G.R. No.

L-34369 September 30, 1974

ANTONIO VILLASIS, MATERNIDAD V. VILLASIS and SANTIAGO ORENDAIN, petitioners,
vs.
HONORABLE
COURT
OF
APPEALS,
ELEUTERIO
VILLASIS
and
LAURA
S.
VILLASIS, respondents.
Augusto A. Kimpo for petitioners.
Silvestre Untaran, Jr. for respondents.

TEEHANKEE, J.:p
The Court in dismissing the petition and affirming the appellate court's dismissal of petitionersappellants' appeal for failure to file appellants' brief finds that petitioners have shown no valid and
justifiable reason for their inexplicable failure to file their brief and have only themselves to blame for
their counsel's utter inaction and gross indifference and neglect in not having filed their brief for a year
since receipt of due notice to file the same.
The case originated in the Antique court of first instance where after due trial judgment was rendered in
favor of respondents-plaintiffs upholding their action for quieting of title with recovery of possession and
damages.
Petitioners-defendants appealed the adverse judgment to the Court of Appeals. On June 25, 1970,
petitioners as appellants received notice through their counsel Benjamin M. Valente to submit the
appellants' brief within the reglementary forty-five day period to expire on August 9, 1970.
On August 10, 1970 (the last day of the reglementary period, August 9 being a Sunday), petitioners'
counsel, Atty. Valente, filed a motion to withdraw as counsel due to his having been employed as
technical assistant in the Supreme Court, with a prayer that appellants' newly engaged counsel be
given sufficient time to file their brief. Said new counsel, Atty. Esdras F. Tayco, filed on August 18, 1970
his appearance with the appellate court.
On August 27, 1970, the appellate court received respondents-appellees' motion to dismiss the appeal
dated August 5, 1970 for appellants' failure to file their brief within the reglementary period.
On September 12, 1970, the appellate court required both counsels of appellants, Atty. Valente (whose
withdrawal it held in abeyance until he filed a proper motion in verified form with the signed conformity
of the clients as per its resolution of August 18, 1970) and Atty. Tayco to comment on the dismissal
motion.
Withdrawing counsel Valente filed his manifestation dated September 28, 1970 alleging inter alia that he
had not received a copy of the dismissal motion and could not therefore comment thereon and
submitting therewith the signed conformity of his clients to his withdrawal and reiterating his prayer for

the court to grant his withdrawal and to grant appellants sufficient time to file their brief. New counsel
Tayco filed no comment whatsoever.
The appellate court granted withdrawing counsel's motion to withdraw per its resolution of October 9,
1970 but meanwhile issued no resolution on the appellees' motion to dismiss the appeal.
On June 25, 1971 or after the lapse of more than eleven (11 months or to be more exact, 319 days)
without appellants having filed their brief at all, the appellate court's special sixth division 1 issued its
resolution granting the dismissal motion and dismissing the appeal on the ground stated by appellees in
their motion that appellants had failed to file their brief within the reglementary 45-day period.
It was only then that new counsel Tayco apparently stirred from almost a year of inaction and filed a
motion dated July 13, 1971 for reconsideration of the dismissal of the appeal on the ground that he as
new counsel had not received the notice to file brief. The appellate court per its resolution of August 17,
1971 denied the motion for reconsideration, pointing out that "Attorney Tayco's appearance was entered
[on August 18, 1970] after the period for filing brief had already expired [on August 10, 1970]." 2
New counsel Tayco filed a second motion for reconsideration on September 10, 1971 still without
having filed appellants, brief, which the appellate court 3 denied per its resolution of October 6, 1971.
Hence, the present appeal by certiorari wherein petitioners are represented by their third counsel, Atty.
Augusto A. Kimpo vice Atty. Tayco.
The appeal is patently without merit.
New counsel Tayco's claim in his motion for reconsideration that he had not received the notice to file
brief borders on the frivolous. Such notice to file brief had been received by his predecessor-counsel
Atty. Valente and is binding on him as the successor. A new counsel who accepts a case in midstream
is presumed and obliged to acquaint himself with all the antecedent processes and proceedings that
have transpired in the record prior to his takeover. It is noteworthy that Atty. Tayco makes no claim that
he was unaware that notice to file brief had been duly served on Atty. Valente and that the period would
expire on August 10, 1970 and that Atty. Valente had asked in his two withdrawal motions that he
(Tayco) as new counsel be granted "sufficient time" to file the brief.
Here the notice to file the brief had been received on June 25, 1970 to expire on August 10, 1970. The
appellate court did not dismiss the appeal at appellees' instance for failure of appellants to file brief until
one year later as per its resolution of June 25, 1971 or until almost eleven months after the expiration of
the reglementary period on August 10, 1970.
The appellate court gave appellants all the time and opportunity to duly prosecute their appeal by filing
their brief in the interval to no avail. It asked both counsels per its resolution of September 12, 1970
(which in effect granted appellants the sufficient time asked by Atty. Valente in his withdrawal motion to
file their brief) to comment on the dismissal motion but withdrawing counsel Valente claimed he could
not file any comment as he had not received the motion while new counsel Tayco ignored the court's
resolution and filed no comment and filed no brief!
Even going by new counsel Tayco's mistaken notion that he was entitled to a new notice to file brief, the
appellate court's resolution of September 12, 1970 requiring his comment on the motion to dismiss

