P. Law Center. The ERC did not dispute the claim of
petitioners that the grossed-up factor mechanism was not published, nor did the
ERC dispute the claim that the grossed-up factor mechanism was not disclosed to
the rural electric cooperatives prior to the review, verification and confirmation of the
PPA.107 The 22 March 2006 Order and 16 February 2007 Order merely stated that
one of the bases of the over-recoveries was "the new grossed-up factor mechanism
adopted by the Commission which provided a true-up mechanism that allows the
distribution utilities to recover the actual cost of purchased power." 108 The 7
December 2005 Order similarly stated that one of the bases of the over-recoveries
was "the new grossed-up factor scheme adopted by the Commission which provided
a different result vis-a-vis the originally approved formula." 109 The ERC did not
explain or disclose in the said Orders any details regarding the grossed-up factor
mechanism.
Based on the records, the first instance wherein the ERC disclosed the details of the
grossed-up factor mechanism was in its comments filed with the Court of Appeals in
CA-G.R. SP Nos. 99249 and 99253 on 1 August 2008 and 9 October 2007,
respectively.110 The ERC reiterated the details of the grossed-up factor mechanism in
its Consolidated Comment filed with this Court on 28 February 2011. 111 The ERC
illustrated the application of the grossed-up factor mechanism in the following
manner:
Given:
Kwh Purchased 100,000 Kwh

Cost of Purchased Power PhP 300,000.00

Kwh Sales 89,000 Kwh
Coop Use 1,000 Kwh
System Loss 10% or 10,000 Kwh
Kwh Sales + Coop Use
Gross-Up Factor =
Kwh Purchased (1-% System Loss)
89,000+1,000
Gross-up Factor =
100,000 (1-10%)
90,000
Gross-up Factor =
=1
90,000
The Gross-up Factor, which in this illustration is equivalent to 1, will be used in
determining the recoverable power cost of an electric cooperative, such that:
Recoverable Cost = Gross-Up Factor x Cost of Purchased Power
Recoverable Cost = 1 x PhP 300,000.00 = PhP 300,000.00112
(Boldfacing supplied)
In its Consolidated Comment, the ERC stated that the PPA "captures the
incremental cost in purchased and generated electricity plus recoverable system
loss in excess of what had already been included as power cost component in the
electric cooperatives basic rates."113 On the other hand, the grossed-up factor
mechanism is a "mathematical calculation that ensures that the electric cooperatives
are able to recover costs incurred from electricity purchased and generated plus
system loss components within allowable limits."114 The ERC proceeded to explain
the relationship between the PPA and the grossed-up factor mechanism thus:
20.2 This gross-up factor mechanism did not modify the PPA formula or state how
the PPA is to be computed. The recoverable amount derived from applying the
gross-up factor is still the maximum allowable cost to be recovered from the electric
cooperatives customers for a given month. If the PPA collected exceeded the
recoverable cost, the difference should be refunded back to the consumers. 115
This Court agrees with the ERC that the grossed-up factor mechanism "did not
modify the PPA formula or state how the PPA is to be computed."116 However, the
grossed-up factor mechanism amends the IRR of R.A. No. 7832 as it serves as an
additional numerical standard that must be observed and applied by rural electric
cooperatives in the implementation of the PPA. While the IRR explains, and
stipulates, the PPA formula, the IRR neither explains nor stipulates the grossed-up
factor mechanism. The reason is that the grossed-up factor mechanism is admittedly
"new" and provides a "different result," having been formulated only after the
issuance of the IRR.
The grossed-up factor mechanism is not the same as the PPA formula provided in
the IRR of R.A. No. 7832. Neither is the grossed-up factor mechanism subsumed in
any of the five variables of the PPA formula. Although both the grossed-up factor
mechanism and the PPA formula account for system loss and use of electricity by
cooperatives, they serve different quantitative purposes.
The grossed-up factor mechanism serves as a threshold amount to which the PPA
formula is to be compared. According to the ERC, any amount collected under the

PPA that exceeds the Recoverable Cost computed under the grossed-up factor
mechanism shall be refunded to the consumers.117 The Recoverable Cost computed
under the grossed-up factor mechanism is "the maximum allowable cost to be
recovered from the electric cooperatives customers for a given month." 118 In effect,
the PPA alone does not serve as the variable rate to be collected from the
consumers. The PPA formula and the grossed-up factor mechanism will both have to
be observed and applied in the implementation of the PPA.
Furthermore, the grossed-up factor mechanism accounts for a variable that is not
included in the five variables of the PPA formula. In particular, the grossed-up factor
mechanism accounts for the amount of power sold in proportion to the amount of
power purchased by a rural electric cooperative, expressed as the Gross-Up Factor.
It appears that the Gross-Up Factor limits the Recoverable Cost by allowing
recovery of the Cost of Purchased Power only in proportion to the amount of power
sold. This is shown by integrating the formula of the Gross-Up Factor with the
formula of the Recoverable Cost, thus:
The grossed-up factor mechanism consists of the following formulas:
Kwh Sales + Coop Use
Gross-Up Factor =
Kwh Purchased (1-% System Loss)
Recoverable Cost = Gross-Up Factor x Cost of Purchased Power
Integrating the above-stated formulas will result in the following formula:
Kwh Sales + Coop Use
Recoverable Cost =
Kwh Purchased (1-% System Loss)

x Cost of Purchased
Power

On the other hand, the PPA formula provided in the IRR of R.A. No. 7832 does not
account for the amount of power sold. It accounts for the amount of power
purchased and generated, expressed as the variable "B" in the following PPA
formula:
Purchased Power Adjustment Clause
A
(PPA) =

-E
B-(C + D)

Where:
A = Cost of electricity purchased and generated for the previous
month
B=

Total Kwh purchased and generated for the previous month

C = The actual system loss but not to exceed the maximum

recoverable rate of system loss in Kwh plus actual company use in
Kwhrs but not to exceed 1% of total Kwhrs purchased and generated
D=

Kwh consumed by subsidized consumers

E = Applicable base cost of power equal to the amount incorporated

into their basic rate per Kwh119 (Boldfacing supplied)

In light of these, the grossed-up factor mechanism does not merely interpret R.A.
No. 7832 or its IRR. It is also not merely internal in nature. The grossed-up factor
mechanism amends the IRR by providing an additional numerical standard that must
be observed and applied in the implementation of the PPA. The grossed-up factor
mechanism is therefore an administrative rule that should be published and
submitted to the U.P. Law Center in order to be effective.
1wphi1

As previously stated, it does not appear from the records that the grossed-up factor
mechanism was published and submitted to the U.P. Law Center. Thus, it is
ineffective and may not serve as a basis for the computation of over-recoveries. The
portions of the over-recoveries arising from the application of the mechanism are
therefore invalid.
Furthermore, the application of the grossed-up factor mechanism to periods of PPA
implementation prior to its publication and disclosure renders the said mechanism
invalid for having been applied retroactively. The grossed-up factor mechanism
imposes an additional numerical standard that clearly "creates a new obligation and
imposes a new duty x x x in respect of transactions or consideration already past." 120
Rural electric cooperatives cannot be reasonably expected to comply with and
observe the grossed-up factor mechanism without its publication. This Court
recognizes that the mechanism aims to reflect the actual cost of purchased power
for the benefit of consumers. However, this objective must at all times be balanced
with the viability of rural electric cooperatives. The ERB itself made the following
observation regarding the operational and economic condition of rural electric
cooperatives in its Order dated 19 February 1997:
Electric cooperatives are created under Presidential Decree No. 269 in the nature of
non-profit organizations. Thus, they do not have the funds they can dispose of to
meet their future emergency obligations and operational needs. They are not entitled
return on their investment as their rates are based on cash flow methodology.
Hence, if the appropriate rate level x x x to keep them going or viable, shall not be
provided, the finances and operations of the said cooperatives will be jeopardized
which ultimately will result in inefficient electric service to their respective customers
or worse shut down when they fail to pay the sources of their electricity like (National
Power Corporation) and their loans to the NEA. 121
Administrative compliance with due process requirements cultivates a regulatory
environment characterized by predictability and stability. These characteristics
ensure that rural electric cooperatives are given the opportunity to achieve efficiency,
and that ultimately, consumers have access to reliable services and affordable
electric rates.
WHEREFORE, we PARTY GRANT the petition and rule that the grossed-up factor
mechanism is INEFFECTIVEand INVALID. We further rule that the portions of the
over-recoveries that may have arisen from the application of the grossed-up factor
mechanism in the 22 March 2006 Order, 16 February 2007 Order, 7 December 2005
Order and 27 March 2006 Order of the Energy Regulatory Commission
are INVALID. Respondent Energy Regulatory Commission is DIRECTED to
compute the portions of the over-recoveries arising from the application of the
grossed-up factor mechanism and to implement the collection of any amount
previously refunded by petitioner to their respective consumers on the basis of the
grossed-up factor mechanism. The 23 December 2008 Decision and 26 April 2010
Resolution of the Court of Appeals are hereby MODIFIED accordingly.
SO ORDERED.
G.R. No. 161718

December 14, 2011

MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner,

vs.
DING VELAYO SPORTS CENTER, INC., Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a Petition for Review under Rule 45 of the Rules of Court of the
Decision1 dated January 8, 2004 of the Court Appeals in CA-G.R. CV No. 68787,
affirming the Decision2 dated October 29, 1999 of Branch 111 of the Regional Trial
Court (RTC) of Pasay City in Civil Case No. 8847, which granted the Complaint for
Injunction, Consignation, and Damages with prayer for a Temporary Restraining
Order filed by respondent Ding Velayo Sports Center, Inc. against petitioner Manila
International Airport Authority (MIAA), and essentially compelled petitioner to renew
the lease of respondent over a parcel of land within the airport premises.
Below are the facts as culled from the records of the case:
On February 15, 1967, petitioner (then still called the Civil Aeronautics
Administration or CAA) and Salem Investment Corporation (Salem) entered into a
Contract of Lease whereby petitioner leased in favor of Salem a parcel of land
known as Lot 2-A, with an area of 76,328 square meters, located in front of the
Manila International Airport (MIA) in Pasay City, and registered under Transfer
Certificate of Title (TCT) No. 6735 in the name of the Republic (Lot 2-A). Petitioner
and Salem entered into said Contract of Lease for the following reasons:
WHEREAS, this particular portion of land is presently an eyesore to the airport
premises due to the fact that a major portion of it consists of swampy and talahib
infested silt and abandoned fishponds and occupied by squatters and some
[petitioners] employees with ungainly makeshift dwellings;
WHEREAS, the LESSOR, in accordance with its general plan to improve and
beautify the airport premises, is interested in developing this particular area by
providing such facilities and conveniences as may be necessary for the comfort,
convenience and relaxation of transients, tourists and the general public;
WHEREAS, the LESSEE, a corporation engaged in hostelry and other allied
business, is ready, willing and able to cooperate with the LESSOR in the
implementation of this general development plan for the airport premises;
xxxx
WHEREAS, the LESSEEs main interest is to have a sufficient land area within
which to construct a modern hotel with such facilities as would ordinarily go with
modern hostelry, including recreation halls, facilities for banks, tourist agencies,
travel bureaus, laundry shops, postal stations, curio and native shops and other
allied business calculated to make the hotel and its facilities comfortable, convenient
and attractive, and for this purpose, an initial land area of some Thirty[-]Five
Thousand Ten (35,010) square meters would be first utilized. 3
The term of the lease and renewal thereof as stipulated upon by petitioner and
Salem are as follows:
3. That the term of the lease shall be for a period of Twenty-Five (25) years,
commencing from the date of receipt of approval of this Contract by the Secretary of
Public Works and Communications, and at the option of the LESSEE, renewable for
another Twenty-Five (25) years. It is understood, that after the first 25 years lease,
the ownership of, and full title to, all the buildings and permanent improvements

introduced by the LESSEE on the leased premises including those introduced on the
Golf Driving Range shall automatically vest in the LESSOR, without cost.
Upon the termination of the lease or should the LESSEE not exercise this option for
renewal, the LESSEE shall deliver the peaceful possession of all the building and
other permanent improvements herein above referred to, with the understanding that
the LESSEE shall have the right to remove from the premises such equipment,
furnitures, accessories and other articles as would ordinarily be classified as
movable property under pertinent provisions of law.
4. That the renewal of this lease contract shall be for another period of Twenty-Five
(25) years, under the same terms and conditions herein stipulated; provided,
however that, since the ownership of the hotel building and permanent improvement
have passed on the LESSOR, the LESSEE shall pay as rental, in addition to the
rentals herein agreed upon, an amount equivalent to One percent (1%) of the
appraised value of the hotel building and permanent improvements at the time of
expiration of Twenty-Five (25) years lease period, payable annually.4
Subsequently, in a Transfer of Lease Rights and Existing Improvements dated
September 30, 1974, Salem conveyed in favor of Ding Velayo Export Corporation
(Velayo Export), for the consideration of P1,050,000.00, its leasehold rights over a
portion of Lot 2-A, measuring about 15,534 square meters, with the improvements
thereon, consisting of an unfinished cinema-theater. Accordingly, petitioner and
Velayo Export executed a Contract of Lease dated November 26, 1974 pertaining to
the aforementioned leased portion of Lot 2-A.
In turn, Velayo Export executed a Transfer of Lease Rights dated April 27, 1976 by
which it conveyed to respondent, for the consideration of P500,000.00, its leasehold
rights over an 8,481-square meter area (subject property) out of the 15,534-square
meter portion it was leasing from petitioner. As a result, petitioner and respondent
executed another Contract of Lease5 dated May 14, 1976 covering the subject
property.
The Contract of Lease dated May 14, 1976 between petitioner (as lessor) and
respondent (as lessee) specified how respondent shall develop and use the subject
property:
2. That the LESSEE shall utilize the premises as the site for the construction of a
Sports Complex facilities and shopping centers in line with the Presidential Decree
for Sports Development and Physical Fitness, including the beautification of the
premises and providing cemented parking areas.
3. That the LESSEE shall construct at its expense on the leased premises a parking
area parallel to and fronting the Domestic Airport Terminal to be open to the traveling
public free of charge to ease the problem of parking congestion at the Domestic
Airport.6
Pursuant to the aforequoted objectives, respondent agreed to the following:
9. Physical improvements on building spaces and areas subject of this agreement
may be undertaken by and at the expenses of the LESSEE. However, no
improvements may be commenced without prior approval of the plans by the
LESSOR and, whenever deemed necessary a cash deposit shall be made in favor
of the LESSOR which shall be equivalent to the cost of restoration of any portion
affected by such alteration or improvements;
10. The LESSEE agrees and binds himself to complete the physical improvements
or contemplated structures within the leased premises for a period of one (1) year.
Failure on the part of the LESSEE to do so within said period shall automatically
revoke the Contract of Lease without necessity of judicial process. 7

The lease rental shall be computed as follows:

5. That the LESSEE shall pay to the LESSOR as monthly rentals for the leased
premises the rate of P0.45 per square meter for the first 300 square meters, P0.30
per square meter for the next 500 square meters, and P0.25 per square meter for
the remaining area pursuant to Part VIII, Section 4 of Administrative Order No. 4,
Series of 1970, which in the case of the 8,481 square meters herein leased shall
amount to P2,205.25 per month, or a royalty equivalent to one percent (1%) of the
monthly gross income of the LESSEE, whichever is higher.
6. That for the purpose of accurately determining the monthly gross income, the
LESSEE hereby gives its consent for the examination of the books by authorized
representatives of the LESSOR or the Commission on Audit;
xxxx
13. If, during the lifetime of this agreement and upon approval by the LESSOR, the
leased area is increased or diminished, or the LESSEE is relocated to another area,
rentals, fees, and charges imposed shall be amended accordingly. Subsequent
amendments to the Administrative Order which will affect an increase of the rates of
fees, charges and rentals agreed upon in this contract shall automatically amend
this contract to the extent that the rates of fees, rentals, and charges are increased.
In the event of relocation of the LESSEE to other areas, the cost of relocation shall
be shouldered by the LESSEE.8
Nonpayment of lease rentals shall have the following consequence:
8. Failure on the part of the LESSEE TO PAY ANY fees, charges, rentals or the
royalty of one percent (1%) within thirty (30) days after receipt of written demand,
the LESSOR shall deny the LESSEE of the further use of the leased premises
and /or any of its facilities, utilities and services. x x x. 9
The Contract of Lease prohibits respondent from transferring its leasehold rights,
engaging in any other business outside those mentioned in said Contract, and
subletting the premises whether in whole or in part, thus:
16. The LESSEE agrees not to assign, sell, transfer or mortgage his rights under
this agreement or sublet the whole or part of premises covered by it to a third party
or parties nor engage in any other business outside of those mentioned in this
contract. Violation of this provision shall also be a ground for revocation of the lease
contract without need of judicial process.10
Period of the lease and renewal thereof are governed by paragraphs 4 and 17 of the
Contract of Lease that read:
4. That the period of this lease shall take effect from June 1, 1976 up to February 15,
1992 which is equivalent to the unexpired portion of the lease contract executed
between [petitioner] and Ding Velayo Export Corporation.
xxxx
17. The LESSEE, if desirous of continuing his lease, should notify the LESSOR sixty
(60) days prior to expiration of the period agreed upon for the renewal of the
Contract of Lease.11
The lease may be revoked/terminated under the following conditions:
15. This contract of lease may be terminated by other party upon thirty (30) days
notice in writing. Failure on the part of the LESSEE to comply with any of the

provisions of this lease contract or any violation of any rule or regulations of the
Airport shall give the LESSOR the right to revoke this contract effective thirty (30)
days after notice of revocation without need of judicial demand. However, the
LESSEE shall remain liable and obligated to pay rentals and other fees and charges
due and in arrears with interest at the rate of twelve percent (12%) per annum;
xxxx
18. Upon termination or revocation of this contract of lease as herein provided, the
LESSEE shall deliver possession of the premises to the LESSOR in the same
condition that they were received giving allowance to normal wear and tear and to
damage or destruction caused by act of God. All permanent improvements,
however, which the LESSEE might have constructed in the premises by virtue
hereof shall upon the termination of this lease automatically become the absolute
property of the LESSOR without cost;
19. In the event that the LESSOR shall need the leased premises in its airport
development program, the LESSEE agrees to vacate the premises within thirty (30)
days from receipt of notice. All improvements not removed by the LESSEE within the
thirty (30) day period shall become the property of the LESSOR without cost. 12
Respondent began occupying the subject property and paying petitioner the amount
of P2,205.25 per month as rental fee. Respondent then constructed a multi-million
plaza with a three-storey building on said property. Respondent leased spaces in the
building to various business proprietors.
In a Letter13 dated April 11, 1979, petitioner requested respondent for a copy of the
latters Gross Income Statement from December 1977 to December 1978, duly
certified by a certified public accountant, for the purpose of computing the royalty
equivalent to 1% of the monthly gross income of respondent. Acceding to this
request, respondent sent petitioner a Letter14 dated May 31, 1979 and appended
therewith the requested income statements which disclosed that the total gross
income of respondent for the period in question amounted toP1,972,968.11.
Respondent also submitted to petitioner and the Commission on Audit (COA) its duly
audited financial statements15 for the years 1984 to 1988. Meanwhile, petitioner had
continued billing respondent the amount of P2,205.25 as monthly rental fee, which
the latter obediently paid.
Petitioner eventually issued Administrative Order (AO) No. 4, series of 1982, 16 and
AO No. 1, series of 1984, fixing various rates for the lease rentals of its properties.
AO No. 4, series of 1982, and AO No. 1, series of 1984, allegedly effected an
increase in the lease rental of respondent for the subject property, as provided for in
paragraph 13 of the Contract of Lease dated May 14, 1976 between petitioner and
respondent. However, said issuances were subjected to review for revision purposes
and their implementation was suspended. Still, petitioner, through a letter dated
September 23, 1986, required respondent to pay a moratorium rental at the rate
of P5.00 per square meter rate per month or a total of P42,405.00 every month.
In a Letter17 dated October 18, 1986, respondent opposed the implementation of any
increase in its lease rental for the subject property. Respondent wrote:
We believe that an increase in rental of a property which does not form part of the
Airport or its immediate premises, like the premises leased to DVSC, although
owned by MIAA is not covered by Batas Pambansa Blg. 325 or Finance Ministry
Order No. 6-83. Furthermore, the language of B.P. No. 325 and Ministry Order No.
6-83 authorizes the fixing or revision of fees and charges only for "services and
functions."
xxxx

Assuming that the increase in rental of MIAA property is authorized by B.P. No. 325
and Ministry Order No. 6-83, such increase as ordered in your moratorium rental
rate insofar as it is made applicable to DVSC is not valid.
The increase which is around 2,000 percent or 20 times above present rental rate is
unreasonably high. Both B.P. No. 325 and Ministry Order No. 6-83 prescribed only
"just and reasonable rates sufficient to cover administrative costs."
Such increase in rental is uncalled for considering that:
Upon termination of the lease, all the improvements on the property shall belong to
MIAA without costs. The original cost of the buildings and other improvements on
the land we have leased is P10,600,000.00. Said improvements would now cost
over P30,000,000.00. In effect the Government would be collecting another P2.0
million a year.
We, therefore, request that the moratorium rate be not applied to us.
Following the foregoing exchange, petitioner had kept on charging respondent the
original monthly rental ofP2,205.25.
More than 60 days prior to the expiration of the lease between petitioner and
respondent, the latter, through its President, Conrado M. Velayo (Velayo), sent the
former a Letter18 dated December 2, 1991 stating that respondent was interested in
renewing the lease for another 25 years.
Petitioner, through its General Manager, Eduardo O. Carrascoso, in a Letter 19 dated
February 24, 1992, declined to renew the lease, ordered respondent to vacate the
subject property within five days, and demanded respondent to pay arrears in lease
rentals as of January 1992 in the sum of P15,671,173.75.
Velayo, on behalf of respondent, replied to petitioner through a Letter 20 dated March
3, 1992 that reads:
This refers to your letters which we received on 26 February 1992 and 27 February
1992, respectively, the first as a response to our letter of 2 December 1991 where
we informed you of our intention to renew our lease contract, and the second
wherein you asked us to vacate within five (5) days the leased premises.
Your second letter surprised us inasmuch as we have been negotiating with you for
the renewal of our lease. In addition, your sudden decision gave us no time to
discuss your terms and conditions with our Board considering that the issues
involved major decision.
For a smoother transition and for the mutual interest of the government, the tenants
and ourselves, may we request for a reconsideration of your decision, and we be
given up to the end of March 1992 to peacefully turn-over to you the leased
premises. This will enable you to create a committee that will take-over the leased
property and its operations.
Likewise, consistent with our previous stand as communicated to you by our legal
counsel, copy of which is hereto attached, we deny any liability on rental increases.
In Letters21 all dated March 10, 1992, Velayo informed petitioner that he already sent
individual letters to Manila Electric Company, Philippine Long Distance Telephone
Company, and Manila Waterworks and Sewerage System, instructing the said utility
companies that succeeding billings for electric, telephone, and water consumptions
should already be transferred to the account of petitioner in light of the expected
turn-over of the subject property and improvements thereon from respondent to
petitioner.

However, around the same time, Samuel Alomesen (Alomesen) became the new
President and General Manager of respondent, replacing Velayo. Alomesen, acting
on behalf of respondent, sent petitioner a Letter 22 dated March 25, 1992, revoking
the aforementioned Letters dated March 3 and 10, 1992 since these were
purportedly sent by Velayo without authority from respondents Board of Directors.
Respondent expressed its interest in continuing the lease of the subject property for
another 25 years and tendered to petitioner a managers check in the amount
of P8,821.00 as payment for the lease rentals for the subject property from
December 1991 until March 1992.
Petitioner entirely disregarded the claims of respondent and threatened to take-over
the subject property.
On March 30, 1992, respondent filed against petitioner before the RTC a Complaint
for Injunction, Consignation, and Damages with a Prayer for a Temporary
Restraining Order.23 Respondent essentially prayed for the RTC to order the renewal
of the Contract of Lease between the parties for another 25-year term counted from
February 15, 1992. On even date, the RTC issued a Temporary Restraining
Order24 preventing petitioner and all persons acting on its behalf from taking
possession of the entire or any portion of the subject property, from administering
the said property, from collecting rental payments from sub-lessees, and from taking
any action against respondent for the collection of alleged arrears in rental payments
until further orders from the trial court.
In its Answer,25 petitioner contended that its Contract of Lease with respondent was
already terminated on February 15, 1992, the expiration date explicitly stated under
paragraph 4 of the same Contract. Petitioner was not bound to renew the Contract
of Lease with respondent. The renewal provision under paragraph 17 of the Contract
was not automatic but merely directory and procedural and that, in any event,
Velayo, the former President of respondent, already conceded to the non-renewal of
the Contract.
Petitioner likewise invoked paragraph 15 of the Contract of Lease, i.e., its right to
revoke the said Contract in case of violation of any of the provisions thereof by
respondent. Petitioner averred that respondent committed the following violations:
(1) respondent failed to fulfill the conditions set forth under paragraphs 2 and 3 of
the Contract as it did not establish a shopping center on the subject property and did
not help ease the problems of parking congestion at the Domestic Airport; (2)
respondent "sub-leased" the subject property in defiance of the prohibition under
paragraph 16 of the Contract; and (3) respondent did not pay the lease rentals in
accordance with paragraphs 5 and 13 of the Contract, thus, incurring a total
outstanding balance of P15,671,173.75 as of February 1992.
By way of counter-claim, petitioner demanded that respondent pay the total
outstanding balance of its lease rentals for the subject property and turn-over lease
rentals it had collected from sub-lessees beginning February 15, 1992.
After the preliminary hearing, the RTC issued a Writ of Preliminary
Injunction26 against petitioner on April 30, 1992 upon the posting by respondent of a
bond in the amount of P100,000.00.
In an Order27 dated June 11, 1996, the RTC denied the Omnibus Motion of petitioner
for the dissolution of the writ of injunction and appointment of a receiver for the fruits
of the subject property; and at the same time, granted the motion of respondent for
the consignment of their monthly lease rentals for the subject property with the RTC.
The RTC terminated the pre-trial proceedings in an Order 28 dated October 23, 1997
for failure of the parties to amicably settle the dispute. Thereafter, trial on the merits
ensued.

Respondent presented the testimonies of Mariano Nocom, Jr., 29 Gladioluz

Segundo,30 Mariano Nocom, Sr.,31and Rosila Mabanag.32 The RTC admitted all the
documentary evidence of respondent in an Order33 dated December 14, 1998.
Petitioner, on the other hand, presented the lone testimony of their accounting
manager, Arlene Britanico.34Among the numerous documents submitted by petitioner
as evidence were its own issuances imposing various rates for the lease of its
properties, which allegedly effected an increase in the lease rentals of respondent
for the subject property, specifically, AO No. 4, series of 1982; 35 AO No. 1, series of
1984;36 AO No. 1, series of 1990;37AO No. 1, series of 1993;38 Resolution No. 9474,39 Resolution No. 96-32,40 and Resolution No. 97-51,41 all amending AO No. 1,
series of 1993; and AO No. 1, series of 1998.42 All of the documentary evidence of
petitioner were admitted by the RTC in an Order 43 dated May 28, 1999.
In its Decision dated October 29, 1999, the RTC ruled in favor of respondent,
disposing thus:
WHEREFORE, judgment is hereby rendered in favor of [respondent] and against
[petitioner].
Accordingly, [petitioner] is hereby ordered to:
1. Grant renewal of the lease contract for the same term as stipulated in the
old contract and the rental to be based on the applicable rate of the time or
renewal;
2. To respect and maintain [respondents] peaceful possession of the
premises;
3. To accept the rental payment consigned by the [respondent] to the court
beginning December 1991 onward until and after a renewal has been duly
executed by both parties;
4. To pay [respondent] as and by way of attorneys fees the sum
of P500,000.00; and
5. To pay the cost of suit.44
Petitioner appealed the RTC judgment before the Court of Appeals and assigned
these errors:
I. The trial court gravely erred in declaring that [respondent] is entitled to a
renewal of the contract of lease.
II. The trial court gravely erred in ordering the renewal of the contract of lease
despite of the fact that it has no legal authority to do so.
III. The trial court gravely erred in declaring that [respondent] did not violate
the terms and conditions of the contract.
IV. The trial court gravely erred in declaring that [petitioners] act of effecting
the increase in the rental during the stipulated lifetime of the contract has no
valid basis.
V. The trial court gravely erred in not finding that [petitioner] is entitled to its
counterclaim.45
The Court of Appeals promulgated its Decision on January 8, 2004, finding no
reversible error in the appealed judgment of the RTC and decreeing as follows:

WHEREFORE, finding no reversible error committed by the trial court, the instant
appeal is hereby DISMISSED, and the assailed decision is hereby AFFIRMED. 46
Hence, the instant Petition for Review, wherein petitioner basically attributed to the
Court of Appeals the very same errors it assigned to the RTC.
Petitioner argues that the renewal of the Contract of Lease cannot be made to
depend on the sole will of respondent for the same would then be void for being a
potestative condition.
We do not agree. As we have already explained in Allied Banking Corporation v.
Court of Appeals 47 :
Article 1308 of the Civil Code expresses what is known in law as the principle of
mutuality of contracts. It provides that "the contract must bind both the contracting
parties; its validity or compliance cannot be left to the will of one of them." This
binding effect of a contract on both parties is based on the principle that the
obligations arising from contracts have the force of law between the contracting
parties, and there must be mutuality between them based essentially on their
equality under which it is repugnant to have one party bound by the contract while
leaving the other free therefrom. The ultimate purpose is to render void a contract
containing a condition which makes its fulfillment dependent solely upon the
uncontrolled will of one of the contracting parties.
An express agreement which gives the lessee the sole option to renew the lease is
frequent and subject to statutory restrictions, valid and binding on the parties. This
option, which is provided in the same lease agreement, is fundamentally part of the
consideration in the contract and is no different from any other provision of the lease
carrying an undertaking on the part of the lessor to act conditioned on the
performance by the lessee. It is a purely executory contract and at most confers a
right to obtain a renewal if there is compliance with the conditions on which the right
is made to depend. The right of renewal constitutes a part of the lessee's interest in
the land and forms a substantial and integral part of the agreement.
The fact that such option is binding only on the lessor and can be exercised only by
the lessee does not render it void for lack of mutuality. After all, the lessor is free to
give or not to give the option to the lessee. And while the lessee has a right to elect
whether to continue with the lease or not, once he exercises his option to continue
and the lessor accepts, both parties are thereafter bound by the new lease
agreement. Their rights and obligations become mutually fixed, and the lessee is
entitled to retain possession of the property for the duration of the new lease, and
the lessor may hold him liable for the rent therefor. The lessee cannot thereafter
escape liability even if he should subsequently decide to abandon the premises.
Mutuality obtains in such a contract and equality exists between the lessor and the
lessee since they remain with the same faculties in respect to fulfillment. 48
Paragraph 17 of the Contract of Lease dated May 14, 1976 between petitioner and
respondent solely granted to respondent the option of renewing the lease of the
subject property, the only express requirement was for respondent to notify
petitioner of its decision to renew the lease within 60 days prior to the expiration of
the original lease term. It has not been disputed that said Contract of Lease was
willingly and knowingly entered into by petitioner and respondent. Thus, petitioner
freely consented to giving respondent the exclusive right to choose whether or not to
renew the lease. As we stated in Allied Banking, the right of renewal constitutes a
part of the interest of respondent, as lessee, in the subject property, and forms a
substantial and integral part of the lease agreement with petitioner. Records show
that respondent had duly complied with the only condition for renewal under Section
17 of the Contract of Lease by notifying petitioner 60 days prior to the expiration of
said Contract that it chooses to renew the lease. We cannot now allow petitioner to

arbitrarily deny respondent of said right after having previously agreed to the grant of
the same.
Equally unmeritorious is the assertion of petitioner that paragraph 17 of the Contract
of Lease dated May 14, 1976 merely provides a procedural basis for a negotiation
for renewal of the lease and the terms thereof. The exercise by respondent of its
option to renew the lease need no longer be subject to negotiations. We reiterate the
point we made in Allied Banking that:
[I]f we were to adopt the contrary theory that the terms and conditions to be
embodied in the renewed contract were still subject to mutual agreement by and
between the parties, then the option - which is an integral part of the consideration
for the contract - would be rendered worthless. For then, the lessor could easily
defeat the lessee's right of renewal by simply imposing unreasonable and onerous
conditions to prevent the parties from reaching an agreement, as in the case at bar.
As in a statute, no word, clause, sentence, provision or part of a contract shall be
considered surplusage or superfluous, meaningless, void, insignificant or nugatory, if
that can be reasonably avoided. To this end, a construction which will render every
word operative is to be preferred over that which would make some words idle and
nugatory.49
In case the lessee chooses to renew the lease but there are no specified terms and
conditions for the new contract of lease, the same terms and conditions as the
original contract of lease shall continue to govern, as the following survey of cases in
Allied Banking would show:
In Ledesma v. Javellana this Court was confronted with a similar problem. In that
case the lessee was given the sole option to renew the lease, but the contract failed
to specify the terms and conditions that would govern the new contract. When the
lease expired, the lessee demanded an extension under the same terms and
conditions. The lessor expressed conformity to the renewal of the contract but
refused to accede to the claim of the lessee that the renewal should be under the
same terms and conditions as the original contract. In sustaining the lessee, this
Court made the following pronouncement:
x x x [i]n the case of Hicks v. Manila Hotel Company, a similar issue was resolved by
this Court. It was held that 'such a clause relates to the very contract in which it is
placed, and does not permit the defendant upon the renewal of the contract in which
the clause is found, to insist upon different terms than those embraced in the
contract to be renewed'; and that 'a stipulation to renew always relates to the
contract in which it is found and the rights granted thereunder, unless it expressly
provides for variations in the terms of the contract to be renewed.'
The same principle is upheld in American Law regarding the renewal of lease
contracts. In 50 Am. Jur. 2d, Sec. 1159, at p. 45, we find the following citations: 'The
rule is well-established that a general covenant to renew or extend a lease which
makes no provision as to the terms of a renewal or extension implies a renewal or
extension upon the same terms as provided in the original lease.'
In the lease contract under consideration, there is no provision to indicate that the
renewal will be subject to new terms and conditions that the parties may yet agree
upon. It is to renewal provisions of lease contracts of the kind presently considered
that the principles stated above squarely apply. We do not agree with the contention
of the appellants that if it was intended by the parties to renew the contract under the
same terms and conditions stipulated in the contract of lease, such should have
expressly so stated in the contract itself. The same argument could easily be
interposed by the appellee who could likewise contend that if the intention was to
renew the contract of lease under such new terms and conditions that the parties
may agree upon, the contract should have so specified. Between the two assertions,
there is more logic in the latter.

The settled rule is that in case of uncertainty as to the meaning of a provision

granting extension to a contract of lease, the tenant is the one favored and not the
landlord. 'As a general rule, in construing provisions relating to renewals or
extensions, where there is any uncertainty, the tenant is favored, and not the
landlord, because the latter, having the power of stipulating in his own favor, has
neglected to do so; and also upon the principle that every man's grant is to be taken
most strongly against himself (50 Am Jur. 2d, Sec. 1162, p. 48; see also 51 C.J.S.
599).'50 (Emphases supplied.)
Being consistent with the foregoing principles, we sustain the interpretation of the
RTC of paragraph 17 of the Contract of Lease dated May 14, 1976 between
petitioner and respondent, to wit:
[Paragraph 17 of the Contract of Lease dated May 14, 1976] admits several
meanings. In simpler terms, the phrase, i.e., "if desirous of continuing his lease, may
be simply restated, i.e., if he wants to go on with his lease, considering the word
`CONTINUE in its verb form ordinarily means to go on in present state, or even
restated in another way if desirous of extending his lease, because the word
`continue in its verb form also means extend uniformly." Thus, if we are to adopt
the interpretation of [petitioner] that the stipulation merely established the procedural
basis for a negotiation for renewal then the aforequoted phrase would be rendered a
mere surplusage, meaningless and insignificant. But if we are to prod deeper to the
very context of the entire stipulations setforth in the contract and from what is
obvious with respect to the intentions of the contracting parties based on their
contemporaneous and subsequent acts including but not limited to the historical
antecedents of the agreement then an interpretation invariably different from that of
[petitioner] becomes inevitable.
Specifically, the extraneous source of the lease contract in question could be the
original and renewed contract of lease by and between Salem Investment
Corporation and CAA the predecessor-in-interest of [petitioner] executed on
February 10, 1967 (Exh. "M"). Under the said lease contract between CAA and
Salem, the term is for a period of twenty-five (25) years renewable for another 25
years at the option of the lessee Salem (Exh. "Y-1"). Later, with the approval of
CAA, Salem transferred its leasehold rights over a portion of the land leased to Ding
Velayo Export Corporation on September 30, 1974 (Exh. "N") and in turn Velayo
Export transferred its leasehold rights over a portion of the leased land transferred to
it by Salem to Velayo Sports Complex, Inc. [respondent] herein on April 29, 1976
(Exh. "O"). Thus, on May 14, 1976, [respondent] and CAA, predecessor-in-interest
of [petitioner], concluded the lease agreement in question with a term equivalent to
the unexpired portion of the lease between Velayo Export and CAA.
As culled from the transfers effected prior to the May 14, 1976 agreement of
[respondent] and [petitioner]s predecessor-in-interest, the renewal of the contract
was clearly at the option of the lessee. Considering that there was no evidence
positively showing that [respondent] and CAA expressly intended the removal of the
option for the renewal of the lease contract from the lessee, it is but logical to
conclude, although the stipulation setforth in paragraph 17 appears to have been
worded or couched in somewhat uncertain terms, that the parties agreed that the
option should remain with the lessee. This must be so because based on the context
of their agreements and bolstered by the testimony of Mr. Mariano Nocom of Salem
Investment and particularly Rosila Mabanag, one of the signatory witness to the
contract and a retired employee of CAAs Legal Division the parties really intended a
renewal for the same term as it was then the usual practice of CAA to have the term
of leases on lands where substantial amount will be involved in the construction of
the improvements to be undertaken by the lessee to give a renewal. In fact, it clearly
appears that the right of renewal constitutes a part of the lessees interest in the land
considering the multimillion investments it made relative to the construction of the
building and facilities thereon and forms a substantial and integral part of the
agreement.51 (Emphases supplied.)

In sum, the renewed contract of lease of the subject property between petitioner and
respondent shall be based on the same terms and conditions as the original contract
of lease. The "original contract of lease" does not pertain to the Contract of Lease
dated May 14, 1976 between petitioner and respondent alone, but also to the
Contract of Lease dated February 15, 1967 between petitioner (then still called CAA)
and Salem, as well as the Contract of Lease dated November 26, 1974 between
petitioner and Velayo Export all three contracts being inextricably connected.
Since the Contract of Lease between petitioner and Salem was for a term of 25
years, then the renewed contract of lease of between petitioner and respondent
shall be for another term of 25 years. This construction of the renewal clause under
paragraph 17 of the Contract of Lease dated May 14, 1976 between petitioner and
respondent is most consistent with the intent of the parties at the time of the
execution of said Contract and most effectual in implementing the same.
In addition to challenging the exclusive right of respondent to renew the Contract of
Lease over the subject property, petitioner insists on its right to refuse the renewal
because of purported violations of the said Contract by respondent, particularly: (1)
subleasing of the premises; (2) failure to ease the problems of parking congestion at
the Domestic Airport and to provide a shopping center and sports facilities, such as
an oval track and a swimming pool; and (3) failure to pay monthly lease rentals in
the form of royalties equivalent to 1% of the gross income of respondent or in
accordance with the rates fixed in the administrative orders of petitioner.
We find no violations by the respondent of the Contract of Lease dated May 14,
1976 as to justify the revocation or refusal to renew of said Contract by petitioner.
The RTC is once again correct in its construal that paragraph 16 of the Contract of
Lease, prohibiting the subleasing of the "premises," refers only to the subject
property. We stress that when the said Contract was executed on May 14, 1976, the
"premises" leased by petitioner to respondent, and which respondent was not
allowed to sublease, is the subject property, i.e., an idle piece of land with an area of
8,481 square meters. More importantly, being the builder of the improvements on
the subject property, said improvements are owned by respondent until their turnover to petitioner at the end of the 25-year lease in 1992. As respondent is not
leasing the improvements from petitioner, then it is not subleasing the same to third
parties.
While the Contract of Lease expressly obligated respondent to build certain
improvements, such as parking, shopping mall, and sports facilities, the belated
insistence by petitioner on compliance with the same appears to be a mere
afterthought.
Article 1235 of the Civil Code states that "[w]hen the obligee accepts the
performance, knowing its incompleteness or irregularity, and without expressing any
protest or objection, the obligation is deemed fully complied with."
As aptly observed by the RTC, paragraphs 9 and 10 of the Contract of Lease
likewise expressly require respondent to submit, for prior approval by petitioner, all
construction plans on the subject property; and to complete the contemplated
improvements thereon within a year. The Contract of Lease was executed on May
14, 1976, and the one-year period expired on May 14, 1977. Yet, petitioner did not
register any protest or objection to the alleged incompleteness of or irregularity in
the performance by respondent of its obligation to build and develop improvements
on the subject property. In fact, upon the expiration of the original 25-year lease
period in February 1992, petitioner was already ready and willing to accept and
appropriate as its own the improvements built on the subject property in 1992.
Petitioner only raised the issue of the purported incompleteness/irregularity of the
said improvements when it was brought to court by respondent for refusing to renew
the lease.

Just as the RTC adjudged, no fault could be attributed to respondent for deficient
payment of lease rentals. Lease rentals were based on either the rates fixed by AO
No. 4, series of 1970, or 1% of the monthly gross income of respondent, whichever
is higher. At the very beginning of the lease, respondent had been paying monthly
lease rentals based on the rates fixed by AO No. 4, series of 1970, which amounted
to P2,205.25 per month. When requested, respondent submitted to petitioner its
gross income statements, so petitioner could very well compute the 1% royalty.
However, petitioner continued to charge respondent only P2,205.25 monthly lease
rental, which the latter faithfully paid.
Petitioner later demanded an increase in lease rentals based on subsequent
administrative issuances raising the rates for the rental of its properties. But the RTC
found that the adverted administrative orders were not published in full, thus, the
same were legally invalid within the context of Article 2 of the Civil Code which
provides that "[l]aws shall take effect after fifteen days following the completion of
their publication in the Official Gazette, unless it is otherwise provided. x x x"
In Taada v.
Tuvera,52http://sc.judiciary.gov.ph/jurisprudence/2008/april2008/173918.htm - _ftn we
enunciated that publication is indispensable in order that all statutes, including
administrative rules that are intended to enforce or implement existing laws, attain
binding force and effect, to wit:
We hold therefore that all statutes, including those of local application and private
laws, shall be published as a condition for their effectivity, which shall begin fifteen
days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by
the President in the exercise of legislative powers whenever the same are validly
delegated by the legislature or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if their purpose is to
enforce or implement existing law pursuant also to a valid delegation. 53
There is no basis for the argument of petitioner that the validity of its administrative
orders cannot be collaterally attacked. To the contrary, we have previously declared
that a party may raise the unconstitutionality or invalidity of an administrative
regulation on every occasion that said regulation is being enforced. 54 Since it is
petitioner which first invoked its administrative orders to justify the increase in lease
rentals of respondent, then respondent may raise before the court the invalidity of
said administrative orders on the ground of non-publication thereof.
Finally, petitioner cannot oppose the renewal of the lease because of estoppel. Our
following disquisition in Kalalo v. Luz55 is relevant herein:
Under Article 1431 of the Civil Code, in order that estoppel may apply the person, to
whom representations have been made and who claims the estoppel in his favor
must have relied or acted on such representations. Said article provides:
"Art. 1431. Through estoppel an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying thereon."
An essential element of estoppel is that the person invoking it has been influenced
and has relied on the representations or conduct of the person sought to be
estopped, and this element is wanting in the instant case. In Cristobal vs.
Gomez, this Court held that no estoppel based on a document can be invoked by
one who has not been misled by the false statements contained therein. And
in Republic of the Philippines vs. Garcia, et al., this Court ruled that there is no
estoppel when the statement or action invoked as its basis did not mislead the
adverse party. Estoppel has been characterized as harsh or odious, and not favored
in law. When misapplied, estoppel becomes a most effective weapon to accomplish

an injustice, inasmuch as it shuts a man's mouth from speaking the truth and debars
the truth in a particular case. Estoppel cannot be sustained by mere argument or
doubtful inference; it must be clearly proved in all its essential elements by clear,
convincing and satisfactory evidence. No party should be precluded from making out
his case according to its truth unless by force of some positive principle of law, and,
consequently, estoppel in pais must be applied strictly and should not be enforced
unless substantiated in every particular.
1wphi1

The essential elements of estoppel in pais may be considered in relation to the party
sought to be estopped, and in relation to the party invoking the estoppel in his favor.
As related to the party to be estopped, the essential elements are: (1) conduct
amounting to false representation or concealment of material facts; or at least
calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; (2) intent,
or at least expectation that his conduct shall be acted upon by, or at least influence,
the other party; and (3) knowledge, actual or constructive, of the real facts. As
related to the party claiming the estoppel, the essential elements are (1) lack of
knowledge and of the means of knowledge of the truth as the facts in questions; (2)
reliance, in good faith, upon the conduct or statements of the party to be estopped;
(3) action or inaction based thereon of such character as to change the position or
status of the party claiming the estoppel, to his injury, detriment or
prejudice.56 (Emphases ours.)
Indeed, Velayos Letters dated March 3 and 10, 1992 to petitioner may have already
expressed acquiescence to the non-renewal of the lease and turn-over of the
improvements on the subject property to petitioner. But not long thereafter,
Alomesen, the new President of respondent, already wrote another Letter dated
March 25, 1992, which revoked Velayos earlier Letters for having been sent without
authority of the Board of Directors of respondent, insisted on the renewal of the
lease, and tendered payment of past due lease rentals. Respondent, through
Alomesen, timely acted to correct Velayos mistakes. In the 15-day interval between
Velayos Letter dated March 10, 1992 and Alomesens Letter dated March 25, 1992,
there is no showing that petitioner, relying in good faith on Velayos Letters, acted or
did not act as to have caused it injury, detriment, or prejudice. There is an utter lack
of clear, convincing, and satisfactory evidence on the part of petitioner, as the party
claiming estoppel, of the second and third elements for the application of said
principle against respondent.
WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The Decision
dated January 8, 2004 of the Court Appeals in CA-G.R. CV No. 68787, which
affirmed the Decision dated October 29, 1999 of Branch 111 of the RTC of Pasay
City in Civil Case No. 8847, is hereby AFFIRMED.
SO ORDERED.
A.M. No. RTJ-08-2103
February 23, 2009
(Formerly OCA I.P.I. No. 07-2664-RTJ)
EDNA S.V. OGKA BENITO, Complainant,
vs.
RASAD G. BALINDONG, Presiding Judge, Regional Trial Court, Malabang,
Lanao del Sur, Branch 12,Respondent.
RESOLUTION
CORONA, J.:
In a complaint dated April 30, 2007, complainant Dr. Edna S.V. Ogka Benito, then
acting mayor of the Municipality of Balabagan, Lanao del Sur, charged respondent

Judge Rasad G. Balindong of the Regional Trial Court (RTC), Malabang, Lanao del
Sur, Branch 12, with gross ignorance of the law.
Complainant alleged that on May 3, 2005, she filed administrative and criminal
complaints against Mamarinta G. Macabato, then municipal treasurer of Balabagan,
Lanao del Sur, for grave misconduct in the Office of the Ombudsman-Mindanao
(Ombudsman) docketed as OMB-M-A-05-175-E. On September 15, 2005, the
Ombudsman impleaded then Mayor Hadji Amer R. Sampiano as co-respondent.
Complainant claimed that these respondents refused to pay her salary as vice
mayor since July 1, 2004 despite repeated demands.1
On May 16, 2006, the Ombudsman rendered a decision in that case finding
respondents therein guilty of conduct prejudicial to the best interest of the service
and imposing on them the penalty of suspension from office without pay for a period
of nine months. It further directed the Regional Secretary 2 of the Department of the
Interior and Local Government, Autonomous Region in Muslim Mindanao (DILGARMM) in Cotabato City to immediately implement the decision. 3
In compliance with the decision of the Ombudsman, the Regional Secretary of the
DILG-ARMM issued Department Order (D.O.) No. 2006-38 dated September 1,
2006 implementing said decision.4 Due to the suspension of Mayor Sampiano,
complainant was sworn in as acting mayor.5
Meanwhile, on September 4, 2006, respondents in OMB-M-A-05-175-E filed a
petition for certiorari and prohibition6 in the RTC of Malabang, Lanao del Sur, Branch
12. The petition was raffled to the sala of herein respondent and docketed as
Special Civil Action (SCA) No. 12-181. Their prayer was to annul and set aside D.O.
No. 2006-38 of the DILG-ARMM and prohibit its implementation. 7
On the same date, respondent issued an order granting a temporary restraining
order (TRO) effective for 72 hours directing the Regional Secretary of the DILGARMM to cease, desist and refrain from implementing the D.O. 8
In an order dated September 6, 2006, respondent extended the TRO for a period of
20 days.9
On September 25, 2006, respondent issued another order for the issuance of a writ
of preliminary injunction directing the Regional Secretary to cease, desist and refrain
from implementing D.O. No. 2006-38.
On October 5, 2006, respondent rendered an "order"/decision annulling D.O. No.
2006-38.10 This decision and the writ of preliminary injunction were annulled by the
Court of Appeals (CA) in its February 8, 2007 decision. 11The CA held that the RTC
had no jurisdiction over the petition filed by the respondents in OMB-M-A-05-175-E
pursuant to Sections 14 and 27 of Republic Act No. (RA) 6770 12 (Ombudsman Act of
1989) and Section 7, Rule III of the Rules of Procedure of the Ombudsman, as
amended by Administrative Order No. 17-03.
Complainant asserted that, despite the clear provisions of the law and procedure,
respondent took cognizance of SCA No. 12-181 and issued the TROs, writ of
preliminary injunction and October 5, 2006 decision. Hence, she submitted that
respondent should be administratively disciplined because of his gross ignorance of
the law which prejudiced the rights of her constituents in Balabagan, Lanao del
Sur. 13
Respondent countered that he issued the orders in good faith. He was not moved by
corrupt motives or improper considerations. This could be shown by the fact that
complainant filed this complaint only after eight months from the resolution of SCA
No. 12-181. Considering that complainant failed to establish bad faith or
malevolence on his part, the complaint against him should be dismissed.

The Office of the Court Administrator (OCA), in its evaluation dated September 24,
2007, found that the pertinent provisions of the law were clear. It stated that:
the issuance of a TRO and writ of preliminary injunction is not a mere deficiency
in prudence, or lapse of judgment by respondent judge but is a blatant disregard of
basic rules constitutive of gross ignorance of the law. In the first place, respondent
Judge should have refrained from taking cognizance of the said special civil action
when it was raffled to his court, he ought to know this, yet he did otherwise.
lawphil.net

It recommended that respondent be held administratively liable for gross ignorance

of the law and finedP21,000.14
We agree with the findings and evaluation of the OCA but we modify the penalty.
A patent disregard of simple, elementary and well-known rules constitutes gross
ignorance of the law.15 Judges are expected to exhibit more than just cursory
acquaintance with laws and procedural rules.16 They must know the law and apply it
properly in good faith.17 They are likewise expected to keep abreast of prevailing
jurisprudence.18 For a judge who is plainly ignorant of the law taints the noble office
and great privilege vested in him. Respondents gross ignorance of the law
constituted inexcusable incompetence which was anathema to the effective
dispensation of justice.
In SCA No. 12-181, respondents in OMB-M-A-05-175-E sought to annul and set
aside D.O. No. 2006-38 of the DILG-ARMM and prohibit its implementation. Since
D.O. No. 2006-38 was issued merely to implement the decision of the Ombudsman,
respondents in OMB-M-A-05-175-E were actually questioning this decision and
seeking to enjoin its implementation by filing a petition for certiorari and prohibition in
the RTC.
This is not allowed under the law, rules and jurisprudence. Under Sections 14 and
27 of RA 6770, no court shall hear any appeal or application for a remedy against
the decision or findings of the Ombudsman, except the Supreme Court, on a pure
question of law.
Section 14. Restrictions. No writ of injunction shall be issued by any court to
delay an investigation being conducted by the Ombudsman under this Act, unless
there is a prima facie evidence that the subject matter of the investigation is outside
the jurisd7iction of the Office of the Ombudsman.
No court shall hear any appeal or application for remedy against the decision
or findings of the Ombudsman, except the Supreme Court, on [a] pure
question of law.
xxx xxx xxx
Section 27. Effectivity and Finality of Decisions. (1) All provisionary orders of the
Office of the Ombudsman are immediately effective and executory. A motion for
reconsideration of any order, directive or decision of the Office of the Ombudsman
must be filed within five (5) days after receipt of written notice and shall be
entertained only on any of the following grounds:
xxx xxx xxx
Findings of fact by the Office of the Ombudsman when supported by substantial
evidence are conclusive. Any order, directive or decision imposing the penalty of
public censure or reprimand, suspension of not more than one (1) month's salary
shall be final and unappealable.

In all administrative disciplinary cases, orders, directives, or decisions of the

Office of the Ombudsman may be appealed to the Supreme Court by filing a
petition for certiorari within ten (10) days from receipt of the written notice of
the order, directive or decision or denial of the motion for reconsideration in
accordance with Rule 45 of the Rules of Court.
1avvphi1

The above rules may be amended or modified by the Office of the

Ombudsman as the interest of justice may require.
However, in Fabian v. Desierto,19 we enunciated the rule that appeals from the
decisions of the Ombudsman in administrative disciplinary cases should be taken
to the CA. Following our ruling in Fabian, the Ombudsman issued Administrative
Order No. 1720 amending Section 7, Rule III21 of Administrative Order No. 07:22
Section 7. Finality and execution of decision. Where the respondent is absolved
of the charge, and in case of conviction where the penalty imposed is public censure
or reprimand, suspension of not more than one month, or a fine not equivalent to
one month salary, the decision shall be final, executory and unappealable. In all
other cases, the decision may be appealed to the Court of Appeals on a
verified petition for review under the requirements and conditions set forth in
Rule 43 of the Rules of Court, within fifteen (15) days from receipt of the
written Notice of the Decision or Order denying the Motion for
Reconsideration.
An appeal shall not stop the decision from being executory. In case the penalty is
suspension or removal and the respondent wins such appeal, he shall be
considered as having been under preventive suspension and shall be paid the
salary and such other emoluments that he did not receive by reason of the
suspension or removal.
A decision of the Office of the Ombudsman in administrative cases shall be
executed as a matter of course. The Office of the Ombudsman shall ensure that the
decision shall be strictly enforced and properly implemented. The refusal or failure
by any officer without just cause to comply with an order of the Office of the
Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for
disciplinary action against said officer. (Emphasis supplied)
These provisions clearly show that respondent had no jurisdiction to take
cognizance of the petition and to issue his subsequent orders. He proceeded
against settled doctrine, an act constituting gross ignorance of the law or
procedure.23
Respondents defense of good faith has no merit. Indeed, good faith and absence of
malice, corrupt motives or improper considerations, are sufficient defenses in which
a judge charged with ignorance of the law can find refuge. 24 However
good faith in situations of fallible discretion inheres only within the parameters of
tolerable judgment and does not apply where the issues are so simple and the
applicable legal principles evident and basic as to be beyond possible margins of
error.25
If ordinary people are presumed to know the law,26 judges are duty-bound to actually
know and understand it. A contrary rule will not only lessen the faith of the people in
the courts but will also defeat the fundamental role of the judiciary to render justice
and promote the rule of law.
Gross ignorance of the law or procedure is a serious charge under Section 8, Rule
140 of the Rules of Court, as amended by A.M. No. 01-8-10-SC, 27 punishable by
either dismissal from service, suspension or a fine of more than P20,000 but not

exceeding P40,000.28 Since this is respondents first offense, we deem it proper to

impose upon him a fine of P30,000.
Members of the bench are enjoined to behave at all times in a way that promotes
public confidence in the integrity and impartiality of the judiciary.29 Respondent's act
of taking cognizance of a case which was plainly not within his courts jurisdiction
failed to meet the high standards of judicial conduct.
Pursuant to A.M. No. 02-9-02-SC,30 this administrative case against respondent as a
judge, based on grounds which are also grounds for disciplinary action against
members of the Bar, shall be considered as disciplinary proceedings against such
judge as a member of the Bar.31
When respondent entertained SCA No. 12-181, issued a TRO and writ of preliminary
injunction and subsequently granted the petition, he acted contrary to law, rules and
jurisprudence. In doing so, he consented to the filing of an unlawful suit, in violation
of the Lawyers Oath. A judge who falls short of the ethics of the judicial office tends
to diminish the peoples respect for the law and legal processes. 32 He also fails to
observe and maintain the esteem due to the courts and to judicial officers. 33 Thus,
respondent violated Canons 1 and 11 of the Code of Professional Responsibility
(CPR):
Canon 1. A lawyer shall uphold the Constitution, obey the laws of the land
and promote respect for law and legal processes.
xxx xxx xxx
Canon 11. A lawyer shall observe and maintain the respect due to the courts
and to judicial officers and should insist on similar conduct by others. (Emphasis
supplied)
Respondents gross ignorance of the law also runs counter to Canons 5 and 6 of the
CPR:
Canon 5. A lawyer shall keep abreast of legal developments, participate in
continuing legal education programs, support efforts to achieve high standards in
law schools as well as in the practical training of law students and assist in
disseminating information regarding the law and jurisprudence.
Canon 6. These Canons shall apply to lawyers in government service in the
discharge of their official tasks. (Emphasis supplied)
Judges should be well-informed of existing laws, recent amendments and current
jurisprudence, in keeping with their sworn duty as members of the bar (and bench)
to keep abreast of legal developments.
For such violation of the Lawyers Oath and Canons 1, 5, 6 and 11 of the CPR,
respondent is fined in the amount of P10,000.34
WHEREFORE, Rasad G. Balindong, Presiding Judge of the Regional Trial Court,
Malabang, Lanao del Sur, Branch 12 is hereby found GUILTY of gross ignorance of
the law. He is FINED P30,000.
Respondent is further hereby FINED P10,000 for his violation of the Lawyers Oath
and Canons 1, 5, 6 and 11 of the Code of Professional Responsibility.
He is STERNLY WARNED that the commission of the same or similar acts shall be
dealt with more severely.

Let this resolution be attached to the personal files of respondent in the Office of the
Court Administrator and the Office of the Bar Confidant.
SO ORDERED.
G.R. No. 148376. March 31, 2005
LEONARDO ACABAL and RAMON NICOLAS, Petitioners,
vs.
VILLANER ACABAL, EDUARDO ACABAL, SOLOMON ACABAL, GRACE
ACABAL, MELBA ACABAL, EVELYN ACABAL, ARMIN ACABAL, RAMIL
ACABAL, and BYRON ACABAL, Respondents.
DECISION
CARPIO MORALES, J.:
Before this Court is a Petition for Review on Certiorari of the February 15, 2001
Decision1 of the Court of Appeals reversing that of the Regional Trial Court (RTC) of
Dumaguete City, Branch 35.2
In dispute is the exact nature of the document3 which respondent Villaner Acabal
(Villaner) executed in favor of his godson-nephew-petitioner Leonardo Acabal
(Leonardo) on April 19, 1990.
Villaners parents, Alejandro Acabal and Felicidad Balasabas, owned a parcel of
land situated in Barrio Tanglad, Manjuyod, Negros Oriental, containing an area of
18.15 hectares more or less, described in Tax Declaration No. 15856. 4 By a Deed of
Absolute Sale dated July 6, 1971,5 his parents transferred for P2,000.00 ownership
of the said land to him, who was then married to Justiniana Lipajan. 6
Sometime after the foregoing transfer, it appears that Villaner became a widower.
Subsequently, he executed on April 19, 1990 a deed 7 conveying the same
property8 in favor of Leonardo.
Villaner was later to claim that while the April 19, 1990 document he executed now
appears to be a "Deed of Absolute Sale" purportedly witnessed by a Bais City trial
court clerk Carmelo Cadalin and his wife Lacorte, what he signed was a document
captioned "Lease Contract"9 (modeled after a July 1976 lease agreement10 he had
previously executed with previous lessee, Maria Luisa Montenegro 11) wherein he
leased for 3 years the property to Leonardo at P1,000.00 per hectare12 and which
was witnessed by two women employees of one Judge Villegas of Bais City.
Villaner thus filed on October 11, 1993 a complaint13 before the Dumaguete RTC
against Leonardo and Ramon Nicolas to whom Leonardo in turn conveyed the
property, for annulment of the deeds of sale.
At the witness stand, Villaner declared:
Q: It appears, Mr. Acabal, that you have signed a document of sale with the
defendant Leonardo Acabal on April 19, 1990, please tell the court whether you have
really agreed to sell this property to the defendant on or before April 19, 1990?
A: We had some agreement but not about the selling of this property.
Q: What was your agreement with the defendant Leonardo Acabal?
A: Our agreement [was] that he will just rent. 14

xxx
Q: Now, please tell the court how were you able to sign this document on April 19,
1990?
A: I do not know why I signed that, that is why I am puzzled.
Q: Why, did you not read the contents of this document?
A: I have not read that. I only happened to read the title of the Lease Contract.
Q: And do you recall who were the witnesses of the document which you
signed in favor of Leonardo Acabal?
A: Employees of Judge Villegas of Bais City.
Q: Did you see them sign that document?
A: Yes, sir.
Q: These signatures appearing in this document marked as Exhibit "C" for the
plaintiff and Exhibit "1" for the defendant, please examine over (sic) these
signatures if these were the signatures of these witnesses who signed this
document?
A: These are not the signatures of the two women.
Q: And after signing this document on April 19, 1990, did you appear before a notary
public to have this notarized?
A: No, I went home to San Carlos.15
xxx
Q: According to this document, you sell (sic) this property at P10,000.00, did you sell
this property to Leonardo Acabal?
A: No, sir.
Q: How about after April 19, 1990, did you receive this amount from Leonardo
Acabal?
A: No, sir.16
xxx
Q: Now you said that on May 25, 1990, Leonardo Acabal did not pay the amount
that he promised to you, what did you do of (sic) his refusal to pay that amount?
A: I went to Mr. [Carmelo] Mellie Cadalin because he was the one who
prepared the papers and to ask Leonardo Acabal why he will not comply with
our agreement.
Q: By the way, who is this Mellie Cadalin?
A: Mellie Cadalin is also working in the sala of Judge Villegas.
Q: Who requested Mellie Cadalin to prepare this document?
A: Maybe it was Leonardo Acabal.

Q: By the way, when for the first time did you talk to Leonardo Acabal regarding your
agreement to lease this property to him?
A: March 14, 1990, in San Carlos.
Q: And what document did you give to him in order that that document will be
prepared?
A: I have given (sic) some papers and contract of lease that I have signed to
(sic) Mrs. Montenegro.17(Emphasis and underscoring supplied)
xxx
Q: Now, Carmelo Cadalin ["Mellie"] also testified before this court that in fact he
identified the document marked as Exhibit "C" for the plaintiff that what you executed
on April 19, 1990 was a deed of sale and not a contract of lease, what can you say
to that statement?
A: That is a lie.
Q: And whats the truth then?
A: What really (sic) I have signed was the document of lease contract.
Q: Now, can you explain to the Honorable Court why it so happened that on
April 19, you were able to sign a deed of sale?
A: What I can see now is that perhaps those copies of the deed of sale were
placed by Mr. Cadalin under the documents which I signed the lease contract.
But why is it that it has already a deed of sale when what I have signed was only the
lease of contract or the contract of lease.
Q: Now, Mr. Cadalin also stated before this court that he handed over to you this
Deed of Sale marked as Exhibit "C" and according to him you read this document,
what can you say to this statement?
A: Yes, there was a document that he gave me to read it (sic)but it was a contract of
lease.
Q: How sure are you that what you signed on April 19, 1990 was really a contract of
lease and not a contract of sale?
A: Because when I signed the contract of lease the witnesses that witnessed
my signing the document were the employees of Judge Villegas and then I am
now surprised why in the deed of sale which I purportedly signed are
witnessed by Carmelo Cadalin and his wife Lacorte.18 (Emphasis and
underscoring supplied)
On the other hand, Leonardo asserts that what Villaner executed was a Deed of
Absolute Sale for a consideration of P10,000.00 which he had already paid,19 and as
he had become the absolute owner of the property, he validly transferred it to
Ramon Nicolas on May 19, 1990.20
Carmelo Cadalin who admittedly prepared the deed of absolute sale and who
appears as a witness, along with his wife, to the execution of the document
corroborated Leonardos claim:
Q: Mr. Cadalin, do you know the plaintiff Villaner Acabal?
A: Yes, I know.21

xxx
Q: And I would like to ask you Mr. witness why do you know Villaner Acabal?
A: At the time that he went to our house together with Leonardo Acabal he
requested me to prepare a deed of sale as regards to a sale of the property. 22
xxx
Q: And after they requested you to prepare a document of sale, what did you
do?
A: At first I refused to [do] it because I have so many works to do, but then
they insisted so I prepared the deed.
Q: After you prepared the document, what did you do?
A: After I prepared it I gave it to him so that he could read the same.
Q: When you say "him," whom do you refer to?
A: Villaner Acabal.
Q: And did Villaner Acabal read the document you prepared?
A: Yes, he read it.
Q: And after reading it what did Villaner Acabal do?
A: He signed the document.
Q: Showing to you a document which is marked Exhibit C for the plaintiff and
Exhibit 1 for the defendants, please tell the Honorable Court what relation this
document has to the document which you described earlier?
COURT INTERPRETER:
Witness is confronted with the said document earlier marked as Exhibit C for
the prosecution and Exhibit 1 for the defense.
A: Yes, this is the one.23
xxx
Q: Also stated in the document is the phrase "Signed in the presence of" and
there is a number and then two signatures, could you please examine the
document and say whether these signatures are familiar to you?
A: Yes, number one is my signature and number 2 is the signature of my wife
as witness.24
xxx
Q: After Villaner Acabal signed the document, what did Villaner Acabal do?
A: He was given the payment by Leonardo Acabal. 25
xxx

Q: Aside from the document, deed of absolute sale, that you mentioned earlier that
you prepared for Villaner Acabal and Leonardo Acabal, what other documents, if
any, did you prepare for them?
A: Affidavit of non-tenancy and aggregate area.26 (Emphasis and underscoring
supplied)
The complaint was later amended27 to implead Villaners eight children as party
plaintiffs, they being heirs of his deceased wife.
By Decision of August 8, 1996, the trial court found for the therein defendants-herein
petitioners Leonardo and Ramon Nicolas and accordingly dismissed the complaint.
Villaner et al. thereupon brought the case on appeal to the Court of Appeals which
reversed the trial court, it holding that the Deed of Absolute Sale executed by
Villaner in favor of Leonardo was simulated and fictitious." 28
Hence, Leonardo and Ramon Nicolas present petition for review
on certiorari,29 anchored on the following assignments of error:
I.
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT
RULED THAT RESPONDENT VILLANER ACABAL WAS DECEIVED INTO
SIGNING THE DEED OF ABSOLUTE SALE WHEN THE LATTER KNOWINGLY,
FREELY AND VOLUNTARILY EXECUTED THE SAME IN FAVOR OF PETITIONER
LEONARDO ACABAL.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
CONSIDERATION OF THE DEED OF ABSOLUTE SALE IN THE AMOUNT OF TEN
THOUSAND PESOS (P10,0000.00) WAS "UNUSUALLY LOW AND INADEQUATE,"
ESPECIALLY TAKING INTO ACCOUNT THE LOCATION OF THE SUBJECT
PROPERTY.
III.
THE COURT OF APPEALS ERRED WHEN IT FAILED TO CONSIDER WHY
RESPONDENT VILLANER ACABAL ONLY QUESTIONED THE POSSESSION AND
OWNERSHIP OF PETITIONER RAMON NICOLAS IN COURT AFTER THE
LATTER WAS IN OPEN, CONTINUOUS AND PEACEFUL POSSESSION OF THE
SUBJECT PROPERTY FOR ALMOST THREE (3) YEARS.
IV.
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN
IT FAILED TO DECLARE PETITIONER RAMON NICOLAS AS A BUYER IN GOOD
FAITH AS THE LATTER TOOK THE NECESSARY STEPS AN ORDINARY AND
PRUDENT MAN WOULD HAVE TAKEN BEFORE BUYING THE QUESTIONED
PROPERTY.
V.
THE COURT OF APPEALS ERRED IN RULING IN FAVOR OF RESPONDENT
VILLANER ACABAL WHEN THE LATTER DID NOT PRESENT A SINGLE
WITNESS TO TESTIFY ON THE ALLEGED CONTRACT OF LEASE WHICH HE
ALLEGEDLY SIGNED AND WITNESSED BY THE EMPLOYEES OF JUDGE
VILLEGAS.

VI.
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN
IT RULED THAT RULE 8, SECTION 8 OF THE 1987 (sic) RULE (sic) OF CIVIL
PROCEDURE IS NOT APPLICABLE IN THE CASE AT BAR, CONTRARY TO THE
RULING OF THE LOWER COURT.
VII.
THE COURT OF APPEALS ERRED WHEN IT ORDERED PETITIONERS TO PAY
RESPONDENTS "JOINTLY AND SEVERALLY BY WAY OF RENTAL THE SUM OF
P10,000.00 PER YEAR FROM 1990 UP TO THE TIME THEY VACATE THE
PREMISES."30
Procedurally, petitioners contend that the Court of Appeals erred when it failed to
apply Section 8, Rule 8 of the Rules of Court, respondent Villaner having failed to
deny under oath the genuineness and due execution of the April 19, 1990 Deed of
Absolute Sale.
Petitioners contention does not persuade. The failure to deny the genuineness and
due execution of an actionable document does not preclude a party from arguing
against it by evidence of fraud, mistake, compromise, payment, statute of limitations,
estoppel, and want of consideration.31
On the merits, this Court rules in petitioners favor.
It is a basic rule in evidence that the burden of proof lies on the party who makes the
allegations32 ei incumbit probatio, qui dicit, non qui negat; cum per rerum naturam
factum negantis probatio nulla sit.33 If he claims a right granted by law, he must
prove it by competent evidence, relying on the strength of his own evidence and not
upon the weakness of that of his opponent.
More specifically, allegations of a defect in or lack of valid consent to a contract by
reason of fraud or undue influence are never presumed but must be established not
by mere preponderance of evidence but by clear and convincing evidence. 34 For the
circumstances evidencing fraud and misrepresentation are as varied as the people
who perpetrate it in each case, assuming different shapes and forms and may be
committed in as many different ways. 35
In the case at bar, it was incumbent on the plaintiff-herein respondent Villaner to
prove that he was deceived into executing the Deed of Absolute Sale. Except for his
bare allegation that the transaction was one of lease, he failed to adduce evidence
in support thereof. His conjecture that "perhaps those copies of the deed of sale
were placed by Mr. Cadalin under the documents which I signed the contract of
lease,"36 must fail, for facts not conjectures decide cases.
Attempting to seek corroboration of his account, Villaner presented Atty. Vicente
Real who notarized the document. While on direct examination, Atty. Real virtually
corroborated Villaners claim that he did not bring the document to him for
notarization,37 on cross-examination, Atty. Real conceded that it was impossible to
remember every person who would ask him to notarize documents:
Q: And in the course of your notarization, can you remember each and every
face that come (sic) to you for notarization?
A: No, it is impossible.
Q: In the case of Villaner Acabal which you have his document notarized (sic)
in 1990, can you remember his face when he came to you?

A: No.
Q: And can you also say, if a person who came to you having a document to
be notarized and if he will appear again after a month, can you remember
whether he was the one who came to you?
A: Not so much because everyday there are many people who appear with
documents to be notarized,
Q: So, it is safe to say that if Villaner Acabal came to you on April 25 or rather
April 16, 1990 andhave (sic) his document notarized if he comes back in, say
May 25, can you still remember if he was the one who came to you?
A: I cannot be sure but at least, there are times I can remember persons
because he seems to be close to me already.
Q: Is this Villaner close to you?
A: Because he has been frequenting the house/asking for a copy of the document.
Q: So, he became close to you after you notarized the document?
A: Yes.38 (Emphasis and underscoring supplied)
On Villaners claim that two women employees of Judge Villegas signed as
witnesses to the deed39 but that the signatures appearing thereon are not those of
said witnesses,40 the same must be discredited in light of his unexplained failure to
present such alleged women employee-witnesses.
In another vein, Villaner zeroes in on the purchase price of the property
P10,000.00 which to him was unusually low if the transaction were one of sale.
To substantiate his claim, Villaner presented Tax Declarations covering the property
for the years 1971,41 1974,42 1977,43 1980,44 1983,45 1985,46 as well as a Declaration
of Real Property executed in 1994.47
It bears noting, however, that Villaner failed to present evidence on the fair market
value of the property as of April 19, 1990, the date of execution of the disputed deed.
Absent any evidence of the fair market value of a land as of the time of its sale, it
cannot be concluded that the price at which it was sold was
inadequate.48 Inadequacy of price must be proven because mere speculation or
conjecture has no place in our judicial system.49
Victor Ragay, who was appointed by the trial court to conduct an ocular
inspection50 of the property and to investigate matters relative to the case, 51 gave an
instructive report dated December 3, 1994,52 the pertinent portions of which are
hereby reproduced verbatim:
a) Only three (3) to four (4) hectares of the eighteen (18) were planted to sugar
cane, the rest was never cultivated;
b) the soil is reddish and somewhat sandy in composition;
c) the soil contains so much limestones (rocks consisting mainly of calcium
carbonate);
d) no part of the land in question is plain or flat, contrary to claim of the plaintiff that
almost 10 hectares of the land in question is plain or flat;

e) some areas, eastward of and adjacent of the land in question (mistakenly to be

owned by the defendant Nicolas) were planted to sugar cane by the owners
Kadusales;
f) the road going to the land in question (as claimed to be the road) is no longer
passable because it has been abandoned and not maintained by anyone, thus it
makes everything impossible for anybody to get and haul the sugar cane from the
area;
g) the Commissioner has discovered some stockpiles of abandoned harvested
sugar canes left to rot, along the side of the road, undelivered to the milling site
because of the difficulty in bringing up trucks to the scene of the harvest;
h) the sugarcanes presently planted on the land in question at the time of the ocular
inspection were three (3) feet in height and their structural built was thin or lean;
i) Most of the part of the 18 hectares is not planted or cultivated because the same is
too rocky and not suitable for planting to sugarcane. 53
Additionally, Ragay reported that one Anatolio Cabusog recently purchased a 6hectare property adjoining that of the subject property for
only P1,600.0054 or P266.67 per hectare. Given that, had the 18-hectare subject
property been sold at about the same time, it would have fetched the amount
of P4,800.00,55 hence, the P10,000.00 purchase price appearing in the questioned
April 19, 1990 document is more than reasonable.
Even, however, on the assumption that the price of P10,000.00 was below the fair
market value of the property in 1990, mere inadequacy of the price per se will not
rule out the transaction as one of sale. For the price must begrossly inadequate or
shocking to the conscience such that the mind revolts at it and such that a
reasonable man would neither directly nor indirectly be likely to consent to it. 56
Still in another vein, Villaner submits that Leonardos transfer of the property to
Nicolas in a span of one month for a profit of P30,000.00 conclusively reflects
Leonardos fraudulent intent. This submission is a non sequitur.
As for Villaners argument that the sale of the property to Leonardo and the
subsequent sale thereof to Nicolas are void for being violative of the retention limits
imposed by Republic Act No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law, the same fails. The pertinent provisions of said law read:
SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person
may retain, directly or indirectly, any public or agricultural land, the size of which may
vary according to factors governing a viable family-sized farm, such as commodity
produced, terrain, infrastructure, and soil fertility as determined by the Presidential
Agrarian Reform Council (PARC) created hereunder, but in no case shall retention
by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to
each child of the landowner, subject to the following qualifications: (1) that he is at
least fifteen (15) years of age; and (2) that he is tilling the land or directly managing
the farm: Provided, That landowners whose lands have been covered by
Presidential Decree No. 27 shall be allowed to keep the areas originally retained by
them thereunder:57 Provided further, That original homestead grantees or direct
compulsory heirs who still own the original homestead at the time of the approval of
this Act shall retain the same areas as long as they continue to cultivate said
homestead.
xxx
Upon the effectivity of this Act, any sale, disposition, lease, management,
contract or transfer of possession of private lands executed by the original

landowner in violation of this Act shall be null and void: Provided, however, that
those executed prior to this Act shall be valid only when registered with the Register
of Deeds within a period of three (3) months after the effectivity of this Act.
Thereafter, all Registers of Deeds shall inform the DAR within thirty (30) days of any
transaction involving agricultural lands in excess of five (5) hectares.
xxx
SECTION 70. Disposition of Private Agricultural Lands. The sale or disposition of
agricultural lands retained by a land owner as a consequence of Section 6 hereof
shall be valid as long as the total landholdings that shall be owned by the transferee
thereof inclusive of the land to be acquired shall not exceed the landholding ceilings
provided for in this Act.
Any sale or disposition of agricultural lands after the effectivity of this Act
found to be contrary to the provisions hereof shall be null and void.
Transferees of agricultural lands shall furnish the appropriate Register of Deeds and
the BARC an affidavit attesting that his total landholdings as a result of the said
acquisition do not exceed the landholding ceiling. The Register of Deeds shall not
register the transfer of any agricultural land without the submission of his sworn
statement together with proof of service of a copy thereof to the BARC. (Emphasis
and underscoring supplied)
As the above-quoted provisions of the Comprehensive Agrarian Reform Law show,
only those private lands devoted to or suitable for agriculture are covered by it. 58 As
priorly related, Victor Ragay, who was appointed by the trial court to conduct an
ocular inspection of the property, observed in his report that only three (3) to four (4)
hectares were planted with sugarcane while the rest of the property was not suitable
for planting as the soil was full of limestone.59 He also remarked that the sugarcanes
were only 3 feet in height and very lean,60 whereas sugarcanes usually grow to a
height of 3 to 6 meters (about 8 to 20 feet) and have stems 2 to 5 centimeters (1-2
inches) thick.61
It is thus gathered that the property was not suitable for agricultural purposes. In any
event, since the area devoted to the planting of sugarcane, hence, suitable for
agricultural purposes, comprises only 4 hectares at the most, it is less than the
maximum retention limit prescribed by law. There was then no violation of the
Comprehensive Agrarian Reform Law.
Even assuming that the disposition of the property by Villaner was contrary to law,
he would still have no remedy under the law as he and Leonardo were in pari
delicto, hence, he is not entitled to afirmative relief one who seeks equity and
justice must come to court with clean hands. In pari delicto potior est conditio
defendentis.62
The proposition is universal that no action arises, in equity or at law, from an
illegal contract; no suit can be maintained for its specific performance, or to
recover the property agreed to be sold or delivered, or the money agreed to be
paid, or damages for its violation. The rule has sometimes been laid down as
though it were equally universal, that where the parties are in pari delicto, no
affirmative relief of any kind will be given to one against the other.63 (Emphasis and
underscoring supplied)
The principle of pari delicto is grounded on two premises: first, that courts should not
lend their good offices to mediating disputes among wrongdoers; 64 and second, that
denying judicial relief to an admitted wrongdoer is an effective means of deterring
illegality.65 This doctrine of ancient vintage is not a principle of justice but one of
policy as articulated in 1775 by Lord Mansfield in Holman v. Johnson:66

The objection, that a contract is immoral or illegal as between the plaintiff and
defendant, sounds at all times very ill in the mouth of the defendant. It is not for his
sake, however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary to the real
justice, as between him and the plaintiff, by accident, if I may so say. The principle of
public policy is this; ex dolo malo non oritur actio.67 No court will lend its aid to a man
who founds his cause of action upon an immoral or an illegal act. If, from the
plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi
causa,68 or the transgression of a positive law of this country, there the court says he
has no right to be assisted. It is upon that ground the court goes; not for the sake of
the defendant, but because they will not lend their aid to such a plaintiff. So if the
plaintiff and the defendant were to change sides, and the defendant was to bring his
action against the plaintiff, the latter would then have the advantage of it; for where
both are equally in fault potior est conditio defendentis.69
Thus, to serve as both a sanction and as a deterrent, the law will not aid either party
to an illegal agreement and will leave them where it finds them.
The principle of pari delicto, however, is not absolute, admitting an exception under
Article 1416 of the Civil Code.
ART. 1416. When the agreement is not illegal per se but is merely prohibited, and
the prohibition by the law is designed for the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover what he has paid or delivered.
Under this article, recovery for what has been paid or delivered pursuant to an
inexistent contract is allowed only when the following requisites are met: (1) the
contract is not illegal per se but merely prohibited; (2) the prohibition is for the
protection of the plaintiffs; and (3) if public policy is enhanced thereby.70 The
exception is unavailing in the instant case, however, since the prohibition is clearly
not for the protection of the plaintiff-landowner but for the beneficiary farmers. 71
In fine, Villaner is estopped from assailing and annulling his own deliberate acts. 72
More. Villaner cannot feign ignorance of the law, nor claim that he acted in good
faith, let alone assert that he is less guilty than Leonardo. Under Article 3 of the Civil
Code, "ignorance of the law excuses no one from compliance therewith."
And now, Villaners co-heirs claim that as co-owners of the property, the Deed of
Absolute Sale executed by Villaner in favor of Leonardo does not bind them as they
did not consent to such an undertaking. There is no question that the property is
conjugal. Article 160 of the Civil Code73 provides:
ART. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the
wife.74
The presumption, this Court has held, applies to all properties acquired during
marriage. For the presumption to be invoked, therefore, the property must be shown
to have been acquired during the marriage.75
In the case at bar, the property was acquired on July 6, 1971 during Villaners
marriage with Justiniana Lipajan. It cannot be seriously contended that simply
because the tax declarations covering the property was solely in the name of
Villaner it is his personal and exclusive property.
In Bucoy v. Paulino76 and Mendoza v. Reyes77 which both apply by analogy, this
Court held that registration alone of the properties in the name of the husband does
not destroy the conjugal nature of the properties. 78 What is material is the time when

the land was acquired by Villaner, and that was during the lawful existence of his
marriage to Justiniana.
Since the property was acquired during the existence of the marriage of Villaner and
Justiniana, the presumption under Article 160 of the Civil Code is that it is the
couples conjugal property. The burden is on petitioners then to prove that it is not.
This they failed to do.
The property being conjugal, upon the death of Justiniana Lipajan, the conjugal
partnership was terminated.79With the dissolution of the conjugal partnership,
Villaners interest in the conjugal partnership became actual and vested with respect
to an undivided one-half portion.80 Justiniana's rights to the other half, in turn, vested
upon her death to her heirs81 including Villaner who is entitled to the same share as
that of each of their eight legitimate children. 82 As a result then of the death of
Justiniana, a regime of co-ownership arose between Villaner and his co-heirs in
relation to the property.83
With respect to Justinianas one-half share in the conjugal partnership which her
heirs inherited, applying the provisions on the law of succession, her eight children
and Villaner each receives one-ninth (1/9) thereof. Having inherited one-ninth (1/9)
of his wifes share in the conjugal partnership or one eighteenth (1/18) 84 of the entire
conjugal partnership and is himself already the owner of one half (1/2) or nineeighteenths (9/18), Villaners total interest amounts to ten-eighteenths (10/18) or
five-ninths (5/9).
While Villaner owns five-ninths (5/9) of the disputed property, he could not claim title
to any definite portion of the community property until its actual partition by
agreement or judicial decree. Prior to partition, all that he has is an ideal or abstract
quota or proportionate share in the property.85 Villaner, however, as a co-owner of
the property has the right to sell his undivided share thereof. The Civil Code
provides so:
ART. 493. Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or mortgage
it, and even substitute another person in its enjoyment, except when personal rights
are involved. But the effect of the alienation or the mortgage, with respect to the coowners, shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership.
Thus, every co-owner has absolute ownership of his undivided interest in the coowned property and is free to alienate, assign or mortgage his interest except as to
purely personal rights. While a co-owner has the right to freely sell and dispose of
his undivided interest, nevertheless, as a co-owner, he cannot alienate the shares of
his other co-owners nemo dat qui non habet.86
Villaner, however, sold the entire property without obtaining the consent of the other
co-owners. Following the well-established principle that the binding force of a
contract must be recognized as far as it is legally possible to do so quando res
non valet ut ago, valeat quantum valere potest 87 the disposition affects only
Villaners sharepro indiviso, and the transferee gets only what corresponds to his
grantors share in the partition of the property owned in common. 88
As early as 1923, this Court has ruled that even if a co-owner sells the whole
property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale. This is because under the aforementioned
codal provision, the sale or other disposition affects only his undivided share and the
transferee gets only what would correspond to this grantor in the partition of the
thing owned in common. Consequently, by virtue of the sales made by Rosalia and
Gaudencio Bailon which are valid with respect to their proportionate shares, and the
subsequent transfers which culminated in the sale to private respondent Celestino

Afable, the said Afable thereby became a co-owner of the disputed parcel of land as
correctly held by the lower court since the sales produced the effect
of substituting the buyers in the enjoyment thereof.
From the foregoing, it may be deduced that since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the consent
of the other co-owners is not null and void. However, only the rights of the co-ownerseller are transferred., thereby making the buyer a co-owner of the property.
The proper action in cases like this is not for the nullification of the sale or the
recovery of possession of the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their shares, but the DIVISION
of the common property as if it continued to remain in the possession of the coowners who possessed and administered it.89
Thus, it is now settled that the appropriate recourse of co-owners in cases where
their consent were not secured in a sale of the entire property as well as in a sale
merely of the undivided shares of some of the co-owners is an action for PARTITION
under Rule 69 of the Revised Rules of Court. Neither recovery of possession nor
restitution can be granted since the defendant buyers are legitimate proprietors and
possessors in joint ownership of the common property claimed. 90 (Italics in the
original; citations omitted; underscoring supplied)
This Court is not unmindful of its ruling in Cruz v. Leis91 where it held:
It is conceded that, as a rule, a co-owner such as Gertrudes could only dispose of
her share in the property owned in common. Article 493 of the Civil Code provides:
xxx
Unfortunately for private respondents, however, the property was registered in TCT
No. 43100 solely in the name of "Gertrudes Isidro, widow." Where a parcel of land,
forming part of the undistributed properties of the dissolved conjugal partnership of
gains, is sold by a widow to a purchaser who merely relied on the face of the
certificate of title thereto, issued solely in the name of the widow, the purchaser
acquires a valid title to the land even as against the heirs of the deceased spouse.
The rationale for this rule is that "a person dealing with registered land is not
required to go behind the register to determine the condition of the property. He is
only charged with notice of the burdens on the property which are noted on the face
of the register or the certificate of title. To require him to do more is to defeat one of
the primary objects of the Torrens system."92 (Citation omitted)
Cruz, however, is not applicable for the simple reason that in the case at bar the
property in dispute is unregistered. The issue of good faith or bad faith of a buyer is
relevant only where the subject of the sale is a registered land but not where the
property is an unregistered land.93 One who purchases an unregistered land does so
at his peril.94 Nicolas claim of having bought the land in good faith is thus irrelevant. 95
WHEREFORE, the petition is GRANTED. The Court of Appeals February 15, 2001
Decision in CA-G.R. CV No. 56148 is REVERSED and SET ASIDE and another is
rendered declaring the sale in favor of petitioner Leonardo Acabal and the
subsequent sale in favor of petitioner Ramon Nicolas valid but only insofar as fiveninths (5/9) of the subject property is concerned.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 137873

April 20, 2001

D. M. CONSUNJI, INC., petitioner,

vs.
COURT OF APPEALS and MARIA J. JUEGO, respondents.
KAPUNAN, J.:
At around 1:30 p.m., November 2, 1990, Jose Juego, a construction worker of D. M.
Consunji, Inc., fell 14 floors from the Renaissance Tower, Pasig City to his death.
PO3 Rogelio Villanueva of the Eastern Police District investigated the tragedy and
filed a report dated November 25, 1990, stating that:
x x x. [The] [v]ictim was rushed to [the] Rizal Medical Center in Pasig, Metro
Manila where he was pronounced dead on arrival (DOA) by the attending
physician, Dr. Errol de Yzo[,] at around 2:15 p.m. of the same date.
Investigation disclosed that at the given time, date and place, while victim
Jose A. Juego together with Jessie Jaluag and Delso Destajo [were]
performing their work as carpenter[s] at the elevator core of the 14 th floor of
the Tower D, Renaissance Tower Building on board a [p]latform made of
channel beam (steel) measuring 4.8 meters by 2 meters wide with pinulid
plywood flooring and cable wires attached to its four corners and hooked at
the 5 ton chain block, when suddenly, the bolt or pin which was merely
inserted to connect the chain block with the [p]latform, got loose xxx causing
the whole [p]latform assembly and the victim to fall down to the basement of
the elevator core, Tower D of the building under construction thereby crushing
the victim of death, save his two (2) companions who luckily jumped out for
safety.
It is thus manifest that Jose A. Juego was crushed to death when the
[p]latform he was then on board and performing work, fell. And the falling of
the [p]latform was due to the removal or getting loose of the pin which was
merely inserted to the connecting points of the chain block and [p]latform but
without a safety lock.1
On May 9, 1991, Jose Juegos widow, Maria, filed in the Regional Trial Court (RTC)
of Pasig a complaint for damages against the deceaseds employer, D.M. Consunji,
Inc. The employer raised, among other defenses, the widows prior availment of the
benefits from the State Insurance Fund.
After trial, the RTC rendered a decision in favor of the widow Maria Juego. The
dispositive portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered ordering defendant to pay
plaintiff, as follows:
1. P50,000.00 for the death of Jose A. Juego.
2. P10,000.00 as actual and compensatory damages.
3. P464,000.00 for the loss of Jose A. Juegos earning capacity.
4. P100,000.00 as moral damages.
5. P20,000.00 as attorneys fees, plus the costs of suit.
SO ORDERED.2
On appeal by D. M. Consunji, the Court of Appeals (CA) affirmed the decision of the
RTC in toto.