appeal for failure to file appellant's brief was tantamount to such notice and he should then have
prepared and filed the brief within forty-five days thereafter. But as already pointed out, he never filed
the appellants' brief during the interval of almost 11 months that the appellate court took before it finally
dismissed the appeal per its resolution of June 25, 1971. During all this period and even during the
three months that followed when he filed two motions for reconsideration, he presented no earnest of
prosecuting the appeal by at least filing the brief even at that late date but contented himself with a
perfunctory prayer in his motion that "appellants be allowed to file their brief."!
The appellate court committed no error therefore in dismissing the appeal. Petitioners-appellants have
shown no valid and justifiable reason for their inexplicable failure to file their brief and have only
themselves to blame for their counsel's utter inaction and grow indifference and neglect in not having
filed their brief for a year since receipt of due notice to file the same. They could not even claim
ignorance of the appellate court's notice to file brief since it had required withdrawing counsel Valente to
secure their written conformity before granting his withdrawal as counsel, and certainly they must have
ascertained from him as well as new counsel the status of their appeal which accounts for Atty.
Valente's repeated prayers in his two motions for withdrawal for the granting of sufficient time for new
counsel to file the brief. They had almost a year thereafter to make sure that their new counsel did
attend to their appeal and did file the brief.
The case of Alonso vs. Rosario 4 cited by petitioners is clearly inapplicable. There, appellants had filed
an opposition to the motion to dismiss their appeal (filed by appellee just five days after the notice to file
brief was served) asking that they be allowed to file the brief after notice of denial of the motion, and
when the appellate court denied both the dismissal and the extension, they moved for reconsideration
and for at least 15 days to file their brief, but the court therein both denied reconsideration and
dismissed the appeal as well for failure to file brief within the reglementary period. Within five (5) days of
such dismissal, appellants nevertheless filed their brief. This Court in reinstating the appeal held that
"the period consumed during the pendency of the motion to dismiss should be excluded from the period
given to petitioners to submit their brief, and if this is done, the brief submitted by them on April 17, 1957
may be deemed presented in due time."
It is manifest that there are two basic differences in this case: here, the motion to dismiss the appeal
was filed precisely on the ground of failure to file the brief after the expiration of the 45-day
reglementary period and no question of suspension of the period arises, whereas there, the appellee
questioned appellants' right to appeal when only 5 days of their 45-day period had elapsed such that
the rule 5 that a motion to dismiss "interrupts the time to plea" was applied by this Court by analogy; and
here, petitioners-appellants never filed their brief while there appellants immediately filed their brief
within 5 days of notice of dismissal of their appeal.
It may parenthetically be noted that aside from petitioners' bare assertion of merit in their appeal, the
Court has not been shown that to reinstate the appeal would serve any purpose and not just be a futile
waste of time, since petitioners have never submitted their brief nor their proposed assignment of errors
against the trial court's verdict. To cap it all, petitioners in praying for a reversal of the appellate court's
dismissal of their appeal, pray that they be given an extension of fifteen (15) days from notice of the
decision within which to file the appellants' brief (at last!). Such laches and lassitude on their part serve
but to confirm the correctness of the appellate court's dismissal of their appeal.
ACCORDINGLY, the petition at bar is dismissed with costs against petitioners.