D. M. Consunji now seeks the reversal of the CA decision on the following grounds:

THE APPELLATE COURT ERRED IN HOLDING THAT THE POLICE

REPORT WAS ADMISSIBLE EVIDENCE OF THE ALLEGED
NEGLIGENCE OF PETITIONER.

THE APPELLATE COURT ERRED IN HOLDING THAT THE

DOCTRINE OF RES IPSA LOQUITOR[sic] IS APPLICABLE TO
PROVE NEGLIGENCE ON THE PART OF PETITIONER.

THE APPELLATE COURT ERRED IN HOLDING THAT PETITIONER

IS PRESUMED NEGLIGENT UNDER ARTICLE 2180 OF THE CIVIL
CODE, AND

THE APPELLATE COURT ERRED IN HOLDING THAT RESPONDENT

IS NOT PRECLUDED FROM RECOVERING DAMAGES UNDER THE
CIVIL CODE.3

Petitioner maintains that the police report reproduced above is hearsay and,
therefore, inadmissible. The CA ruled otherwise. It held that said report, being an
entry in official records, is an exception to the hearsay rule.
The Rules of Court provide that a witness can testify only to those facts which he
knows of his personal knowledge, that is, which are derived from his perception. 4 A
witness, therefore, may not testify as what he merely learned from others either
because he was told or read or heard the same. Such testimony is considered
hearsay and may not be received as proof of the truth of what he has learned. 5 This
is known as the hearsay rule.
Hearsay is not limited to oral testimony or statements; the general rule that excludes
hearsay as evidence applies to written, as well as oral statements. 6
The theory of the hearsay rule is that the many possible deficiencies, suppressions,
sources of error and untrustworthiness, which lie underneath the bare untested
assertion of a witness, may be best brought to light and exposed by the test of
cross-examiantion.7 The hearsay rule, therefore, excludes evidence that cannot be
tested by cross-examination.8
The Rules of Court allow several exceptions to the rule, 9 among which are entries in
official records. Section 44, Rule 130 provides:
Entries in official records made in the performance of his duty made in the
performance of his duty by a public officer of the Philippines, or by a person in
the performance of a duty specially enjoined by law areprima facie evidence
of the facts therein stated.
In Africa, et al. vs. Caltex (Phil.), Inc., et al.,10 this Court, citing the work of Chief
Justice Moran, enumerated the requisites for admissibility under the above rule:
(a) that the entry was made by a public officer or by another person specially
enjoined by law to do so;
(b) that it was made by the public officer in the performance of his duties, or
by such other person in the performance of a duty specially enjoined by law;
and
(c) that the public officer or other person had sufficient knowledge of the facts
by him stated, which must have been acquired by him personally or through
official information.

The CA held that the police report meets all these requisites. Petitioner contends
that the last requisite is not present.
The Court notes that PO3 Villanueva, who signed the report in question, also
testified before the trial court. InRodriguez vs. Court of Appeals,11 which involved a
Fire Investigation Report, the officer who signed the fire report also testified before
the trial court. This Court held that the report was inadmissible for the purpose of
proving the truth of the statements contained in the report but admissible insofar as
it constitutes part of the testimony of the officer who executed the report.
x x x. Since Major Enriquez himself took the witness stand and was available
for cross-examination, the portions of the report which were of his personal
knowledge or which consisted of his perceptions and conclusions were not
hearsay. The rest of the report, such as the summary of the statements of the
parties based on their sworn statements (which were annexed to the Report)
as well as the latter, having been included in the first purpose of the offer [as
part of the testimony of Major Enriquez], may then be considered
as independently relevant statements which were gathered in the course of
the investigation and may thus be admitted as such, but not necessarily to
prove the truth thereof. It has been said that:
"Where regardless of the truth or falsity of a statement, the fact that it
has been made is relevant, the hearsay rule does not apply, but the
statement may be shown. Evidence as to the making of such statement
is not secondary but primary, for the statement itself may constitute a
fact in issue, or be circumstantially relevant as to the existence of such
a fact."
When Major Enriquez took the witness stand, testified for petitioners on his
Report and made himself available for cross-examination by the adverse
party, the Report, insofar as it proved that certain utterances were made (but
not their truth), was effectively removed from the ambit of the aforementioned
Section 44 of Rule 130. Properly understood, this section does away with the
testimony in open court of the officer who made the official record, considers
the matter as an exception to the hearsay rule and makes the entries in said
official record admissible in evidence as prima facie evidence of the facts
therein stated. The underlying reasons for this exceptionary rule are necessity
and trustworthiness, as explained in Antillon v. Barcelon.
The litigation is unlimited in which testimony by officials is daily needed;
the occasions in which the officials would be summoned from his
ordinary duties to declare as a witness are numberless. The public
officers are few in whose daily work something is not done in which
testimony is not needed from official sources. Were there no exception
for official statements, hosts of officials would be found devoting the
greater part of their time to attending as witnesses in court or delivering
deposition before an officer. The work of administration of government
and the interest of the public having business with officials would alike
suffer in consequence. For these reasons, and for many others, a
certain verity is accorded such documents, which is not extended to
private documents. (3 Wigmore on Evidence, Sec. 1631).
The law reposes a particular confidence in public officers that it
presumes they will discharge their several trusts with accuracy and
fidelity; and, therefore, whatever acts they do in discharge of their duty
may be given in evidence and shall be taken to be true under such a
degree of caution as to the nature and circumstances of each case
may appear to require.

It would have been an entirely different matter if Major Enriquez was not
presented to testify on his report. In that case the applicability of Section 44 of
Rule 143 would have been ripe for determination, and this Court would have
agreed with the Court of Appeals that said report was inadmissible since the
aforementioned third requisite was not satisfied. The statements given by the
sources of information of Major Enriquez failed to qualify as "official
information," there being no showing that, at the very least, they were under a
duty to give the statements for record.
Similarly, the police report in this case is inadmissible for the purpose of proving the
truth of the statements contained therein but is admissible insofar as it constitutes
part of the testimony of PO3 Villanueva.
In any case, the Court holds that portions of PO3 Villanuevas testimony which were
of his personal knowledge suffice to prove that Jose Juego indeed died as a result of
the elevator crash. PO3 Villanueva had seen Juegos remains at the
morgue,12 making the latters death beyond dispute. PO3 Villanueva also conducted
an ocular inspection of the premises of the building the day after the incident 13 and
saw the platform for himself.14 He observed that the platform was crushed15 and that
it was totally damaged.16 PO3 Villanueva also required Garcia and Fabro to bring the
chain block to the police headquarters. Upon inspection, he noticed that the chain
was detached from the lifting machine, without any pin or bolt. 17
What petitioner takes particular exception to is PO3 Villanuevas testimony that the
cause of the fall of the platform was the loosening of the bolt from the chain block. It
is claimed that such portion of the testimony is mere opinion. Subject to certain
exceptions,18 the opinion of a witness is generally not admissible. 19
Petitioners contention, however, loses relevance in the face of the application of res
ipsa loquitur by the CA. The effect of the doctrine is to warrant a presumption or
inference that the mere fall of the elevator was a result of the person having charge
of the instrumentality was negligent. As a rule of evidence, the doctrine of res ipsa
loquituris peculiar to the law of negligence which recognizes that prima
facie negligence may be established without direct proof and furnishes a substitute
for specific proof of negligence.20
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while the mere
happening of an accident or injury will not generally give rise to an inference
or presumption that it was due to negligence on defendants part, under the
doctrine of res ipsa loquitur, which means, literally, the thing or transaction
speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks
for itself, the facts or circumstances accompanying an injury may be such as
to raise a presumption, or at least permit an inference of negligence on the
part of the defendant, or some other person who is charged with negligence.
x x x where it is shown that the thing or instrumentality which caused the
injury complained of was under the control or management of the defendant,
and that the occurrence resulting in the injury was such as in the ordinary
course of things would not happen if those who had its control or
management used proper care, there is sufficient evidence, or, as sometimes
stated, reasonable evidence, in the absence of explanation by the defendant,
that the injury arose from or was caused by the defendants want of care. 21
One of the theoretical based for the doctrine is its necessity, i.e., that necessary
evidence is absent or not available.22
The res ipsa loquitur doctrine is based in part upon the theory that the
defendant in charge of the instrumentality which causes the injury either

knows the cause of the accident or has the best opportunity of ascertaining it
and that the plaintiff has no such knowledge, and therefore is compelled to
allege negligence in general terms and to rely upon the proof of the
happening of the accident in order to establish negligence. The inference
which the doctrine permits is grounded upon the fact that the chief evidence
of the true cause, whether culpable or innocent, is practically accessible to the
defendant but inaccessible to the injured person.
It has been said that the doctrine of res ipsa loquitur furnishes a bridge by
which a plaintiff, without knowledge of the cause, reaches over to defendant
who knows or should know the cause, for any explanation of care exercised
by the defendant in respect of the matter of which the plaintiff complains. The
res ipsa loquitur doctrine, another court has said, is a rule of necessity, in that
it proceeds on the theory that under the peculiar circumstances in which the
doctrine is applicable, it is within the power of the defendant to show that
there was no negligence on his part, and direct proof of defendants
negligence is beyond plaintiffs power. Accordingly, some court add to the
three prerequisites for the application of the res ipsa loquitur doctrine the
further requirement that for the res ipsa loquitur doctrine to apply, it must
appear that the injured party had no knowledge or means of knowledge as to
the cause of the accident, or that the party to be charged with negligence has
superior knowledge or opportunity for explanation of the accident. 23
The CA held that all the requisites of res ipsa loquitur are present in the case at bar:
There is no dispute that appellees husband fell down from the 14 th floor of a
building to the basement while he was working with appellants construction
project, resulting to his death. The construction site is within the exclusive
control and management of appellant. It has a safety engineer, a project
superintendent, a carpenter leadman and others who are in complete control
of the situation therein. The circumstances of any accident that would occur
therein are peculiarly within the knowledge of the appellant or its employees.
On the other hand, the appellee is not in a position to know what caused the
accident. Res ipsa loquitur is a rule of necessity and it applies where evidence
is absent or not readily available, provided the following requisites are
present: (1) the accident was of a kind which does not ordinarily occur unless
someone is negligent; (2) the instrumentality or agency which caused the
injury was under the exclusive control of the person charged with negligence;
and (3) the injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured. x x x.
No worker is going to fall from the 14th floor of a building to the basement
while performing work in a construction site unless someone is negligent[;]
thus, the first requisite for the application of the rule of res ipsa loquitur is
present. As explained earlier, the construction site with all its paraphernalia
and human resources that likely caused the injury is under the exclusive
control and management of appellant[;] thus[,] the second requisite is also
present. No contributory negligence was attributed to the appellees deceased
husband[;] thus[,] the last requisite is also present. All the requisites for the
application of the rule of res ipsa loquitur are present, thus a reasonable
presumption or inference of appellants negligence arises. x x x. 24
Petitioner does not dispute the existence of the requisites for the application of res
ipsa loquitur, but argues that the presumption or inference that it was negligent did
not arise since it "proved that it exercised due care to avoid the accident which befell
respondents husband."
Petitioner apparently misapprehends the procedural effect of the doctrine. As stated
earlier, the defendants negligence is presumed or inferred 25 when the plaintiff
establishes the requisites for the application of res ipsa loquitur. Once the plaintiff

makes out a prima facie case of all the elements, the burden then shifts to defendant
to explain.26 The presumption or inference may be rebutted or overcome by other
evidence and, under appropriate circumstances disputable presumption, such as
that of due care or innocence, may outweigh the inference. 27 It is not for the
defendant to explain or prove its defense to prevent the presumption or inference
from arising. Evidence by the defendant of say, due care, comes into play only after
the circumstances for the application of the doctrine has been established.
1wphi1.nt

In any case, petitioner cites the sworn statement of its leadman Ferdinand Fabro
executed before the police investigator as evidence of its due care. According to
Fabros sworn statement, the company enacted rules and regulations for the safety
and security of its workers. Moreover, the leadman and the bodegero inspect the
chain block before allowing its use.
It is ironic that petitioner relies on Fabros sworn statement as proof of its due care
but, in arguing that private respondent failed to prove negligence on the part of
petitioners employees, also assails the same statement for being hearsay.
Petitioner is correct. Fabros sworn statement is hearsay and inadmissible. Affidavits
are inadmissible as evidence under the hearsay rule, unless the affiant is placed on
the witness stand to testify thereon.28 The inadmissibility of this sort of evidence is
based not only on the lack of opportunity on the part of the adverse party to crossexamine the affiant, but also on the commonly known fact that, generally, an affidavit
is not prepared by the affiant himself but by another who uses his own language in
writing the affiants statements which may either be omitted or misunderstood by the
one writing them.29 Petitioner, therefore, cannot use said statement as proof of its
due care any more than private respondent can use it to prove the cause of her
husbands death. Regrettably, petitioner does not cite any other evidence to rebut
the inference or presumption of negligence arising from the application of res ipsa
loquitur, or to establish any defense relating to the incident.
Next, petitioner argues that private respondent had previously availed of the death
benefits provided under the Labor Code and is, therefore, precluded from claiming
from the deceaseds employer damages under the Civil Code.
Article 173 of the Labor Code states:
Article 173. Extent of liability. Unless otherwise provided, the liability of the
State Insurance Fund under this Title shall be exclusive and in place of all
other liabilities of the employer to the employee, his dependents or anyone
otherwise entitled to receive damages on behalf of the employee or his
dependents. The payment of compensation under this Title shall not bar the
recovery of benefits as provided for in Section 699 of the Revised
Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as
amended, Republic Act Numbered Six hundred ten, as amended, Republic
Act Numbered Forty-eight hundred sixty-four as amended, and other laws
whose benefits are administered by the System or by other agencies of the
government.
The precursor of Article 173 of the Labor Code, Section 5 of the Workmens
Compensation Act, provided that:
Section 5. Exclusive right to compensation. The rights and remedies
granted by this Act to an employee by reason of a personal injury entitling him
to compensation shall exclude all other rights and remedies accruing to the
employee, his personal representatives, dependents or nearest of kin against
the employer under the Civil Code and other laws because of said injury x x x.
Whether Section 5 of the Workmens Compensation Act allowed recovery under said
Act as well as under the Civil Code used to be the subject of conflicting decisions.

The Court finally settled the matter in Floresca vs.Philex Mining Corporation,30 which
involved a cave-in resulting in the death of the employees of the Philex Mining
Corporation. Alleging that the mining corporation, in violation of government rules
and regulations, failed to take the required precautions for the protection of the
employees, the heirs of the deceased employees filed a complaint against Philex
Mining in the Court of First Instance (CFI). Upon motion of Philex Mining, the CFI
dismissed the complaint for lack of jurisdiction. The heirs sought relief from this
Court.
Addressing the issue of whether the heirs had a choice of remedies, majority of the
Court En Banc,31 following the rule in Pacaa vs. Cebu Autobus Company, held in
the affirmative.
WE now come to the query as to whether or not the injured employee or his
heirs in case of death have a right of selection or choice of action between
availing themselves of the workers right under the Workmens Compensation
Act and suing in the regular courts under the Civil Code for higher damages
(actual, moral and exemplary) from the employers by virtue of the negligence
or fault of the employers or whether they may avail themselves cumulatively
of both actions, i.e., collect the limited compensation under the Workmens
Compensation Act and sue in addition for damages in the regular courts.
In disposing of a similar issue, this Court in Pacaa vs. Cebu Autobus
Company, 32 SCRA 442, ruled thatan injured worker has a choice of either to
recover from the employer the fixed amounts set by the Workmens
Compensation Act or to prosecute an ordinary civil action against the
tortfeasor for higher damages but he cannot pursue both courses of action
simultaneously. [Underscoring supplied.]
Nevertheless, the Court allowed some of the petitioners in said case to proceed with
their suit under the Civil Code despite having availed of the benefits provided under
the Workmens Compensation Act. The Court reasoned:
With regard to the other petitioners, it was alleged by Philex in its motion to
dismiss dated May 14, 1968 before the court a quo, that the heirs of the
deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza,
Lorenzo Isla and Saturnino submitted notices and claims for compensation to
the Regional Office No. 1 of the then Department of Labor and all of them
have been paid in full as of August 25, 1967, except Saturnino Martinez
whose heirs decided that they be paid in installments x x x. Such allegation
was admitted by herein petitioners in their opposition to the motion to dismiss
dated may 27, 1968 x x x in the lower court, but they set up the defense that
the claims were filed under the Workmens Compensation Act before they
learned of the official report of the committee created to investigate the
accident which established the criminal negligence and violation of law by
Philex, and which report was forwarded by the Director of Mines to then
Executive Secretary Rafael Salas in a letter dated October 19, 1967 only x x
x.
WE hold that although the other petitioners had received the benefits under
the Workmens Compensation Act, such my not preclude them from bringing
an action before the regular court because they became cognizant of the fact
that Philex has been remiss in its contractual obligations with the deceased
miners only after receiving compensation under the Act. Had petitioners been
aware of said violation of government rules and regulations by Philex, and of
its negligence, they would not have sought redress under the Workmens
Compensation Commission which awarded a lesser amount for
compensation. The choice of the first remedy was based on ignorance or a
mistake of fact, which nullifies the choice as it was not an intelligent choice.
The case should therefore be remanded to the lower court for further

proceedings. However, should the petitioners be successful in their bid before

the lower court, the payments made under the Workmens Compensation Act
should be deducted from the damages that may be decreed in their favor.
[Underscoring supplied.]
The ruling in Floresca providing the claimant a choice of remedies was reiterated
in Ysmael Maritime Corporation vs. Avelino,32 Vda. De Severo vs. FelicianoGo,33 and Marcopper Mining Corp. vs. Abeleda.34 In the last case, the Court again
recognized that a claimant who had been paid under the Act could still sue under the
Civil Code. The Court said:
In the Robles case, it was held that claims for damages sustained by workers
in the course of their employment could be filed only under the Workmens
Compensation Law, to the exclusion of all further claims under other laws. In
Floresca, this doctrine was abrogated in favor of the new rule that the
claimants may invoke either the Workmens Compensation Act or the
provisions of the Civil Code, subject to the consequence that the choice of
one remedy will exclude the other and that the acceptance of compensation
under the remedy chosen will preclude a claim for additional benefits under
the other remedy. The exception is where a claimant who has already been
paid under the Workmens Compensation Act may still sue for damages under
the Civil Code on the basis of supervening facts or developments occurring
after he opted for the first remedy. (Underscoring supplied.)
Here, the CA held that private respondents case came under the exception because
private respondent was unaware of petitioners negligence when she filed her claim
for death benefits from the State Insurance Fund. Private respondent filed the civil
complaint for damages after she received a copy of the police investigation report
and the Prosecutors Memorandum dismissing the criminal complaint against
petitioners personnel. While stating that there was no negligence attributable to the
respondents in the complaint, the prosecutor nevertheless noted in the
Memorandum that, "if at all," the "case is civil in nature." The CA thus applied the
exception in Floresca:
x x x We do not agree that appellee has knowledge of the alleged negligence
of appellant as early as November 25, 1990, the date of the police
investigators report. The appellee merely executed her sworn statement
before the police investigator concerning her personal circumstances, her
relation to the victim, and her knowledge of the accident. She did not file the
complaint for "Simple Negligence Resulting to Homicide" against appellants
employees. It was the investigator who recommended the filing of said case
and his supervisor referred the same to the prosecutors office. This is a
standard operating procedure for police investigators which appellee may not
have even known. This may explain why no complainant is mentioned in the
preliminary statement of the public prosecutor in her memorandum dated
February 6, 1991, to wit: "Respondent Ferdinand Fabro x x x are being
charged by complainant of "Simple Negligence Resulting to Homicide." It is
also possible that the appellee did not have a chance to appear before the
public prosecutor as can be inferred from the following statement in said
memorandum: "Respondents who were notified pursuant to Law waived their
rights to present controverting evidence," thus there was no reason for the
public prosecutor to summon the appellee. Hence, notice of appellants
negligence cannot be imputed on appellee before she applied for death
benefits under ECC or before she received the first payment therefrom. Her
using the police investigation report to support her complaint filed on May 9,
1991 may just be an afterthought after receiving a copy of the February 6,
1991 Memorandum of the Prosecutors Office dismissing the criminal
complaint for insufficiency of evidence, stating therein that: "The death of the
victim is not attributable to any negligence on the part of the respondents. If at
all and as shown by the records this case is civil in nature." (Underscoring

supplied.) Considering the foregoing, We are more inclined to believe

appellees allegation that she learned about appellants negligence only after
she applied for and received the benefits under ECC. This is a mistake of fact
that will make this case fall under the exception held in the Floresca ruling.35
The CA further held that not only was private respondent ignorant of the facts, but of
her rights as well:
x x x. Appellee [Maria Juego] testified that she has reached only elementary
school for her educational attainment; that she did not know what damages
could be recovered from the death of her husband; and that she did not know
that she may also recover more from the Civil Code than from the ECC. x x
x.36
Petitioner impugns the foregoing rulings. It contends that private respondent "failed
to allege in her complaint that her application and receipt of benefits from the ECC
were attended by ignorance or mistake of fact. Not being an issue submitted during
the trial, the trial court had no authority to hear or adjudicate that issue."
Petitioner also claims that private respondent could not have been ignorant of the
facts because as early as November 28, 1990, private respondent was the
complainant in a criminal complaint for "Simple Negligence Resulting to Homicide"
against petitioners employees. On February 6, 1991, two months before the filing of
the action in the lower court, Prosecutor Lorna Lee issued a resolution finding that,
although there was insufficient evidence against petitioners employees, the case
was "civil in nature." These purportedly show that prior to her receipt of death
benefits from the ECC on January 2, 1991 and every month thereafter, private
respondent also knew of the two choices of remedies available to her and yet she
chose to claim and receive the benefits from the ECC.
When a party having knowledge of the facts makes an election between inconsistent
remedies, the election is final and bars any action, suit, or proceeding inconsistent
with the elected remedy, in the absence of fraud by the other party. The first act of
election acts as a bar.37 Equitable in nature, the doctrine of election of remedies is
designed to mitigate possible unfairness to both parties. It rests on the moral
premise that it is fair to hold people responsible for their choices. The purpose of the
doctrine is not to prevent any recourse to any remedy, but to prevent a double
redress for a single wrong.38
The choice of a party between inconsistent remedies results in a waiver by election.
Hence, the rule in Florescathat a claimant cannot simultaneously pursue recovery
under the Labor Code and prosecute an ordinary course of action under the Civil
Code. The claimant, by his choice of one remedy, is deemed to have waived the
other.
Waiver is the intentional relinquishment of a known right.39
[It] is an act of understanding that presupposes that a party has knowledge of
its rights, but chooses not to assert them. It must be generally shown by the
party claiming a waiver that the person against whom the waiver is asserted
had at the time knowledge, actual or constructive, of the existence of the
partys rights or of all material facts upon which they depended. Where one
lacks knowledge of a right, there is no basis upon which waiver of it can rest.
Ignorance of a material fact negates waiver, and waiver cannot be established
by a consent given under a mistake or misapprehension of fact.
A person makes a knowing and intelligent waiver when that person knows
that a right exists and has adequate knowledge upon which to make an
intelligent decision.

Waiver requires a knowledge of the facts basic to the exercise of the right
waived, with an awareness of its consequences. That a waiver is made
knowingly and intelligently must be illustrated on the record or by the
evidence.40
That lack of knowledge of a fact that nullifies the election of a remedy is the basis for
the exception in Floresca.
It is in light of the foregoing principles that we address petitioners contentions.
Waiver is a defense, and it was not incumbent upon private respondent, as plaintiff,
to allege in her complaint that she had availed of benefits from the ECC. It is, thus,
erroneous for petitioner to burden private respondent with raising waiver as an
issue. On the contrary, it is the defendant who ought to plead waiver, as petitioner
did in pages 2-3 of its Answer;41 otherwise, the defense is waived. It is, therefore,
perplexing for petitioner to now contend that the trial court had no jurisdiction over
the issue when petitioner itself pleaded waiver in the proceedings before the trial
court.
Does the evidence show that private respondent knew of the facts that led to her
husbands death and the rights pertaining to a choice of remedies?
It bears stressing that what negates waiver is lack of knowledge or a mistake of fact.
In this case, the "fact" that served as a basis for nullifying the waiver is
the negligence of petitioners employees, of which private respondent purportedly
learned only after the prosecutor issued a resolution stating that there may be civil
liability. InFloresca, it was the negligence of the mining corporation and its violation
of government rules and regulations. Negligence, or violation of government rules
and regulations, for that matter, however, is not a fact, but aconclusion of law, over
which only the courts have the final say. Such a conclusion binds no one until the
courts have decreed so. It appears, therefore, that the principle that ignorance or
mistake of fact nullifies a waiver has been misapplied in Floresca and in the case at
bar.
In any event, there is no proof that private respondent knew that her husband died in
the elevator crash when on November 15, 1990 she accomplished her application
for benefits from the ECC. The police investigation report is dated November 25,
1990, 10 days after the accomplishment of the form. Petitioner filed the application
in her behalf on November 27, 1990.
There is also no showing that private respondent knew of the remedies available to
her when the claim before the ECC was filed. On the contrary, private respondent
testified that she was not aware of her rights.
Petitioner, though, argues that under Article 3 of the Civil Code, ignorance of the law
excuses no one from compliance therewith. As judicial decisions applying or
interpreting the laws or the Constitution form part of the Philippine legal system
(Article 8, Civil Code), private respondent cannot claim ignorance of this Courts
ruling inFloresca allowing a choice of remedies.
The argument has no merit. The application of Article 3 is limited to mandatory and
prohibitory laws.42 This may be deduced from the language of the provision, which,
notwithstanding a persons ignorance, does not excuse his or her compliance with
the laws. The rule in Floresca allowing private respondent a choice of remedies is
neither mandatory nor prohibitory. Accordingly, her ignorance thereof cannot be held
against her.
Finally, the Court modifies the affirmance of the award of damages. The records do
not indicate the total amount private respondent ought to receive from the ECC,
although it appears from Exhibit "K"43 that she received P3,581.85 as initial payment

representing the accrued pension from November 1990 to March 1991. Her initial
monthly pension, according to the same Exhibit "K," was P596.97 and present total
monthly pension was P716.40. Whether the total amount she will eventually receive
from the ECC is less than the sum of P644,000.00 in total damages awarded by the
trial court is subject to speculation, and the case is remanded to the trial court for
such determination. Should the trial court find that its award is greater than that of
the ECC, payments already received by private respondent under the Labor Code
shall be deducted from the trial court' award of damages. Consistent with our ruling
in Floresca, this adjudication aims to prevent double compensation.
WHEREFORE, the case is REMANDED to the Regional Trial Court of Pasig City to
determine whether the award decreed in its decision is more than that of the ECC.
Should the award decreed by the trial court be greater than that awarded by the
ECC, payments already made to private respondent pursuant to the Labor Code
shall be deducted therefrom. In all other respects, the Decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.
G.R. No. 202303

June 4, 2014

GERARDO R. VILLASEOR AND RODEL A. MESA, Petitioners,

vs.
OMBUDSMAN AND HON. HERBERT BAUTISTA, City Mayor, Quezon
City, Respondents.
DECISION
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the March 15, 2012 and June 18, 2012 Resolutions of the Court of
Appeals (CA). in CA G.R. SP No. 121378, which dismissed for utter lack of merit the
petition to nullify or restrain the immediate implementation of the June 17, 2003 Joint
Decision of the Office of the Ombudsman in OMB-ADM-0-01-0376 and OMB-ADM0-01-0390, directing the dismissal from the service and one-year suspension of
petitioners Gerardo R. Villaseor (Villaseor) and Rodel A. Mesa (Mesa),
respectively.
1

The Facts
The petitioners, along with several others, were administratively charged in
connection with the Manor Hotel fire tragedy that took place on August 18, 2001,
killing 74 people and causing injury to others. Petitioner Villaseor was an electrical
inspector from the Electrical Division, and petitioner Mesa was an inspector from the
Electrical Engineering Office, both of Quezon City.
In OMB-ADM-0-01-0376, petitioner Villaseor was charged with grave misconduct
prejudicial to the best interest of the service and gross negligence. In OMB-ADM00390, both petitioners were charged with violation of Section 4 of Republic Act
(R.A.) No. 6713 (Code of Conduct and Ethical Standards for Public Officials and
Employees).
In its Joint Decision dated June 17, 2003, the Investigating Panel of the Office of the
Ombudsman ruled as follows:
1. In OMB-ADM-0-01-0376, Villaseor was found guilty of conduct prejudicial
to the best interest of the service and gross neglect of duty for which he was
meted the penalty of dismissal from the service with all its accessory
penalties.

2. In OMB-ADM-0-01-0390, Mesa was found guilty of conduct prejudicial to

the best interest of the service for which he was meted the penalty of one
year suspension without pay.
In its Memorandum, dated July 26, 2004, the Ombudsman approved the findings in
the Joint Decision as regards the petitioners.
3

On December 13, 2004, Villaseor and Mesa filed their separate motions for
reconsideration of the Joint Decision.
4

In the Memorandum, dated March 2, 2006, the Ombudsman denied the motion for
reconsideration filed by Mesa and those of the other accused, and affirmed in toto
the Joint Decision. Villaseors motion for reconsideration, however, was not
enumerated as one of the pleadings resolved.
5

On April 18, 2006, Mesa appealed to the CA, which was docketed as CA-G.R. No.
93891. Villaseor made no appeal, his motion for reconsideration before the
Ombudsman being yet unresolved.
In the Order dated August 23, 2006, pending resolution of Mesas appeal and
Villaseors motion for reconsideration, the Ombudsman directed the Mayor of
Quezon City and the Secretary of the Department of Interior and Local Government
to enforce the Joint Decision immediately upon receipt of the order.
7

On September 20, 2011, Villaseor and Mesa filed a special civil action for
certiorari before the CA docketed as CA-G.R. SP No. 121378, assailing the August
23, 2006 Order of the Ombudsman ordering the immediate implementation of the
Joint Decision despite the pendency of Villaseors motion for reconsideration and
Mesas appeal. They prayed that the said order be annulled and an injunction be
issued to restrain its implementation.
8

In the assailed March 15, 2012 Resolution, the CA dismissed the petition for utter
lack of merit. It held that the Ombudsman decision was immediately executory
pending appeal and would not be stayed by the filing of the appeal or issuance of an
injunctive relief.
9

In the assailed June 18, 2012 Resolution, the CA denied the petitioners motion for
reconsideration.
10

Hence, this petition.

Issues And Arguments
Petitioner Villaseor argues that his constitutional right of not to be deprived of life,
liberty and property without due process of law, was grossly violated by the
Ombudsman when:
1. He was prevented from cross-examining complainants witnesses;
2. He failed to receive any copy of any order relative to the preliminary conference of
the case; and
3. His dismissal from the service was ordered implemented while his motion for
reconsideration remains unresolved.
He argues that the order of dismissal cannot be deemed executory as it has not yet
attained finality on account of his unresolved motion for reconsideration.
Petitioner Mesa, on the other hand, argues that the order of suspension against him
should not have been implemented pending his appeal with the CA, in accordance

with Section 7 of Rule III of the Office of the Ombudsmans Rules of Procedure. He
argues that Administrative Order (A.O.) No. 17, which took effect on September 7,
2003 and amended said Section 7, should not be applied to his case because it was
promulgated long after the rendition of the order of his suspension on June 17,
2003. Mesa further argues that to apply the amendment to him will give it a
retroactive effect which is prohibited under Article 4 of the Civil Code.
Both petitioners aver that Ombudsman v. Samaniego, the case relied upon by the
CA, cannot be applied to their case because the principal basis of the ruling was
Section 7, as amended, which they insist is inapplicable to them.
11

The first two issues raised by petitioner Villaseor do not relate to the assailed CA
Resolutions, which ruled upon the Order of the Ombudsman implementing the Joint
Decision. They are, therefore, irrelevant to the present petition. The sole issue
before the Court now is, thus:
Whether the Ombudsmans order of dismissal from the service and suspension of
one year can be implemented pending resolution of petitioner Villaseors motion for
reconsideration before the Ombudsman, and petitioner Mesas appeal before the
CA?
The Ruling of the Court
The petition must fail.
Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman, as
amended by A.O. No. 17, dated September 15, 2003, provides:
SEC. 7. Finality and execution of decision. Where the respondent is absolved of
the charge, and in case of conviction where the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a fine equivalent to one
month salary, the decision shall be final, executory and unappealable. In all other
cases, the decision may be appealed to the Court of Appeals on a verified petition
for review under the requirements and conditions set forth in Rule 43 of the Rules of
Court, within fifteen (15) days from receipt of the written Notice of the Decision or
Order denying the motion for reconsideration.
An appeal shall not stop the decision from being executory. In case the penalty is
suspension or removal and the respondent wins such appeal, he shall be
considered as having been under preventive suspension and shall be paid the
salary and such other emoluments that he did not receive by reason of the
suspension or removal.
A decision of the Office of the Ombudsman in administrative cases shall be
executed as a matter of course. The Office of the Ombudsman shall ensure that the
decision shall be strictly enforced and properly implemented. The refusal or failure
by any officer without just cause to comply with an order of the Office of the
Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for
disciplinary action against such officer.
[Emphases supplied]
From the above, it can be gleaned that the Ombudsman decisions in administrative
cases may either be unappealable or appealable. Unappealable decisions are final
and executory, and they are as follows: (1) respondent is absolved of the charge; (2)
the penalty imposed is public censure or reprimand; (3) suspension of not more than
one month; and (4) a fine equivalent to one months salary. Appealable decisions, on
the other hand, are those which fall outside said enumeration, and may be appealed
to the CA under Rule 43 of the Rules of Court, within 15 days from receipt of the
written notice of the decision or order denying the motion for reconsideration.

Section 7 is categorical in providing that an appeal shall not stop the decision from
being executory, and that such shall be executed as a matter of course.
Petitioner Mesa was ordered suspended for one year without pay, while petitioner
Villaseor was ordered dismissed from the service. These are plainly appealable
decisions which are immediately executory pending appeal.
The petitioners cannot argue that A.O. No. 17, which makes appealable decisions of
the Ombudsman immediately executory, cannot be applied to them. It is of no
moment that A.O. No. 17 took effect on September 7, 2003, after the Joint Decision
was issued against Mesa and Villaseor on June 17, 2003. Of note are the facts that
the Joint Decision was approved by the Ombudsman on November 26, 2004; the
motions for reconsideration thereto were denied on March 2, 2006; and the Joint
Decision was ordered implemented on August 23, 2006, all after A.O. No. 17 had
already become effective.
Article 4 of the Civil Code does indeed provide that laws shall have no retroactive
effect. Rules regulating the procedure of courts, however, are retroactive in nature,
and are, thus, applicable to actions pending and unresolved at the time of their
passage. As a general rule, no vested right may attach to or arise from procedural
laws and rules, hence, retroactive application does not violate any right of a person
adversely affected.
12

The Rules of Procedure of the Office of the Ombudsman are procedural in nature
and therefore, may be applied retroactively to petitioners cases which were pending
and unresolved at the time of the passing of A.O. No. 17. No vested right is violated
by the application of Section 7 because the respondent in the administrative case is
considered preventively suspended while his case is on appeal and, in the event he
wins on appeal, he shall be paid the salary and such other emoluments that he did
not receive by reason of the suspension or removal. It is important to note that there
is no such thing as a vested interest in an office, or even an absolute right to hold
office. Excepting constitutional offices which provide for special immunity as regards
salary and tenure, no one can be said to have any vested right in an office.
13

The nature of appealable decisions of the Ombudsman was, in fact, settled in

Ombudsman v. Samaniego, where it was held that such are immediately executory
pending appeal and may not be stayed by the filing of an appeal or the issuance of
an injunctive writ. The petitioners argue that this particular case cannot be applied
to them because it was based on Section 7, as amended by A.O. No. 17,which
cannot be applied to them retroactively. Their argument cannot be given credence.
As already discussed, Section 7 may be retroactively applied in the case of the
petitioners.
14

It is, therefore, beyond cavil that petitioner Mesas appeal cannot stay the
implementation of the order of suspension against him.
Petitioner Villaseor argues that the Ombudsman erred in implementing the order of
dismissal against him despite his pending motion for reconsideration with the same
office.
The records show that both petitioners duly filed their respective motions for
reconsideration on December 13, 2004. In the March 2, 2006 Memorandum of the
Ombudsman, Mesas motion for reconsideration, among others, was denied. Thus,
he appealed to the CA. A review of the said Memorandum reveals, however, that
Villaseors motion for reconsideration was not enumerated as one of the pleadings
submitted for resolution, and nowhere was his liability discussed or even mentioned
therein. It is, therefore, apparent that Villaseors motion for reconsideration was
never resolved by the Ombudsman, for which reason he has been unable to file an
appeal with the CA.
15

Nonetheless, Villaseors pending motion for reconsideration cannot stop his order
of dismissal from being executory. Memorandum Circular No. 01, series of 2006, of
the Office of the Ombudsman, provides in part:
Section 7, Rule III of Administrative Order No. 07, otherwise known as, the
"Ombudsman Rules of Procedure" provides that: "A decision of the Office of the
Ombudsman in administrative cases shall be executed as a matter of course."
In order that the foregoing rule may be strictly observed, all concerned are hereby
enjoined to implement all Ombudsman decisions, orders or resolutions in
administrative disciplinary cases, immediately upon receipt thereof by their
respective offices.
The filing of a motion for reconsideration or a petition for review before the Office of
the Ombudsman does not operate to stay the immediate implementation of the
foregoing Ombudsman decisions, orders or resolutions.
xxx
[Emphasis supplied]
Thus, petitioner Villaseors filing of a motion for reconsideration does not stay the
immediate implementation of the Ombudsmans order of dismissal, considering that
"a decision of the Office of the Ombudsman in administrative cases shall be
executed as a matter of course" under Section 7. As already explained, no vested
right of Villaseor would be violated as he would be considered under preventive
suspension, and entitled to the salary and emoluments he did not receive in the
event that he wins his eventual appeal.
The Ombudsman did not, therefore, err in implementing the orders of suspension of
one year and dismissal from the service against the petitioners.
The Court notes, however, that under Section 8 of Rule III of the Rules of Procedure
of the Office of the Ombudsman, as amended by A.O. No. 17, the Hearing Officer
shall decide a motion for reconsideration within S days from the date of submission
for resolution. Petitioner Villaseor filed his motion for reconsideration on December
13, 2004, on the same day as petitioner Mesa, whose motion was duly resolved.
Whether by oversight or negligence, a period nearly I 0 years has elapsed without
action on Villase11or's motion for reconsideration. The Office of the Ombudsman is
called upon to be more vigilant in carrying out its functions and in complying with the
periods laid clown in the law.
1wphi1

WHEREFORE, the petition is DENIED. The March 15, 2012 and June 18, 2012
Resolutions of the Court of Appeals, in CA G.R. SP No. 121378 are AFFIRMED.
The Office of the Ombudsman is DIRECTED to resolve the motion for
reconsideration of petitioner Gerardo R. ViIlaseor in OMB-A DM-0-01-03 76 and
OMB-ADM-0-01-0390 with immediate dispatch.
SO ORDERED.
G.R. No. 199310

February 19, 2014

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
REMMAN ENTERPRISES, INC., represented by RONNIE P.
INOCENCIO, Respondent.
DECISION

REYES, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision dated November 10, 2011 of the
Court of Appeals (CA) in CA-G.R. CV No. 90503. The CA affirmed the
Decision dated May 16, 2007 of the Regional Trial Court (RTC) of Pasig City,
Branch 69, in Land Registration Case No. N-11465.
1

The Facts
On December 3, 2001, Remman Enterprises, Inc. (respondent), filed an
application with the RTC for judicial confirmation of title over two parcels of land
situated in Barangay Napindan, Taguig, Metro Manila, identified as Lot Nos. 3068
and 3077, Mcadm-590-D, Taguig Cadastre, with an area of 29,945 square meters
and 20,357 sq m, respectively.
4

On December 13, 2001, the RTC issued the Order finding the respondents
application for registration sufficient in form and substance and setting it for initial
hearing on February 21, 2002. The scheduled initial hearing was later reset to May
30, 2002. The Notice of Initial Hearing was published in the Official Gazette, April 1,
2002 issue, Volume 98, No. 13, pages 1631-1633 and in the March 21, 2002 issue
of Peoples Balita, a newspaper of general circulation in the Philippines. The Notice
of Initial Hearing was likewise posted in a conspicuous place on Lot Nos. 3068 and
3077, as well as in a conspicuous place on the bulletin board of the City hall of
Taguig, Metro Manila.
5

On May 30, 2002, when the RTC called the case for initial hearing, only the Laguna
Lake Development Authority (LLDA) appeared as oppositor. Hence, the RTC issued
an order of general default except LLDA, which was given 15 days to submit its
comment/opposition to the respondents application for registration.
10

On June 4, 2002, the LLDA filed its Opposition to the respondents application for
registration, asserting that Lot Nos. 3068 and 3077 are not part of the alienable and
disposable lands of the public domain. On the other hand, the Republic of the
Philippines (petitioner), on July 16, 2002, likewise filed its Opposition, alleging that
the respondent failed to prove that it and its predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession of the subject parcels of land
since June 12, 1945 or earlier.
11

12

Trial on the merits of the respondents application ensued thereafter.

The respondent presented four witnesses: Teresita Villaroya, the respondents
corporate secretary; Ronnie Inocencio, an employee of the respondent and the one
authorized by it to file the application for registration with the RTC; Cenon Cerquena
(Cerquena), the caretaker of the subject properties since 1957; and Engineer
Mariano Flotildes (Engr. Flotildes), a geodetic engineer hired by the respondent to
conduct a topographic survey of the subject properties.
For its part, the LLDA presented the testimonies of Engineers Ramon Magalonga
(Engr. Magalonga) and Christopher A. Pedrezuela (Engr. Pedrezuela), who are both
geodetic engineers employed by the LLDA.
Essentially, the testimonies of the respondents witnesses showed that the
respondent and its predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession of the said parcels of land long before June 12,
1945. The respondent purchased Lot Nos. 3068 and 3077 from Conrado Salvador
(Salvador) and Bella Mijares (Mijares), respectively, in 1989. The subject properties
were originally owned and possessed by Veronica Jaime (Jaime), who cultivated
and planted different kinds of crops in the said lots, through her caretaker and hired
farmers, since 1943. Sometime in 1975, Jaime sold the said parcels of land to

Salvador and Mijares, who continued to cultivate the lots until the same were
purchased by the respondent in 1989.
The respondent likewise alleged that the subject properties are within the alienable
and disposable lands of the public domain, as evidenced by the certifications issued
by the Department of Environment and Natural Resources (DENR).
In support of its application, the respondent, inter alia, presented the following
documents: (1) Deed of Absolute Sale dated August 28, 1989 executed by Salvador
and Mijares in favor of the respondent; (2) survey plans of the subject
properties; (3) technical descriptions of the subject properties; (4) Geodetic
Engineers Certificate; (5) tax declarations of Lot Nos. 3068 and 3077 for 2002; and
(6) certifications dated December 17, 2002, issued by Corazon D. Calamno
(Calamno), Senior Forest Management Specialist of the DENR, attesting that Lot
Nos. 3068 and 3077 form part of the alienable and disposable lands of the public
domain.
13

14

15

16

17

18

On the other hand, the LLDA alleged that the respondents application for
registration should be denied since the subject parcels of land are not part of the
alienable and disposable lands of the public domain; it pointed out that pursuant to
Section 41(11) of Republic Act No. 4850 (R.A. No. 4850), lands, surrounding the
Laguna de Bay, located at and below the reglementary elevation of 12.50 meters are
public lands which form part of the bed of the said lake. Engr. Magalonga, testifying
for the oppositor LLDA, claimed that, upon preliminary evaluation of the subject
properties, based on the topographic map of Taguig, which was prepared using an
aerial survey conducted by the then Department of National Defense-Bureau of
Coast in April 1966, he found out that the elevations of Lot Nos. 3068 and 3077 are
below 12.50 m. That upon actual area verification of the subject properties on
September 25, 2002, Engr. Magalonga confirmed that the elevations of the subject
properties range from 11.33 m to 11.77 m.
19

On rebuttal, the respondent presented Engr. Flotildes, who claimed that, based on
the actual topographic survey of the subject properties he conducted upon the
request of the respondent, the elevations of the subject properties, contrary to
LLDAs claim, are above 12.50 m. Particularly, Engr. Flotildes claimed that Lot No.
3068 has an elevation ranging from 12.60 m to 15 m while the elevation of Lot No.
3077 ranges from 12.60 m to 14.80 m.
The RTC Ruling
On May 16, 2007, the RTC rendered a Decision, which granted the respondents
application for registration of title to the subject properties, viz:
20

WHEREFORE, premises considered, judgment is rendered confirming the title of the

applicant Remman Enterprises Incorporated over a parcels of land [sic] consisting of
29,945 square meters (Lot 3068) and 20,357 (Lot 3077) both situated in Brgy.
Napindan, Taguig, Taguig,
Metro Manila more particularly described in the Technical Descriptions Ap-04003103 and Swo-00-001769 respectively and ordering their registration under the
Property Registration Decree in the name of Remman Enterprises Incorporated.
SO ORDERED.

21

The RTC found that the respondent was able to prove that the subject properties
form part of the alienable and disposable lands of the public domain. The RTC
opined that the elevations of the subject properties are very much higher than the
reglementary elevation of 12.50 m and, thus, not part of the bed of Laguna Lake.
The RTC pointed out that LLDAs claim that the elevation of the subject properties is
below 12.50 m is hearsay since the same was merely based on the topographic

map that was prepared using an aerial survey on March 2, 1966; that nobody was
presented to prove that an aerial survey was indeed conducted on March 2, 1966 for
purposes of gathering data for the preparation of the topographic map.
Further, the RTC posited that the elevation of a parcel of land does not always
remain the same; that the elevations of the subject properties may have already
changed since 1966 when the supposed aerial survey, from which the topographic
map used by LLDA was based, was conducted. The RTC likewise faulted the
method used by Engr. Magalonga in measuring the elevations of the subject
properties, pointing out that:
Further, in finding that the elevation of the subject lots are below 12.5 meters,
oppositors witness merely compared their elevation to the elevation of the particular
portion of the lake dike which he used as his [benchmark] or reference point in
determining the elevation of the subject lots. Also, the elevation of the said portion of
the lake dike that was then under the construction by FF Cruz was allegedly 12.79
meters and after finding that the elevation of the subject lots are lower than the said
[benchmark] or reference point, said witness suddenly jumped to a conclusion that
the elevation was below 12.5 meters. x x x.
Moreover, the finding of LLDAs witness was based on hearsay as said witness
admitted that it was DPWH or the FF Cruz who determined the elevation of the
portion of the lake dike which he used as the [benchmark] or reference point in
determining the elevation of the subject lots and that he has no personal knowledge
as to how the DPWH and FF Cruz determined the elevation of the said [benchmark]
or reference point and he only learn[ed] that its elevation is 12.79 meters from the
information he got from FF Cruz.
22

Even supposing that the elevations of the subject properties are indeed below 12.50
m, the RTC opined that the same could not be considered part of the bed of Laguna
Lake. The RTC held that, under Section 41(11) of R.A. No. 4850, Laguna Lake
extends only to those areas that can be covered by the lake water when it is at the
average annual maximum lake level of 12.50 m. Hence, the RTC averred, only
those parcels of land that are adjacent to and near the shoreline of Laguna Lake
form part of its bed and not those that are already far from it, which could not be
reached by the lake water. The RTC pointed out that the subject properties are more
than a kilometer away from the shoreline of Laguna Lake; that they are dry and
waterless even when the waters of Laguna Lake is at its maximum level. The RTC
likewise found that the respondent was able to prove that it and its predecessors-ininterest have been in open, continuous, exclusive, and notorious possession of the
subject properties as early as 1943.
The petitioner appealed the RTC Decision dated May 16, 2007 to the CA.
The CA Ruling
On November 10, 2011, the CA, by way of the assailed Decision, affirmed the RTC
Decision dated May 16, 2007. The CA found that the respondent was able to
establish that the subject properties are part of the alienable and disposable lands of
the public domain; that the same are not part of the bed of Laguna Lake, as claimed
by the petitioner. Thus:
23

The evidence submitted by the appellee is sufficient to warrant registration of the

subject lands in its name. Appellees witness Engr. Mariano Flotildes, who
conducted an actual area verification of the subject lots, ably proved that the
elevation of the lowest portion of Lot No. 3068 is 12.6 meters and the elevation of its
highest portion is 15 meters. As to the other lot, it was found [out] that the elevation
of the lowest portion of Lot No. 3077 is also 12.6 meters and the elevation of its
highest portion is 15 meters. Said elevations are higher than the reglementary

elevation of 12.5 meters as provided for under paragraph 11, Section 41 of R.A. No.
4850, as amended.
In opposing the instant application for registration, appellant relies merely on the
Topographic Map dated March 2, 1966, prepared by Commodore Pathfinder, which
allegedly shows that the subject parcels of land are so situated in the submerge[d]
[lake water] of Laguna Lake. The said data was gathered through aerial photography
over the area of Taguig conducted on March 2, 1966. However, nobody testified on
the due execution and authenticity of the said document. As regards the testimony of
the witness for LLDA, Engr. Ramon Magalonga, that the subject parcels of land are
below the 12.5 meter elevation, the same can be considered inaccurate aside from
being hearsay considering his admission that his findings were based merely on the
evaluation conducted by DPWH and FF Cruz. x x x. (Citations omitted)
24

The CA likewise pointed out that the respondent was able to present certifications
issued by the DENR, attesting that the subject properties form part of the alienable
and disposable lands of the public domain, which was not disputed by the petitioner.
The CA further ruled that the respondent was able to prove, through the testimonies
of its witnesses, that it and its predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession of the subject properties prior to
June 12, 1945.
Hence, the instant petition.
The Issue
The sole issue to be resolved by the Court is whether the CA erred in affirming the
RTC Decision dated May 16, 2007, which granted the application for registration
filed by the respondent.
The Courts Ruling
The petition is meritorious.
The petitioner maintains that the lower courts erred in granting the respondents
application for registration since the subject properties do not form part of the
alienable and disposable lands of the public domain. The petitioner insists that the
elevations of the subject properties are below the reglementary level of 12.50 m and,
pursuant to Section 41(11) of R.A. No. 4850, are considered part of the bed of
Laguna Lake.
That the elevations of the subject properties are above the reglementary level of
12.50 m is a finding of fact by the lower courts, which this Court, generally may not
disregard. It is a long-standing policy of this Court that the findings of facts of the
RTC which were adopted and affirmed by the CA are generally deemed conclusive
and binding. This Court is not a trier of facts and will not disturb the factual findings
of the lower courts unless there are substantial reasons for doing so.
25

That the subject properties are not part of the bed of Laguna Lake, however, does
not necessarily mean that they already form part of the alienable and disposable
lands of the public domain. It is still incumbent upon the respondent to prove, with
well-nigh incontrovertible evidence, that the subject properties are indeed part of the
alienable and disposable lands of the public domain. While deference is due to the
lower courts finding that the elevations of the subject properties are above the
reglementary level of 12.50 m and, hence, no longer part of the bed of Laguna Lake
pursuant to Section 41(11) of R.A. No. 4850, the Court nevertheless finds that the
respondent failed to substantiate its entitlement to registration of title to the subject
properties.

"Under the Regalian Doctrine, which is embodied in our Constitution, all lands of the
public domain belong to the State, which is the source of any asserted right to any
ownership of land. All lands not appearing to be clearly within private ownership are
presumed to belong to the State. Accordingly, public lands not shown to have been
reclassified or released as alienable agricultural land, or alienated to a private
person by the State, remain part of the inalienable public domain. The burden of
proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration, who must prove that the land
subject of the application is alienable or disposable. To overcome this presumption,
incontrovertible evidence must be presented to establish that the land subject of the
application is alienable or disposable."
26

The respondent filed its application for registration of title to the subject properties
under Section 14(1) of Presidential Decree (P.D.) No. 1529 , which provides that:
27

Sec. 14. Who may apply. The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or through
their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.
xxxx
Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect or
incomplete titles to public land acquired under Section 48(b) of Commonwealth Act
(C.A.) No. 141, or the Public Land Act, as amended by P.D. No. 1073. Under
Section 14(1) of P.D. No. 1529, applicants for registration of title must sufficiently
establish: first, that the subject land forms part of the disposable and alienable lands
of the public domain; second, that the applicant and his predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession and occupation
of the same; and third, that it is under a bona fide claim of ownership since June 12,
1945, or earlier.
28

29

The first requirement was not satisfied in this case. To prove that the subject
property forms part of the alienable and disposable lands of the public domain, the
respondent presented two certifications issued by Calamno, attesting that Lot Nos.
3068 and 3077 form part of the alienable and disposable lands of the public domain
"under Project No. 27-B of Taguig, Metro Manila as per LC Map 2623, approved on
January 3, 1968."
30

However, the said certifications presented by the respondent are insufficient to prove
that the subject properties are alienable and disposable. In Republic of the
Philippines v. T.A.N. Properties, Inc., the Court clarified that, in addition to the
certification issued by the proper government agency that a parcel of land is
alienable and disposable, applicants for land registration must prove that the DENR
Secretary had approved the land classification and released the land of public
domain as alienable and disposable. They must present a copy of the original
classification approved by the DENR Secretary and certified as true copy by the
legal custodian of the records. Thus:
31

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable
and disposable. The applicant for land registration must prove that the DENR
Secretary had approved the land classification and released the land of the public
domain as alienable and disposable, and that the land subject of the application for
registration falls within the approved area per verification through survey by the
PENRO or CENRO. In addition, the applicant for land registration must present a
copy of the original classification approved by the DENR Secretary and certified as a

true copy by the legal custodian of the official records. These facts must be
established to prove that the land is alienable and disposable. Respondent failed to
do so because the certifications presented by respondent do not, by themselves,
prove that the land is alienable and disposable. (Emphasis ours)
32

In Republic v. Roche, the Court deemed it appropriate to reiterate the ruling in

T.A.N. Properties, viz:
33

Respecting the third requirement, the applicant bears the burden of proving the
status of the land. In this connection, the Court has held that he must present a
certificate of land classification status issued by the Community Environment and
Natural Resources Office (CENRO) or the Provincial Environment and Natural
Resources Office (PENRO) of the DENR. He must also prove that the DENR
Secretary had approved the land classification and released the land as alienable
and disposable, and that it is within the approved area per verification through
survey by the CENRO or PENRO. Further, the applicant must present a copy of the
original classification approved by the DENR Secretary and certified as true copy by
the legal custodian of the official records. These facts must be established by the
applicant to prove that the land is alienable and disposable.
Here, Roche did not present evidence that the land she applied for has been
classified as alienable or disposable land of the public domain. She submitted only
the survey map and technical description of the land which bears no information
regarding the lands classification. She did not bother to establish the status of the
land by any certification from the appropriate government agency. Thus, it cannot be
said that she complied with all requisites for registration of title under Section 14(1)
of P.D. 1529. (Citations omitted and emphasis ours)
34

The DENR certifications that were presented by the respondent in support of its
application for registration are thus not sufficient to prove that the subject properties
are indeed classified by the DENR Secretary as alienable and disposable. It is still
imperative for the respondent to present a copy of the original classification
approved by the DENR Secretary, which must be certified by the legal custodian
thereof as a true copy. Accordingly, the lower courts erred in granting the application
for registration in spite of the failure of the respondent to prove by well-nigh
incontrovertible evidence that the subject properties are alienable and disposable.
Nevertheless, the respondent claims that the Courts ruling in T.A.N. Properties,
which was promulgated on June 26, 2008, must be applied prospectively, asserting
that decisions of this Court form part of the law of the land and, pursuant to Article 4
of the Civil Code, laws shall have no retroactive effect. The respondent points out
that its application for registration of title to the subject properties was filed and was
granted by the RTC prior to the Courts promulgation of its ruling in T.A.N.
Properties. Accordingly, that it failed to present a copy of the original classification
covering the subject properties approved by the DENR Secretary and certified by
the legal custodian thereof as a true copy, the respondent claims, would not warrant
the denial of its application for registration.
The Court does not agree.
Notwithstanding that the respondents application for registration was filed and
granted by RTC prior to the Courts ruling in T.A.N. Properties, the pronouncements
in that case may be applied to the present case; it is not antithetical to the rule of
non-retroactivity of laws pursuant to Article 4 of the Civil Code. It is elementary that
the interpretation of a law by this Court constitutes part of that law from the date it
was originally passed, since this Courts construction merely establishes the
contemporaneous legislative intent that the interpreted law carried into effect. "Such
judicial doctrine does not amount to the passage of a new law, but consists merely
of a construction or interpretation of a pre-existing one."
35

36

Verily, the ruling in T.A.N. Properties was applied by the Court in subsequent cases
notwithstanding that the applications for registration were filed and granted by the
lower courts prior to the promulgation of T.A.N. Properties.
In Republic v. Medida, the application for registration of the subject properties
therein was filed on October 22, 2004 and was granted by the trial court on June 21,
2006. Similarly, in Republic v. Jaralve, the application for registration of the subject
property therein was filed on October 22, 1996 and was granted by the trial court on
November 15, 2002. In the foregoing cases, notwithstanding that the applications for
registration were filed and granted by the trial courts prior to the promulgation of
T.A.N. Properties, this Court applied the pronouncements in T.A.N. Properties and
denied the applications for registration on the ground, inter alia, that the applicants
therein failed to present a copy of the original classification approved by the DENR
Secretary and certified by the legal custodian thereof as a true copy.
37

38

Anent the second and third requirements, the Court finds that the respondent failed
to present sufficient evidence to prove that it and its predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and occupation of
the subject properties since June 12, 1945, or earlier.
To prove that it and its predecessors-in-interest have been in possession and
occupation of the subject properties since 1943, the respondent presented the
testimony of Cerquena. Cerquena testified that the subject properties were originally
owned by Jaime who supposedly possessed and cultivated the same since 1943;
that sometime in 1975, Jaime sold the subject properties to Salvador and Mijares
who, in turn, sold the same to the respondent in 1989.
The foregoing are but unsubstantiated and self-serving assertions of the possession
and occupation of the subject properties by the respondent and its predecessors-ininterest; they do not constitute the well-nigh incontrovertible evidence of possession
and occupation of the subject properties required by Section 14(1) of P.D. No. 1529.
Indeed, other than the testimony of Cerquena, the respondent failed to present any
other evidence to prove the character of the possession and occupation by it and its
predecessors-in-interest of the subject properties.
For purposes of land registration under Section 14(1) of P.D. No. 1529, proof of
specific acts of ownership must be presented to substantiate the claim of open,
continuous, exclusive, and notorious possession and occupation of the land subject
of the application. Applicants for land registration cannot just offer general
statements which are mere conclusions of law rather than factual evidence of
possession. Actual possession consists in the manifestation of acts of dominion over
it of such a nature as a party would actually exercise over his own property.
39

Although Cerquena testified that the respondent and its predecessors-in-interest

cultivated the subject properties, by planting different crops thereon, his testimony is
bereft of any specificity as to the nature of such cultivation as to warrant the
conclusion that they have been indeed in possession and occupation of the subject
properties in the manner required by law. There was no showing as to the number of
crops that are planted in the subject properties or to the volume of the produce
harvested from the crops supposedly planted thereon.
Further, assuming ex gratia argumenti that the respondent and its predecessors-ininterest have indeed planted crops on the subject properties, it does not necessarily
follow that the subject properties have been possessed and occupied by them in the
manner contemplated by law. The supposed planting of crops in the subject
properties may only have amounted to mere casual cultivation, which is not the
possession and occupation required by law.
"A mere casual cultivation of portions of the land by the claimant does not constitute
possession under claim of ownership. For him, possession is not exclusive and

notorious so as to give rise to a presumptive grant from the state. The possession of
public land, however long the period thereof may have extended, never confers title
thereto upon the possessor because the statute of limitations with regard to public
land does not operate against the state, unless the occupant can prove possession
and occupation of the same under claim of ownership for the required number of
years."
40

Further, the Court notes that the tax declarations over the subject properties
presented by the respondent were only for 2002. The respondent failed to explain
why, despite its claim that it acquired the subject properties as early as 1989, and
that its predecessors-in-interest have been in possession of the subject property
since 1943, it was only in 2002 that it started to declare the same for purposes of
taxation. "While tax declarations are not conclusive evidence of ownership, they
constitute proof of claim of ownership." That the subject properties were declared
for taxation purposes only in 2002 gives rise to the presumption that the respondent
claimed ownership or possession of the subject properties starting that year.
Likewise, no improvement or plantings were declared or noted in the said tax
declarations. This fact belies the claim that the respondent and its predecessors-ininterest, contrary to Cerquena's testimony, have been in possession and occupation
of the subject properties in the manner required by law.
41

Having failed to prove that the subject properties form part of the alienable and
disposable lands of the public domain and that it and its predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession and occupation
of the same since June 12, 1945, or earlier, the respondent's application for
registration should be denied.
1wphi1

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is

GRANTED. The Decision dated November 10, 2011 of the Court of Appeals in CAG.R. CV No. 90503, which affirmed the Decision dated May 16, 2007 of the
Regional Trial Court of Pasig City, Branch 69, in Land Registration Case No. N11465 is hereby REVERSED and SET ASIDE. The Application for Registration of
Remman Enterprises, Inc. in Land Registration Case No. N-11465 is DENIED for
lack of merit.
SO ORDERED.
[G.R. No. 131481, March 16 : 2011]
BUKLOD NANG MAGBUBUKID SA LUPAING RAMOS, INC., PETITIONER, VS. E. M.
RAMOS AND SONS, INC., RESPONDENT.
[G.R. No. 131624]
DEPARTMENT OF AGRARIAN REFORM, PETITIONER, VS. E. M. RAMOS AND SONS,
INC., RESPONDENT.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari, under Rule 45 of the
1997 Rules of Civil Procedure, filed by the Buklod ng Maqbubukid Sa Lupaing Ramos, Inc.
(Buklod) and the Department of Agrarian Regorm (DAR), assailing the Decision[1] dated
March 26, 1997 and the Resolution[2] dated November 24, 1997 of the Court of Appeals in
CA G.R. SP No. 40950.
The Court of Appeals declared the parcels of land owned by E.M. Ramos and Sons, Inc.
(EMRASON), located in Barangay Langkaan, Dasmarias, Cavite (subject property),
exempt from the coverage of the Comprehensive Agrarian Reform Program (CARP), thus,
nullifying and setting aside the Decision[3] dated February 7, 1996 and Resolution[4] dated
May 14, 1996 of the Office of hte President (OP) in O.P. Case No. 5461.
Quoted hereunder are the facts of the case as found by the Court of Appeals:

At the core of the controversy are several parcels of unirrigated land (303.38545 hectares)
which from part of a larger expanse with an area of 372 hectares situated at Barangay
Langkaan, Dasmarias, Cavite. Originally owned by the MAnila Golf and Country Club, he
property was aquired by the [herein repondent EMRASON] in 1965 for the purpose of
developing the same into a residential subdivision known as "Traveller's Life Homes".
Sometime in 1971, the Municipal Council of Dasmarias, Cavite, acting pursuant to
Republic Act (R.A.) No. 2264, otherwise known as the "Loval Autonomy Act", enacteed
Municipal Ordinance No. 1, hereinafter referred to as Ordinance No. 1, enitled "An Ordinance
Providing Subdivision Regulation and Providing Penalties for Violation Thereof."
In May, 1972, [respondent] E.M. Ramos and Sons, Inc., applied for an authority to convert
and development its aforementioned 372-hectare property into a residential subdivision,
ataching to the apllication detailed development plans and development proposals from
Bancom Development Corporation and San Miguel Corporation. Acting thereon the
Municipal Council of Dasmarias, Cavite passed on July 9, 1972 Municipal Ordinance No.
29-A (Ordinance "No. 29-A, for brevity), approving [EMRASON's] application. Ordinance No.
29-A pertinently reads:
"Resolved, as it is hereby resolved, to approve the application for subdivision containing an
area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan,
named as Traveller's Life Homes.
Resolved that the Municipal Ordinance regarding subdivision regulations existing in this
municipality shall be strictly followed by the subdivision ".
Subsequently, [EMRASON] paid the fees, dues and licenses needed to proceed with property
development.
It appears, however, that the actual implementation of the subdivision project suffered
delay owing to the confluence of events. Among these was the fact that the property in
question was then mortgaged to, and the titles thereto were in the possession of, the
Overseas Bank of Manila, which during the period material was under liquidation.
On June 15. 1988, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law or CARL, took effect, ushering in a new process of land classification, acquisition
and distribution.
On September 23, 1988, the Municipal Mayor of Dasmarias, Cavite addressed a letter to
[EMRASON], stating in part, as follows:
"In reply to your letter of June 2, 1988, we wish to clarify that the Municipality
of Dasmarias, Cavite, has approved the development of your property situated in Barrios
Bukal and Langkaan, Dasmarias, Cavite, with a total area of 3 72 hectares, more or less,
into residential, industrial, commercial and golf course project.
This conversion conforms with the approved Development Plan of the Municipality
of Dasmarias Cavite ".
Then came the Aquino government's plan to convert the tenanted neighboring property of
the National Development Company (NDC) into an industrial estate to be managed through
a joint venture scheme by NDC and the Marubeni Corporation. Part of the overall conversion
package called for providing the tenant-farmers, opting to remain at the NDC property, with
three (3) hectares each. However, the size of the NDC property turned out to be insufficient
for both the demands of the proposed industrial project as well as the government's
commitment to the tenant-farmers. To address this commitment, the Department of
Agrarian Reform (DAR) was thus tasked with acquiring additional lands from the nearby
areas. The DAR earmarked for this purpose the subject property of [EMRASON].
On August 29, 1990, then OAR Secretary Benjamin Leong sent out the first of four batches
of notices of acquisition, each of which drew protest from [EMRASON]. All told, these notices
covered 303.38545 hectares of land situated at Barangay Langkaan, Dasmarias, Cavite
owned by [EMRASON].
In the meantime, [EMRASON] filed with the Department of Agrarian Reform Adjudication
Board (DARAB), Region IV, Pasig, Metro Manila, separate petitions to nullify the first three
sets of the above notices. Collectively docketed as DARAB Case No. IV-Ca-0084-92, these
petitions were subsequently referred to the Office of the Regional Director, Region IV, which
had jurisdiction thereon. In his referral action, the Provincial Agrarian Adjudicator directed
the DAR Region IV, through its Operations Division, to conduct a hearing and/or
investigation lo determine whether or not the subject property is covered by the

Comprehensive Agrarian Reform Program (CARP) and, if not, to cancel the notices of
acquisition.
Forthwith, the DAR regional office conducted an on-site inspection of the subject property.
In the course of the hearing, during which [EMRASON] offered Exhibits :'A" to "UU-2" as
documentary evidence, [EMRASON] received another set of notices of acquisition. As lo be
expected, [EMRASON] again protested.
On August 28, 1992, the Legal Division of DAR, Region IV, through Hearing Officer Victor
Baguilat, rendered a decision declaring as null and void all the notices of acquisitions,
observing that the property covered thereby is, pursuant to Department of Justice (DOJ)
Opinion No. 44, series of 1990, exempt from CARP. The dispositive portion of the decision
reads, as follows;
''WHEREFORE, in the light of the foregoing x x x, considering that the notices of acquisition
dated August 29, 1990 relative to the 39 hectares partly covered by Transfer Certificate of
Title No. T-19298; notices of acquisition all dated April 3, 1991 relative to the 131.41975
hectares partly covered by Transfer Certificates of Title Nos. x x x; notices of acquisition all
dated August 28, 1991 relative lo the 56.9201 hectares covered by Transfer Certificates of
Title Nos. x x x; and notices of acquisition all dated May 15, 1992 relative to the 76.0456
covered by Transfer Certificates of Title Nos. xx, all located at Barangay Langkaan,
Dasmarias, Cavite and owned by petitioner EM RAMOS and SONS, INC. are null and void
on the ground that the subject properties are exempted from CARP coverage pursuant to
DOJ Opinion No. 44, Series of 1990, therefore, the aforesaid notices of acquisition be
cancelled and revoked. "
The DOJ Opinion adverted to, rendered by then Justice Secretary Franklin Drilon, clarified
that lands already converted to non-agricultural uses before June 15, 1988 were no longer
covered by CARP.
On September 3, 1992, the Region IV DAR Regional Director motu propio elevated the case
to the Office of the Agrarian Reform Secretary, it being his view that Hearing Officer
Baguilat's decision ran contrary to the department's official position "to pursue the coverage
of the same properties and its eventual distribution to qualified beneficiaries particularly the
Langkaan farmers in fulfillment of the commitment of the government to deliver to them
the balance of thirty-nine hectares x x x".
On January 6, 1993, the herein respondent DAR Secretary Ernesto Garilao [(DAR
Secretary Garilao)] issued an order, the decretal portion of which partly reads:
"WHEREFORE, in the interest of law and justice, an order is hereby rendered:
1. Affirming the Notices of Acquisition dated August 29, 1990, April 3, 1991, August 28,
1991 and May 15, 1992 covering 303.38545 hectares of the property owned by the E.M.
RAMOS & SONS, INC, located at Barangay Langkaan, Dasmarinas, Cavite x x x;
xxxx
3. Directing the OAR field officials concerned to pursue (he coverage under RA 6657 of the
properties of E.M. Ramos & Sons, Inc. for which subject Notices of Acquisition had been
issued.
SO ORDERED".
Its motion for reconsideration of the aforesaid order having been denied by the [DAR
Secretary Garilao] in his subsequent order of January 6, 1993, [EMRASON] appealed to
the Office of the President where the recourse was docketed as O.P. Case No. 5461.
On February 7, 1996, the Office of the President, through herein respondent Deputy
Executive Secretary Renato C. Corona [(Deputy Executive Secretary Corona)], rendered
the herein assailed decision x x x, dismissing [EMRASON's] appeal on the strength of the
following observation:
"To recapitulate, this Office holds that [EMRASON's] property has remained AGRICULTURAL
in classification and therefore falls within the coverage of the CARP, on the basis of the
following:br>
1. [EMRASON] failed to comply with the mandatory requirements and conditions of
Municipal Ordinance Nos. 1 and 29-A, specifically, among others, the need for

approval of the National Planning Commission through the Highway District

Engineer, and the Bureau of Lands before final submission to the Municipal Council
and Municipal Mayor;
2. [EMRASON] failed to comply with Administrative Order No. 152, dated December 16,
1968, and
3. The certification of the Human Settlements Regulatory Commission (HSRC) in
1981 and the Housing and Land Use Regulatory Board (HLRB) in 1992 that the
property of [EMRASON] is agricultural".

Undaunted, [EMRASON] interposed a motion for reconsideration, followed later by another

motion whereunder it invited attention to legal doctrines involving land conversion recently
enunciated by no less than the Office of the President itself.
On May 14, 1996, the [Deputy Executive Secretary Corona] came out with his second
challenged issuance denying [EMRASON's] aforementioned motion for reconsideration x x x.
[5]

From the denial of its Motion for Reconsideration by the OP, EMRASON filed a Petition for
Review with the Court of Appeals, which was docketed as CA-G.R. SP No. 40950.
On July 3, 1996, the Court of Appeals issued a Temporary Restraining Order (TRO), [6] which
enjoined then DAR Secretary Ernesto Garilao and Deputy Executive Secretary Renato C.
Corona from implementing the OP Decision of February 7, 1996 and Resolution of May 14,
1996 until further orders from the court. On September 17, 1996, the appellate court issued
a Resolution[8] granting the prayer of EMRASON for the issuance of a writ of preliminary
injunction. The writ of preliminary injunction[9] was actually issued on September 30, 1996
after EMRASON posted the required bond of P500,000,00.
The DAR Secretary filed a Motion for Reconsideration of the Resolution dated September 17,
1996 of the Court of Appeals, with the prayer that the writ of preliminary injunction already
issued be lifted, recalled and/or dissolved.
At this juncture, the DAR had already prepared Certificates of Land Ownership Award
(CLOAs) to distribute the subject property to farmer-beneficiaries. However, the writ of
preliminary injunction issued by the Court of Appeals enjoined the release of the CLOAs.
Buklod, on behalf of the alleged 300 farmer-beneficiaries of the subject property, filed a
Manifestation and Omnibus Motion, wherein it moved that it be allowed to intervene as an
indispensable party in CA-G.R. SP No. 40950; that the writ of preliminary injunction be
immediately dissolved, having been issued in violation of Section 55 of the CARL; and that
the Petition for Review of EMRASON be dismissed since the appropriate remedy should have
been a petition for certiorari before the Supreme Court.
On March 26, 1997, the Court of Appeals promulgated its assailed Decision.
The Court of Appeals allowed the intervention of Buklod because -the latter's participation
was "not being in any way prejudicial to the interest of the original parties, nor will such
intervention change the factual legal complexion of the case." The appellate court, however,
affirmed the propriety of the remedy availed by EMRASON given that under Section 5 of
Supreme Court Revised Administrative Circular No. 1-95 dated May 16, 1995, appeals from
judgments or final orders of the OP or the DAR under the CARL shall be taken to the Court
of Appeals, through a verified petition for review; and that under Section 3 of the same
Administrative Circular, such a petition for review may raise questions of facts, law, or mixed
questions of facts and law.
Ultimately, the Court of Appeals ruled in favor of EMRASON because the subject property
was already converted/classified as residential by the Municipality of Dasmarias prior to
the effectivity of the CARL. The appellate court reasoned:
For one, whether or not the Municipality of Dasmarias, Cavite had in place in the early
seventies a general subdivision plan is to us of no moment. The absence of such general
plan at that time cannot be taken, for the nonce, against the [herein respondent
EMRASON]. To our mind, the more weighty consideration is the accomplished fact that the
municipality, conformably with its statutory-conferred local autonomy, had passed a
subdivision measure, I.e., Ordinance No. 1, and had approved in line thereto, through the
medium of Ordinance No. 29-A, [EMRASON's] application for subdivision, or with like effect
approved the conversion/classification of the lands in dispute as residential. Significantly,
the Municipal Mayor of Dasmarias, Cavite, in his letter of September 23, 1988 to
[EMRASON], clarified that such conversion conforms with the approved development plan of

the municipality.
For another, the requirement prescribed by the cited Section 16[a] of Ordinance No. 1
relates to the approval in the first instance by the National Planning Commission of the final
plat of the scheme of the subdivision, not the conversion from agricultural to residential
itself. As [EMRASON] aptly puts it:
"x x x the final plat or final plan, map or chart of the subdivision is not a condition sine qua
non for the conversion x x x as the conversion was already done by the Municipal Council of
Dasmarias, Cavite. Municipal Ordinance NO. 29-A merely required that the final plat, or
final plan x x x of the subdivision be done in conformity with Municipal Ordinance No. 1, the
same to be followed by (he subdivision itself. [EMRASON] therefore did not have to
undertake the immediate actual development of the subject parcel of lands as the same had
already been converted and declared residential by law. x x x " (Petition, pp. 17 and 18).
[EMRASON's] pose has the merit of logic. As may be noted, Ordinance No. 29-A contained
two (2) resolutory portions, each interrelated to, but nonetheless independent of, the other.
The first resolution, reading "Resolved, as it is hereby resolved, to approve the application for subdivision containing an
area of Three Hundred Seventy-Two (372) Hectares situated in Barrios Bocal and Langkaan,
named as Travellers Life Homes "
approved the application for subdivision or the conversion of the 372-hectare area into
residential, while the second, reading "Resolved that the Municipal Ordinance regarding subdivision regulations existing in this
municipality shall be strictly followed by the subdivision "
provides that the subdivision owner/developer shall follow subdivision regulations, it will be
noted further that the second resolution already referred to the [EMRASON's] property as
"'subdivision", suggesting that the Municipal Council already considered as of that moment
[EMRASON's] area to be for residential use.
Another requirement which [EMRASON] allegedly failed to comply with is found in
Administrative Order (A.O.) No. 152, series of 1968, which pertinently provides "1. All Municipal Boards or City Councils, and all Municipal Councils in cities and
municipalities in which a subdivision ordinance is in force, shall submit three copies of every
proposed subdivision plan for which approval is sought together with the subdivision
ordinance, to the National Planning Commission for comment and recommendation ".
This Court is at a loss to understand how [EMRASON] could be expected to heed a directive
addressed to local government legislative bodies. From a perusal of the title of A.O. No.
152, it is at once obvious from whom it exacts compliance with its command, thus:
"REQUIRING THE MUNICIPAL BOARDS OR CITY COUNCILS AND MUNICIPAL COUNCILS TO
SUBMIT PROPOSED ORDINANCES AND SUBDIVISION PLANS TO THE NATIONAL PLANNING
COMMISSION FOR COMMENT AND RECOMMENDATION, BEFORE TAKING ACTION ON THE
SAME, AND TO FORWARD A COPY OF THEIR APPROVED SUBDIVISION ORDINANCES TO THE
SAID COMMISSION".
To be sure, [EMRASON] cannot be made to bear the consequences for the non-compliance,
if this be the case, by the Municipal Council of Dasmarinas, Cavite with what A.O. 152
required. A converse proposition would be antithetical to the sporting idea of fair play.[11]
As for the other requirements which EMRASON purportedly failed to comply with, the Court
of Appeals held that these became obligatory only after the subject property was already
converted to non-agricultural, to wit:
Foregoing considered, this Court holds that everything needed to validly effect the
conversion of the disputed area to residential had been accomplished. The only conceivable
step yet to be taken relates to the obtention of a conversion order from the DAR, or its
predecessor, the Ministry of Agrarian Reform (MAR.) under its rather intricate procedure
established under Memorandum Circular No. 11-79. But then, this omission can hardly
prejudice the [herein respondent EMRASON] for the DAR7MAR guidelines were promulgated
only in 1979, at which time the conversion of [EMRASON's] property was already a fait
accompli.
Like the conversion procedure set up under Memorandum Circular No. 11-79, the revised
methodology under the CARL cannot also be made to apply retroactively to lands duly
converted/classified as residential under the aegis of the Local Autonomy Act. For, as a rule,

a statute is not intended to affect transactions which occurred before it becomes operational
(Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE, Vol. I, 1983
ed.; p. 23). And as the landmark case of Natalia Realty, Inc. vs. Department of
Agrarian Reform, 225 SCRA 278, teaches:
"Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectively of CARL
by government agencies other than respondent DAR x x x.
xxxx
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is hound by
such conversion. It was therefore error to include the underdeveloped portions x x x within
the coverage of CARL".
It may be so, as the assailed decision stated, that in Natalia the lands therein involved
received a locational clearance from the Housing and Land Use Regulatory Board (HLRB,
formerly the Human Settlement Regulatory Commission [HSRC], as residential or
commercial, a factor [EMRASON] cannot assert in its favor. This dissimilarity, however,
hardly provides a compelling justification not to apply the lessons of Natalia. This is
because the property involved in this case, unlike that in Natalia, underwent
classification/conversion before the creation on May 13, 1976 of the HSRC, then known as
the Human Settlements Regulatory Commission (P.D. No. 933). Furthermore, what is
recognized as the HSRC's authority to classify and to approve subdivisions and
comprehensive land use development plans of local governments devolved on that agency
only upon its reorganization on February 7, 1981, with the issuance of Executive Order No.
648 known as the Charter of the Human Settlements Regulatory Commission. Section
5 of the same executive order invested the HSRC with the above classifying and approving
authority. In fine, the property of [EMRASON] went into the process of conversion at the
time when the intervention thereon of the HSRC, which was even then non-existent, was
unnecessary. Shortly before the creation of the HSRC, it would appear that to provincial,
city, or municipal councils/boards, as the case may be, belong the prerogative, albeit
perhaps not exclusive, to classify private lands within their respective territorial jurisdiction
and approve their conversion from agricultural to residential or other non-agricultural uses.
To paraphrase the holding in Patalinghug vs. Court of Appeals, 229 SCRA 554, once a
local government has, pursuant to its police power, reclassified an area as residential, that
determination ought to prevail and must be respected.[12]
The Court of Appeals further observed that the subject property has never been devoted to
any agricultural activity and is, in fact, more suitable for non-agricultural purposes, thus:
It is worthy to note that the CARL defines "agricultural lands" as "lands devqtedto
agricultural activity x x x and not classified as mineral, forest, residential, commercial or
industrial lands" (Sec. 3[c]). Guided by this definition, it is clear that [herein respondent
EMRASON's] area does not fall under the category of agricultural lands. For, let alone the
reality that the property is not devoted to some agricultural activity, being in fact
unirrigated, and, as implied in the decision of the DAR Hearing Officer Victor Baguilat,
without duly instituted tenants, the same had been effectively classified as residential. The
bare circumstance of its not being actually developed as subdivision or that it is
underdeveloped would not alter the conclusion. For, according to Natalia, what actually
determines the applicability of the CARL to a given piece of land is its previous classification
and not its current use or stages of development as non-agricultural property.
As a pragmatic consideration, the disputed area, in terms of its location in relation to
existing commercial/industrial sites and its major economic use, is more suitable for
purposes other than agriculture. In this connection, this Court notes that the property is
situated at the heart of the CALABARZON, and, as Annex "C" of the petition demonstrates,
lies adjacent to huge industrial/commercial complexes. The San Miguel-Monterey meat
plant, the NDC-Marubeni complex and the Reynolds Aluminum plant may be mentioned. For
sure, the Sangguniang Panlalawigan of Cavite, obviously cognizant of the economic potential
of certain areas in the Municipality of Dasmarias has, by Resolution No. 105, series of
1988. declared defined tracts of lands in the Municipality of Dasmarias as "industrialresidential-institutional mix."[13]
As a last point, the Court of Appeals justified its issuance of a writ of preliminary injunction
enjoining the implementation of the OP Decision dated February 7, 1996 and Resolution
dated May 14, 1996,viz:
As a final consideration, we will address the [herein petitioners] OAR Secretary's and
Buklod's joint concern regarding the propriety of the preliminary injunction issued in this
case. They alleged that the issuance is violative of Section 55 of the CARL which reads:

"SEC. 55. No Restraining Order or Preliminary

Injunction. - No Court in the Philippines shall have jurisdiction to issue any restraining order
or writ of preliminary injunction against the PARC or any of its duly authorized or designated
agencies in any case, dispute, controversy arising from, necessary to, or in connection with
the application, implementation, enforcement, or interpretation of this Act and other
pertinent laws on agrarian reform". (Underscoring added.)
As will be noted, the aforequoted section specifically mentions the Presidential Agrarian
Reform Council (PARC) of which the DAR Secretary is the Vice Chairman, or any of its duly
designated agencies as protected from an injunctive action of any court. These agencies
include the PARC Executive Committee, the PARC Secretariat, which the DAR Secretary
heads, and. on the local level, the different Agrarian Reform Action Committees (Sees. 41 to
45, R.A. No. 6657).
From the records, there is no indication that the [petitioner] Agrarian Reform
Secretary acted vis-a-vis the present controversy for, or as an agency of, the PARC. Hence,
he cannot rightfully invoke Section 55 of the CARL and avail himself of the protective mantle
afforded by that provision. The PARC, it bears to stress, is a policy-formulating and
coordinating body (Sec. 18. E.O. 229, July 22, 1987) without express adjudicatory mandate,
unlike the DAR Secretary who, as department head, is "vested with primary jurisdiction to
determine and adjudicate agrarian reform matters and shall have exclusive jurisdiction over
all matters involving the implementation of agrarian reform" (Sec. 50. R.A. 6657). Thus, it
is easy lo accept the proposition that the [petitioner] Agrarian Reform Secretary issued
his challenged orders in the exercise of his quasi-judicial power as department head. [14]
In the end, the Court of Appeals decreed:
WHEREFORE, the instant petition for review is hereby GRANTED. Accordingly, the
challenged decision dated February 7, 1996 and the resolution of May 14, 1996 of the Office
of the President in O.P. Case No. 5461 are hereby NULLIFIED, VACATED andSET ASIDE,
and the notices of acquisition issued by the Department of Agrarian Reform covering the
372-hectare property of the [herein respondent EMRASON] at Barangay Langkaan,
Dasmarias, Cavite declared VOID.
The writ of preliminary injunction issued by this Court on September 30, 1996 is hereby
made permanent.[15]
Buklod and DAR. filed their respective Motions for Reconsideration of the foregoing Decision
but both Motions were denied by the Court of Appeals in a Resolution dated November 24,
1997.
Aggrieved, Buklod and DAR filed the instant Petitions, which were consolidated by this Court
in a Resolution[16] dated August 19, 1998.
In G.R. No. 131481, Buklod raises the following arguments:
1] THE MUNICIPAL ORDINANCE INVOKED BY [EMRASON] AS CONVERSION OF THE
PROPERTY IN QUESTION ENACTED ON JULY 9, 1972 BY THE MUNICIPAL COUNCIL OF
DASMARIAS, CAVITE IS IMPOTENT BECAUSE THE MUNICIPAL ORDINANCE IMPOSED
CONDITIONS WHICH [EMRASON] NEVER COMPLIED. NO COMPLIANCE NO CONVERSION.
2] AT THE TIME THE ALLEGED ORDINANCE WAS ENACTED, A LAND REFORM LAW WAS
ALREADY IN EFFECT GRANTING SECURITY OF TENURE TO THE FARMERS SO THAT A
LANDOWNER CANNOT ARBITRARILY CONVERT AN AGRICULTURAL LAND INTO A DIFFERENT
CLASSIFICATION WITHOUT COMPLYING WITH LEGAL REQUIREMENTS (R.A. 3844).
3] A MERE MUNICIPAL ORDINANCE CANNOT NEGATE LAND REFORM RIGHTS GRANTED TO
THE FARMERS BY LEGISLATIVE ENACTMENT UNDER R.A. 3844 AND SUBSEQUENT LAWS.
LAND REFORM LAW BEING A SOCIAL LEGISLATION IS PARAMOUNT.
4] LAND REFORM IS A CONSTITUTIONAL MANDATE FOR THE BENEFIT OF THE LANDLESS
FARMERS SO THAT THE LAND REFORM LAW SHOULD BE CONSTRUED AND APPLIED IN
ORDER TO ATTAIN THE LEGISLATIVE INTENT OF RELIEVING THE FARMERS FROM THEIR
POVERTY AND BONDAGE. THE COURT OF APPEALS IGNORED THIS CONSTITUTIONAL
MANDATE TO FAVOR THE LANDLORD [EMRASON].
5] THE COURT OF APPEALS ISSUED A RESTRAINING ORDER/INJUNCTION AGAINST THE
CLEAR PROHIBITION IN THE CARL (SEC. 55 RA 6657) AND SO FAR DEPARTED FROM THE
USUAL COURSE OF BY REFUSING TO GRANT THE PETITIONER FARMERS A HEARING
INSPITE OF THE PROCEDURE PRESCRIBED BY RA 7902 (SEC. ]).[17]