G.R. Nos. 112438-39 December 12, 1995

CHEMPHIL
EXPORT
&
IMPORT
CORPORATION
(CEIC), petitioner,
vs.
THE HONORABLE COURT OF APPEALS JAIME Y. GONZALES, as Assignee of the Bank of the
Philippine Islands (BPI), RIZAL COMMERCIAL BANKING CORPORATION (RCBC), LAND BANK
OF THE PHILIPPINES (LBP), PHILIPPINE COMMERCIAL & INTERNATIONAL BANK (PCIB) and
THE PHILIPPINE INVESTMENT SYSTEM ORGANIZATION (PISO), respondents.
G.R. No. 113394 December 12, 1995
PHILIPPINE COMMERCIAL INDUSTRIAL BANK (AND ITS ASSIGNEE JAIME Y.
GONZALES) petitioner,
vs.
HONORABLE COURT OR APPEALS and CHEMPHIL EXPORT AND IMPORT CORPORATION
(CEIC),respondents.

KAPUNAN, J.:
Before us is a legal tug-of-war between the Chemphil Export and Import Corporation (hereinafter
referred to as CEIC), on one side, and the PISO and Jaime Gonzales as assignee of the Bank of the
Philippine Islands (BPI), Rizal Commercial Banking Corporation (RCBC), Land Bank of the Philippines
(LBP) and Philippine Commercial International Bank (PCIB), on the other (hereinafter referred to as the
consortium), over 1,717,678 shares of stock (hereinafter referred to as the "disputed shares") in the
Chemical Industries of the Philippines (Chemphil/CIP).
Our task is to determine who is the rightful owner of the disputed shares.
Pursuant to our resolution dated 30 May 1994, the instant case is a consolidation of two petitions for
review filed before us as follows:
In G.R. Nos. 112438-39, CEIC seeks the reversal of the decision of the Court of Appeals (former Twelfth
Division) promulgated on 30 June 1993 and its resolution of 29 October 1993, denying petitioner's
motion for reconsideration in the consolidated cases entitled "Dynetics, Inc., et al. v. PISO, et al." (CAG.R. No. 20467) and "Dynetics, Inc., et al. v. PISO, et al.; CEIC, Intervenor-Appellee" (CA-G.R. CV No.
26511).
The dispositive portion of the assailed decision reads, thus:
WHEREFORE, this Court resolves in these consolidated cases as follows:
1. The Orders of the Regional Trial Court, dated March 25, 1988, and May 20, 1988, subject of CA-G.R.
CV No. 10467, are SET ASIDE and judgment is hereby rendered in favor of the consortium and against
appellee Dynetics, Inc., the amount of the judgment, to be determined by Regional Trial Court, taking
into account the value of assets that the consortium may have already recovered and shall have
recovered in accordance with the other portions of this decision.