In G.R. No. 131624, the DAR ascribes the following errors on the part of the Court of
Appeals:
I.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE MUNICIPALITY OF
DASMARIAS, CAVITE, WAS AUTHORIZED, UNDER THE LOCAL AUTONOMY ACT, TO
CLASSIFY AND/OR RECLASSIFY LANDS CONSIDERING THAT WHAT WAS CONFERRED
THEREUNDER WAS ONLY ZONING AUTHORITY, THUS, RENDER THE EXERCISE THEREOF BY
THE MUNICIPAL COUNCIL OF DASMARIAS, CAVITE, ULTRA VIRES;
II.
EVEN ASSUMING, IN GRATIA ARGUMENTI, THAT THE AUTHORITY TO CLASSIFY AND
RECLASSIFY LANDS IS POSSESSED BY MUNICIPAL CORPORATIONS, STILL THE HONORABLE
COURT OF APPEALS ERRED WHEN IT CONSIDERED THE ALLEGED PASSAGE OF ORDINANCE
NO. 29-A OF THE MUNICIPAL COUNCIL OF DASMARIAS, CAVITE, AS A VALID MEASURE
RECLASSIFYING SUBJECT AGRICULTURAL LAND TO NON-AGRICULTURAL USE
CONSIDERING THAT THE SAID APPROVAL OF THE SUBDIVISION, PER LETTER OF THE
MUNICIPAL MAYOR, FAILED TO COMPLY WITH EXISTING RULES AND REGULATIONS ON THE
MATTER AND, THEREFORE, NONCOMPLYING AND INEFFECTUAL; AND
III.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT APPLIED THE RULING OF THE
HONORABLE COURT IN THE NATALIA REALTY CASE DUE TO SUBSTANTIAL DISSIMILARITY
IN FACTUAL SETTING AND MILIEU.[18]
At the crux of the present controversy is the question of whether the subject property could
be placed under the CARP.
DAR asserts that the subject property could be compulsorily acquired by the State from
EMRASON and distributed to qualified farmer-beneficiaries under the CARP since it was still
agricultural land when the CARL became effective on June 15, 1988. Ordinance Nos. 1 and
29-A, approved by the Municipality of Dasmarias on July 13, 1971 and July 9, 1972,
respectively, did not reclassify the subject property from agricultural to non-agricultural. The
power to reclassify lands is an inherent power of the National Legislature under Section 9 of
Commonwealth Act No. 141, otherwise known as the Public Land Act, as amended, which,
absent a specific delegation, could not be exercised by any local government unit (LGU).
The Local Autonomy Act of 1959 - in effect when the Municipality of Dasmarias approved
Ordinance Nos. 1 and 29-A - merely delegated to cities and municipalities zoning authority,
to be understood as the regulation of the uses of property in accordance with the existing
character of the land and structures. It was only Section 20 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, which extended to cities and
municipalities limited authority to reclassity agricultural lands.
DAR also argues that even conceding that cities and municipalities were already authorized
in 1972 to issue an ordinance reclassifying lands from agricultural to non-agricultural,
Ordinance No. 29-A of the Municipality of Dasmarias was not valid since it failed to
comply with Section 3 of the Local Autonomy Act of 1959, Section 16(a) of Ordinance No. 1
of the Municipality of Dasmarinas, and Administrative Order No. 152 dated December 16,
1968, which all required review and approval of such an ordinance by the National Planning
Commission (NPC). Subsequent developments further necessitated review and approval of
Ordinance No. 29-A by the Human Settlements Regulatory Commission (HSRC), which later
became the Housing and Land Use Regulatory Board (HLURB).
DAR further avers that the reliance by the Court of Appeals -on Natalia Realty, Inc. v.
Department of Agrarian Reform[19] (Natalia Realty case) is misplaced because the lands
involved therein were converted from agricultural to residential use by Presidential
Proclamation No. 1637, issued pursuant to the authority delegated to the President under
Section 71, et seq., of the Public Land Act.[20]
Buklod adopts the foregoing arguments of DAR. In addition, it submits that prior to
Ordinance Nos. 1 and 29-A, there were already laws implementing agrarian reform,
particularly: (1) Republic Act No. 3844, otherwise known as the Agricultural Land Reform
Code, in effect since August 8, 1963, and subsequently amended by Republic Act No. 6389
on September 1.0, 1971, after which it became known as the Code of Agrarian Reforms;
and (2) Presidential Decree No. 27, otherwise known as the Tenants Emancipation Decree,
which took effect on November 19, 1972. Agricultural land could not be converted for the
purpose of evading land reform for there were already laws granting farmer-tenants security

of tenure, protection from ejectment without just cause, and vested rights to the land they
work on.
Buklod contends that EMRASON failed to comply with Section 36 of the Code of Agrarian
Reforms, which provided that the conversion of land should be implemented within one year,
otherwise, the conversion is deemed in bad faith. Given the failure of EMRASON to comply
with many other requirements for a valid conversion, the subject property has remained
agricultural. Simply put, no compliance means no conversion. In fact, Buklod points out,
the subject property is still declared as "agricultural" for real estate tax purposes.
Consequently, EMRASON is now estopped from insisting that the subject property is actually
"residential."
Furthermore, Buklod posits that land reform is a constitutional mandate which should be
given paramount consideration. Pursuant to said constitutional mandate, the Legislature
enacted the CARL. It is a basic legal principle that a legislative statute prevails over a mere
municipal ordinance.
Finally, Buklod questions the issuance by the Court of Appeals of a writ of preliminary
injunction enjoining the distribution of the subject property to the farmer-beneficiaries in
violation of Section 55 of the CARL; as well as the refusal of the appellate court to hold a
hearing despite Section 1 of Republic Act No. 7902,[21] prescribing the procedure for
reception of evidence before the Court of Appeals. At such a hearing, Buklod intended to
present evidence that the subject property is actually agricultural and that Buklod members
have been working on said property for decades, qualifying them as farmer-beneficiaries.
EMRASON, on the other hand, echoes the ruling of the Court of Appeals that the subject
property is exempt from CARP because it had already been reclassified as residential with
the approval of Ordinance No. 29-A by the Municipality of Dasmarias on July 9, 1972.
EMRASON cites Ortigas & Co., Ltd. Partnership v. Feati Bank and Trust Co.[22] (Ortigas case)
where this Court ruled that a municipal council is empowered to adopt zoning and
subdivision ordinances or regulations under Section 3 of the Local Autonomy Act of 1959.
Still relying on the Ortigas case, EMRASON avows that the Municipality of Dasmarias,
taking into account the conditions prevailing in the area, could validly zone and reclassify
the subject property in the exercise of its police power in order to safeguard the health,
safety, peace, good order, and general welfare of the people in the locality. EMRASON
describes the whole area surrounding the subject property as residential subdivisions (i.e.,
Don Gregorio, Metro Gate, Vine Village, and Cityland Greenbreeze 1 and 2 Subdivisions) and
industrial estates (i.e., Reynolds Aluminum Philippines, Inc. factory; NDC-Marubeni
industrial complex, San Miguel Corporation-Monterey cattle and piggery farm and
slaughterhouse), traversed by national highways (i.e., Emilio Aguinaldo National Highway,
Trece Martirez, Puerto Azul Road, and Governor's Drive). EMRASON mentions that on March
25, 1988, theSangguniang Panlalawigan of the Province of Cavite passed Resolution No. 105
which declared the area where subject property is located as "industrial-residentialinstitutional mix."
EMRASON further maintains that Ordinance No. 29-A of the Municipality of Dasmarias is
valid. Ordinance No. 29-A is complete in itself, and there is no more need to comply with the
alleged requisites which DAR and Buklod are insisting upon. EMRASON quotes
from Patalinghug v. Court of Appeals[23] (Patalinghug case) that "once a local government
has reclassified an area as commercial, that determination for zoning purposes must
prevail."
EMRASON points out that Ordinance No. 29-A, reclassifying the subject property, was
approved by the Municipality of Dasmarias on July 9, 1972. Executive Order No. 648,
otherwise known as the Charter of the Human Settlements Regulatory Commission (HSRC
Charter) - which conferred upon the HSRC the power and duty to review, evaluate, and
approve or disapprove comprehensive land use and development plans and zoning
ordinances of LGUs - was issued only on February 7, 1981. The exercise by HSRC of such
power could not be applied retroactively to this case without impairing vested rights of
EMRASON. EMRASON disputes as well the absolute necessity of submitting Ordinance No.
29-A to the NPC for approval. Based on the language of Section 3 of the Local Autonomy Act
of 1959, which used the word "may," review by the NPC of the local planning and zoning
ordinances was merely permissive. EMRASON additionally posits that Ordinance No. 1 of the
Municipality of Dasmarias simply required approval by the NPC of the final plat or plan,
map, or chart of the subdivision, and not of the rcclassification and/or conversion by the
Municipality of the subject property from agricultural to residential. As for Administrative
Order No. 152 dated December 16, 1968, it was directed to and should have been complied
with by the city and municipal boards and councils. Thus, EMRASON should not be made to
suffer for the non-compliance by the Municipal Council of Dasmarinas with said
administrative order.

EMRASON likewise reasons that since the subject property was already reclassified as
residential with the mere approval of Ordinance No. 29-A by the Municipality of Dasmarinas,
then EMRASON did not have to immediately undertake actual development of the subject
property. Reclassification and/or conversion of a parcel of land are different from the
implementation of the conversion.
EMRASOK is resolute in its stance that the Court of Appeals correctly applied the Natalia
Realty caseto the present case since both have similar facts; the only difference being that
the former involves a presidential fiat while the latter concerns a legislative fiat.
EMRASON denies that the Buklod members are farmer-tenants of the subject property. The
subject property has no farmer-tenants because, as the Court of Appeals observed, the
property is unirrigated and not devoted to any agricultural activity. The subject property was
placed under the CARP only to accommodate the farmer-tenants of the NDC property who
were displaced by the NDC-Marubeni Industrial Project. Moreover, the Buklod members are
still undergoing a screening process before the DAR-Region IV, and are yet to be declared as
qualified farmer-beneficiaries of the subject property. Hence, Buklod members tailed to
establish they already have vested right over the subject property.
EMRASON urges the Court not to consider issues belatedly raised by Buklod, It may be
recalled that Buklod intervened in CA-G.R. SP No. 40950 just before the Court of Appeals
rendered judgment in said case. When the appellate court promulgated its Decision on
March 26, 1997 favoring EMRASON, Buklod filed a Motion for Reconsideration of said
judgment, to which EMRASON, in turn, filed a Comment and Opposition. In its Reply to the
aforementioned Comment and Opposition of EMRASON, Buklod raised new factual matters,
specifically, that: (1) EMRASON has not even subdivided the title to the subject property 27
years after its purported reclassification/conversion; (2) EMRASON never obtained a
development permit nor mayor's permit to operate a business in Dasmarinas; and (3) the
farmer-tenants represented by Buklod have continuously cultivated the subject property.
There was no cogent or valid reason for the Court oi' Appeals to allow Buklod to present
evidence to substantiate the foregoing allegations. The DAR Region IV Hearing Officer
already conducted extensive hearings during which the farmers were duly represented.
Likewise, Buklod raises for the first time in its Petition before this Court the argument that
the Tenants Emancipation Decree prescribes a procedure for conversion which EMRASON
failed to comply with.
Lastly, EMRASON defends the issuance by the Court of Appeals of a writ of preliminary
injunction in CA-G.R. SP No. 40950. Section 55 of the CARL is inapplicable to the case at bar
because said provision only prohibits the issuance by a court of a TRO or writ of preliminary
injunction "against the PARC or any ol^ its duly authorized or designated agencies." As the
Court of Appeals declared, the PARC is a policy-formulating and coordinating body. There is
no indication whatsoever that the DAR Secretary was acting herein as an agent of the PARC.
The DAR Secretary issued the orders of acquisition for the subject property in the exercise
of his quasi-judicial powers as department head.
The Court, after consideration of the issues and arguments in the Petitions at bar, affirms
the Court of Appeals and rules in favor of EMRASON.
CARP coverage limited to agricultural land
Section 4, Chapter II of the CARL, as amended,24 particularly defines the coverage of the
CARP, to wit:
SEC. 4. Scope. - The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural
lands as provided in Proclamation No. 131 and Executive Order No. 229, including other
lands of the public domain suitable for agriculture: Provided, That landholdings of
landowners with a total area of five (5) hectares and below shall not be covered for
acquisition and distribution to qualified beneficiaries.
More specifically, the following lands are covered by the CARP:
(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall be
undertaken after the approval of this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined by law, the specific limits
of the public domain;
(b) All lands of the public domain in excess of the specific limits as determined by Congress
in the preceding paragraph;

(c) All other lands owned by the Government devoted to or suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon.
A comprehensive inventory system in consonance with the national land use plan shall be
instituted by the Department of Agrarian Reform (DAR), in accordance with the Local
Government Code, for the purpose of properly identifying and classifying farmlands within
one (1) year from effectivity of this /Vet. without prejudice to the implementation of the
land acquisition and distribution." (Emphases supplied.)
Section 3(c), Chapter I of the CARL further narrows down the definition of agricultural
land that is subject to CARP to "land devoted to agricultural activity as defined in this Act
and not classified as mineral, forest, residential, commercial or industrial land."
The CARL took effect on June 15, 1988. To be exempt from the CARP, the subject property
should have already been reclassified as residential prior to said date.
The Local Autonomy Act of 1959
The Local Autonomy Act of 1959, precursor of the Local Government Code of 1991,
provided;
SEC. 3. Additional powers of provincial boards, municipal boards or city councils and
municipal and regularly organized municipal district councils. - x x x
xxxx
Power to adopt zoning and planning ordinances. Any provision of law to the contrary
notwithstanding, Municipal Boards or City Councils in cities, and Municipal Councils in
municipalities are hereby authorized to adopt zoning and subdivision ordinances or
regulations for their respective cities and municipalities subject to the approval of the City
Mayor or Municipal Mayor, as the case may be. Cities and municipalities may, however,
consult the National Planning Commission on matters pertaining to planning and
zoning. (Emphases supplied.)
Pursuant to the foregoing provision, the Municipal Council of Dasmarias
approved Ordinance No. 1 on July 13, 1971, which laid down the general subdivision
regulations for the municipality; andResolution No. 29-A on July 9, 1972, which
approved the application for subdivision of the subject property.
The Court observes that the OP, the Court of Appeals, and even the parties themselves
referred to Resolution No. 29-A as an ordinance. Although it may not be its official
designation, calling Resolution No. 29-A as Ordinance No. 29-A is not completely inaccurate.
In the Ortigas & Co. case, the Court found it immaterial that the then Municipal Council of
Mandaluyong declared certain lots as part of the commercial and industrial zone through a
resolution, rather than an ordinance, because:
Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act, empowers a
Municipal Council "to adopt zoning and subdivision ordinances or regulations" for the
municipality. Clearly, the law docs not restrict the exercise of the power through an
ordinance. Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is
a regulatory measure within the intendment or ambit of the word
"regulation" under the provision. As a matter oi' fact the same section declares that the
power exists "(A)ny provision of law to the contrary notwithstanding x x x."[25](Emphases
supplied.)
Zoning and reclassification
Section 3(c), Chapter I of the CARL provides that a parcel oi^ land reclassified for nonagricultural uses prior to June 15, 1988 shall no longer be considered agricultural land
subject to CARP. The Court is now faced with the question of whether Resolution No. 29-A of
the Municipality of Dasmarias dated July 9, 1972, which approved the subdivision of the
subject property for residential purposes, had also reclassified the same from agricultural to
residential.
Zoning classification is an exercise by the local government of police power, not the power
of eminent domain. A zoning ordinance is defined as a local city or municipal legislation
which logically arranges, prescribes, defines, and apportions a given political subdivision into
specific land uses as present and future projection of needs.[26]

The Court gave a more extensive explanation of zoning in Pampanga Bus Company, Inc. v.
Municipality of Tarlac,[27] thus:
The appellant argues that Ordinance No. 1 is a zoning ordinance which the Municipal Council
is authorized to adopt. McQuillin in his treaties on Municipal Corporations (Volume 8, 3rd
ed.) says:
Zoning is governmental regulation of the uses of land and buildings according to districts or
zones. It is comprehensive where it is governed by a single plan for the entire municipality
and prevails throughout the municipality in accordance with that plan. It is partial or limited
where it is applicable only to a certain part of the municipality or to certain uses. Fire limits,
height districts and building regulations are forms of partial or limited zoning or use
regulation that are antecedents of modern comprehensive zoning, (pp. 11-12.)
The term "zoning," ordinarily used with the connotation of comprehensive or general zoning,
refers to governmental regulation of the uses of land and buildings according to districts or
zones. This regulation must and does utilize classification of uses within districts as well as
classification of districts, inasmuch as it manifestly is impossible to deal specifically with
each of the innumerable uses made of land and buildings. Accordingly, (zoning has been
defined as the confining of certain classes of buildings and uses to certain localities, areas,
districts or zones.) It has been stated that zoning is the regulation by districts of building
development and uses of property, and that the term "zoning" is not only capable of this
definition but has acquired a technical and artificial meaning in accordance therewith.
(Zoning is the separation of the municipality into districts and the regulation of buildings and
structures within the districts so created, in accordance with their construction, and nature
and extent of their use. It is a dedication of districts delimited to particular uses designed to
subserve the general welfare.) Numerous other definitions of zoning more or less in
accordance with these have been given in the cases, (pp. 27-28.)[28]
According to Section 1(b) of Ordinance No. 1, "[s]ubdivision means the division of a tract or
parcel of land into two or more lots, sites or other divisions for the purpose, whether
immediate or future, o[f| a sale or building development. It includes resubdivision, and
when appropriate to the context, relates to the process of subdividing as to the land of
territory subdivided." Subdivision ordinances or regulations such as Resolution No. 29-A, in
relation to Ordinance No. 1, constitute partial or limited zoning, for they are applicable to
a specific property in the city or municipality to be devoted for a certain use.
Section 9 of the Public Land Act - cited by the DAR and Buklod as the purported delegation
by the National Legislature of the power to reclassify - is immaterial to the instant cases.
Said provision reads:
SEC. 9. For the purpose of their administration and disposition, the lands of the public
domain alienable or open to disposition shall be classified, according to the use or purposes
to which such lands are destined, as follows:
(a)

Agricultural;

(b)

Residential, commercial, industrial, or for similar productive purposes;

(c)

Educational, charitable, or other similar purposes; and

(d)

Reservations for townsites and for public and quasi-public uses.

The President, upon recommendation by the Secretary of Agriculture and Natural Resources,
shall from time to time make the classifications provided for in this section, and may, at any
time and in a similar manner, transfer lands from one class to another. (Emphasis supplied.)
The power delegated to the President under the aforequoted provision of the Public Land Act
is limited to the classification of lands of the public domain that are alienable or open
to disposition. It finds no application in the present cases for the simple reason that the
subject property involved herein is no longer part of the public domain. The subject property
is already privately owned and accordingly covered by certificates of title.
The concept that concerns this Court in the instant cases is the reclassification of
agricultural lands. InAlarcon v. Court of Appeals,[29] the Court had the occasion to define and
distinguish reclassificationfrom conversion as follows:
Conversion is the act of changing the current use of a piece of agricultural land into some
other use as approved by the Department of Agrarian Reform. Reclassification, on the other
hand, is the act of specifying how agricultural lands shall be utilized for non-agricultural uses

such as residential, industrial, commercial, as embodied in the land use plan, subject to the
requirements and procedure for land use conversion, x x x. (Italics supplied.)
Reclassification also includes the reversion of non-agricultural lands to agricultural use.[31]
Under the present Local Government Code, it is clear that the authority to reclassify
agricultural lands primarily resides in the sanggunian of the city or municipality. Said
provision reads in full:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an ordinance
passed by the sanggunian after conducting public hearing for the purpose, authorize
the reclassification of agricultural lands and provide for the manner of their utilization
or disposition in the following cases: (X) when the land ceases to be economically feasible
and sound for agricultural purposes as determined by the Department of Agriculture or (2)
where the land shall have substantially greater economic value for residential, commercial,
or industrial purposes, as determined by the sanggunian concerned: Provided, That such
reclassification shall be limited to the following percentage of the total agricultural land area
at the time of the passage of the ordinance:
(1)

For highly urbanized and independent component cities, fifteen percent (15%);

(2)
and

For component cities and first to the third class municipalities, ten percent (10%);

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That
agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act
Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise known as "The
Comprehensive Agrarian Reform Law", shall not be affected by the said reclassification and
the conversion of such lands into other purposes shall be governed by Section 65 of said
Act.
(b) The President may, when public interest so requires and upon recommendation of the
National Economic and Development Authority, authorize a city or municipality to reclassify
lands in excess of the limits set in the next preceding paragraph.
(c) The local government units shall, in conformity with existing laws, continue toprepare
their respective comprehensive land use plans enacted through zoning
ordinances which shall be the primary and dominant bases for the future use of land
resources: Provided, That the requirements for food production, human settlements, and
industrial expansion shall be taken into consideration in the preparation of such plans.
(d) When approval by a national agency is required for reclassification, such approval
shall not be unreasonably withheld. Failure to act on a proper and complete application for
reclassification within three (3) months from receipt of the same shall be deemed as
approval thereof.
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any
manner the provisions of R.A. No. 6657. (Emphases supplied.)
Prior to the Local Government Code of 1991, the Local Autonomy Act of 1959 was silent on
the authority to reclassify agricultural lands. What the earlier statute expressly granted to
city and municipal boards and councils, under Section 3 thereof, was the power to adopt
zoning and subdivision ordinances and regulations.
DAR and Buklod insist that zoning is merely the regulation of land use based on
the existing character of the property and the structures thereon; and that zoning is a
lesser power compared to reclassification so that the delegation of the former to the local
government should not be deemed to include the latter.
Such arguments are easily refuted by reference to the definitions of zoning and
reclassification earlier presented herein, which support a more extensive concept of zoning
than that which DAR and BUKLOD assert.
By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define, and
apportion the land within its political jurisdiction into specific uses based not only on
the present, but also on the future projection of needs. To limit zoning to the existing
character of the property and the structures thereon would completely negate the power of
the local legislature to plan land use in its city or municipality. Under such circumstance,
zoning would involve no planning at all, only the rubber-stamping by the local legislature of
the current use of the land.

Moreover, according to the definition of reclassification, the specified non-agricultural use of

the land must be embodied in a land use plan, and the land use plan is enacted through a
zoning ordinance. Thus, zoning and planning ordinances take precedence over
reclassification. The reclassification of land use is dependent on the zoning and land use
plan, not the other way around.
It may, therefore, be reasonably presumed that when city and municipal boards and
councils approved an ordinance delineating an area or district in their cities or municipalities
as residential, commercial, or industrial zone, pursuant to the power granted to them under
Section 3 of the Local Autonomy Act of 1959, they were, at the same time, reclassifying any
agricultural lands within the zone for non-agri cultural use; hence, ensuring the
implementation of and compliance with their zoning ordinances. The logic and practicality
behind such a presumption is more evident when considering the approval by local
legislative bodies of subdivision ordinances and regulations. The approval by city and
municipal boards and councils of an application for subdivision through an ordinance should
already be understood to include approval of the reclassification of the land, covered by said
application, from agricultural to the intended non-agricultural use. Otherwise, the approval
of the subdivision application would serve no practical effect; for as long as the property
covered by the application remains classified as agricultural, it could not be subdivided and
developed for non-agricultural use.
A liberal interpretation of the zoning power of city and municipal boards and councils, as to
include the power to accordingly reclassify the lands within the zones, would be in accord
with the avowed legislative intent behind the Local Autonomy Act of 1959, which was to
increase the autonomy of local governments. Section 12 of the Local Autonomy Act of 1959
itself laid down rules for interpretation of the said statute:
SEC. 12. Rules for the interpretation of the Local Autonomy Act. 1. Implied power of a province, a city or municipality shall be liberally construed in its
favor. Any fair and reasonable doubt as to the existence of the power should be interpreted
in favor of the local government and it shall be presumed to exist.
2. The general welfare clause shall be liberally interpreted in case of doubt so as to
give more power to local governments in promoting the economic condition, social welfare
and material progress of the people in the community.
3. Vested rights existing at the time of the promulgation of this law arising out of a
contract between a province, city or municipality on one hand and a third party on the other,
should be governed by the original terms and provisions of the same, and in no case would
this act infringe existing rights.
Moreover, the regulation by local legislatures of land use in their respective territorial
jurisdiction through zoning and reclassification is an exercise of police power. In Binay v.
Domingo,32] the Court recognized that police power need not always be expressly
delegated, it may also be inferred:
The police power is a governmental function, an inherent attribute of sovereignty, which was
born with civilized government. It is founded largely on the maxims, "Sic utere tuo et
alienum non laedas" and "Salus populi est suprema lex" Its fundamental purpose is securing
the general welfare, comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of
Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise such power,
there must be a valid delegation of such power by the legislature which is the repository of
the inherent powers of the State. A valid delegation of police power may arise from
express delegation, or be inferred from the mere fact of the creation of the
municipal corporation; and as a general rule, municipal corporations may exercise
police powers within the fair intent and purpose of their creation which are
reasonably proper to give effect to the powers expressly granted, and statutes
conferring powers on public corporations have been construed as empowering
them to do the things essential to the enjoyment of life and desirable for the
safety of the people. (62 C.J.S., p. 277). The so-called inferred police powers of such
corporations are as much delegated powers as arc those conferred in express terms, the
inference of their delegation growing out of the fact of the creation of the municipal
corporation and the additional fact that the corporation can only fully accomplish the objects
of its creation by exercising such powers. (Crawfordsville vs. Braden, 28 N.E. 849).
Furthermore,municipal corporations, as governmental agencies, must have such
measures of the power as are necessary to enable them to perform their
governmental functions. The power is a continuing one, founded on public necessity. (62
C.J.S. p. 273) Thus, not only does the State effectuate its purposes through the exercise of

the police power but the municipality does also. (U.S. v. Salaveria, 39 Phil. 102).
Municipal governments exercise this power under the general welfare clause: pursuant
thereto they are clothed with authority to "enact such ordinances and issue such regulations
as may be necessary to carry out and discharge the responsibilities conferred upon it by
law, and such as shall be necessary and proper to provide for the health, safety, comfort
and convenience, maintain peace and order, improve public morals, promote the prosperity
and general welfare of the municipality and the inhabitants thereof, and insure the
protection of property therein." (Sections 91, 149, 177 and 208, BP 337). And under
Section 7 of BP 337, "every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary and proper for
governance such as to promote health and safety, enhance prosperity, improve morals, and
maintain peace and order in the local government unit, and preserve the comfort and
convenience of the inhabitants therein."
Police power is the power to prescribe regulations to promote the health, morals, peace,
education, good order or safety and general welfare of the people. It is the most essential,
insistent, and illimitable of powers. In a sense it is the greatest and most powerful attribute
of the government. It is elastic and must be responsive to various social conditions.
(Sangalang, el al. vs. IAC, 176 SCRA 719). On it depends the security of social order, the
life and health of the citizen, the comfort of an existence in a thickly populated community,
the enjoyment of private and social life, and the beneficial use of property, and it has been
said to be the very foundation on which our social system rests. (16 C.J.S., p. 896)
However, it is not confined within narrow circumstances of precedents resting on past
conditions; it must follow the legal progress of a democratic way of life. (Sangalang, el al.
vs. IAC, supra).
xxxx
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an
exact definition but has been, purposely, veiled in general terms to underscore its allcomprehensiveness. Its scope, over-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuring the greatest benefits.
The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the people
in their health, safely, comfort, and convenience as consistently as may be with private
rights. It extends to all the great public needs, and, in a broad sense includes all legislation
and almost every function of the municipal government. It covers a wide scope of subjects,
and, while it is especially occupied with whatever affects the peace, security, health, morals,
and general welfare of the community, it is not limited thereto, but is broadened to deal with
conditions which exists so as to bring out of them the greatest welfare of the people by
promoting public convenience or general prosperity, and to everything worthwhile for the
preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is
deemed inadvisable to attempt to frame any definition which shall absolutely indicate the
limits of police power.[33] (Emphases supplied.)
Based on the preceding discussion, it cannot be said that the power to reclassify agricultural
land was first delegated to the city and municipal legislative bodies under Section 26 of the
Local Government Code of 1991. Said provision only articulates a power of local legislatures,
which, previously, had only been implied or inferred.
Compliance with other requirements or conditions
Resolution No. 29-A is a valid ordinance, which, upon its approval on July 9, 1972,
immediately effected the zoning and reclassifying of the subject property for residential use.
It need not comply with any of the requirements or conditions which DAR and Buklod are
insisting upon.
DAR and Buklod aver that Resolution No. 29-A was not reviewed and approved by the NPC,
in violation of the line in Section 3 of the Local Autonomy Act of 1959, stating that "[c]ities
and municipalities may, however, consult the National Planning Commission on matters
pertaining to planning and zoning." Consideration must be given, however, to the use of the
word "may" in the said sentence. Where the provision reads "may," this word shows that it
is not mandatory but discretionary. It is an auxiliary verb indicating liberty, opportunity,
permission and possibility.[34] The use of the word "may" in a statute denotes that it is
directory in nature and generally permissive only. The "plain meaning rule" or verba legis in
statutory construction is thus applicable in this case. Where the words of a statute are clear,
plain, and free from ambiguity, it must be given its literal meaning and applied without
attempted interpretation.[35] Since consultation with the NPC was merely discretionary, then

there were only two mandatory requirements for a valid zoning or subdivision ordinance or
regulation under Section 3 of the Local Autonomy Act of 1959, namely, that (1) the
ordinance or regulation be adopted by the city or municipal board or council; and (2) it be
approved by the city or municipal mayor, both of which were complied with byl Resolution
No. 29-A.
Section 16(a) of Ordinance No. 1 of the Municipality of Dasmarias likewise mentions the
NPC, to wit:
a. Final plat of subdivision - As essential requirements before a subdivision is accepted for
verification by the Bureau of Lands, the final plat of the scheme of the subdivision must
comply with the provision of this ordinance. Application for plat approval shall be
submitted to the Municipal Mayor and shall be forwarded to the National Planning
Commission thru the Highway District Engineer for comment and/or
recommendations, before action is taken by the Municipal Council. The final approval
of the plat shall be made by the Municipal Mayor upon recommendation of the Municipal
Council by means of a resolution. (Emphasis supplied.)
The aforementioned provision of Ordinance No. 1 refers to the final plat of the subdivision.
The term plat includes "plat, plan, plot or replot."[36] It must be distinguished from the
application for subdivision.
The Court concurs with the analysis of the Court of Appeals that Resolution No. 29-A
actually contains two resolutions. The first reads:
Resolved, As it is hereby Resolved to approve the application for subdivisioncontaining
an area of Three Hundred Seventy-Two Hectares (372) situated in barrio Bocal and
Langkaan, named as Travellers Life Homes.[37] (Efriphasis supplied.)
It is manifest, even from just a plain reading of said resolution, that the application for
subdivision covering the subject property was categorically and unconditionally approved by
the Municipality of Dasmarinas. As a consequence of such approval, the subject property is
immediately deemed zoned and reclassified as residential.
Meanwhile, the second resolution in Resolution No. 29-A states:
Resolved, that this municipal ordinance regarding subdivision regulations existing in
this municipality shall be strictly followed by the subdivision.[38] (Emphases supplied.)
Significantly, this second resolution already refers to a "subdivision," supporting the
immediately executory nature of the First resolution. The municipal ordinance which the
subdivision must follow is Ordinance No. 1, the general subdivision regulations of the
Municipality of Dasmarinas. Most provisions of Ordinance No. 1 laid down the minimum
standards for the streets, roadways, sidewalks, intersections, lots and blocks, and other
improvements in the subdivision, with which the final plat must comply or conform.
Irrefragably, the review of the final plat of the subdivision calls for a certain level of
technical expertise; hence, the directive to the Municipal Mayor to refer the final plat to the
NPC, through the Highway District Engineer, for comments and recommendation, before the
same is approved by the Municipal Council, then the Mayor.
In relation to the preceding paragraph, Administrative Order No. 152 dated December 16,
1968 required city and municipal boards and councils to submit proposed subdivision
ordinances and plans or forward approved subdivision ordinances to the NPC. The OP
imposed such a requirement because "it has come to the attention of [the] Office that the
minimum standards of such ordinances regarding design, servicing and streets, and open
spaces for parks and other recreational purposes are not being complied with[.]" [39] Review
by the NPC of the proposed subdivision plan was for the purpose of determining "if it
conforms with the subdivision ordinance."[40]
It is apparent that Section 16(a) of Ordinance No. 1 and Administrative Ordinance No. 152
contained the same directive: that the final plat of the subdivision be reviewed by the NPC
to determine its conformity with the minimum standards set in the subdivision ordinance of
the municipality. A closer scrutiny will reveal that Section 16(a) of Ordinance No. 1 and
Administrative Order No. 152 related to the duties and responsibilities of local government
and NPC officials as regards the final plat of the subdivision. There is no evidence to
establish that the concerned public officers herein did not follow the review process for the
final plat as provided in Section 16(a) of Ordinance No. 1 and Administrative Order No. 152
before approving the same. Under Section 3(m), Rule 131 of the Rules of Court, there is a
presumption that official duty has been regularly performed. Thus, in the absence of
evidence to the contrary, there is a presumption that public officers performed their official
duties regularly and legally and in compliance with applicable laws, in good faith, and in the

exercise of sound judgment.[41] And - just as the Court of Appeals observed - even if it is
established that the accountable public officials failed to comply with their duties and
responsibilities under Section 16(a) of Ordinance No. 1 and Administrative Order No. 152, it
would be contrary to the fundamental precepts of fair play to make EMRASON bear the
consequences of such non-compliance.
Although the two resolutions in Resolution No. 29-A may be related to the same subdivision,
they are independent and separate. Non-compliance with the second resolution may result
in the delay or discontinuance of subdivision development, or even the imposition of the.
penalties[42] provided in Ordinance No. 1, but not the annulment or reversal of the first
resolution and its consequences.
The Court again agrees with the Court of Appeals that Resolution No. 29-A need not be
subjected to review and approval by the HSRC/HLURB. Resolution No. 29-A was approved
by the Municipality of Dasmarinas on July 9, 1972, at which time, there was even no
HSRC/HLURB to speak of.
The earliest predecessor of the HSRC, the Task Force on Human Settlements, was created
through Executive Order No. 419 more than a year later on September 19, 1973. And
even then, the Task Force had no power to review and approve zoning and subdivision
ordinances and regulations.
It was only on August 9, 1978, with the issuance of Letter of Instructions No. 729, that
local governments were required to submit their existing land use plans, zoning ordinances,
enforcement systems, and procedures to the Ministry of Human Settlements for review and
ratification.
The HSRC was eventually established on February 7, 1981. Section 5(b) of the HSRC
Charter43 contained the explicit mandate for the HSRC to:
b. Review, evaluate and approve or disapprove comprehensive land use
development plans and zoning ordinances of local government; and the zoning
component of civil works and infrastructure projects of national, regional and local
governments; subdivisions, condominiums or estate development projects including
industrial estates, of both the public and private sectors and urban renewal plans, programs
and projects: Provided, that the land use Development Plans and Zoning Ordinances of
Local Governments herein subject to review, evaluation and approval of the commission
shall respect the classification of public lands for forest purposes as certified by the Ministry
of Natural Resources: Provided, further, that the classification of specific alienable and
disposable lands by the Bureau of Lands shall be in accordance with the relevant zoning
ordinance of: Local government where it exists; and provided, finally, that in cities and
municipalities where there are as yet no zoning ordinances, the Bureau of Lands may
dispose of specific alienable and disposable lands in accordance with its own classification
scheme subject to the condition that the classification of these lands may be subsequently
change by the local governments in accordance with their particular zoning ordinances
which may be promulgated later. (Emphases supplied.)
Neither the Ministry of Human Settlements nor the HSRC, however, could have exercised its
power of review retroactively absent an express provision to that effect in Letter of
Instructions No. 729 or the HSRC Charter, respectively. A sound cannon of statutory
construction is that a statute operates prospectively only and never retroactively, unless the
legislative intent to the contrary is made manifest either by the express terms oi' the statute
or by necessary implication. Article 4 of the Civil Code provides that: "Laws shall have no
retroactive effect, unless the contrary is provided." Hence, in order that a law may have
retroactive effect, it is necessary that an express provision to this effect be made in the law,
otherwise nothing should be understood which is not embodied in the law. Furthermore, it
must be borne in mind that a law is a rule established to guide our actions without no
binding effect until it is enacted, wherefore, it has no application to past times but only to
future time, and that is why it is said that the law looks to the future only and has no
retroactive effect unless the legislator may have formally given that effect to some legal
provisions.[44]
Subsequent zoning ordinances
Still by the authority vested upon it by Section 3 of the Local Autonomy Act,
the Sangguniang Bayanof Dasmarias subsequently enacted a Comprehensive Zoning
Ordinance, ratified by the HLURB under Board Resolution No. 42-A-3 dated February 11,
1981 (1981 Comprehensive Zoning Ordinance of Dasmarinas). Upon the request of the
DAR, Engr. Alfredo Gil M. Tan, HLURB Regional Technical Coordinator, issued a
certification[45] dated September 10, 1992 stating that per the 1981 Comprehensive Zoning
Ordinance of Dasmarinas, the subject property was within the agricultural zone. Does this

mean that the subject property reverted from residential to agricultural classification?
The Court answers in the negative. While the subject property may be physically located
within an agricultural zone under the 1981 Comprehensive Zoning Ordinance of Dasmarinas,
said property retained its residential classification.
According to Section 17, the Repealing Clause, of the 1981 Comprehensive Zoning
Ordinance of Dasmarinas: "AH other ordinances, rules or regulations in conflict with the
provision of this Ordinance are hereby repealed: Provided, that rights that have vested
before the cffectivity of this Ordinance shall not be impaired."
In Ayog v. Cusi, Jr.,[46] the Court expounded on vested right and its protection:
That vested right has to be respected. It could not be abrogated by the new Constitution.
Section 2, Article XIII of the 1935 Constitution allows private corporations to purchase
public agricultural lands not exceeding one thousand and twenty-four hectares. Petitioners'
prohibition action is barred by the doctrine of vested rights in constitutional law.
"All right is vested when the right to enjoyment has become the property of some particular
person or persons as a present interest" (16 C.J.S. 1173). It is "the privilege to enjoy
property legally vested, to enforce contracts, and enjoy the rights of property conferred by
the existing law" (12 C.J.S. 955, Note 46, No. 6) or "some right or interest in property which
has become fixed and established and is no longer open to doubt or controversy" (Downs
vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. "A state may not impair
vested rights by legislative enactment, by the enactment or by the subsequent
repeal of a municipal ordinance, or by a change in the constitution of the State,
except in a legitimate exercise of the police power" (16 C.J.S. 1177-78).
It has been observed that, generally, the term "vested right" expresses the concept of
present fixed interest, which in right reason and natural justice should be protected against
arbitrary State action, or an innately just and imperative right which an enlightened free
society, sensitive to inherent and irrefragable individual rights, cannot deny (16 C.J.S. 1174,
Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd
587).47 (Emphasis supplied.)
It is true that protection of vested rights is not absolute and must yield to the exercise of
police power:
A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future contracts, but equally to
Ihose already in existence. Non-impairment of contracts or vested rights clauses will have to
yield to the superior and legitimate exercise by the State of police power to promote the
health, morals, peace, education, good order, safety, and general welfare of the people, x x
x.[48]
Nonetheless, the Sangguniang Bayan of Dasmarias in this case, in its exercise of police
power through the enactment of the 1981 Comprehensive Zoning Ordinance, itself abided
by the general rule and included in the very same ordinance an express commitment to
honor rights that had already vested under previous ordinances, rules, and regulations.
EMRASON acquired the vested right to use and develop the subject property as a residential
subdivision on July 9, 1972 with the approval of Resolution No. 29-A by the Municipality of
Dasmarinas. Such right cannot be impaired by the subsequent enactment of the 1981
Comprehensive Zoning Ordinance of Dasmarinas, in which the subject property was included
in an agricultural zone. Hence, the Municipal Mayor of Dasmariflas had been continuously
and consistently recognizing the subject property as a residential subdivision.[49]
Incidentally, EMRASON mentions Resolution No. 105, Defining and Declaring the Boundaries
of Industrial and Residential Land Use Plan in the Municipalities of Imus and Parts of
Dasmariflas, Carmona, Gen. Mariano Alvarez, Gen. Trias, Silang, Tanza, Naic, Rosario, and
Trece Martires City, Province o[ Cavite, approved by the Sangguniang Panlalawigan of Cavite
on March 25, 1988. TheSangguniang Panlalawigan determined that "the lands extending
from the said designated industrial areas would have greater economic value for residential
and institutional uses, and would serve the interest and welfare for the greatest good of the
greatest number of people."50 Resolution No. 105, approved by the HLURB in 1990, partly
reads:
Tracts of land in the Municipality of Carmona from the People's Technology Complex to parts
of the Municipality of Silang, parts of the Municipalities of Dasmarias, General Trias,

Trece Martires City, Municipalities of Tanza and Naic forming the strip of land traversed by
the Puerto Azul Road extending two kilometers more or less from each side of the road
which are hereby declared as industrial-residential-institutional mix. (Emphases
supplied.)
There is no question that the subject property is located within the afore-described area.
And even though Resolution No. 105 has no direct bearing on the classification of the
subject property prior to the CARL - it taking effect only in 1990 after being approved by the
HLURB - it is a confirmation that at present, the subject property and its surrounding areas
are deemed by the Province of Cavite better suited and prioritized for industrial and
residential development, than agricultural purposes.
CARP exemption
The Court reiterates that since July 9, 1972, upon approval of Resolution No. 29-A by the
Municipality of Dasmarinas, the subject property had been reclassified from agricultural to
residential. The tax declarations covering the subject property, classifying the same as
agricultural, cannot prevail over Resolution No. 29-A. The following pronouncements of the
Court in the Patalinghug case are of particular relevance herein:
The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's
building being declared for taxation purposes as residential. It is our considered view,
however, that a tax declaration is not conclusive of (he nature of the property for
zoning purposes. A property may have been declared by its owner as residential for real
estate taxation purposes but it may well be within a commercial zone. A discrepancy may
thus exist in the determination of the nature of property for real estate taxation purposes
vis-a-vis the determination of a property for zoning purposes.
xxxx
The trial court's determination that Mr. Tepoot's building is commercial and, therefore, Sec.
8 is inapplicable, is strengthened by the fact that the Sangguniang Panlungsod has declared
the questioned area as commercial or C-2. Consequently, even if Tepoot's building was
declared for taxation purposes as residential, once a local government has reclassified
an area as commercial, that determination for zoning purposes must prevail. While
the commercial character of the questioned vicinity has been declared thru the ordinance,
private respondents have failed to present convincing arguments to substantiate their claim
that Cabaguio Avenue, where the funeral parlor was constructed, was still a residential zone.
Unquestionably, the operation of a funeral parlor constitutes a "commercial purpose," as
gleaned from Ordinance No. 363.[52](Emphases supplied.)
Since the subject property had been reclassified as residential land by virtue of Resolution
No. 29-A dated July 9, 1972, it is no longer agricultural land by the time the CARL took
effect on June 15, 1988 and is, therefore, exempt from the CARP.
This is not the first time that the Court made such a ruling.
In the Natalia Realty case, Presidential Proclamation No. 1637 dated April 18, 1979 set
aside land in the Municipalities of Antipolo, San Mateo, and Montalban, Province of Rizal, as
townsite areas. The properties owned by Natalia Realty, Inc. (Natalia properties) were
situated within the areas proclaimed as townsite reservation. The developer of the Natalia
properties was granted the necessary clearances and permits by the PJSRC for the
development of a subdivision in the area. Thus, the Natalia properties later became the
Antipolo Hills Subdivision. Following the effectivity of the CARL on June 15, 1988, the DAR
placed the undeveloped portions of the Antipolo Hills Subdivision under the CARP. For having
done so, the Court found that the DAR committed grave abuse of discretion, thus:
Section 4 of R.A. 6657 provides that the CARL shall "cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands." As to what
constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as
defined in this Act and not classified as mineral, forest, residential, commercial or industrial
land." The deliberations of the Constitutional Commission confirm this limitation.
"Agricultural lands" arc only those lands which are "arable and suitable agricultural lands"
and "do not include commercial, industrial and residential lands."
Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills
Subdivision cannot in any language be considered as "agricultural lands." These lots were
intended for residential use. They ceased to be agricultural lands upon approval of
their inclusion in the Lungsod Silangan Reservation. Even today, the areas in question
continue to be developed as a low-cost housing subdivision, albeit at a snail's pace, x x
x The enormity of the resources needed for developing a subdivision may have

delayed its completion but this does not detract from the fact that these lands are
still residential lands and outside the ambit of the CARL.
Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the eifectivity of CARL by
government agencies other than respondent OAR. In its Revised Rules and Regulations
Governing Conversion of Private Agricultural Lands to Non-Agricultural Uses, DAR itself
defined ''agricultural land" thus "x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A.
6657 and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory Board (BLURB) and its
preceding competent authorities prior to 15 June 1988 for residential, commercial or
industrial use."
Since the NATALIA lands were converted prior to 15 June 1988, respondent DAR is bound by
such conversion. It was therefore error to include the undeveloped portions of the Antipolo
Hills Subdivision within the coverage of CARL.
Be that as it may, the Secretary of Justice, responding to a query by the Secretary of
Agrarian Reform, noted in an Opinion that lands covered by Presidential Proclamation No.
1637, inter alia, of which the NATALIA lands are part, having been reserved for townsite
purposes "to be developed as human settlements by the proper land and housing agency,"
are "not deemed 'agricultural lands' within the meaning and intent of Section 3 (c) of R.A.
No. 6657." Not being deemed "agricultural lands," they are outside the coverage of CARL.
[53]
(Emphases supplied.)
That the land in the Natalia Realty case was reclassified as residential by a presidential
proclamation, while the subject property herein was reclassified as residential by a local
ordinance, will not preclude the application of the ruling of this Court in the former to the
latter. The operative fact that places a parcel of land beyond the ambit of the CARL is its
valid reclassification from agricultural to non-agricultural prior to the effectivity of the CARL
on June 15, 1988, not by how or whose authority it was reclassified.
In Pasong Bayabas Farmers Association, Inc. v. Court of Appeals[54] (Pasong Bayabas case),
the Court made the following findings:
Under Section 3(c) of Rep. Acl No. 6657. agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land. Agricultural
lands are only those lands which are arable or suitable lands that do not include commercial,
industrial and residential lands. Section 4(e) of the law provides that it covers all private
lands devoted to or suitable for agriculture regardless of the agricultural products raised or
that can be raised thereon. Rep. Act No. 6657 took effect only on June 15, 1988. But long
before the law took effect, the property subject of the suit had already been
reclassified and converted from agricultural to non-agricultural or residential land
by the following administrative agencies: (a) the Bureau of Lands, when it approved
the subdivision plan of the property consisting of 728 subdivision lots; (b) the National
Planning Commission which approved the subdivision plan subdivided by the LDC/CAI for
the development of the property into a low-cost housing project; (c) the Municipal
Council of Carmona, Cavite, when it approved Kapasiyahang Blg. 30 on May 30,
1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979, when he granted
the application of the respondent for the development of the Hakone Housing Project with
an area of 35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional
Director of Region IV, which found, after verification and investigation, that the property was
not covered by P.D. No. 27, it being untenanted and not devoted to the production of
palay/or corn and that the property was suitable for conversion to residential subdivision:
(e) by the Ministry of Local Government and Community Development; (f) the Human
Settlements Regulatory Commission which issued a location clearance, development permit,
Certificate of Inspection and License to Sell to the LDC/private respondent: and, (g) the
Housing and Land Use Regulatory Board which also issued to the respondent CAI/LDC a
license to sell the subdivision lots." (Emphases supplied.)
Noticeably, there were several government agencies which reclassified and converted the
property from agricultural to non-agricultural in the Pasong Bayabas case. The CARL though
does not specify which specific government agency should have done the reclassification.
To be exempt from CARP, all that is needed is one valid reclassification of the land from
agricultural to non-agricultural by a duly authorized government agency before June 15,
1988, when the CARL took effect. All similar actions as regards the land subsequently
rendered by other government agencies shall merely serve as confirmation of the
reclassification. The Court actually recognized in the Pasong Bayabas case the power of the

local government to convert or reclassify lands through a zoning ordinance:

Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically
empowers municipal and/or city councils to adopt zoning and subdivision
ordinances or regulations in consultation with the National Planning Commission.
A zoning ordinance prescribes, defines, and apportions a given political subdivision into
specific land uses as present and future projection of needs. The power of the local
government to convert or reclassify lands to residential lands to non-agricultural
lands rcclassificd is not subject to the approval of the Department of Agrarian
Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner applies only to
applications by the landlord or the beneficiary for the conversion of lands previously placed
under the agrarian reform law after the lapse of five years from its award. It docs not apply
to agricultural lands already converted as residential lands prior to the passage of Rep. Act
No. 6657.[56](Emphases supplied.)
At the very beginning of Junto v. Garilao,[57] the Court already declared that:
Lands already classified and identified as commercial, industrial or residential before June
15, 1988 - the date of effectivity of the Comprehensive Agrarian Reform Law (CARL) - are
outside the coverage of this law. Therefore, they no longer need any conversion clearance
from the Department of Agrarian Reform (DAR).[58]
The Court then proceeded to uphold the authority of the City Council of Bacolod to reclassify
as residential a parcel of land through Resolution No. 5153-A, series of 1976. The
reclassification was later affirmed by the HSRC. Resultantly, the Court sustained the DAR
Order dated September 13, 1994, exempting the same parcel of land from CARP Coverage.
The writ of preliminary injunction
Any objection of Buklod against the issuance by the Court of Appeals of a writ of preliminary
injunction, enjoining then DAR Secretary Garilao and Deputy Executive Secretary Corona
from implementing the OP Decision of February 7, 1996 and Resolution of May 14, 1996
during the pendency of CA-G.R. SP No. 40950, had been rendered moot and academic when
the appellate court already promulgated its Decision in said case on March 26, 1997 which
made the injunction permanent. As the Court held in Kho v. Court of Appeals[59]:
We cannot likewise overlook the decision of the trial court in the case for final injunction and
damages. The dispositive portion of said decision held that the petitioner does not have
trademark rights on the name and container of the beauty cream product. The said decision
on the merits of the trial court rendered the issuance of the writ of a preliminary injunction
moot and academic notwithstanding the fact that the same has been appealed in the Court
of Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of
Appeals, to wit:
Considering that preliminary injunction is a provisional remedy which may be granted at
any time after the commencement of the action and before judgment when it is established
that the plaintiff is entitled to the relief demanded and only when his complaint shows facts
entitling such reliefs xxx and it appearing that the trial court had already granted the
issuance of a final injunction in favor of petitioner in its decision rendered after trial on the
merits xxx the Court resolved to Dismiss the instant petition having been rendered moot
and academic. An injunction issued by the trial court after it has already made a clear
pronouncement as to the plaintiffs right thereto, that is, after the same issue has been
decided on the merits, the trial court having appreciated the evidence presented, is proper,
notwithstanding the fact that the decision rendered is not yet final xxx.Being an ancillary
remedy, the proceedings for preliminary injunction cannot stand separately or proceed
independently of the decision rendered on the merit of the main case for injunction. The
merit of the main case having been already determined in favor of the applicant, the
preliminary determination of its non-existence ceases to have any force and effect, (italics
supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any
question on the preliminary injunctive order moot and academic despite the fact that the
decision granting a final injunction is pending appeal. Conversely, a decision denying the
applicant-plaintiffs right to a final injunction, although appealed, renders moot and academic
any objection to the prior dissolution of a writ of preliminary injunction. [60]
Issues belatedly raised
Buklod sought to intervene in CA-G.R. SP No. 40950, then pending before the Court of
Appeals, by filing a Manifestation and Omnibus Motion in which it argued only two points:
(1) the writ of preliminary injunction be immediately dissolved for having been issued in

violation of Section 55 of the CARL; and (2) that the Petition for Review of EMRASON be
dismissed for being the wrong remedy.
It was only after the Court of Appeals rendered its Decision dated March 26, 1997
unfavorable to both DAR and Buklod did Buklod raise in its Motion for Reconsideration
several other issues, both factual and legal,[61] directly assailing the exemption of the
subject property from the CARP. The Court of Appeals refused to consider said issues
because they were raised by Buklod for the first time in its Motion for Reconsideration.
Buklod persistently raises the same issues before this Court, and the Court, once more,
refuses to take cognizance of the same.
As a rule, no issue may be raised on appeal unless it has been brought before the lower
tribunal for its consideration. Higher courts are precluded from entertaining matters neither
alleged in the pleadings nor raised during the proceedings below, but ventilated for the first
time only in a motion for reconsideration or on appeal.[62] The issues were first raised only
in the Motion for Reconsideration of the Decision of the Court of Appeals, thus, it is as if
they were never duly raised in that court at all. "Hence, this Court cannot now, for the first
time on appeal, entertain these issues, for to do so would plainly violate the basic rule of
fair play, justice and due process. The Court reiterates and emphasizes the well-settled rule
that an issue raised for the first time on appeal and not raised timely in the proceedings in
the lower court is barred by estoppel.[63]
Indeed, there are exceptions to the aforecited rule that no question may be raised for the
first time on appeal. Though not raised below, the issue of lack of jurisdiction over the
subject matter may be considered by the reviewing court, as it may be raised at any stage.
The said court may also consider an issue not properly raised during trial when there is plain
error. Likewise, it may entertain such arguments when there are jurisprudential
developments affecting the issues, or when the issues raised present a matter of public
policy.[64] Buklod, however, did not allege, much less argue, that its case falls under any of
these exceptions.
Nonetheless, even when duly considered by this Court, the issues belatedly raised by Buklod
are without merit.
Contrary to the contention of Buklod, there is no necessity to carry out the conversion of the
subject property to a subdivision within one year, at the risk of said property reverting to
agricultural classification.
Section 36(1) of the Agricultural Land Reform Code, in effect since August 8, 1963,
provided:
SEC. 36. Possession of Landholding; Exceptions. Notwithstanding any agreement as to
the period or future surrender, of the land, an agricultural lessee shall continue in the
enjoyment and possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after due hearing it is
shown that:
(1) The agricultural lessor-owner or a member of his immediate family will personally
cultivate the landholding or will convert the landholding, if suitably located, into residential,
factory, hospital or school site or other useful non-agricultural purposes: Provided, That the
agricultural lessee shall be entitled to disturbance compensation equivalent to five years
rental on his landholding in addition to his rights under Sections twenty-five and thirty-four,
except when the land owned and leased by the agricultural lessor is not more than five
hectares, in which case instead of disturbance compensation the lessee may be entitled to
an advanced notice of at least one agricultural year before ejectment proceedings are filed
against him: Provided, further,That should the landholder not cultivate the land himself
for three years or fail to substantially carry out such conversion within one year
after the dispossession of the tenant, it shall be presumed that he acted in bad
faith and the tenant shall have the right to demand possession of the land and
recover damages for any loss incurred by him because of said dispossessions; xxx.
(Emphasis supplied.)
On September 10, 1971, the Agricultural Land Reform Code was amended and it came to
be known as the Code of Agrarian Reforms. After its amendment, Section 36(1) stated:
(1) The landholding is declared by the department head upon recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or some
other urban purposes: Provided, That the agricultural lessee shall be entitled to disturbance
compensation equivalent to five times the average of the gross harvests on his landholding
during the last five preceding calendar years.

At the time Resolution No. 29-A was enacted by the Municipality of Dasmarinas on July 9,
1972, the Code of Agrarian Reforms was already in effect. The amended Section 36(3)
thereof no longer contained the one-year time frame within which conversion should be
carried out.
More importantly, Section 36(1) of the Code o[ Agrarian Reforms would apply only if the
land in question was subject of an agricultural leasehold, a fact that was not established in
the proceedings below. It may do well for the Buklod members to remember that they filed
their present Petition to seek award of ownership over portions of the subject property as
qualified farmer-beneficiaries under the CARP; and not payment of disturbance
compensation as agricultural lessees under the Code of Agrarian Reforms. The insistence by
Buklod on the requisites under Section 36(1) of the Agricultural Land Reform Code/Code of
Agrarian Reforms only serves to muddle the issues rather than support its cause.
Buklod likewise invokes the vested rights of its members under the Agricultural Land Reform
Code/Code of Agrarian Reforms and the Tenants Emancipation Decree, which preceded the
CARP. Yet, for the Buklod
members to be entitled to any of the rights and benefits under the said laws, it is incumbent
upon them to prove first that they qualify as agricultural lessees or farm workers of the
subject property, as defined in Section 166(2)[65] and (15)[66]of the Code of Agrarian
Reforms; and/or they are tenant-farmers of private agricultural lands primarily devoted to
rice and corn, under a system of share-crop or lease tenancy, and are members of a duly
recognized farmer's cooperative, as required by the Tenants Emancipation Decree. None of
these determinative facts were established by Buklod.
Buklod counters that it precisely moved for a hearing before the Court of Appeals so that it
could present evidence to prove such facts, but the appellate court erroneously denied its
motion.
The Court finds that the Court of Appeals did not err on this matter.
In the recent case of Office of the Ombudsman v. Sison,[67] the Court expounded on the
rules on intervention:
It is fundamental that the allowance or disallowance of a Motion 10 Intervene is addressed
to the sound discretion of the court. The permissive tenor of the rules shows the intention lo
give to the court the full measure of discretion in permitting or disallowing the intervention,
thus:
SECTION 1. Who may intervene, - A person who has a Icga) interest in the mailer in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other disposition of property in the
custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the original parties, and whether or not
the intcrvenor's rights may be fully protected in a separate proceeding.
SECTION 2. Time to intervene. - The motion to intervene may be filed al any time
before rendition of judgment by the trial court. A copy of the pleading-in-intervention
shall be attached to the motion and served on the original parties. (Emphasis supplied.)
Simply, intervention is a procedure by which third persons, not originally parties to the suit
but claiming an interest in the subject matter, come into the case in order to protect their
right or interpose their claim. Its main purpose is to settle in one action and by a single
judgment all conflicting claims of, or the whole controversy among, the persons involved.
To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1)
the movant has a legal interest in the matter in litigation; and (2) intervention must not
unduly delay or prejudice the adjudication of the rights of the parties, nor should the claim
of the intervenor be capable of being properly decided in a separate proceeding. The
interest,' which entitles one to intervene, must involve the matter in litigation and of such
direct and immediate character that the intervenor will either gain or lose by the direct legal
operation and effect of the judgment.[68]
To apply the rules strictly, the motion of Buklod to intervene was filed too late. According to
Section 2, Rule 19 of the Rules of Civil Procedure, "a motion to intervene may be filed at
any time beforerendition of judgment by the trial court." Judgment was already rendered in
DARAB Case No. IV-Ca-0084-92 (the petition of EMRASON to nullify the notices of
acquisition over the subject property), not only by the DAR Hearing Officer, who originally

heard the case, but also the DAR Secretary, and then the OP, on appeal.
Buklod only sought to intervene when the case was already before the Court of Appeals. The
appellate court, in the exercise of its discretion, still allowed the intervention of Buklod in
CA-G.R. SP No. 40950 only because it was "not being in any way prejudicial to the interest
of the original parties,nor will such intervention change the factual legal complexion
of the case."[69] The intervention of Buklod challenged only the remedy availed by
EMRASON and the propriety of the preliminary injunction issued by the Court of Appeals,
which were directly and adequately addressed by the appellate court in its Decision dated
March 26, 1997.
The factual matters raised by Buklod in its Motion for Reconsideration of the March 26, 1997
Decision of the Court of Appeals, and which it sought to prove by evidence, inevitably
changes "the factual legal complexion of the case." The allegations of Buklod that its
members are tenant-farmers of the subject property who acquired vested rights under
previous agrarian reform laws, go against the findings of the DAR Region IV Hearing Officer,
adopted by the DAR Secretary, the OP, and Court of Appeals, that the subject property was
being acquired under the CARP for distribution to the tenant-farmers of the neighboring
NDC property, after a determination that the latter property was insufficient for the needs of
both the NDC-Marubeni industrial estate and the tenant-farmers.
Furthermore, these new claims of Buklod are beyond the appellate jurisdiction of the Court
of Appeals, being within the primary jurisdiction of the DAR. As Section 50 of the CARL, as
amended, reads:
SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).
In fact, records reveal that Buklod already sought remedy from the DARAB. DARAB Case
No. IV-CA-0261, entitled Buklod nang Magbubukid sa Lupaing Ramos, rep. by Edgardo
Mendoza, et at. v. E.M. Ramos and Sons, Inc., et al., was pending at about the same time
as DARAB Case No. lV-Ca-0084-92, the petition of EMRASON for nullification of the notices
of acquisition covering the subject property. These two cases were initially consolidated
before the DARAB Region IV. The DARAB Region IV eventually dismissed DARAB Case No.
IV-Ca-0084-92 and referred the same to the DAR Region IV Office, which had jurisdiction
over the case. Records failed to reveal the outcome of DARAB Case No. IV-CA-0261,
On a final note, this Court has stressed more than once that social justice - or any justice
for that matter - is for the deserving, whether he be a millionaire in his mansion or a pauper
in his hovel. It is true that, in case of reasonable doubt, the Court is called upon to tilt the
balance in favor of the poor to whom the Constitution fittingly extends its sympathy and
compassion. But never is it justified to give preference to the poor simply because they are
poor, or to reject the rich simply because they are rich, for justice must always be served for
poor and rich alike, according to the mandate of the law.[70] Vigilance over the rights of the
landowners is equally important because social justice cannot be invoked to trample on the
rights of property owners, who under our Constitution and laws are also entitled to
protection.[71]
WHEREFORE, the Petitions for Review filed by the Buklod Nang Magbubukid Sa Lupaing
Ramos, Inc. in G.R. No. 131481 and the Department of Agrarian Reform in G.R. No. 131624
are hereby DENIED. The Decision dated March 26, 1997 and the Resolution dated
November 24, 1997 of the Court of Appeals in CA-G.R. SP No. 40950 are
hereby AFFIRMED.
SO ORDERED.

G.R. No. L-63915 December 29, 1986

LORENZO M. TA;ADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF
ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(MABINI), petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the
President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive

Assistant to the President, MELQUIADES P. DE LA CRUZ, ETC., ET

AL.,respondents.
RESOLUTION

CRUZ, J.:
Due process was invoked by the petitioners in demanding the disclosure of a
number of presidential decrees which they claimed had not been published as
required by law. The government argued that while publication was necessary as a
rule, it was not so when it was "otherwise provided," as when the decrees
themselves declared that they were to become effective immediately upon their
approval. In the decision of this case on April 24, 1985, the Court affirmed the
necessity for the publication of some of these decrees, declaring in the dispositive
portion as follows:
WHEREFORE, the Court hereby orders respondents to publish in the Official
Gazette all unpublished presidential issuances which are of general
application, and unless so published, they shall have no binding force and
effect.
The petitioners are now before us again, this time to move for
reconsideration/clarification of that decision. 1Specifically, they ask the following questions:
1. What is meant by "law of public nature" or "general applicability"?
2. Must a distinction be made between laws of general applicability and laws which
are not?
3. What is meant by "publication"?
4. Where is the publication to be made?
5. When is the publication to be made?
Resolving their own doubts, the petitioners suggest that there should be no
distinction between laws of general applicability and those which are not; that
publication means complete publication; and that the publication must be made
forthwith in the Official Gazette. 2
In the Comment 3 required of the then Solicitor General, he claimed first that the motion was a
request for an advisory opinion and should therefore be dismissed, and, on the merits, that the clause
"unless it is otherwise provided" in Article 2 of the Civil Code meant that the publication required therein
was not always imperative; that publication, when necessary, did not have to be made in the Official
Gazette; and that in any case the subject decision was concurred in only by three justices and
consequently not binding. This elicited a Reply 4 refuting these arguments. Came next the February
Revolution and the Court required the new Solicitor General to file a Rejoinder in view of the supervening
events, under Rule 3, Section 18, of the Rules of Court. Responding, he submitted that issuances
intended only for the internal administration of a government agency or for particular persons did not have
to be 'Published; that publication when necessary must be in full and in the Official Gazette; and that,
however, the decision under reconsideration was not binding because it was not supported by eight
members of this Court. 5

The subject of contention is Article 2 of the Civil Code providing as follows:

ART. 2. Laws shall take effect after fifteen days following the completion of
their publication in the Official Gazette, unless it is otherwise provided. This
Code shall take effect one year after such publication.

After a careful study of this provision and of the arguments of the parties, both on
the original petition and on the instant motion, we have come to the conclusion and
so hold, that the clause "unless it is otherwise provided" refers to the date of
effectivity and not to the requirement of publication itself, which cannot in any event
be omitted. This clause does not mean that the legislature may make the law
effective immediately upon approval, or on any other date, without its previous
publication.
Publication is indispensable in every case, but the legislature may in its discretion
provide that the usual fifteen-day period shall be shortened or extended. An
example, as pointed out by the present Chief Justice in his separate concurrence in
the original decision, 6 is the Civil Code which did not become effective after fifteen days from its
publication in the Official Gazette but "one year after such publication." The general rule did not apply
because it was "otherwise provided. "

It is not correct to say that under the disputed clause publication may be dispensed
with altogether. The reason. is that such omission would offend due process insofar
as it would deny the public knowledge of the laws that are supposed to govern the
legislature could validly provide that a law e effective immediately upon its approval
notwithstanding the lack of publication (or after an unreasonably short period after
publication), it is not unlikely that persons not aware of it would be prejudiced as a
result and they would be so not because of a failure to comply with but simply
because they did not know of its existence, Significantly, this is not true only of penal
laws as is commonly supposed. One can think of many non-penal measures, like a
law on prescription, which must also be communicated to the persons they may
affect before they can begin to operate.
We note at this point the conclusive presumption that every person knows the law,
which of course presupposes that the law has been published if the presumption is
to have any legal justification at all. It is no less important to remember that Section
6 of the Bill of Rights recognizes "the right of the people to information on matters of
public concern," and this certainly applies to, among others, and indeed especially,
the legislative enactments of the government.
The term "laws" should refer to all laws and not only to those of general application,
for strictly speaking all laws relate to the people in general albeit there are some that
do not apply to them directly. An example is a law granting citizenship to a particular
individual, like a relative of President Marcos who was decreed instant
naturalization. It surely cannot be said that such a law does not affect the public
although it unquestionably does not apply directly to all the people. The subject of
such law is a matter of public interest which any member of the body politic may
question in the political forums or, if he is a proper party, even in the courts of justice.
In fact, a law without any bearing on the public would be invalid as an intrusion of
privacy or as class legislation or as anultra vires act of the legislature. To be valid,
the law must invariably affect the public interest even if it might be directly applicable
only to one individual, or some of the people only, and t to the public as a whole.
We hold therefore that all statutes, including those of local application and private
laws, shall be published as a condition for their effectivity, which shall begin fifteen
days after publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by
the President in the exercise of legislative powers whenever the same are validly
delegated by the legislature or, at present, directly conferred by the Constitution.
administrative rules and regulations must a also be published if their purpose is to
enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only
the personnel of the administrative agency and not the public, need not be
published. Neither is publication required of the so-called letters of instructions

issued by administrative superiors concerning the rules or guidelines to be followed

by their subordinates in the performance of their duties.
Accordingly, even the charter of a city must be published notwithstanding that it
applies to only a portion of the national territory and directly affects only the
inhabitants of that place. All presidential decrees must be published, including even,
say, those naming a public place after a favored individual or exempting him from
certain prohibitions or requirements. The circulars issued by the Monetary Board
must be published if they are meant not merely to interpret but to "fill in the details"
of the Central Bank Act which that body is supposed to enforce.
However, no publication is required of the instructions issued by, say, the Minister of
Social Welfare on the case studies to be made in petitions for adoption or the rules
laid down by the head of a government agency on the assignments or workload of
his personnel or the wearing of office uniforms. Parenthetically, municipal ordinances
are not covered by this rule but by the Local Government Code.
We agree that publication must be in full or it is no publication at all since its purpose
is to inform the public of the contents of the laws. As correctly pointed out by the
petitioners, the mere mention of the number of the presidential decree, the title of
such decree, its whereabouts (e.g., "with Secretary Tuvera"), the supposed date of
effectivity, and in a mere supplement of the Official Gazette cannot satisfy the
publication requirement. This is not even substantial compliance. This was the
manner, incidentally, in which the General Appropriations Act for FY 1975, a
presidential decree undeniably of general applicability and interest, was "published"
by the Marcos administration. 7 The evident purpose was to withhold rather than disclose
information on this vital law.

Coming now to the original decision, it is true that only four justices were
categorically for publication in the Official Gazette 8 and that six others felt that publication
could be made elsewhere as long as the people were sufficiently informed. 9 One reserved his vote 10 and
another merely acknowledged the need for due publication without indicating where it should be
made. 11 It is therefore necessary for the present membership of this Court to arrive at a clear consensus
on this matter and to lay down a binding decision supported by the necessary vote.

There is much to be said of the view that the publication need not be made in the
Official Gazette, considering its erratic releases and limited readership. Undoubtedly,
newspapers of general circulation could better perform the function of
communicating, the laws to the people as such periodicals are more easily available,
have a wider readership, and come out regularly. The trouble, though, is that this
kind of publication is not the one required or authorized by existing law. As far as we
know, no amendment has been made of Article 2 of the Civil Code. The Solicitor
General has not pointed to such a law, and we have no information that it exists. If it
does, it obviously has not yet been published.
At any rate, this Court is not called upon to rule upon the wisdom of a law or to
repeal or modify it if we find it impractical. That is not our function. That function
belongs to the legislature. Our task is merely to interpret and apply the law as
conceived and approved by the political departments of the government in
accordance with the prescribed procedure. Consequently, we have no choice but to
pronounce that under Article 2 of the Civil Code, the publication of laws must be
made in the Official Gazett and not elsewhere, as a requirement for their effectivity
after fifteen days from such publication or after a different period provided by the
legislature.
We also hold that the publication must be made forthwith or at least as soon as
possible, to give effect to the law pursuant to the said Article 2. There is that
possibility, of course, although not suggested by the parties that a law could be
rendered unenforceable by a mere refusal of the executive, for whatever reason, to
cause its publication as required. This is a matter, however, that we do not need to
examine at this time.

Finally, the claim of the former Solicitor General that the instant motion is a request
for an advisory opinion is untenable, to say the least, and deserves no further
comment.
The days of the secret laws and the unpublished decrees are over. This is once
again an open society, with all the acts of the government subject to public scrutiny
and available always to public cognizance. This has to be so if our country is to
remain democratic, with sovereignty residing in the people and all government
authority emanating from them.
Although they have delegated the power of legislation, they retain the authority to
review the work of their delegates and to ratify or reject it according to their lights,
through their freedom of expression and their right of suffrage. This they cannot do if
the acts of the legislature are concealed.
Laws must come out in the open in the clear light of the sun instead of skulking in
the shadows with their dark, deep secrets. Mysterious pronouncements and
rumored rules cannot be recognized as binding unless their existence and contents
are confirmed by a valid publication intended to make full disclosure and give proper
notice to the people. The furtive law is like a scabbarded saber that cannot feint
parry or cut unless the naked blade is drawn.
WHEREFORE, it is hereby declared that all laws as above defined shall immediately
upon their approval, or as soon thereafter as possible, be published in full in the
Official Gazette, to become effective only after fifteen days from their publication, or
on another date specified by the legislature, in accordance with Article 2 of the Civil
Code.
SO ORDERED.
B.M. No. 2713

June 10, 2014

ATTY. AILEEN R. MAGLANA, Complainant,

vs.
ATTY. JOSE VICENTE R. OPINION, Respondent.
RESOLUTION
BRION, J.:
Before the Court is the Appeal dated June 11, 2013 (with Urgent Motion to Prohibit
Protestant-Appellee to Participate in the Election for Executive Vice President of the
Integrated Bar of the Philippines [IBP] Set on June 15, 2013) filed by Atty. Aileen R.
Maglana, President of IBP Samar Chapter, assailing the June 7, 2013 decision of
the IBP Board of Governors (BOG).
1

This BOG decision granted the election protest of Atty. Jose Vicente R. Opinion;
declared Atty. Opinion as eligible to run for Governor of IBP Eastern Visayas for the
2013-2015 term; annulled the proclamation of Atty. Maglana as Governor of IBP
Eastern Visayas; and proclaimed Atty. Opinion as the duly elected Governor of IBP
Eastern Visayas for the 2013-2015 term.
3

The Antecedents
On May 25, 2013, thirteen (13) delegates of the IBP Eastern Visayas Region
gathered at the Session Hall of the Regional Trial Court (RTC), Branch 24,
Bulwagan ng Katarungan, Capitol Site, Maasin, Leyte, to elect the Governor of their
region for the 2013-2015 term. Also present during the meeting were the Courts
designated observer, Judge Bethany G. Kapili (Executive Judge of the RTC, Branch
24, Maasin, Leyte), other lawyers of the Southern Leyte Chapter and outgoing

Governor Manuel Enage, Jr. Governor Enage presided over the election. He then
called the election to order and opened the nominations for the position of Governor
of IBP Eastern Visayas for the 2013-2015 term.
4

Upon a motion duly seconded, Atty. Maglana - the incumbent President of IBP
Samar Chapter - was nominated for the position of Governor. Atty. Maglana then
moved that Governor Enage declare that only IBP Samar Chapter was qualified to
be voted upon for the position of Governor for IBP Eastern Visayas, to the exclusion
of all the other eight (8) chapters. Atty. Maglana cited the rotation rule under Bar
Matter No. 491 and argued that since 1989 or the start of the implementation of the
rotation rule, only IBP Samar Chapter had not served as Governor for IBP Eastern
Visayas.
5

Atty. Opinion, the candidate of the IBP Eastern Samar Chapter, thereafter, took the
floor and manifested that before he decided to run for Governor, he sought the
opinion of the IBP if he was still qualified to run considering that he also ran for
Governor and lost in the immediately preceding term. Atty. Opinion stated that he
received an opinion dated April 2, 2013 from Governor Vicente M. Joyas, Chairman
of the IBP Executive Committee, that pertinently stated:
6

This has reference to your Letter dated March 15, 2013 addressed to former IBP
President Roan I. Libarios seeking clarification on your Chapters qualification to
field a candidate for Governor on May 25, 2013.
Please be informed that your having lost the Governorship elections for Eastern
Visayas in 2011 does not disqualify your Chapter from seeking an election for
Governorship of Eastern Visayas Region. Thus, under the present set up, the IBP
Chapters of Eastern Samar, Samar, and Biliran are qualified to field their respective
candidate for the scheduled Regional Elections on May 25, 2013.
7

Atty. Opinion also manifested that in the 2011 Regional Elections for IBP Eastern
Visayas, the representative of IBP Samar Chapter, Judge Amanzar, waived "the
votes as he cannot pursue an election at that time." Instead, Atty. Opinion was
"asked to run." The Chapter President of Samar in 2011, however, categorically
denied the waiver and said, "I did not pursue my intentions, although I had one at
that time to run for governor, because I was financially handicapped... but I did not
categorically waive our right to the governorship, because I believe that waiver
should be, - should not be implied. I categorically say that I did not waive my right, or
the right of the chapter to run for governor."
8

Atty. Jose Aguilar Grapilon, the delegate from Biliran, meanwhile pointed out that
Governor Joyas as Chairman of the IBP Executive Committee had no authority to
make the above-cited pronouncement; it is only the Supreme Court that has the
authority to determine the qualified chapters in the region.
10

After heated debates on the proper interpretation of the rotation rule to the present
case, Governor Enage eventually ruled that Atty. Opinion was disqualified from
running for the position of Governor of IBP Eastern Visayas. Thereafter, some
delegates protested the decision of Governor Enage which prompted him to call a
recess. When the session resumed, Atty. Malig-on, Vice President of IBP Cebu
Chapter, moved that the election be suspended and the issue of Atty. Opinions
objection to Governor Enages ruling be resolved by the IBP BOG. Governor Enage,
however, denied this motion and, thereafter, ordered the distribution of the ballots.
11

12

The counting of the ballots revealed that only ten (10) out of the eleven (11) ballots
cast were filled up. Governor Enage counted the votes, with six (6) votes in favor of
Atty. Opinion considered as stray votes and four (4) votes in favor of Atty. Maglana.
He then proceeded to proclaim Atty. Maglana as the duly elected Governor of IBP
Eastern Visayas in view of the disqualification of the other nominee, Atty. Opinion.
13

The Protest
On May 27, 2013, Atty. Opinion filed an election protest with the IBP BOG. In
support of his election protest, Atty. Opinion raised two points.
14

First, he noted that since its introduction in 1990, the rotation rule had not been
followed in the elections for Governor of IBP Eastern Visayas since Cebu Province,
Cebu City, Bohol and Northern Samar have had two elected governors each, as
opposed to other chapters which only had one governor elected. Since the rotation
rule was not followed, IBP Eastern Samar Chapter cannot be disqualified to run
since it was merely exercising its right to run for the second time in the same
manner as that of the other chapters that had elected two governors.
15

Second, he emphasized that IBP Samar Chapter had waived its turn in the rotation
when it did not field a candidate for Governor in the 2007, 2009 and 2011 elections.
He notes that IBP Samar Chapter should not be allowed to assert its turn in the
rotation at anytime; otherwise, it would disrupt the sequence considering it "follows
Cebu City sequence wise." Thus, for the 2013 regional elections, both Eastern
Samar and Samar should have been declared eligible to run for Governor of IBP
Eastern Visayas.
16

In her Comment, Atty. Maglana argued three points.

17

First, IBP Samar Chapter did not waive its turn in the rotation. In fact, the former IBP
Samar Chapter President, Atty. Cesar Mabansag, categorically denied, during the
May 25,2013 regional elections, that he had waived the right of IBP Samar Chapter
to the governorship. Even if there was a waiver during the 2011 election, IBP Samar
Chapter can reclaim its right to the governorship before the rotation is completed,
pursuant to Section 39, Article VI, as amended, of the IBP By-Laws. Thus, for the
2013-2015 term, IBP Samar Chapter, which remains to be the only chapter that did
not have its turn in the rotation, should be allowed to reclaim its right to the
governorship.
18

Second, she noted that since Bar Matter No. 586, dated May 14, 1991, mandated
the strict implementation of the rotation rule, and based on IBP records, all chapters
in the region, except IBP Samar Chapter, have already had their turn in the rotation.
Thus, she argued that in order for the rotation cycle in the region to be completed,
IBP Samar Chapter, which had not yet had its turn in the rotation, should be deemed
the only qualified chapter to field its candidate for governor in the May 25, 2013
regional elections.
19

Third, she contended that even if the rotation cycle is reckoned from 1973, it is still
IBP Samar Chapters turn in the rotation, pursuant to the rotation rule under Section
39,Article VI, as amended, of the IBP By-Laws. She notes that with the election of
Governor Enage in the 2011-2013 term, the remaining chapters that have not served
as governor are Samar, Biliran and Eastern Samar Chapters. Thus, pursuant to
Section 39, IBP Samar Chapter should be able to field its candidate for governor
first, ahead of Biliran and Eastern Samar Chapters.
20

The IBP BOG Decision

In its June 7, 2013 decision, the IBP BOG granted the election protest of Atty.
Opinion and declared him the duly elected Governor of IBP Eastern Visayas for the
2013-2015 term.
First, the IBP BOG held that IBP Samar waived its turn in the first rotation cycle,
from 1989 to 2007. It noted that under the rotation rule, the governorship of a region
shall rotate once in as many as the number of chapters there are in the region, to
give every chapter a chance to represent the region in the IBP BOG. In the case of
IBP Eastern Visayas, the region consists of nine (9) chapters, thus the cycle consists

of nine governorship terms (from 1989 to 2007). Based on the records, it is clear that
four chapters have been represented twice; IBP Eastern Samar was represented
once while IBP Samar was never represented at all.
Based on these considerations, the IBP BOG concluded that IBP Samar Chapter
effectively waived its turn in the rotation order when it did not field any candidate
from 1989 to 2007,as well as when it did not invoke the rotation rule to challenge the
nominations of those candidates whose chapters had already been previously
represented in the rotation cycle.
21

Second, the IBP BOG ruled that the first rotation cycle had already terminated with
the 2005 to 2007 term despite the lack of representation from Eastern Samar as it
has effectively waived its turn in the first rotation cycle. It emphasized that the
rotation rule is not absolute and is subject to waiver, such as when the chapters, in
the order of rotation, opt not to file or nominate their own candidates for governor
during the election regularly done for that purpose. It also held that Atty. Maglanas
contentions that IBP Eastern Samar can reclaim the governorship at any time and
that the first rotation cycle cannot be completed unless IBP Eastern Samar has had
its turn are completely anathema to the concept of the rotation cycle; the rotation
cycle should run its course and the rotation in the region cannot be held hostage by
any one chapter.
22

Third, the IBP BOG found that based on the rotation by exclusion rule (i.e., once a
member of the chapter is elected as governor, his or her chapter would be excluded
in the next turn until all have taken turns in the rotation cycle), the six (6) remaining
chapters in the region were actually qualified to field a candidate for governor in the
May 25, 2013 regional elections. It also noted that the IBP Eastern Visayas region is
actually already in its second rotation cycle with governors from Leyte (2007-2009),
Bohol (2009-2011) and Southern Leyte (2011-2013) already having served the
region. In the present case, both IBP Eastern Samar and IBP Samar were actually
qualified to field their candidates for Governor, alongside IBP Cebu City, IBP Cebu
Province, IBP Biliran and IBP Northern Samar Chapters.
23

Fourth, the IBP BOG concluded that Atty. Opinion, who was actually a qualified
candidate for Governor of IBP Eastern Visayas, should be declared the duly elected
Governor for IBP Eastern Visayas for the 2013-2015 term, considering that he
garnered the majority six (6) votes, as opposed to the minority four (4) votes
garnered by Atty. Maglana.
24

The Appeal
On June 11, 2013, Atty. Maglana filed the present Appeal (With Urgent Motion to
Prohibit Protestant-Appellee to Participate in the Election for Executive Vice
President of the Integrated Bar of the Philippines Set on June 15, 2013). In support
of her Appeal, Atty. Maglana submits the following arguments:
First, IBP Samar Chapter is the only qualified chapter to field a candidate for
governor for the 2013-2015 term, to the exclusion of all other chapters in the IBP
Eastern Visayas region. She emphasizes that based on the records, IBP Samar
Chapter clearly had never served as governor for IBP Eastern Visayas since the
introduction of Bar Matter No. 491 in 1989.
25

Second, IBP Samar Chapter never waived its turn in the rotation cycle because
under the rotation by exclusion scheme, it does not know when its turn to serve as
governor would be. Even assuming that there had been a waiver, Section 39, Article
VI, as amended, of the IBP By-Laws allows the chapter that waived its turn in the
rotation order to reclaim its right at any time before the rotation is completed.
26

Third, the rotation cycle in the IBP Eastern Visayas region can only be completed
once a nominee from IBP Samar Chapter had served as Governor for the 2013-

2015 term. The rotation cycle cannot simply be deemed complete by just equating
the number of terms with the number of chapters in the region. Atty. Maglana
contends that the situation of IBP Samar Chapter is the same as that of Romblon
Chapter in 2009 when the Court, in In the Matter of the Brewing Controversies in the
Election in the Integrated Bar of the Philippines, affirmed IBP Romblon Chapters
right to the 2009-2011 term despite the fact that there were other chapters in the
Western Visayas region that had served more than one term.
27

28

On July 2, 2013, the Court issued a Resolution denying Atty. Maglanas prayer to
restrain Atty. Opinion from voting in the election on June 15, 2013, the same having
become moot and academic. In the same Resolution, the Court also required Atty.
Maglana to furnish the Court, within five (5) days from notice, a certified true copy of
the IBP BOG decision dated June 7, 2013.
29

On August 3, 2013, Atty. Maglana submitted her Compliance with the Courts
directive in its July 2, 2013 Resolution.
30

The Issues for Resolution

The core issues raised by the present Appeal are the following:
1. Whether the first rotation cycle in IBP Eastern Visayas, since the
implementation of Bar Matter No. 491, has been completed;
2. Whether IBP Samar Chapter waived its turn in the rotation order so that it
can no longer claim its right to the governorship position for the 2013-2015
term;
3. Whether IBP Samar Chapter is the only qualified chapter to field a
candidate for governor in IBP Eastern Visayas for the 2013-2015 term; and
4. Whether Atty. Opinion should be declared the duly elected Governor for IBP
Eastern Visayas for the 2013-2015 term.
Our Ruling
We affirm the IBP BOG decision dated June 7, 2013 and declare Atty. Opinion the
duly elected Governor of IBP Eastern Visayas for the 2013-2015 term.
We begin with a brief background on the organizational structure of the IBP. The IBP
is divided into nine (9) geographic regions, namely: Northern Luzon, Central Luzon,
Southern Luzon, Bicolandia, Greater Manila, Western Visayas, Eastern Visayas,
Western Mindanao and Eastern Mindanao.
31

Each of these regions is subdivided into chapters and is represented by a Governor

elected by delegates from among the member-chapters of each region. In the case
of IBP Eastern Visayas, the region is composed of nine (9) chapters, namely:
32

33

1. Biliran
2. Bohol
3. Cebu Province
4. Cebu City
5. Eastern Samar
6. Leyte

7. Northern Samar
8. Samar
9. Southern Leyte
At least one (1) month before the national convention, the delegates from each
region shall elect the Governor for their region, who shall be chosen by rotation.

34

These nine (9) Governors constitute the IBP BOG which governs and has general
charge of the IBPs affairs and activities. Aside from the Governors, the other
national officers of the IBP are: the IBP President, the EVP, the National Secretary,
the National Treasurer, and the heads of the National Committees.
35

The Rotation Rule

The logical starting point in resolving the present matter before us is Section 39,
Article VI of the IBP By-Laws, as amended by Bar Matter No. 491. This provision
established the rotation rule in the IBP. The provision states:
SEC. 39. Nomination and election of the Governors. At least one (1) month before
the national convention the delegates from each region shall elect the governor for
their region, the choice of which shall as much as possible be rotated among the
chapters in the region.
In its Resolution in Bar Matter No. 586 dated May 16, 1991, the Court decreed
without amending Section 39, Article VI of the IBP By-Laws that the rotation rule
under Sections 37 and 39, Article VI of the IBP By-Laws should be strictly
implemented "so that all prior elections for governor in the region shall be reckoned
with or considered in determining who should be the governor to be selected from
the different chapters to represent the region in the Board of Governors."
36

Despite the call for strict implementation of the rotation rule under Bar Matter No.
586 in 1991, the Court amended Section 39, Article VI of the IBP By-Laws only in
2010 in In the Matter of the Brewing Controversies in the Election in the Integrated
Bar of the Philippines, by mandating the mandatory and strict implementation of the
rotation rule, as well as recognizing that the rotation rule is subject to waivers by the
chapters of the regions. The provision, as further amended, now reads:
37

Section 39. Nomination and election of the Governors. At least one (1) month
before the national convention the delegates from each region shall elect the
Governor for their region, who shall be chosen by rotation which is mandatory and
shall be strictly implemented among the Chapters in the region. When a Chapter
waives its turn in the rotation order, its place shall redound to the next Chapter in the
line. Nevertheless, the former may reclaim its right to the Governorship at any time
before the rotation is completed; otherwise, it will have to wait for its turn in the next
round, in the same place that it had in the round completed.
38

Broken down into its components, Section 39, Article VI, as amended, of the IBP ByLaws contains the following elements:
(a) Delegates from each region shall elect the governor for their region who
shall be chosen by rotation;
(b) Rotation of the governorship of each region shall be mandatory and to be
strictly implemented;
(c) A chapter may waive its turn in the rotation order which shall redound to
the next chapter in the line; and

(d) The chapter that waived its turn may reclaim its right to the governorship at
any time before the rotation is completed; otherwise, it will have to wait for its
turn in the next round, in the same place that it had in the round completed.
Elements a, c and d are key elements that are decisive in resolving the present
controversy. As far as element (a) is concerned, the problem relates to the element
of rotation where the manner of implementation is the disputed issue. Elements (c)
and (d) also assume significance because of the assertion of waiver on the part of
IBP Samar Chapter of its right to the governorship.
As has been interpreted and applied by the Court in the past, the rotation rule under
Section 39, Article VI, as amended, of the IBP By-Laws actually consists of two
underlying directives.
First is the directive for the mandatory and strict implementation of the rotation rule.
The rule mandates that the governorship of a region shall rotate once in as many
terms as there may be chapters in the region. This serves the purpose of giving
every chapter a chance to represent the region in the IBP BOG.
Second is the exception from the mandatory and strict implementation of the rotation
rule. This exception would allow a chapter to waive its turn in the rotation order,
subject to its right to reclaim the governorship at any time before the rotation is
completed. Thus, as the Court held in In the Matter of the Brewing Controversies in
the Election in the Integrated Bar of the Philippines, "[t]he rotation rule is not
absolute but subject to waiver as when the chapters in the order of rotation opted
not to field or nominate their own candidates for Governor during the election
regularly done for that purpose."
39

The Operation of the Rotation System in IBP Eastern Visayas

Pursuant to Bar Matter No. 491, the delegates for the 1989-1991 term elected Atty.
Benedict H. Alo of Cebu Province as Governor of IBP Eastern Visayas. This
development ushered in the implementation of the rotation system for the
governorship of IBP Eastern Visayas. Thus, the rotational cycle should be counted
from the time of Bar Matter No. 491, when the Court provided for the rotation
system. This term (1989-1991) constituted the first "turn" in the cycle and should be
considered the starting point for consideration in resolving the various aspects of the
present controversy. Note, however, that part of this term was under a caretaker that
served as a preliminary and preparatory measure under the developments that
initiated Bar Matter No. 491.
The tabulation below shows the election developments for the position of Governor
for IBP Eastern Visayas from the 1989-1991 term up to the present, viz.:
Term

Elected Governors

Chapter

1989-1990

Caretaker Board

N/A

1990-1991

Benedicto H. Alo

Cebu Province

1991-1993

Baldomero C. Estenzo

Cebu City

1993-1995

Agustinus V. Gonzaga

Bohol

1995-1997

Jose Aguila Grapilon

Biliran

1997-1999

Kenny A.H. Tantuico

Northern Samar

1999-2001

Celestino B. Sabate

Eastern Samar

2001-2003

Emil L. Ong

Northern Samar

2003-2005

Manuel M. Monzon

Cebu Province

2005-2007

Manuel P. Legaspi

Cebu City

2007-2009

Evergisto S. Escalon

Leyte

2009-2011

Roland B. Inting

Bohol

2011-2013

Manuel L. Enage, Jr.

Southern Leyte

2013-2015

Disputed

Disputed

a. The First rotation cycle has been completed in 2007.