2. The Orders of the Regional Trial Court dated December 19, 1989 and March 5, 1990 are hereby
REVERSED and SET ASIDE and judgment is hereby rendered confirming the ownership of the
consortium over the Chemphil shares of stock, subject of CA-G.R. CV No. 26511, and the Order dated
September 4, 1989, is reinstated.
No pronouncement as to costs.
SO ORDERED. 1
In G.R. No. 113394, PCIB and its assignee, Jaime Gonzales, ask for the annulment of the Court of
Appeals' decision (former Special Ninth Division) promulgated on 26 March 1993 in "PCIB v. Hon. Job
B. Madayag & CEIC" (CA-G.R. SP NO. 20474) dismissing the petition for certiorari, prohibition
and mandamus filed by PCIB and of said court's resolution dated 11 January 1994 denying their motion
for reconsideration of its decision. 2
The antecedent facts leading to the aforementioned controversies are as follows:
On September 25, 1984, Dynetics, Inc. and Antonio M. Garcia filed a complaint for declaratory relief
and/or injunction against the PISO, BPI, LBP, PCIB and RCBC or the consortium with the Regional Trial
Court of Makati, Branch 45 (Civil Case No. 8527), seeking judicial declaration, construction and
interpretation of the validity of the surety agreement that Dynetics and Garcia had entered into with the
consortium and to perpetually enjoin the latter from claiming, collecting and enforcing any purported
obligations which Dynetics and Garcia might have undertaken in said agreement. 3
The consortium filed their respective answers with counterclaims alleging that the surety agreement in
question was valid and binding and that Dynetics and Garcia were liable under the terms of the said
agreement. It likewise applied for the issuance of a writ of preliminary attachment against Dynetics and
Garcia. 4
Seven months later, or on 23 April 1985, Dynetics, Antonio Garcia and Matrix Management & Trading
Corporation filed a complaint for declaratory relief and/or injunction against the Security Bank & Trust
Co. (SBTC case) before the Regional Trial Court of Makati, Branch 135 docketed as Civil Case No.
10398. 5
On 2 July 1985, the trial court granted SBTC's prayer for the issuance of a writ of preliminary
attachment and on 9 July 1985, a notice of garnishment covering Garcia's shares in CIP/Chemphil
(including the disputed shares) was served on Chemphil through its then President. The notice of
garnishment was duly annotated in the stock and transfer books of Chemphil on the same date. 6
On 6 September 1985, the writ of attachment in favor of SBTC was lifted. However, the same was
reinstated on 30 October 1985. 7
In the meantime, on 12 July 1985, the Regional Trial Court in Civil Case No. 8527 (the consortium case)
denied the application of Dynetics and Garcia for preliminary injunction and instead granted the
consortium's prayer for a consolidated writ of preliminary attachment. Hence, on 19 July 1985, after the
consortium had filed the required bond, a writ of attachment was issued and various real and personal
properties of Dynetics and Garcia were garnished, including the disputed shares. 8 This garnishment,
however, was not annotated in Chemphil's stock and transfer book.

On 8 September 1987, PCIB filed a motion to dismiss the complaint of Dynetics and Garcia for lack of
interest to prosecute and to submit its counterclaims for decision, adopting the evidence it had adduced
at the hearing of its application for preliminary attachment. 9
On 25 March 1988, the Regional Trial Court dismissed the complaint of Dynetics and Garcia in Civil
Case No. 8527, as well as the counterclaims of the consortium, thus:
Resolving defendant's, Philippine Commercial International Bank, MOTION TO DISMISS WITH
MOTION TO SUBMIT DEFENDANT PCIBANK's COUNTERCLAIM FOR DECISION, dated September
7, 1987:
(1) The motion to dismiss is granted; and the instant case is hereby ordered dismissed pursuant to Sec.
3, Rule 17 of the Revised Rules of Court, plaintiff having failed to comply with the order dated July 16,
1987, and having not taken further steps to prosecute the case; and
(2) The motion to submit said defendant's counterclaim for decision is denied; there is no need; said
counterclaim is likewise dismissed under the authority of Dalman vs. City Court of Dipolog City, L63194, January 21, 1985, wherein the Supreme Court stated that if the civil case is dismissed, so also
is the counterclaim filed therein. "A person cannot eat his cake and have it at the same time" (p. 645,
record, Vol. I). 10
The motions for reconsideration filed by the consortium were, likewise, denied by the trial court in its
order dated 20 May 1988:
The Court could have stood pat on its order dated 25 March 1988, in regard to which the defendantsbanks concerned filed motions for reconsideration. However, inasmuch as plaintiffs commented on said
motions that: "3). In any event, so as not to unduly foreclose on the rights of the respective parties to
refile and prosecute their respective causes of action, plaintiffs manifest their conformity to the
modification of this Honorable Court's order to indicate that the dismissal of the complaint and the
counterclaims is without prejudice." (p. 2, plaintiffs' COMMENT etc. dated May 20, 1988). The Court is
inclined to so modify the said order.
WHEREFORE , the order issued on March 25, 1988, is hereby modified in the sense that the dismissal
of the complaint as well as of the counterclaims of defendants RCBC, LBP, PCIB and BPI shall be
considered as without prejudice (p. 675, record, Vol. I). 11
Unsatisfied with the aforementioned order, the consortium appealed to the Court of Appeals, docketed
as CA-G.R. CV No. 20467.
On 17 January 1989 during the pendency of consortium's appeal in CA-G.R. CV No. 20467, Antonio
Garcia and the consortium entered into a Compromise Agreement which the Court of Appeals approved
on 22 May 1989 and became the basis of its judgment by compromise. Antonio Garcia was dropped as
a party to the appeal leaving the consortium to proceed solely against Dynetics, Inc. 12 On 27 June
1989, entry of judgment was made by the Clerk of Court. 13
Hereunder quoted are the salient portions of said compromise agreement:
xxx xxx xxx

3. Defendants, in consideration of avoiding an extended litigation, having agreed to limit their claim
against plaintiff Antonio M. Garcia to a principal sum of P145 Million immediately demandable and to
waive all other claims to interest, penalties, attorney's fees and other charges. The aforesaid
compromise amount of indebtedness of P145 Million shall earn interest of eighteen percent (18%) from
the date of this Compromise.