Counting from the governorship of Atty. Benedicto H. Alo of IBP Cebu Province
Chapter, the first rotation cycle of governors, consisting of nine (9) governorship
terms from 1989 to 2007, followed the following pattern and succession:
1. Cebu Province - Benedicto H. Alo, 1990-1991
2. Cebu City - Baldomero C. Estenzo, 1991-1993
3. Bohol - Agustinus V. Gonzaga, 1993-1995
4. Biliran - Jose Aguila Grapilon, 1995-1997
5. Northern Samar - Kenny A.H. Tantuico, 1997-1999
6. Eastern Samar - Celestino B. Sabate, 1999-2001
7. Northern Samar - Emil L. Ong, 2001-2003
8. Cebu Province - Manuel M. Monzon, 2003-2005
9. Cebu City - Manuel P.Legaspi, 2005-2007
leaving three chapters Samar, Leyte and Southern Leyte with no governor
elected to represent the chapters slot in the rotation. Pursuant to the rotational rule,
the governorship of a region shall rotate once in as many terms as there may be
chapters in the region, to give every chapter a chance to represent the region in the
IBP BOG. However, not every chapter was represented in the first rotational cycle.
As the IBP BOG noted, there were instances when the Governor of IBP Eastern
Visayas came from the same chapter, such as Northern Samar (1997-1999 and
2001-2003), Cebu Province (1990-1991 and 2003-2005)and Cebu City (1991-1993
and 2005-2007).
These "aberrant" developments, strictly speaking, sidetracked the smooth and
proper implementation of the rotation rule in the first rotational cycle that started with
the 1990-1991 term of IBP Cebu Province and which should have ended in the
2005-2007 term with all the chapters, including Samar, Leyte and Southern Leyte,
given the chance to be governor. Stated otherwise, had the chapters strictly and
mandatorily followed the rotation rule, the first rotational cycle should have been
completed in 2007.
We cannot sustain Atty. Maglanas arguments, that: (1) the first rotation cycle in IBP
Eastern Visayas region had not been completed in 2007; and (2) that the rotation
cycle can only be completed once a nominee from IBP Samar Chapter had served
as governor for the 2013-2015 term, for two reasons.
First, as the IBP BOG established, the primary reason why some chapters, such as
Northern Samar, Cebu Province and Cebu City, were represented twice (in the first
rotation cycle) was because Samar either did not field any candidate from 1989 to
2007 or it failed to invoke the rotation rule to challenge the nominations of those

candidates whose chapters had already been represented in the rotation cycle. We
agree with the IBP BOG that Samar Chapter effectively waived its turn in the rotation
order, as will be further explained below. Because of this waiver of its turn in the first
rotation cycle, we conclude that the first rotation cycle had been completed in 2007.
Second, Atty. Maglana cannot simply reclaim IBP Samar Chapters right to the
governorship in the 2013-2015 term because it is contrary to Section 39, Article VI,
as amended, of the IBP By-Laws. This provision states that the chapter which has
waived its turn in the rotation cycle may reclaim its right to the governorship at any
time before the rotation is completed. Having been established that the first
rotational cycle had been completed in the 2005-2007 term, IBP Samar Chapter can
no longer belatedly reclaim its right to the governorship in the 2013-2015 term as it
should have exercised its claim on or before the completion of the first rotation cycle
in 2007. In this regard, we quote with approval the disquisition of the IBP BOG:
Moreover, protestees view that the Samar chapter, by virtue of its being the only
chapter that has yet to have its turn as governor in the rotation rule era, can reclaim
the governorship at any time it opts to and that the rotation cycle cannot be deemed
completed until it does is anathema to the very concept of the rotation rule. The
region cannot be held hostage indefinitely by one chapter. The rotation has to run its
course. Indeed the flaw of protestees reasoning would be even more apparent if the
issue of the election of the Executive Vice President would come into play inasmuch
as the Samar Chapter could then invoke its perceived right to the governorship
when it is the turn of Eastern Visayas Region to have an EVP elected from its ranks,
thus, giving it an undue advantage over the other chapters in the region.
40

The dissent, however, emphasizes that the preferred policy as mandated in Section
39, Article VI, as amended of the IBP By-Laws, is the mandatory and strict
implementation of the rotation by exclusion rule. The dissent posits that unless and
until IBP Samar Chapter had actually been given the opportunity to seat as
Governor of IBP Eastern Visayas, the first rotation cycle for the position of IBP
Eastern Visayas cannot be considered complete.
41

The dissents reliance on the mandatory and strict implementation of the rotation by
exclusion rule, as mandated by Section 39, as amended, Article VI of the IBP ByLaws, is inaccurate. Despite the amendment of Section 39, Article VI of the IBP ByLaws mandating the strict implementation of the rotation by exclusion rule, the Court
cannot ignore the reality that prior to the present amendment (i.e., from the 19891991 term until December 2010), the prevailing rotation rule was not mandatory; the
choice of governor should only be rotated as much as possible among the chapters
of the region.
Note that this rule even prevailed after the first rotation cycle of governors,
consisting of nine governorship terms from 1989 to 2007. Thus, the dissent cannot
simply apply Section 39, Article VI, as amended, of the IBP By-Laws in the present
case because this amendment calling for the strict implementation of the rotation
rule cannot be interpreted retroactively, but only prospectively, so that it would only
take effect in the 2011-2013 term.
As previously emphasized, not every chapter was represented in the first rotation
cycle; there were three instances when the Governor of IBP Eastern Visayas came
from the same Chapter, such as the case of Northern Samar, Cebu Province and
Cebu City. These aberrant developments can only be justified under the "as much
as possible" qualifier cited above. Based on these considerations and from a
practical perspective, we can reasonably conclude that the first rotation cycle has
been completed in 2007 despite the non-participation of Samar, Leyte and Southern
Leyte, after considering the following premises:

i. Bar Matter No. 491 lays down the starting point of the IBP's rotation system
that called for the election of a governor for a region to be rotated as much as
possible among the chapters of the region;
ii. This rule on rotation prevailed until the amendment of Section 39, Article VI
of the IBP By-Laws on December 14, 2010 decreeing the mandatory and
strict implementation of the rotation rule; and
iii. The recent amendment of Section 39, Article VI of the IBP By-Laws should
be interpreted prospectively so that it would only take effect from the 20112013 term.
b. IBP Samar Chapter waived its turn in the first rotation cycle.
As mentioned, the rotation rule under Section 39, Article VI, as amended, of the IBP
By-Laws is not absolute as it is subject to a waiver, as when a chapter in the order of
rotation opts not to field or nominate its candidate for governor during the election
regularly called for the purpose. The dissent, however, posits that IBP Samar
Chapter did not waive its turn in the rotation cycle because there was no clear or
unequivocal waiver on its part.
42

First, the dissent notes that no express waiver was executed by the IBP Samar
Chapter to forego its turn in the rotation cycle. Second, the second and third
elements of a valid waiver were not proven. The dissent argues only during the
election for governor for 2013-2015 that IBP Samar Chapter could have been aware
of its right to be the sole and only remaining Chapter that should vie for the position
of Governor because it is only during that time that it becomes clear that it is the only
remaining Chapter of IBP Eastern Visayas which remains unrepresented in the IBP
BOG. Lastly, the IBP By-Laws is silent on how and when the waiver should be made
and whether or not the Chapter President or the Board of Directors is clothed with
authority to waive the turn of the Chapter in the rotation cycle on behalf of its
members. Thus, the dissent concludes that it remains unclear that there was a clear
and unequivocal intention on the part of IBP Samar Chapter and its members to
waive its right to the governorship.
43

The dissents citation of Article 6 of the Civil Code and its application of the elements
of a valid waiver of a right under civil law is misplaced.
Section 5, Article VIII of the Constitution mandates the Courts power of supervision
over the IBP. In Garcia v. De Vera, the Court held that implicit in the constitutional
grant to the Supreme Court of the power to promulgate rules affecting the IBP
(under Section 5, Article VIII of the Constitution) is the power to supervise all the
activities of the IBP, including the election of its officers. In administrative matters
concerning the IBP, the Court can supervise the IBP by ensuring the legality and
correctness of the exercise of its powers as to means and manner, and by
interpreting for it the constitutional provisions, laws and regulations affecting the
means and manner of the exercise of its powers. For this reason, the IBP By-Laws
mandates that the Court has the plenary power to amend, modify or repeal the IBP
By-Laws in accordance with policies it deems, not only consistent with the
Constitution, laws and regulations, but also as may be necessary, practicable and
appropriate in light of prevailing circumstances.
44

45

Pursuant to the Court's power of supervision over the IBP, the Court already spoke
decisively on the issue of waiver under Section 39, Article VI, as amended, of the
IBP By-Laws in In the Matter of the Brewing Controversies in the Election in the
Integrated Bar of the Philippines. As mentioned, the Court ruled that the rotation
rule under Section 39 is not absolute, but is subject to a waiver, as when a chapter
in the order of the rotation opts not to field or nominate a candidate for governor
during the election regularly called for that purpose. Notably, the Court in that case
also established the standards by which a chapter may be deemed to have waived
46

its turn in the rotation cycle under Section 39, Article VI, as amended, of the IBP ByLaws. Thus, the dissent's reliance on the standards of waiver of rights under civil law
cannot simply prevail over the standards set by the Court in the Brewing
Controversies case.
In the Brewing Controversies case, the Court held that the six chapters in the region
that should strictly take precedence in the rotation rule over Lanao del Sur Chapter
(i.e., IBP Sarangani Chapter and the other five chapters) waived their turn in the
rotation order by not fielding a candidate for governor and by failing to invoke the
rotation rule to challenge the nominations from the latter. In ruling that Atty.
Marohomsalic of Lanao del Sur Chapter was qualified to run for governor in the
2009 elections, the Court noted that there were instances when the governor of
Western Mindanao Region came from the same chapter and that the other chapters
opted not to field or nominate their own candidates, thus:
In the regular election of April 25, 2009, there is no dispute that the voting delegates
of IBP Western Mindanao Region voted into office Atty. Marohomsalic of Lanao del
Sur Chapter as Governor for the 2009-2011 term. During the said election, his only
rival was Atty. Benjamin Lanto who also belongs to the same Lanao del Sur Chapter.
A third candidate, Atty. Escobar from the Sarangani Chapter, was nominated but he
declined the nomination.
While the Committee points out that six (6) chapters in the region, including
Sarangani, are entitled to precedence over the Lanao del Sur chapter in the order of
rotation, the fact remains that not one of them nominated or fielded a candidate from
their respective ranks during the April 25, 2009 election. Neither did any one of them
challenge the nominations of the Lanao del Sur Chapter based on the order of
rotation.
By not fielding a candidate for Governor and by declining the nomination raised in
favor of its Chapter President (Atty. Escobar), the IBP Sarangani Chapter is deemed
to have waived its turn in the rotation order. The same can be said of the remaining
chapters. They too are deemed to have waived their turn in the rotation as they
opted not to field or nominate a candidate from among their respective members.
Neither did they invoke the rotation rule to challenge the nominations from the Lanao
del Sur Chapter. On the contrary, they fully expressed their concurrence to the cited
nominations, which may be interpreted as a waiver of their right to take their turn to
represent the region in the Board of Governors for the 2009-2011 term.
1wphi1

It need not be stressed that, as cited by the Committee itself, there were instances
when the Governor of the Western Mindanao Region came from the same chapter
such as ZAMBASULTA (1997-1999 & 1999-2001) and Sultan Kudarat (2003-2005 &
2007-2009). Thus, Atty. Marohomsalic could not be faulted if the other chapters
opted not to field or nominate their own candidates. Having been validly nominated
and duly proclaimed as the duly elected Governor of Western Mindanao, Atty.
Marohomsalic therefore deserves to assume his position during the remainder of the
term.
It would have been a different story if another Chapter in the order of rotation fielded
its own candidate or invoked the rotation rule to challenge Atty. Marohomsalics
nomination. But the record is bereft of any showing that his nomination and
subsequent election was challenged on that basis. If there was any challenge at all,
it merely referred to his nomination by Atty. Macalawi which the Committee itself has
found to be in order. Thus, no compelling reason exists to disregard the electoral
mandate and nullify the will of the voting delegates as expressed through the ballot.
The "rotation rule" is not absolute but subject to waiver as when the chapters in the
order of rotation opted not to field or nominate their own candidates for Governor
during the election regularly done for that purpose. If a validly nominated candidate
obtains the highest number of votes in the election conducted, his electoral mandate

deserves to be respected unless obtained through fraud as established by evidence.

Such is not the case here.
Suffice it to say, the "rotation rule" should be applied in harmony with, and not in
derogation of, the sovereign will of the electorate as expressed through the ballot.
Thus, Atty. Marohomsalic cannot be divested and deprived of his electoral mandate
and victory. The order of rotation is not a rigid and inflexible rule as to bar its
relaxation in exceptional and compelling circumstances.
47

The same facts obtain in the present case. As the IBP BOG noted, not all the nine
(9) chapters of Eastern Visayas were able to field a governor for the first rotation
cycle from 1989 to 2007 since three chapters were represented twice. IBP Eastern
Samar Chapter, to which Atty. Opinion belongs, was represented once while IBP
Samar Chapter, which Atty. Maglana represents, was not represented at all. The IBP
BOG also established that some chapters were represented twice during the first
rotation cycle because Samar Chapter either did not field any candidate for governor
from 1989 to 2007 or it did not invoke the rotation rule to challenge the nominations
of those candidates whose chapters had already been previously represented in the
rotation cycle. Based on these considerations and pursuant to the Courts December
14, 2010 ruling, we conclude that IBP Eastern Samar effectively waived its turn in
the first rotation cycle.
To justify its position that it is the sole Chapter qualified to field a candidate in the
2013-2015 term, Atty. Maglana cites the December 14, 2010 Resolution of the Court
in In the Matter of the Brewing Controversies in the Election in the Integrated Bar of
the Philippines where it upheld the turn of IBP Romblon Chapter which then
completed the rotation cycle in IBP Western Visayas region.
48

The citation is also misplaced. In this case, the Court upheld the election of Atty.
Fortunato as Governor of IBP Western Visayas since he obtained the highest
number of votes and also because under the rotation rule, it was the turn of the
Romblon Chapter to represent IBP Western Visayas Region in the IBP BOG.
Contrary to Atty. Maglanas contentions, the Court in that case never made a finding
that there were also chapters that had two governors in one cycle and that these
second terms were considered as "aberrations." Furthermore, unlike the case of IBP
Samar Chapter, the Court did not make any finding regarding the waiver of the right
to the governorship in IBP Romblon Chapters case.
c. IBP Samar Chapter is not the only qualified chapter to field a candidate for
governor for the 2013-2015 term.
With the end of the first rotation cycle in 2007 during the term of Atty. Manuel P.
Legaspi of IBP Cebu City Chapter, the election of Atty. Evergisto S. Escalon of IBP
Leyte Chapter in that same year effectively ushered in a fresh second rotation cycle
in the IBP Eastern Visayas region.
Thus, the second rotation cycle for governor in the IBP Eastern Visayas region now
follows the following pattern and succession:
1. Leyte - Evergisto S.Escalon, 2007-2009
2. Bohol - Roland B. Inting, 2009-2011
3. Southern Leyte - Manuel L.Enage, Jr., 2011-2013
With the IBP Eastern Visayas region already in the second rotation cycle and with
governors from Leyte, Bohol and Southern Leyte Chapters having served the region
as starting points, Atty. Maglanas position that IBP Samar Chapter is the only
remaining chapter qualified to field a candidate for governor in the 2013 -2015 term
clearly fails. The rotation by exclusion rule provides that "once a member of [a]

chapter is elected as Governor, his [or her] chapter would be excluded in the next
turn until all have taken their turns in the rotation cycle. Once a full rotation cycle
ends and a fresh cycle commences, all the chapters in the region are once again
entitled to vie but subject again to the rule on rotation by exclusion."
49

Under this rule, considering that Leyte, Bohol and Southern Leyte Chapters already
served in the second rotation cycle, the six remaining chapters are qualified to field
their candidates for governor in the 2013-2015 term. Applied in the present case, it is
clear that both IBP Eastern Samar and IBP Samar, along with Cebu Province, Cebu
City, Biliran and Northern Samar Chapters, are qualified to field their candidates in
the May 25, 2013 regional elections in the IBP Eastern Visayas region.
d. Atty. Opinion is the duly elected Governor for IBP Eastern Visayas for the 20132015 term.
Based on the above considerations, we agree with the IBP BOG that Governor
Enage seriously erred in disqualifying Atty. Opinion as a candidate and in declaring
the six (6) votes he garnered as stray.
The election of Atty. Opinion is well-settled. He did not only come from the chapter
which is entitled to be elected for the position but also got the majority of six (6)
votes, as opposed to the four (4) votes garnered by Atty. Maglana in the May 25,
2013 elections.
As the Court held in its December 14, 2010 Resolution in In the Matter of the
Brewing Controversies in the Election in the Integrated Bar of the Philippines, "[i]f a
validly nominated candidate obtains the highest number of votes in the election
conducted, his electoral mandate deserves to be respected unless obtained through
fraud as established by evidence."
50

51

Similarly, such is not the case here and thus, Atty. Opinion should be declared the
duly elected Governor for IBP Eastern Visayas in the 2013-2015 term.
WHEREFORE, premises considered, the Court resolves that:
1. Atty. Jose Vicente R. Opinion is qualified to run for Governor of IBP Eastern
Visayas region for the 2013-2015 term;
2. The six (6) votes cast in favor of Atty. Jose Vicente R. Opinion are valid
votes and should be counted in his favor;
3. The proclamation of Atty. Aileen R. Maglana by Governor Manuel Enage,
Jr. be annulled since she failed to obtain the majority of the votes cast in the
May 25, 2013 elections; and
4. Atty. Jose Vicente R. Opinion be declared the duly elected Governor of IBP
Eastern Visayas region for the 2013-2015 term, having garnered the highest
number of votes cast in the May 25, 2013 elections.
SO ORDERED.
G.R. No. 148777

October 18, 2007

ESTATE OF THE LATE ENCARNACION VDA. DE PANLILIO, represented by

GEORGE LIZARES, Petitioner,
vs.
GONZALO DIZON, RICARDO GUINTU, ROGELIO MUNOZ, ELISEO GUINTU,
ROBERTO DIZON, EDILBERTO CATU, HERMINIGILDO FLORES, CIPRIANO
DIZON, JUANARIO MANIAGO, GORGONIO CANLAS, ANTONIO LISING,
CARLOS PINEDA, RENATO GOZUN, ALFREDO MERCADO, BIENVENIDO

MACHADA, and the REGIONAL DIRECTOR of the DEPARTMENT OF

AGRARIAN REFORM, REGION III, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 157598
REYNALDO VILLANUEVA, CENON GUINTO, CELESTINO DIZON, CARMELITA
VDA. DE DAVID, FORTUNATO TIMBANG, OSCAR SANTIAGO, CELESTINO
ESGUERRA, ANTONIO DIZON, and TEODULO DIZON,Petitioners,
vs.
COURT OF APPEALS and GEORGE LIZARES, Respondents.
DECISION
VELASCO, JR., J.:
Did the owner of two (2) lots by a subsequent affidavit validly and legally revoke the
first affidavit voluntarily surrendering said lots for land acquisition under the
Comprehensive Agrarian Reform Law? The answer will determine the rights of the
parties in the instant petitionsthe heirs of the lot owner vis--vis the tenants
declared to be beneficiaries of the Operation Land Transfer (OLT) under Presidential
Decree No. (PD) 27.1
The Case
Before us are two petitions. The first is a Petition for Review on Certiorari 2 under
Rule 45 docketed as G.R. No. 148777, which seeks to set aside the November 29,
2000 Amended Decision3 of the Court of Appeals (CA) in CA-G.R. SP No. 47502,
which affirmed the August 7, 1997 Decision4 of the Department of Agrarian Reform
Adjudication Board (DARAB) in DARAB Case Nos. 4558-4561; and the June 26,
2001 Resolution5 disregarding the Motion for Reconsideration6 of said Amended
Decision. The other is a Petition for Certiorari and Mandamus7under Rule 65
docketed as G.R. No. 157598, which seeks to set aside the November 14, 2002 CA
Resolution8which denied petitioners Motion for Entry of Judgment,9 and the January
24, 2003 CA Resolution10 likewise denying petitioners Motion for Reconsideration. 11
Through our August 27, 2003 Resolution,12 these cases were consolidated as they
arose out of the same factual milieu.
The Facts
Encarnacion Vda. De Panlilio is the owner of the disputed landholdings over a vast
tract of land, with an aggregate area of 115.41 hectares called Hacienda Masamat
located in Masamat, Mexico, Pampanga covered by Transfer Certificates of Title
(TCT) Nos. 3510, 3513, 3514, 3515, 3522, 3523, 3524, 3525, 3526, 3528, 3530,
3531, 3532, 3533, RT-499 (9191), and RT-500 (11670),13 all of the Pampanga
Registry of Deeds.
On April 19, 1961, Panlilio entered into a contract of lease over the said landholdings
with Paulina Mercado, wife of Panlilios nephew. The contract of lease was
subsequently renewed on October 13, 196414 and September 18, 1974,15 covering
agricultural years from 1961 to 1979.
Sometime in 1973, pursuant to the OLT under PD 27, the Department of Agrarian
Reform (DAR) issued thirty eight (38) Certificates of Land Transfer (CLTs) to
Panlilios tenants. The tenant-awardees were made defendants in the instant
consolidated complaints filed by petitioner Lizares.

On November 26, 1973, lessee Paulina Mercado filed a letter-complaint with the
DAR questioning the issuance of CLTs to Panlilios tenants, alleging, among others,
that the DAR should not have issued the CLTs since the land involved was
principally being planted with sugar and was outside the coverage of PD 27. She
claimed that respondents surreptitiously planted palay (rice plant) instead of sugar in
order to bring the land within the purview of the law. After proper investigation, the
DAR concluded that the CLTs were "properly and regularly issued."
Paulina Mercado likewise filed a similar complaint with the Court of Agrarian
Relations (CAR) at San Fernando, Pampanga, docketed as CAR Case No. 1649P74.
On December 4, 1976, the tenants of the portion of the land planted with sugar cane
petitioned the DAR to cause the reversion of their sugarland to riceland so that it
may be covered by the Agrarian Reform Law. The petition was with the conformity of
Panlilio.
Thus, on January 12, 1977, Panlilio executed an Affidavit, partly quoted as follows:
1. That I am the owner of an agricultural landholding situated [in] Mexico,
Pampanga, with an area of 115.4 hectares, more or less, dedicated at present
to the production of palay and sugarcane crops;
2. That I have been informed that 50.22 hectares comprising the portion
dedicated to palay crop have been placed under the provisions and coverage
of P.D. No. 27 and that Certificates of Land Transfer have been issued to the
tenant-farmers thereon;
3. That as owner of the abovementioned property, I interpose no objection to
the action taken by the Department of Agrarian Reform in placing the
aforesaid portion dedicated to palay crop within the coverage of P.D. No. 27;
4. That lately, all the tenants of my said property including those in the
sugarcane portions, have filed a petition dated December 4, 1976 with the
Honorable Secretary Conrado F. Estrella, Secretary of Agrarian Reform,
requesting for the reversion of the sugarcane portion of my property adverted
to [the] palay land which is the original classification of my entire subject
property;
5. That the aforesaid petition dated December 4, 1976 of the tenants of my
property which was filed with the DAR carries my written conformity;
6. That it is my desire that my entire subject property which is referred to as
Hacienda Masamat be placed under the coverage of P.D. 27 without
exception and that thereafter the same be sold to tenantpetitioners.16 (Emphasis supplied.)
On January 20, 1977, by virtue of the said Affidavit, the DAR Secretary, through
Director Gaudencio Besa, ordered Director Severino Santiago, Regional Director of
Region III, San Fernando, Pampanga, "to distribute all land transfer certificates, in
view of the desire of Encarnacion Vda. de Panlilio to place her property under the
Land Transfer Program of the government."
On the basis of the action of the DAR Secretary, the CAR, on March 17, 1978,
issued an Order dismissing the complaint of Paulina Mercado (lessee) in CAR Case
No. 1649-P74, thus:
With this development, the resolution of the principal issue in the instant case has
become moot and academic, it being already settled in the DAR proceedings the
placement of the land in question under the land transfer program of the

government. Therefore, the instant case should be dismissed. Necessarily, all

pending incidents should be deemed disposed of. 17
On December 29, 1986, Panlilio died.
Thereafter, sometime in 1993, the DAR issued Emancipation Patents (EPs) to the
following tenants of Panlilio:
EP Nos.
Hermenegildo Flores

690774
143627

Celestino Dizon

690960
683355
45390

Gonzalo Dizon

680524

Roberto Dizon

690758

Cipriano Dizon

45260
45256

Antonio Dizon

681072

Teodulo Dizon

45326

Juanario Maniago

143207

Celestino Esguerra

45265
45219

Florentino Lapuz

690759
45259

Gorgonio Canlas

143508

Carlos Pineda

197097
45254

Renato Gozun

143208

Romeo Pangilinan

475341

Jose Serrano

475340

Wenceslao Pangilinan 476572

Guillermo del Rosario

475339

Candido Timbang

143931
45262
45257

Arsenio Legaspi

4526618

Subsequently, in June 1994, the Bacolod City Regional Trial Court (RTC), Branch 49
appointed petitioner George Lizares as executor of the estate of Panlilio. 19 Records
show that petitioner Lizares is the son of the late Jesus Lizares, Panlilios
administrator of Hacienda Masamat during her lifetime.
On February 28, 1994, petitioner Lizares filed his first complaint with the Provincial
Agrarian Reform Adjudicator (PARAD), Region III, San Fernando, Pampanga,
docketed as DARAB Case No. 638 P94,20 for annulment of coverage of
landholdings under PD 27 and ejectment against Reynaldo Villanueva, et al. who
filed their Answer with Counterclaim21 on April 12, 1994.

On April 10, 1995, petitioner filed with the PARAD three more complaints for
cancellation of EPs, docketed as DARAB Case Nos. 933-P95, 22 934-P95,23 and
935-P95,24 against the rest of respondents who filed their motions to dismiss 25 on
grounds of lack of cause of action and lack of jurisdiction. On July 13, 1995, the
PARAD denied the motions.26 Respondents then filed their Answer with
Counterclaim.27
Upon petitioners motion, all the cases were consolidated. The PARAD then directed
the parties to submit their respective position papers,28 and, thereafter, considered
the cases submitted for decision.
The three (3) complaints filed in 1995 for cancellation of EPs have the following
defendants: (1) in DARAB Case No. 933-P95, Herminigildo Flores and the Regional
Director, DAR, Region III; (2) in DARAB Case No. 934-P95, Celestino Dizon,
Gonzalo Dizon, Roberto Dizon, and the Regional Director, DAR, Region III; and (3)
in DARAB Case No. 935-P95, Cipriano Dizon, Antonio Dizon, Teodulo Dizon,
Juanario Maniago, Celestino Esguerra, Florentino Lapuz, Gorgonio Canlas, Antonio
Lising, Carlos Pineda, Renato Gozun, Alfredo Mercado, Romeo Pangilinan, Jose
Serrano, Wenceslao Pangilinan, Guillermo del Rosario, Candido Timbang,
Bienvenido Mechada, and Arsenio Legaspi, and the Regional Director, DAR, Region
III.
Thus, aside from public respondent DAR Regional Director, Region III, DARAB Case
No. 638-P94 had 15 defendants, DARAB Case No. 933-P95 had a sole defendant,
DARAB Case No. 934-P95 had three defendants, and DARAB Case No. 935-P95
had 18 defendants. All the four (4) consolidated cases were against 37 defendants.
The Ruling of the PARAD in DARAB Case
Nos. 638-P94, 933-P95, 934-P95 and 935-P95
On November 14, 1995, the PARAD rendered a Joint Decision 29 dismissing
petitioner Lizares complaint on the ground that the subject landholdings have been
properly placed under the coverage of PD 27 through the January 12, 1977
Affidavit30 of Panlilio, unequivocally placing her entire property within the coverage of
the OLT. In addition, the PARAD relied on the report of the DAR and the Bureau of
Lands personnel that the subject landholding is devoted to palay. And, finally, the
PARAD applied the equitable remedy of laches, in that Panlilio failed during her
lifetime to bring to the attention of the DAR and CAR her February 3, 1977
Affidavit31 ostensibly revoking her previous January 12, 1977 Affidavit.
The Ruling of the DARAB in DARAB Case Nos. 4558-4561
(DARAB Case Nos. 638-P94, 933-P95, 934-P95 and 935-P95)
Aggrieved, petitioner Lizares appealed the PARAD decision before the DARAB,
which, on August 7, 1997, rendered a Decision 32 affirming the PARAD decision.
The DARAB likewise disregarded petitioner Lizares Motion for Reconsideration 33 of
the August 7, 1997 Decision.
Prior to the issuance of the August 7, 1997 DARAB Decision, petitioner Lizares and
defendant-appellees Wenceslao Pangilinan, Romeo Pangilinan, Jose Serrano, and
Guillermo del Rosario filed their February 10, 1997 Joint Partial Motion to
Dismiss34 with the DARAB, seeking dismissal of their respective claims in DARAB
Case No. 4561 (DARAB Case No. 935-P95) based on an Affidavit of Cancellation
of Lis Pendens Annotation of TCT Nos. 14321, 14322, 14323, and 14324, all of the
Pampanga Register of Deeds,35 which was executed by petitioner Lizares.
Apparently, petitioner Lizares received from a certain Ms. Petronila Catap the
amount of PhP 1,356,619 for the settlement of DARAB Case No. 4561 (DARAB
Case No. 935-P95) against the abovementioned defendant-appellees. 36

Earlier on, petitioner Lizares filed his April 19, 1996 Motion to Withdraw Appeal in
favor of defendant-appellees Reynaldo Villanueva, Cenon Guinto, Carmelita Vda. de
David, Oscar Santiago, Celestino Dizon, Fortunato Timbang, and Florentino Lapuz
in DARAB Case No. 4558 (DARAB Case No. 638-P94); defendant-appellee
Celestino Dizon in DARAB Case No. 4559 (DARAB Case No. 933-P95); and
defendant-appellees Antonio Dizon, Teodulo Dizon, Celestino Esguerra, Florentino
Lapuz, and Candido Timbang in DARAB Case No. 4561 (DARAB Case No. 935P95), as said defendant-appellees agreed to settle and compromise with petitioner
Lizares. The motion was however resisted by other defendant-appellees through a
May 27, 1996 Counter-Motion to the Plaintiff-Appellant Motion to Withdraw
Appeal,37 on the ground that a piece-meal withdrawal is not proper as the matter in
controversy is common and the same to all.
Unfortunately, the Motion to Withdraw Appeal was not resolved as petitioner Lizares
did not attend the DARAB scheduled hearings. Thus, the August 7, 1997 Decision
was subsequently promulgated in favor of all defendant-appellees.
Petitioner Lizares elevated the DARAB consolidated cases to the CA for review in
CA-G.R. SP No. 47502 under Rule 43 of the Rules of Court.
The Ruling of the Court of Appeals
The April 11, 2000 CA Decision
At the outset, the CA saw it differently.
On April 11, 2000, the CA rendered a Decision sustaining petitioners position and
granted relief, thus:
WHEREFORE, the petition is GRANTED. The decision of the Department of
Agrarian Reform Adjudication Board affirming the decision of the Provincial Agrarian
Reform Adjudication Board, Region III, San Fernando, Pampanga is REVERSED
and SET ASIDE. The Certificates of Land Transfer issued to private respondents
insofar as they pertain to sugarlands are hereby declared NULL and VOID. 38
The CA primarily anchored its ruling on Panlilios February 3, 1977 Affidavit
ostensibly revoking her January 12, 1977 Affidavit and ascribed error to both the
PARAD and DARAB in ignoring Panlilios second affidavit. Moreover, it relied on the
November 26, 1973 letter-complaint of Paulina Mercado to the DAR Secretary and
the CAR Resolution in CAR Case No. 1649-P74, that the subject landholding in
question is principally devoted to the production of sugar cane as buttressed by the
report and findings of Atty. Gregorio D. Sapera, Legal Officer III of the DAR Central
Office.
The November 29, 2000 CA Amended Decision
Unconvinced, Reynaldo Villanueva, et al. interposed a Motion for Reconsideration or
in the alternative, Motion to Remand for New Trial 39 of said Decision, where they
contended that:
1. Petitioners complaints should have been dismissed for his failure to
implead therein indispensable parties, namely the Land Bank of the
Philippines which paid Panlilio the amortizations on the land and the third
persons who purchased the landholdings from the tenants;
2. [The CA] disturbed and reversed the findings of fact by the PARAD and the
DARAB supported by substantial evidence. x x x
3. It is not the job of the appellate court to sieve through the evidence
considered by the administrative agency in adjudicating the case before it,
following the doctrine of primary jurisdiction. x x x

4. [The CA] violated the principle of res judicata in reversing the CAR
resolution dismissing the complaint in Case No. 1649-P74 rendered twentytwo years ago. Likewise, estoppel and laches bar the instant actions. x x x
5. Lastly, the petition should be dismissed in favor of Romeo Pangilinan,
Wenceslao Pangilinan, Jose Serrano and Guillermo del Rosario in view of the
compromise agreement in DARAB Case No. 4561 between them and
petitioner herein. They submitted, as proof, their joint motion to dismiss the
complaint executed on February 10, 1997 and petitioner Lizares receipt from
them of P1,356,619.00 as consideration for the dismissal of his complaints
against them.40
After considering the above contentions together with petitioner Lizares Comment
on the Motion for Reconsideration dated May 2, 2000 with Motion for Correction of
the Dispositive Portion of the Decision,41respondents Reply42 to said comment, and
petitioners Rejoinder,43 the appellate court rendered on November 29, 2000 the
assailed Amended Decision on a vote of 3-2, the dispositive portion of which reads:
WHEREFORE, respondents motion for reconsideration of Our Decision is hereby
GRANTED. The petition is ordered DISMISSED and the challenged DARAB
decision is AFFIRMED. Costs against petitioner.44
In reversing its earlier April 11, 2000 Decision, the CA concluded that the February 3,
1977 Affidavit was not executed by Panlilio, ratiocinating that if she indeed made the
second affidavit which purportedly repudiated her earlier January 12, 1977 Affidavit,
the natural course of action to take was for her to submit the second affidavit to the
DAR to exclude the majority of her landholdings planted with sugar cane from the
coverage of the OLT under PD 27. Her failure to effectuate the removal of her land
from the Comprehensive Agrarian Reform Program (CARP) coverage for nine (9)
years until her death on December 29, 1986 led the court a quo to believe that the
second affidavit was not genuine. Moreover, Jesus Lizares, Panlilios administrator
and father of petitioner Lizares, likewise did not take any action, in accordance with
the second affidavit showing that he was not aware of such affidavit of revocation.
The CA even doubted petitioner Lizares contention that the second affidavit was
submitted to the DAR and CAR but was not acted upon for such averment was not
substantiated.
The appellate court also found Panlilio and her successors-in-interest guilty of
laches, pointing out that aside from the alleged second affidavit of revocation, there
was no indication of Panlilios intention to recover the disputed landholdings.
On the issue of fraud and collusion on the part of the DAR personnel, the CA found
that no preponderance of evidence was evinced to prove the accusation.
In fine, the CA recognized and applied the principle of res judicata to the March 17,
1978 CAR Order rendered more than 20 years ago, holding that the resolution of
said court placing the entire landholdings in question under the coverage of PD 27
had long become final and executory.
Petitioner Lizares plea for recall of the assailed Amended Decision was rejected
through the assailed June 26, 2001 CA Resolution.45
Petition for review on certiorari under G.R. No. 148777
Thus, we have this Petition for Review on Certiorari against only 15 private
respondents from the original defendants below, namely: Gonzalo Dizon, Ricardo
Guintu, Rogelio Munoz, Eliseo Guintu, Roberto Dizon, Edilberto Catu, Herminigildo
Flores, Cipriano Dizon, Juanario Maniago, Gorgonio Canlas, Antonio Lising, Carlos
Pineda, Renato Gozun, Alfredo Mercado, and Bienvenido Machada.

Petition for certiorari under G.R. No. 157598

Consequent to the filing of the Petition for Review on Certiorari by petitioner Lizares,
on January 28, 2002, the other original defendants in the consolidated cases before
the PARAD and DARAB, who were not made respondents in G.R. No. 148777,
namely: Reynaldo Villanueva, Cenon Guinto, Celestino Dizon, Carmelita Vda. de
David, Florentino Lapuz, Fortunato Timbang, Oscar Santiago, Candido Timbang,
Celestino Esguerra, Antonio Dizon, and Teodulo Dizon, filed before the CA a Motion
for Entry of Judgment46 of the November 29, 2000 Amended Decision in CA-G.R. SP
No. 47502 based on the out-of-court settlement during the pendency of the case. On
July 4, 2002, a second Motion for Entry of Judgment47 with the same averments was
filed reiterating their plea for execution.
The November 14, 2002 CA Resolution48 denied their motions for entry of judgment.
A Motion for Reconsideration49 having been turned down through the January 24,
2003 CA Resolution,50 petitioners now register the instant Petition for Certiorari and
Mandamus in G.R. No. 157598, assailing the aforesaid Resolutions for grave abuse
of discretion.
The Issues
In G.R. No. 148777, petitioner Lizares presents the following issues for our
consideration:
1. Whether or not in its 29 November 2000 Amended Decision, the Court of
Appeals erred gravely in reversing its ruling in the 11 April 2000 Decision on
the import and significance of the second affidavit executed by Encarnacion L.
Vda. de Panlilio revoking or repudiating her first affidavit (by which she
purportedly agreed to have her land at Hacienda Masamat, which was
dedicated to sugarcane, placed under the coverage of P.D. No. 27);
2. Whether or not in its 29 November 2000 Amended Decision, the Court of
Appeals erred gravely in setting aside the 11 April 2000 Decisions ruling that
the land in question being planted with sugarcane is not covered by P.D. No.
27, by instead declaring that "the fact that land is sugarland has become
inconsequential to the coverage under P.D. No. 27 in the light of the affidavit
dated January 12, 1977";
3. Whether or not in its 29 November 2000 Amended Decision, the Court of
Appeals erred gravely in finding Encarnacion L. Vda. de Panlilio and petitioner
guilty of laches or estoppel;
4. Whether or not res judicata applies in the instant case;
5. Whether or not in its 29 November 2000 Amended Decision, the Court of
Appeals erred gravely in failing to rule that there was fraud and collusion on
the part of the respondents in the coverage of the subject parcels of land;
6. Whether or not the Court of Appeals acted with grave abuse of discretion in
declaring the transfer made by the private respondents to third persons valid;
7. Whether or not forum-shopping or a false certification of non-forum
shopping [is present] here; and
8. Whether or not the instant petition complies with the nature and requisites
of an appeal by certiorari under Rule 45.51
In G.R. No. 157598, petitioners raise the sole issue of "whether the petitioners are
entitled to an entry of judgment."52

The Courts Ruling

G.R. No. 148777
Before we go to the substantial issues, we tackle first the procedural issues raised in
the last two issues in G.R. No. 148777 on whether the instant petition complies with
the requirements of Rule 45 and whether forum shopping is present.
Petition complied with requisites for review on certiorari
Private respondents contend that the grounds relied upon by petitioner are factual in
nature and thus outside the purview of a review on certiorari by this Court. Petitioner
disagrees and posits that the petition raises issues of both fact and law which are so
intimately intertwined and that issues of law permeate the controversy between the
parties.
We find for petitioner. The rule is clearquestions of facts are proscribed by Rule
45. A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue does
not call for an examination of the probative value of the evidence presented, the
truth or falsehood of facts being admitted. A question of fact exists when the doubt or
difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation. 53
The rule is subject to exceptions. One such exception exists in this case. Mixed
questions of law and facts are raised pertaining to the applicability of PD 27 on a
large portion of subject landholdings that were planted with sugar cane, which would
have been otherwise exempt, but were voluntary waived through an affidavit by the
lot owner to be placed under the OLT pursuant to said law; the import and
significance of the purported affidavit of revocation; and, the interpretation of
Executive Order No. (EO) 22854 in relation to subsequent land transfer made by the
farmer-beneficiaries.
At the very least, the instant petition complies with the requisites of Rule 45,
particularly Section 6, as we have given the instant petition due course. 55
No forum shopping
Private respondents argue that petitioner Lizares is guilty of forum shopping for
having pursued other civil cases allegedly involving the same subject matter and on
the same grounds raised in this petition. Petitioner Lizares counters that there is no
forum shopping, first, as the instant petition is a mere continuation of a pending
action, that is, the consolidated cases filed with the PARAD; second, the causes of
action and issues raised in the other civil cases lodged with the RTC were different.
Respondents postulation cannot be entertained.
Private respondents failed to furnish us copies of portions of the relevant records of
the other civil cases instituted by petitioner Lizares needed to determine the
existence of forum shopping. Absent such necessary pleadings, we are constrained
to take petitioners assertion at face value that the other cases, particularly Civil
Case Nos. 11342, 11344, 11345, 11346 and 11347, filed before the RTC differ from
the instant case as to the issues raised, the reliefs prayed for, and the parties
impleaded.
Time and again, the court has reminded prospective petitioners and lawyers alike
that it is necessary that they attach to the petition under Rule 45 all the material
portions of the case records of the lower courts or quasi-judicial bodies which at one

time or another had adjudicated the case or complaint. These documents are
required to support the grounds presented in the petition under Rule 45. 56 Any
decision, order, pleading, or document forming parts of the records that is relevant or
important to the petition should be appended to it so that the court, in reviewing the
petition, will have easy access to these papers. More importantly, the submission will
obviate delay as the court can readily decide the petition without need of the
elevation of the records of the court or quasi-judicial body a quo.
Now we move on to the substantive issues.
Main Issue: Genuineness and authenticity
of the February 3, 1977 Affidavit
The pith of the dispute is whether or not the February 3, 1977 affidavit of the lot
owner, the late Encarnacion Vda. de Panlilio, is genuine or authentic.
We rule in the negative.
In a slew of cases, the principle is firmly entrenched in this jurisdiction that this Court
is not a trier of facts, and is not tasked to calibrate and assess the probative weight
of evidence adduced by the parties during trial all over again. 57 However, in rare
occasions, exceptions are allowed. One exception is when there are competing
factual findings by the different triers of fact, such as those made by the quasiagencies on the one hand and the CA on the other, this Court is compelled to go
over the records of the case, as well as the submissions of the parties, and resolve
the factual issues.58 In this case, however, there is coalescence in the findings of the
appellate court with that of the two quasi-judicial agencies belowthe PARAD and
DARABon the issue of the authenticity of the second Panlilio Affidavit.
It being a question of fact, we find no reason to disturb the findings and conclusions
of the court a quo in its questioned November 29, 2000 Amended Decision holding
that the challenged February 3, 1977 Panlilio Affidavit is not an authentic document.
We quote with approval the factual findings of the CA which completely gave full
accord and affirmed the findings of the PARAD and DARAB, viz:
After assessing the grounds raised by respondents in their motion for
reconsideration and a meticulous review of the records, We are now in serious
doubts as to the correctness of Our Decision. Our reasons are:
First, according to petitioner Lizares, Panlilios second affidavit (revoking her first
affidavit) upon which this Court anchors its assailed Decision, was executed as early
as February 2, 1977. If it were true, Panlilios natural reaction was to submit her
second affidavit or affidavit of revocation to the DAR in order to exclude her
landholdings from the coverage of the Operation Land Transfer under P.D. 27.
Significantly, Panlilio died on December 29, 1986. She had therefore, nine (9) years
from the date of execution of her second affidavit, within which to have her land
excluded by the DAR from such coverage considering that it was principally planted
[with] sugar and that she was misled by DAR lawyer, Atty. Pepito Sanchez, into
signing her first affidavit. But she did not. Petitioners father, Jesus Lizares, was her
administrator. Yet he did not also take any action for apparently he was not aware of
such affidavit of revocation.
Moreover, in her second affidavit, Panlilio specifically stated:
"That another reason for my desire not to place my entire property referred to as
Hacienda Masamat in Mexico, Pampanga, under P.D. 27 is the fact that the said
Hacienda Masamat is leased to my nephews wife, Mrs. Paulina Y. Mercado, and the
lease contract I executed in her favor covering my said Hacienda Masamat is still
subsisting and in force and will expire only after the agricultural crop year 19781979;"

If Panlilio indeed signed her affidavit of revocation, why did she not inform her niece
Paulina about it in order to protect her right as a lessee? It must be remembered that
at that time, the latters complaints (for cancellation of CLTs) against the tenants of
Panlilio were still pending in the DAR and the CAR. Had Panlilio given Paulina a
copy of such second affidavit, she could have brought it to the attention of the CAR
and the DAR. Certainly, the subject landholdings could not have been placed
entirely under Operation Land Transfer. We need not emphasize here that being a
lessee, Paulina would not want to part with her Aunts landholdings.
Out of the blue, the second affidavit surfaced only in 1994 and 1995 when petitioner
Lizares brought the instant actions against Panlilios tenants or after eighteen (18)
years from the date of its alleged execution. At this juncture, We can only conclude
without hesitation that Panlilio did not execute the second affidavit.
Petitioner alleged in his position paper that the same affidavit of revocation was
submitted to the DAR and the CAR, but they were not acted upon because of the
dismissal of the cases for cancellation of CLTs filed by Paulina Mercado. Petitioners
claim is a mere allegation. It has not been substantiated. Again, if it were true, why
did Panlilio and Paulina fail to pursue any further action? 59
We respect and accord finality to the aforequoted findings of facts of the CA, being
the tribunal tasked to undertake a final review of the facts of the case subject of
course to certain tolerated exceptional situations. Once again we reiterate the
prevailing rule that the findings of fact of the trial court, particularly when affirmed by
the Court of Appeals are binding upon this Court. 60
Second Issue: There is valid waiver through
the January 12, 1977 Affidavit
The CA likewise did not err in reversing its April 11, 2000 Decision that the subject
land was properly covered by PD 27 since Panlilio surrendered said lot to the DAR
for coverage under PD 27 pursuant to her January 12, 1977 Affidavit. The nonexistence of the February 3, 1977 Affidavit supports the inclusion of the entire lot in
the CARP of the Government.
On the other hand, petitioner Lizares argues that there was no valid waiver under
PD 27.
We are not convinced.
Considering the non-revocation of the January 12, 1977 Panlilio Affidavit,, the CA
considered the land of Panlilio planted with sugar cane as falling under the coverage
of PD 27, thus:
[W]hile the proceedings in the CAR tend to establish the land as principally
sugarland, hence outside the coverage of P.D. 27, still, Panlilios consent to have the
entire land covered by the said law as alleged in her first affidavit, cannot be
construed as a violation of its provisions. In fact, in executing the said affidavit, she
did not defeat, nor contravene the express intent of the law to emancipate her
tenants from the bondage of the soil. In doing so, she even supported its
implementation.
In Our challenged Decision We found that the subject land was principally planted
[with] sugar and therefore outside the pale of P.D. 27. But We overlooked the fact
that Panlilio in her first affidavit, which was not validly revoked, expressed her desire
to have her entire landholdings placed within the coverage of Operation Land
Transfer. To be sure, the fact that Panlilios land is sugarland has become
inconsequential in the light of her first affidavit.61
We agree with the CA.

While PD 27 clearly applies to private agricultural lands primarily devoted to rice and
corn under a system of sharecrop or lease-tenancy, whether classified as landed
estate or not, it does not preclude nor prohibit the disposition of landholdings planted
with other crops to the tenants by express will of the landowner under PD 27.
In the instant case, a large portion of Hacienda Masamat with an aggregate area of
115.41 hectares was planted with sugar cane. It is undisputed, as was duly shown in
the January 12, 1977 Panlilio Affidavit, that only 50.22 hectares were planted with
palay. Thus, approximately 65.19 hectares of the subject landholdings were planted
with sugar cane aside from the portions used for the residences of the tenants and
planted with crops for their daily sustenance. Needless to say, with the January 12,
1977 Panlilio Affidavit, she expressed her intent to include the 65.19 hectares to be
placed under the OLT pursuant to PD 27 in favor of her tenants which otherwise
would have been exempt. Indeed, waiver or an intentional and voluntary surrender
of a right can give rise to a valid title or ownership of a property in favor of another
under Article 6 of the Civil Code. Thus, such disposition through the OLT pursuant to
PD 27 is indeed legal and proper and no irregularity can be attributed to the DAR
which merely relied on the January 12, 1977 Panlilio Affidavit.
Third Issue: Equitable remedy of laches
The court a quo correctly ruled that Panlilio and her successors-in-interest are
bound by the coverage of the lot under PD 27 by reason of laches.
Even granting arguendo that the February 3, 1977 Affidavit of revocation is genuine
and was furnished both the DAR and the CAR, still, no relief can be accorded
petitioner Lizares on account of laches.
Laches and its elements
Delay for a prolonged period of time can result in loss of rights and actions. The
equitable defense of laches does not even concern itself with the character of the
defendants title, but only with plaintiffs long inaction or inexcusable neglect to bar
the latters action as it would be inequitable and unjust to the defendant.
According to settled jurisprudence, "laches" means "the failure or neglect, for an
unreasonable and unexplained length of time, to do that whichby the exercise of
due diligencecould or should have been done earlier." 62Verily, laches serves to
deprive a party guilty of it of any judicial remedies. Its elements are: (1) conduct on
the part of the defendant, or of one under whom the defendant claims, giving rise to
the situation which the complaint seeks a remedy; (2) delay in asserting the
complainants rights, the complainant having had knowledge or notice of the
defendants conduct as having been afforded an opportunity to institute a suit; (3)
lack of knowledge or notice on the part of the defendant that the complainant would
assert the right in which the defendant bases the suit; and (4) injury or prejudice to
the defendant in the event relief is accorded to the complainant, or the suit is not
held barred.63
In Santiago v. Court of Appeals, we explained that there is "no absolute rule as to
what constitutes laches or staleness of demand; each case is to be determined
according to its particular circumstances."64
Laches has set in
The records demonstrate clear signs of laches. The first element is undisputed.
Panlilios erstwhile tenants were issued CLTs sometime in 1973 and subsequently
EPs in 1993. CAR Case No. 1649-P74 filed by Panlilios lessee, Paulina Mercado,
was dismissed with finality on March 17, 1978 as no appeal was pursued. Since
then, Panlilio and her administrator for the subject landholdings in Hacienda
Masamat, Jesus Lizares, did not take any action to revoke the CLTs. With the

dismissal of the land case in 1978, with finality, the possession of the tenants of
Panlilio was fully recognized by her and her successors-in-interest.
It cannot be disputed that Panlilios tenants, the private respondents, occupied
portions of the subject landholdings in an open, continuous, and adverse manner in
the concept of owners from 1978 until 1994 and 1995 when the subject cases were
instituted by petitioner Lizares or for more than sixteen (16) years. Private
respondents possession of said portions for a lengthy period of time gave cause to
petitioner to complain and take legal steps to protect Panlilios rights of ownership
and title over the disputed lot. No such action was taken.
Likewise, the second element of laches is amply shown. Panlilio and her
successors-in-interest did not take any administrative or judicial action to protect her
rights for more than 16 years.
As it is, if Panlilio indeed executed the affidavit of revocation in February 3, 1977,
why did she not pursue any action to implement her affidavit disregarding her
January 12, 1977 Affidavit? Indeed, Panlilio, during her lifetime, did not lift a finger to
regain her land. After she died on December 29, 1986, Jesus Lizares, her
administrator for Hacienda Masamat, likewise did not initiate any legal action to
effectuate her alleged wish. Unfortunately for petitioner Lizares, the cases initiated
by him in 1994 and 1995 were belatedly filed and much delay had transpired which
proved to be prejudicial to his interests.
Anent the third element, private respondents did not know nor anticipate that their
possession, occupancy, and ownership of the subject landholdings after 16 years
would still be questioned. In fact, private respondents did not only continue tilling the
land, but later on had conveyed their lots to innocent third parties for value.
Moreover, we take judicial notice that numerous commercial buildings, residential
houses, and a large mall stand on major portions of former Hacienda Masamat. In
fact, the subject landholdings are now much different from what they were more than
two decades ago. Thus, after more than sixteen (16) years of unquestioned,
peaceful, and uninterrupted possession, private respondents did not expect that
petitioner Lizares would still assert any right over the landholdings after the lapse of
such a long period of occupation.
Finally, grave prejudice and serious damage would befall private respondents, in
general, who relied on their CLTs and EPs, and subsequent purchasers for value of
the lots forming parts of the former hacienda who relied on private respondents titles
if the complaints of petitioner were not barred. As a matter of fact, some buyers not
impleaded in the instant case opted to settle out-of-court with petitioner Lizares
rather than be disturbed in their possession and their right of ownership.
Considering the foregoing discussion, we uphold the finding of laches. Verily, it
would be a grave injustice if private respondents and the subsequent purchasers for
value would now be made to suffer after petitioner Lizares and his predecessors-ininterest had slept on their rights for more than 16 years.
Fourth Issue: Principle of res judicata inapplicable
Private respondents contend that the dismissal in CAR Case No. 1649-P74
constitutes res judicata over the instant case. CAR Case No. 1649-P74 involved
Panlilios lessee against private respondents with the issue of the crops being
planted on subject landholdings, while the instant case involves Panlilios successorin-interest petitioner Lizares against private respondents involving the issue of the
alleged affidavit of revocation.
The reliance on res judicata is misplaced.

Res judicata, either in the concept of bar by former judgment or conclusiveness of

judgment, cannot be applied to the present case.
In Vda. de Cruzo v. Carriaga, Jr., we discussed the doctrine of res judicata, as
follows:
The doctrine of res judicata thus lays down two main rules which may be stated as
follows: 1) The judgment or decree of a court of competent jurisdiction on the merits
concludes the parties and their privies to the litigation and constitutes a bar to a new
action or suit involving the same cause of action either before the same or any other
tribunal; and 2) Any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which a
judgment or decree is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies whether
or not the claim or demand, purpose or subject matter of the two suits is the same.
These two main rules mark the distinction between the principles governing the two
typical cases in which a judgment may operate as evidence. In speaking of these
cases, the first general rule above stated, and which corresponds to the aforequoted
paragraph (b) of Section 49, is referred to as "bar by former judgment" while the
second general rule, which is embodied in paragraph (c) of the same section, is
known as "conclusiveness of judgment."
Stated otherwise, when we speak of res judicata in its concept as a "bar by former
judgment," the judgment rendered in the first case is an absolute bar to the
subsequent action since said judgment is conclusive not only as to the matters
offered and received to sustain that judgment but also as to any other matter which
might have been offered for that purpose and which could have been adjudged
therein. This is the concept in which the termres judicata is more commonly and
generally used and in which it is understood as the bar by prior judgment
constituting a ground for a motion to dismiss in civil cases.
On the other hand, the less familiar concept or less terminological usage of res
judicata as a rule on conclusiveness of judgment refers to the situation where the
judgment in the prior action operates as an estoppel only as to the matters actually
determined therein or which were necessarily included therein. Consequently, since
other admissible and relevant matters which the parties in the second action could
properly offer are not concluded by the said judgment, the same is not a bar to or a
ground for dismissal of the second action.
At bottom, the other elements being virtually the same, the fundamental difference
between the rule of res judicata as a bar by former judgment and as merely a rule on
the conclusiveness of judgment is that, in the first, there is an identity in the cause of
action in both cases involved whereas, in the second, the cause of action in the first
case is different from that in the second case.65
Premised on the foregoing disquisition, the principle of res judicata requires the
concurrence of the following requisites:
a) The former judgment or order must be final;
b) It must be a judgment or order on the merits, that is, it was rendered after a
consideration of the evidence or stipulations submitted by the parties at the
trial of the case;
c) It must have been rendered by a court having jurisdiction over the subject
matter and the parties; and
d) There must be, between the first and second actions, identity of parties, of
subject matter and of cause of action. This requisite is satisfied if the two
actions are substantially between the same parties. 66

For want of the fourth requisite that there must be, between the first and second
actions, identity of parties, subject matter, and cause of action, the instant case is
thus removed from the operation of the principle of res judicata. Stated differently,
there is no identity of parties and issues in CAR Case No. 1649-P74 and the instant
case.
Nevertheless, while res judicata is not applicable in the instant case, still, it will not
accord legal relief to petitioner with respect to his claim of ownership over the lots in
dispute.
Fifth Issue: Fraud and collusion not proven
Petitioner Lizares accuses the DAR personnel and private respondents of fraud and
collusion. Absent any proof, such allegation falls flat.
In the recent case of Heirs of Cipriano Reyes v. Calumpang, we elucidated on this
same issue of the required evidential proof, thus:
Basic is the rule of actori incumbit onus probandi, or the burden of proof lies with the
plaintiff. Differently stated, upon the plaintiff in a civil case, the burden of proof never
parts. In the case at bar, petitioners must therefore establish their case by a
preponderance of evidence, that is, evidence that has greater weight, or is more
convincing than that which is offered in opposition to itwhich petitioners utterly
failed to do so. Besides, it is an age-old rule in civil cases that one who alleges a fact
has the burden of proving it and a mere allegation is not evidence. Fraud is never
presumed, but must be established by clear and convincing evidence. Thus, by
admitting that Victorino, Luis, and Jovito, all surnamed Reyes, indeed executed the
Deed of Quitclaim coupled with the absence of evidence substantiating fraud and
mistake in its execution, we are constrained to uphold the appellate courts
conclusion that the execution of the Deed of Quitclaim was valid. 67
Hence, we uphold the CAs pronouncement that there was no collusion and fraud
especially considering that no clear and convincing evidence was presented to
overwhelm and rebut the presumption that official duty has been regularly
performed68 by the DAR personnel.
Sixth Issue: Subsequent transfers valid only
to qualified farmer-beneficiaries
Petitioner Lizares asseverates that ownership of lands granted to tenant-farmers
under PD 27 may not be transferred or conveyed to third parties except by
hereditary succession or to the Government. He contends that the CA committed
grave abuse of discretion in declaring the sale of the land by private respondents
Gonzalo Dizon, et al. to third persons valid. The CA ratiocinated that EO 228 was
enacted after PD 27 and since EO 228 is a later law, it will prevail over PD 27. Thus,
the ownership of the lot may now be transferred to persons other than the heirs of
the beneficiary or the Government.
Petitioner is correct.
EO 228 not inconsistent with PD 27 on prohibition of transfers
The prohibition in PD 27, the Tenants Emancipation Decree, which took effect on
October 21, 1972, states that "[t]itle to land acquired pursuant to this Decree or the
Land Reform Program of the Government shall not be transferable except by
hereditary succession or to the Government in accordance with the provisions of this
Decree, the Code of Agrarian Reforms and other existing laws and regulations
(emphasis supplied)."

Hereditary succession means succession by intestate succession or by will to the

compulsory heirs under the Civil Code, but does not pertain to testamentary
succession to other persons. "Government" means the DAR through the Land Bank
of the Philippines which has superior lien by virtue of mortgages in its favor.
Thus, PD 27 is clear that after full payment and title to the land is acquired, the land
shall not be transferred except to the heirs of the beneficiary or the Government. If
the amortizations for the land have not yet been paid, then there can be no transfer
to anybody since the lot is still owned by the Government. The prohibition against
transfers to persons other than the heirs of other qualified beneficiaries stems from
the policy of the Government to develop generations of farmers to attain its avowed
goal to have an adequate and sustained agricultural production. With certitude, such
objective will not see the light of day if lands covered by agrarian reform can easily
be converted for non-agricultural purposes.
On the other hand, Sec. 6 of EO 228 provides, thus:
Sec. 6 The total cost of the land including interest at the rate of six percent (6%) per
annum with a two percent (2%) interest rebate for amortizations paid on times, shall
be paid by the farmer-beneficiary or his heirs to the Land Bank over a period of up to
twenty (20) years in twenty (20) equal annual amortizations. Lands already valued
and financed by Land Bank are likewise extended a 20-year period of payment of
twenty (20) equal annual amortizations. However, the farmer-beneficiary if he so
elects, may pay in full before the twentieth year or may request the Land Bank to
structure a repayment period of less than twenty (20) years if the amount to amount
to be financed and the corresponding annual obligations are well within the farmers
capacity to meet. Ownership of lands acquired by farmer-beneficiary may be
transferred after full payment of amortizations. (Emphasis supplied.)
The CA highlighted and made much of the last sentence of Sec. 6 which authorizes
the transfer of the ownership of the lands acquired by the farmer-beneficiary after full
payment of amortizations. It construed said provision to mean that the farmerbeneficiary can sell the land even to a non-qualified person.
This is incorrect.
First of all, the provision in question is silent as to who can be the transferees of the
land acquired through the CARP. The rule in statutory construction is that statutes
in pari materia should be construed together and harmonized.69 Since there appears
to be no irreconcilable conflict between PD 27 and Sec. 6 of EO 228, then the two
(2) provisions can be made compatible by maintaining the rule in PD 27 that lands
acquired under said decree can only be transferred to the heirs of the original
beneficiary or to the Government. Second, PD 27 is the specific law on agrarian
reform while EO 228 was issued principally to implement PD 27. This can easily be
inferred from EO 228 which provided for the mode of valuation of lands subject of
PD 27 and the manner of payment by the farmer-beneficiary and mode of
compensation to the land owner. Third, implied repeals are not favored. A perusal of
the aforequoted Sec. 6 of EO 228 readily reveals that it confers upon the beneficiary
the privilege of paying the value of the land on a twenty (20)-year annual
amortization plan at six percent (6%) interest per annum. He may elect to pay in full
the installments or have the payment plan restructured. Said provision concludes by
saying that after full payment, ownership of the land may already be transferred.
Thus, it is plain to see that Sec. 6 principally deals with payment of amortization and
not on who qualify as legal transferees of lands acquired under PD 27. Since there
is no incompatibility between PD 27 and EO 228 on the qualified transferees of land
acquired under PD 27, ergo, the lands acquired under said law can only be
transferred to the heirs of the beneficiary or to the Government for eventual transfer
to qualified beneficiaries by the DAR pursuant to the explicit proscription in PD 27.

Thus, the alleged transfers made by private respondents in G.R. No. 148777 of
lands acquired under PD 27 to non-qualified persons are illegal and null and void. 70
The ruling in Victorino Torres v. Leon Ventura sheds light on the policy behind the
prohibition, thus:
The law is clear and leaves no room for doubt. Upon the promulgation of
Presidential Decree No. 27 on October 21, 1972, petitioner was DEEMED OWNER
of the land in question. As of that date, he was declared emancipated from the
bondage of the soil. As such, he gained the rights to possess, cultivate, and enjoy
the landholding for himself. Those rights over that particular property were granted
by the government to him and to no other. To insure his continued possession and
enjoyment of the property, he could not, under the law, make any valid form of
transfer except to the government or by hereditary succession, to his successors. 71
In addition, the prohibition was expanded not only to cover the title issued to the
tenant-farmer but also the rights and interests of the farmer in the land while he is
still paying the amortizations on it. A contrary ruling would make the farmer an "easy
prey to those who would like to tempt [him/her] with cash in exchange for inchoate
title over the same," and PD 27 could be easily circumvented and the title shall
eventually be acquired by non-tillers of the soil. 72
Anent the contravention of the prohibition under PD 27, we ruled in Siacor v.
Gigantana73 and more recently in Caliwag-Carmona v. Court of Appeals, 74 that sales
or transfers of lands made in violation of PD 27 and EO 228 in favor of persons
other than the Government by other legal means or to the farmers successor by
hereditary succession are null and void. The prohibition even extends to the
surrender of the land to the former landowner. The sales or transfers are void ab
initio, being contrary to law and public policy under Art. 5 of the Civil Code that "acts
executed against the provisions of mandatory or prohibiting laws shall be void x x x."
In this regard, the DAR is duty-bound to take appropriate measures to annul the
illegal transfers and recover the land unlawfully conveyed to non-qualified persons
for disposition to qualified beneficiaries. In the case at bar, the alleged transfers
made by some if not all of respondents Gonzalo Dizon, et al. (G.R. No. 148777) of
lands covered by PD 27 to non-qualified persons are illegal and null and void.
G.R. No. 157598
Finally, we resolve the sole issue raised in G.R. No. 157598 on whether petitioners
Reynaldo Villanueva, et al. are entitled to a partial entry of judgment of the Amended
Decision in CA-G.R. SP No. 47502.
Petitioners in G.R. No. 157598 are not entitled to a partial entry of judgment in
CA-G.R. SP No. 47502
Petitioners contend that they are entitled to a partial entry of judgment in CA-G.R.
SP No. 47502 as respondent George Lizares in G.R. No. 148777 deliberately
excluded them on account of the amicable settlement concluded between them.
Thus, they contend that any judgment rendered by the Court in G.R. No. 148777 will
not affect them. In gist, petitioners strongly assert that the Amended Decision in CAG.R. SP No. 47502 is already final and executory with respect to them.
Respondent Lizares, on the other hand, has continually affirmed that he deliberately
excluded petitioners in his petition for review under G.R. No. 148777 as they had
amicably settled with him; and that he has released, discharged, and waived any
and all claims against petitioners on account of the petition. Thus, respondent
Lizares interposes no objection for the issuance of a partial entry of judgment in CAG.R. SP No. 47502 insofar as petitioners are concerned, as the issues and reliefs he
is seeking in G.R. No. 148777 do not concern nor prejudice petitioners.

We disagree.
It is clear that petitioners, though they settled with respondent Lizares out-of-court,
were not able to get a favorable ruling from the DARAB approving the motion to
withdraw appeal filed by respondent Lizares in DARAB Case Nos. 4558, 4559, and
4561. This motion for the recall of the appeal remained unacted upon until the
August 7, 1997 DARAB Decision was rendered in favor of all the defendants and
appellees.
Subsequently, the DARAB cases were elevated for review to the CA and docketed
as CA-G.R. SP No. 47502.
In its November 29, 2000 Amended Decision, the CA upheld the DARAB Decision.
On January 28, 2002, petitioners Reynaldo Villanueva, et al. filed a Motion for Entry
of Judgment based on their out-of-court settlement with petitioner Lizares while the
DARAB case was pending. On July 4, 2002, a second motion for entry of judgment
was filed which was denied together with the first motion by the CA on November
14, 2002.
The reason for the denial by the CA of the aforementioned prayers for entry of
judgment is as follows:
Our Amended Decision in this case had long been elevated to the Supreme Court by
a petition for review on certiorari under Rule 45. As held by the Supreme Court
in Heirs of the Late Justice Jose B. L. Reyes vs. Court of Appeals, by the mere fact
of the filing of the petition, the finality of the Court of Appeals decision was stayed,
andthere could be no entry of judgment therein, and hence, no premature execution
could be had. In that case, the High Court emphatically declared that when this
Court adopted a resolution granting execution pending appeal after the petition for
review was already filed in the Supreme Court, the Court of Appeals encroached on
the hallowed grounds of the Supreme Court. Thus, We find no legal basis or
justification to allow [the] motions for partial entry of judgment even on the ground
that private [respondent]-movants were not impleaded in G.R. No. 148777 and in the
absence of opposition from herein petitioner who had allegedly concluded an out-ofcourt settlement with private [respondent]-movants. 75
We fully agree with the CA that there should be no partial entry of judgment for
petitioners Reynaldo Villanueva, et al. since their motion to withdraw was not acted
upon by the DARAB nor by the CA. Thus, there is nothing to record in the Book of
Entry of Judgments.
More importantly, it appears that the transfers made by some or all of petitioners
Reynaldo Villanueva, et al. (G.R. No. 157598) to non-qualified persons are
proscribed under PD 27. Such finding necessarily preludes the entry of judgment in
favor of said petitioners. Consequently, the alleged transfers made by petitioners
Villanueva, et al., being in contravention of a prohibitory provision of PD 27, are null
and void, and the titles issued to non-qualified individuals have to be cancelled and
new ones issued to the Government.
1wphi1

WHEREFORE, the petition in G.R. No. 148777 is partly granted. The November 29,
2000 Amended Decision of the CA in CA-G.R. SP No. 47502 is affirmed with the
modification that the transfers made by private respondents to non-qualified
persons, if any, under PD 27 are illegal and declared NULL and VOID, and the titles
issued based on the transfers are likewise NULL and VOID. The DAR is ORDERED
to investigate the transfers covering the subject landholdings and, based on the
findings of illegal transfers for violations of PD 27 and EO 228, to coordinate with the
Register of Deeds of Pampanga for the cancellation of the titles registered in the
names of the transferees or to their subsequent transferees and to issue new titles
to the Government for disposition to qualified beneficiaries. The November 14, 1995

PARAD Joint Decision in DARAB Cases Nos. 638-P94, 933-P95, 934-P95, and
935-P95, as affirmed by the August 7, 1997 DARAB Decision in DARAB Case Nos.
4558, 4559, 4560, and 4561, is accordingly MODIFIED.
The petition in G.R. No. 157598 is DISMISSED for lack of merit. The transfers made
by petitioners Reynaldo, et al. to non-qualified persons, if any, under PD 27 are
likewise declared NULL and VOID. Similarly, the DAR is ORDERED to investigate
the transfers covering the subject landholdings and, based on the findings of illegal
transfers for violations of PD 27 and EO 228, to coordinate with the Register of
Deeds of Pampanga for the cancellation of the titles concerned registered in the
names of the transferees or to their subsequent transferees and to issue new titles
to the Government for disposition to qualified beneficiaries.
SO ORDERED.
G.R. No. 152012 September 30, 2005
LAND AND HOUSING DEVELOPMENT CORPORATION and ABV ROCK
GROUP, Petitioners,
vs.
MARIANITO C. ESQUILLO, Respondent.
DECISION
PANGANIBAN, J.:
uitclaims, releases and other waivers of benefits granted by laws or contracts in
favor of workers should be strictly scrutinized to protect the weak and the
disadvantaged. The waivers should be carefully examined, in regard not only to the
words and terms used, but also the factual circumstances under which they have
been executed.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
set aside the July 27, 2001 Decision2 and the January 29, 2002 Resolution3 of the
Court of Appeals (CA) in CA-GR SP No. 50679. The dispositive portion of the
Decision reads as follows:
"WHEREFORE, premises considered, the decision dated May 30, 1997 of public
respondent is herebyANNULLED and SET ASIDE and the decision, dated February
27, 1997 of Labor Arbiter Andres Zavalla isREINSTATED and AFFIRMED in toto.
Costs against [herein petitioners]."4
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The antecedents are narrated by the CA as follows:
"[Respondent] Marianito C. Esquillo was hired as a structural engineer by [Petitioner]
ABV Rock Group (ABV) based in Jeddah, Kingdom of Saudi Arabia. He
commenced employment on July 27, 1989, with an initial monthly salary of
US$1,000.00 that was gradually increased, on account of his good performance and
the annual renewal of his employment contract, until it reached US$1,300.00.
Private respondent Land & Housing Development Corporation (LHDC), a local
placement agency, facilitated [respondents] employment papers.
"Although [respondents] employment contract was supposed to be valid until July
26, 1995, it was pre-terminated, through an Inter-Office Memo on Notice of

Termination, dated November 17, 1994, allegedly, for the reason, reduction of force.
Petitioner however, claims that the reason adduced was negated by the fact that a
lot of transferees from other sites were taken in and promotions as well as reclassifications in the lower ranks were done as shown by the list of fifteen (15)
transferees from Riyadh effective November 5, 1994, as well as letters of promotion
and re-classification. He further claimed that [Petitioner] ABV maliciously
confiscated his iqama or resident visa despite the fact that it was [respondents]
previous employer, FEAL IBC., which secured his iqama. Consequently,
[respondent] was prevented from getting another job in Jeddah.
"[Respondent] subsequently received the amount of twenty-three thousand, one
hundred fifty-three Saudi Riyals (SR23,153.00) from [Petitioner] ABV, as final
settlement of his claims and was issued an exit visa that required him to immediately
go back to the Philippines.
"As a result of the foregoing, [respondent] filed a complaint for breach of contract
and/or illegal dismissal, before the Philippine Overseas Employment Administration
which was referred to the National Labor Relations Commission, Sub-Regional
Arbitration Branch No. IV, San Pablo City, and docketed as SRAB-IV-4-0053-96-L.
The parties were required to file their position papers and responsive pleadings.
"In their position paper, [petitioners] maintained that [respondents] dismissal was for
valid cause, that is, reduction of force. Due to the Gulf War, the projects of
[Petitioner] ABV were reduced and it was forced to terminate the contracts of
workers whose job were not so immediate and urgent and retain only those workers
whose skills were needed just to maintain the projects. [Respondent] was informed,
one month in advance, of the pre-termination of his contract, and he was paid his
salary, overtime pay, bonus and other benefits in the total amount of US$6,716.00 or
Saudi Riyals SR25,192.00. With respect to the alleged confiscation of [respondents]
iqama, [petitioners] alleged that the law requires its surrender to the Saudi
authorities upon the termination of the employees contract of employment.
"Upon the submission of the case for resolution, the Hon. Labor Arbiter Andres
Zavalla issued his Decision, dated February 27, 1997, decreeing, as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering
[petitioners] jointly and severally to pay [respondent] his salaries corresponding to
the unexpired portion of his contract from December 19, 1994 up to July 26, 1995 in
the total amount of NINE THOUSAND FOUR HUNDRED FORTY SEVEN U.S.
Dollars (US$9,447.00) and ten percent (10%) of his monetary award as attorneys
fees both in Philippine currency to be computed at the prevailing rate at the time of
payment.
All other claims of [respondent] are hereby dismissed for lack of merit.
SO ORDERED.
"When [petitioners] filed their joint appeal, docketed as NLRC NCR CA No. 01265097, [the NLRC] in a Decision, dated May 30, 1997, reversed the aforecited decision
and dismissed the [respondents] complaint for lack of merit. [Respondents] motion
for reconsideration was denied in a Resolution, dated July 10, 1997." 5
Ruling of the Court of Appeals
The Court of Appeals ruled that despite the absence of a written categorical
objection to the sufficiency of the payment received as consideration for the
execution of the quitclaim,
jurisprudence supported the right of respondent to demand what was rightfully his
under our labor laws. Hence, he should have been allowed to recover the difference

between the amount he had actually received and the amount he should have
received.
The CA also found that the NLRC had erroneously applied RA 8042 to the case. The
appellate court held that respondent was entitled to the salaries corresponding to the
unexpired portion of his Contract, in addition to what he had already received.
Hence, this Petition.6
The Issues

Petitioners raise the following issues for this Courts consideration:

"A. Whether or not the Honorable Court of Appeals committed reversible error when
it took cognizance of an issue of fact which was raised for the first time on appeal.
"B. Whether or not the Honorable Court of Appeals committed reversible error in its
27 July 2001 Decision and 29 January 2002 Resolution by affirming the 27 February
1997 Decision of the Labor Arbiter which rendered as null and void and without
binding effect the release and quitclaim executed by the respondent in favor of the
petitioners, and, thereafter, granted the respondent monetary award." 7
In the main, the issue is whether respondent, despite having executed a quitclaim, is
entitled to a grant of his additional monetary claims.
The Courts Ruling
The Petition has no merit.
At the outset, the Court notes the Manifestation of the Office of the Solicitor General
(OSG), recommending that "the decision dated May 30, 1997 of the NLRC be
annulled and set aside and that [Respondent] Esquillo be awarded the total amount
of his salaries corresponding to the unexpired portion of his contract of
employment."8
Main Issue:
Entitlements of a Dismissed
Employee Who Has Executed a Quitclaim
The factual findings of labor officials, who are deemed to have acquired expertise in
matters within their respective jurisdictions, are generally accorded not only respect
but finality.9 In the present case, the labor arbiter found respondents dismissal to be
illegal and devoid of any just or authorized cause. The factual findings of the NLRC
and the CA on this matter were not contradictory. Hence, the Court finds no reason
to deviate from theirfactual finding that respondent was dismissed without any legal
cause.
Indeed, an employee cannot be dismissed except for cause, as provided by law, and
only after due notice and hearing.10 Employees who are dismissed without cause
have the right to be reinstated without loss of seniority rights and other privileges;
and to be paid full back wages, inclusive of allowances and other benefits, plus
proven damages.
With regard to contract workers, in cases arising before the effectivity of RA 8042
(the Migrant Workers and Overseas Filipinos Act11), it is settled that if "the contract is
for a fixed term and the employee is dismissed without just cause, he is entitled to
the payment of his salaries corresponding to the unexpired portion of his
contract."12In the present case, the Contract of respondent was until July 26, 1995.

Since his dismissal from service effective December 18, 1994, was not for a just
cause, he is entitled to be paid his salary corresponding to the unexpired portion of
his Contract, in the total amount of US$9,447.
We now go to the Release and Quitclaim signed by respondent. The document,
which was prepared by Petitioner ABV Rock Group, 13 states:
"KNOW ALL MEN BY THESE PRESENTS:
That for and in consideration of the sum of Saudi Riyals SR: TWENTY THREE
THOUSAND ONE HUNDRED FIFTY THREE (SR23,153) receipt of which is hereby
acknowledged to my full and complete satisfaction, I,MARIANITO C. ESQUILLO do
discharge my employer, ABV ROCK GROUP KB, JEDDAH, & its recruitment agent,
the LAND & HOUSING DEVP. CORP., from any and all claims, demands, debts,
dues, actions, or causes of action, arising from my employment with aforesaid
company/firm/entity.
"I hereby certify that I am of legal age, that I fully understand this instrument and
agree that this is a full and final release and discharge of the parties referred to
herein, and I further agree that this release may be pleaded as absolute and final
bar to any suit or suits or legal proceedings that may hereafter be prosecuted by me
against aforementioned companies/entities.
IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HANDS THIS 29 day
of NOV, 1994 at JEDDAH.
SIGNED
MARIANITO C. ESQUILLO."14
Petitioners claim that the foregoing Release and Quitclaim has forever released
them from "any and all claims, demands, dues, actions, or causes of action" arising
from respondents employment with them. They also contend that the validity of the
document can no longer be questioned.
Unfortunately for petitioners, jurisprudence does not support their stance. The fact
that employees have signed a release and/or quitclaim does not necessarily result in
the waiver of their claims. The law strictly scrutinizes agreements in which workers
agree to receive less compensation than what they are legally entitled to. That
document does not always bar them from demanding benefits to which they are
legally entitled.15 The reason for this policy was explained, inter alia, in Marcos v.
National Labor Relations Commission, which we quote:
"We have heretofore explained that the reason why quitclaims are commonly
frowned upon as contrary to public policy, and why they are held to be ineffective to
bar claims for the full measure of the workers legal rights, is the fact that the
employer and the employee obviously do not stand on the same footing. The
employer drove the employee to the wall. The latter must have to get hold of money.
Because, out of a job, he had to face the harsh necessities of life. He thus found
himself in no position to resist money proffered. His, then, is a case of adherence,
not of choice. One thing sure, however, is that petitioners did not relent on their
claim. They pressed it. They are deemed not [to] have waived any of their
rights. Renuntiatio non praesumitur.
"Along this line, we have more trenchantly declared that quitclaims and/or complete
releases executed by the employees do not estop them from pursuing their claims
arising from unfair labor practices of the employer. The basic reason for this is that
such quitclaims and/or complete releases are against public policy and, therefore,
null and void. The acceptance of termination does not divest a laborer of the right to

prosecute his employer for unfair labor practice acts. While there may be possible
exceptions to this holding, we do not perceive any in the case at bar.
xxxxxxxxx
"We have pointed out in Veloso, et al. vs. Department of Labor and Employment, et
al., that:
While rights may be waived, the same must not be contrary to law, public order,
public policy, morals or good customs or prejudicial to a third person with a right
recognized by law.
Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the
quitclaim obligates the workers concerned to forego their benefits while at the same
time exempting the employer from any liability that it may choose to reject. This runs
counter to Art. 22 of the Civil Code which provides that no one shall be unjustly
enriched at the expense of another."16
In Periquet v. NLRC, this Court set the guidelines and the current doctrinal policy
regarding quitclaims and waivers, as follows:
"Not all waivers and quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represents a reasonable settlement, it is binding on
the parties and may not later be disowned simply because of a change of mind. It is
only where there is clear proof that the waiver was wangled from an unsuspecting or
gullible person, or the terms of settlement are unconscionable on its face, that the
law will step in to annul the questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking." 17
Hence, quitclaims in which employees voluntarily accept a reasonable amount or
consideration as settlement are deemed valid. These agreements cannot be set
aside merely because the parties have subsequently changed their
minds.18 Consistent with this doctrine, a tribunal has the duty of scrutinizing
quitclaims brought to its attention by either party, in order to determine their validity.
In the present case, petitioners themselves offered the Release and Quitclaim as a
defense. Even though respondent -- in his pleadings before the labor arbiter -- was
silent on the matter, he nonetheless filed this case and questioned his dismissal
immediately, a few days after setting foot in the Philippines. In asking for payment
for the unexpired portion of his employment Contract, he was eloquently taking issue
with the validity of the quitclaim. His actions spoke loudly enough; words were not
necessary.
To determine whether the Release and Quitclaim is valid, one important factor that
must be taken into account is the consideration accepted by respondent; the amount
must constitute a "reasonable settlement." The NLRC considered the amount of
US$6,716 or SR23,153 reasonable, when compared with (1) $3,900, the threemonth salary that he would have been entitled to recover if RA 8042 were applied;
and (2) US$9,447, his salaries for the unexpired portion of his Contract.
It is relevant to point out, however, that respondent was dismissed prior to the
effectivity of RA 8042. As discussed at the outset, he is entitled to his salaries
corresponding to the unexpired portion of his Contract. This amount is exclusive of
the SR23,153 that he received based on the November 29, 1994 Final Settlement.
The latter amount was comprised of overtime pay, vacation pay, indemnity, contract
reward and notice pay -- items that were due him under his employment Contract.
For these reasons, the consideration stated in the Release and Quitclaim cannot be
deemed a reasonable settlement; hence, that agreement must be set aside.

That respondent is a professional structural engineer did not make him less
susceptible to disadvantageous financial offers, faced as he was with the prospect of
unemployment in a country not his own. "This Court has allowed supervisory
employees to seek payment of benefits and a manager to sue for illegal dismissal
even though, for a consideration, they executed deeds of quitclaims releasing their
employers from liability."19
To stress, "in case of doubt, laws should be interpreted to favor the working class -whether in the government or in the private sector -- in order to give flesh and vigor
to the pro-poor and pro-labor provisions of our Constitution." 20
WHEREFORE, the Petition is DENIED and the assailed Decision and
Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 174144, April 17, 2007
BELLA A. GUERRERO, PETITIONER, VS.
BELLA A. GUERRERO, PETITIONER, VS.
RESURRECCION A. BIHIS, RESPONDENT.
DECISION
CORONA, J.:
The Scriptures tell the story of the brothers Jacob and Esau[1], siblings who fought bitterly over the
inheritance of their father Isaac's estate. Jurisprudence is also replete with cases involving acrimonious
conflicts between brothers and sisters over successional rights. This case is no exception.
On February 19, 1994, Felisa Tamio de Buenaventura, mother of petitioner
Bella A. Guerrero and respondent Resurreccion A. Bihis, died at the Metropolitan Hospital in Tondo,
Manila.
On May 24, 1994, petitioner filed a petition for the probate of the last will and testament of the decedent in
Branch 95 [2] of the Regional Trial Court of Quezon City where the case was docketed as Sp. Proc. No.
Q-94-20661.
The petition alleged the following: petitioner was named as executrix in the decedent's will and she was
legally qualified to act as such; the decedent was a citizen of the Philippines at the time of her death; at
the time of the execution of the will, the testatrix was 79 years old, of sound and disposing mind, not
acting under duress, fraud or undue influence and was capacitated to dispose of her estate by will.
Respondent opposed her elder sister's petition on the following grounds: the will was not executed and
attested as required by law; its attestation clause and acknowledgment did not comply with the
requirements of the law; the signature of the testatrix was procured by fraud and petitioner and her
children procured the will through undue and improper pressure and influence.
In an order dated November 9, 1994, the trial court appointed petitioner as special administratrix of the
decedent's estate. Respondent opposed petitioner's appointment but subsequently withdrew her
opposition. Petitioner took her oath as temporary special administratrix and letters of special
administration were issued to her.
On January 17, 2000, after petitioner presented her evidence, respondent filed a demurrer thereto
alleging that petitioner's evidence failed to establish that the decedent's will complied with Articles 804
and 805 of the Civil Code.
In a resolution dated July 6, 2001, the trial court denied the probate of the will ruling that Article 806 of the
Civil Code was not complied with because the will was "acknowledged" by the testatrix and the witnesses
at the
testatrix's, residence at No. 40 Kanlaon Street, Quezon City before Atty. Macario O. Directo who was a
commissioned notary public for and in Caloocan City. The dispositive portion of the resolution read:
WHEREFORE, in view of the foregoing, the Court finds, and so declares that it cannot admit the last will
and testament of the late Felisa Tamio de Buenaventura to probate for the reasons hereinabove
discussed and also in accordance with Article 839 [of the Civil Code] which provides that if the formalities
required by law have not been complied with, the will shall be disallowed. In view thereof, the Court
shall henceforth proceed with intestate succession in regard to the estate of the deceased Felisa Tamio
de Buenaventura in accordance with Article 960 of the [Civil Code], to wit: "Art. 960. Legal or intestate
succession takes place: (1) If a person dies without a will, or with a void will, or one which has
subsequently lost its validity, xxx."

Petitioner elevated the case to the Court of Appeals but the appellate court dismissed the appeal and
affirmed the resolution of the trial court.[4]
Thus, this petition.
Petitioner admits that the will was acknowledged by the testatrix and the witnesses at the testatrix's
residence in Quezon City before Atty. Directo and that, at that time, Atty. Directo was a commissioned
notary public for and in Caloocan City. She, however, asserts that the fact that the notary public was
acting outside his territorial jurisdiction did not affect the validity of the notarial will.
Did the will "acknowledged" by the testatrix and the instrumental witnesses before a notary public acting
outside the place of his commission satisfy the requirement under Article 806 of the Civil Code? It did not.
Article 806 of the Civil Code provides:
ART. 806. Every will must be acknowledged before a notary public by
the testator and the witnesses. The notary public shall not be required
to retain a copy of the will, or file another with the office of the Clerk of
Court.
One of the formalities required by law in connection with the execution of a notarial will is that it must be
acknowledged before a notary public by the testator and the witnesses.[6] This formal requirement is one
of the indispensable requisites for the validity of a will.[7] In other words, a notarial will that is not
acknowledged before a notary public by the testator and the instrumental witnesses is void and cannot be
accepted for probate.
An acknowledgment is the act of one who has executed a deed in going before some competent officer
and declaring it to be his act or deed.[8] In the case of a notarial will, that competent officer is the notary
public.
The acknowledgment of a notarial will coerces the testator and the instrumental witnesses to declare
before an officer of the law, the notary public, that they executed and subscribed to the will as their own
free act or deed.[9] Such declaration is under oath and under pain of perjury, thus paving the way for the
criminal prosecution of persons who participate in the execution of spurious wills, or those executed
without the free consent of the testator.[10] It also provides a further degree of assurance that the testator
is of a certain mindset in making the testamentary dispositions to the persons instituted as heirs or
designated as devisees or legatees in the will.[11]
Acknowledgment can only be made before a competent officer, that is, a lawyer duly commissioned as a
notary public.
In this connection, the relevant provisions of the Notarial Law provide:
SECTION 237. Form of commission for notary public. -The
appointment of a notary public shall be in writing, signed by the judge,
and substantially in the following form:
GOVERNMENT OF THE
REPUBLIC OF THE PHILIPPINES
PROVINCE OF ___________
This is to certify that ____________, of the municipality of ________
in said province, was on the ___ day of __________, anno Domini
nineteen hundred and _______, appointed by me a notary public,
within and for the said province, for the term ending on the first day
of January, anno Domini nineteen hundred and _____.

Judge of the Court of

irst Instance[12] of said
Province
SECTION 240. Territorial jurisdiction. - The jurisdiction of a notary
public in a province shall be co-extensive with the province. The
jurisdiction of a notary public in the City of Manila shall be coextensive with said city. No notary shall possess authority to do
any notarial act beyond the limits of his jurisdiction. (emphases
supplied)
A notary public's commission is the grant of authority in his favor to perform notarial acts. [13] It is issued
"within and for" a particular territorial jurisdiction and the notary public's authority is co-extensive with it. In
other words, a notary public is authorized to perform notarial acts, including the taking of
acknowledgments, within that territorial jurisdiction only. Outside the place of his commission, he is bereft

of power to perform any notarial act; he is not a notary public. Any notarial act outside the limits of his
jurisdiction has no force and effect. As this Court categorically pronounced in Tecson v.
Tecson:[14]
An acknowledgment taken outside the territorial limits of the officer's
jurisdiction is void as if the person taking it ware wholly without official
character. (emphasis supplied)
Since Atty. Directo was not a commissioned notary public for and in Quezon City, he lacked the authority
to take the acknowledgment of the testatrix and the instrumental witnesses. In the same vein, the testatrix
and her witnesses could not have validly acknowledged the will before him. Thus, Felisa Tamio
de Buenaventura's last will and testament was, in effect, not acknowledged as required by law.
Moreover, Article 5 of the Civil Code provides:
ART. 5. Acts executed against the provisions of mandatory or
prohibitory laws shall be void, except when the law itself authorizes
their validity.
The violation of a mandatory or a prohibitory statute renders the act illegal and void unless the law itself
declares its continuing validity. Here, mandatory and prohibitory statutes were transgressed in the
execution of the alleged "acknowledgment." The compulsory language of Article 806 of the Civil Code
was not complied with and the interdiction of Article 240 of the Notarial Law was breached.
Ineluctably, the acts of the testatrix, her witnesses and Atty. Directo were all completely void.
The Court cannot turn a blind eye to Atty. Directo's participation in the preparation, execution and unlawful
"acknowledgment" of Felisa Tamio de Buenaventura's will. Had he exercised his notarial commission
properly, the intent of the law to effectuate the decedent's final statements[15] as expressed in her will
would not have come to naught.[16] Hence, Atty. Directo should show cause why he should not
be administratively sanctioned as a member of the bar and as an officer of the court.
WHEREFORE, the petition is hereby DENIED.