For being legally proper, defendant's MOTION TO ORDER THE CORPORATE SECRETARY OF
CHEMICAL INDUSTRIES OF THE PHILS., INC. (CHEMPIL) TO ENTER IN THE STOCK AND
TRANSFER BOOKS OF CHEMPHIL THE SHERIFF'S CERTIFICATE OF SALE DATED AUGUST 22,
1989 AND TO ISSUE NEW CERTIFICATES OF STOCK IN THE NAME OF THE DEFENDANT BANKS,
dated August 29, 1989, is hereby granted.

4. Plaintiff Antonio M. Garcia and herein defendants have no further claims against each other.

WHEREFORE, the corporate secretary of the aforesaid corporation, or whoever is acting for and in his
behalf, is hereby ordered to (1) record and/or register the Certificate of Sale dated August 22, 1989
issued by Deputy Sheriff Cristobal S. Jabson of this Court; (2) to cancel the certificates of stock of
plaintiff Antonio M. Garcia and all those which may have subsequently been issued in replacement
and/or in substitution thereof; and (3) to issue in lieu of the said shares new shares of stock in the name
of the defendant Banks, namely, PCIB, BPI, RCBC, LBP and PISO bank in such proportion as their
respective claims would appear in this suit (p. 82, record, Vol. II). 22

5. This Compromise shall be without prejudice to such claims as the parties herein may have against
plaintiff Dynetics, Inc.
6. Plaintiff Antonio M. Garcia shall have two (2) months from date of this Compromise within which to
work for the entry and participation of his other creditor, Security Bank and Trust Co., into this
Compromise. Upon the expiration of this period, without Security Bank and Trust Co. having joined, this
Compromise shall be submitted to the Court for its information and approval (pp. 27, 28-31, rollo, CAG.R. CV No. 10467). 14
It appears that on 15 July 1988, Antonio Garcia under a Deed of Sale transferred to Ferro Chemicals,
Inc. (FCI) the disputed shares and other properties for P79,207,331.28. It was agreed upon that part of
the purchase price shall be paid by FCI directly to SBTC for whatever judgment credits that may be
adjudged in the latter's favor and against Antonio Garcia in the aforementioned SBTC case. 15
On 6 March 1989, FCI, through its President Antonio M. Garcia, issued a Bank of America Check No.
860114 in favor of SBTC in the amount of P35,462,869.62. 16 SBTC refused to accept the check
claiming that the amount was not sufficient to discharge the debt. The check was thus consigned by
Antonio Garcia and Dynetics with the Regional Trial Court as payment of their judgment debt in the
SBTC case. 17
On 26 June 1989, FCI assigned its 4,119,614 shares in Chemphil, which included the disputed shares,
to petitioner CEIC. The shares were registered and recorded in the corporate books of Chemphil in
CEIC's name and the corresponding stock certificates were issued to it. 18
Meanwhile, Antonio Garcia, in the consortium case, failed to comply with the terms of the compromise
agreement he entered into with the consortium on 17 January 1989. As a result, on 18 July 1989, the
consortium filed a motion for execution which was granted by the trial court on 11 August 1989. Among
Garcia's properties that were levied upon on execution were his 1,717,678 shares in Chemphil (the
disputed shares) previously garnished on 19 July 1985. 19
On 22 August 1989, the consortium acquired the disputed shares of stock at the public auction sale
conducted by the sheriff for P85,000,000.00. 20 On same day, a Certificate of Sale covering the disputed
shares was issued to it.
21

On 30 August 1989, the consortium filed a motion (dated 29 August 1989) to order the corporate
secretary of Chemphil to enter in its stock and transfer books the sheriff's certificate of sale dated 22
August 1989, and to issue new certificates of stock in the name of the banks concerned. The trial court
granted said motion in its order dated 4 September 1989, thus:

On 26 September 1989, CEIC filed a motion to intervene (dated 25 September 1989) in the consortium
case seeking the recall of the abovementioned order on grounds that it is the rightful owner of the
disputed shares. 23 It further alleged that the disputed shares were previously owned by Antonio M.
Garcia but subsequently sold by him on 15 July 1988 to Ferro Chemicals, Inc. (FCI) which in turn
assigned the same to CEIC in an agreement dated 26 June 1989.
On 27 September 1989, the trial court granted CEIC's motion allowing it to intervene, but limited only to
the incidents covered by the order dated 4 September 1989. In the same order, the trial court directed
Chemphil's corporate secretary to temporarily refrain from implementing the 4 September 1989
order. 24
On 2 October 1989, the consortium filed their opposition to CEIC's motion for intervention alleging that
their attachment lien over the disputed shares of stocks must prevail over the private sale in favor of the
CEIC considering that said shares of stock were garnished in the consortium's favor as early as 19 July
1985. 25
On 4 October 1989, the consortium filed their opposition to CEIC's motion to set aside the 4 September
1989 order and moved to lift the 27 September 1989 order. 26
On 12 October 1989, the consortium filed a manifestation and motion to lift the 27 September 1989
order, to reinstate the 4 September 1989 order and to direct CEIC to surrender the disputed stock
certificates of Chemphil in its possession within twenty-four (24) hours, failing in which the President,
Corporate Secretary and stock and transfer agent of Chemphil be directed to register the names of the
banks making up the consortium as owners of said shares, sign the new certificates of stocks
evidencing their ownership over said shares and to immediately deliver the stock certificates to them. 27
Resolving the foregoing motions, the trial court rendered an order dated 19 December 1989, the
dispositive portion of which reads as follows:
WHEREFORE, premises considered, the Urgent Motion dated September 25, 1989 filed by CEIC is
hereby GRANTED. Accordingly, the Order of September 4, 1989, is hereby SET ASIDE, and any and all
acts of the Corporate Secretary of CHEMPHIL and/or whoever is acting for and in his behalf, as may
have already been done, carried out or implemented pursuant to the Order of September 4, 1989, are
hereby nullified.

PERFORCE, the CONSORTIUM'S Motions dated October 3, 1989 and October 11, 1989, are both
hereby denied for lack of merit.
The Cease and Desist Order dated September 27, 1989, is hereby AFFIRMED and made
PERMANENT.
SO ORDERED. 28
In so ruling, the trial court ratiocinated in this wise:
xxx xxx xxx

On 23 January 1990, the consortium and PCIB filed separate motions for reconsideration of the
aforestated
order
which
were
opposed
by
petitioner
CEIC. 30
On
5
March
reconsideration. 31

1990,

the

trial

court

denied

the

motions

for

On 16 March 1990, the consortium appealed to the Court of Appeals (CA-G.R. No. 26511). In its
Resolution dated 9 August 1990, the Court of Appeals consolidated CA-G.R. No. 26511 with CA-G.R.
No. 20467. 32

After careful and assiduous consideration of the facts and applicable law and jurisprudence, the Court
holds that CEIC's Urgent Motion to Set Aside the Order of September 4, 1989 is impressed with merit.
The CONSORTIUM has admitted that the writ of attachment/garnishment issued on July 19, 1985 on
the shares of stock belonging to plaintiff Antonio M. Garcia was not annotated and registered in the
stock and transfer books of CHEMPHIL. On the other hand, the prior attachment issued in favor of
SBTC on July 2, 1985 by Branch 135 of this Court in Civil Case No. 10398, against the same
CHEMPHIL shares of Antonio M. Garcia, was duly registered and annotated in the stock and transfer
books of CHEMPHIL. The matter of non-recording of the Consortium's attachment in Chemphil's stock
and transfer book on the shares of Antonio M. Garcia assumes significance considering CEIC's position
that FCI and later CEIC acquired the CHEMPHIL shares of Antonio M. Garcia without knowledge of the
attachment of the CONSORTIUM. This is also important as CEIC claims that it has been subrogated to
the rights of SBTC since CEIC's predecessor-in-interest, the FCI, had paid SBTC the amount of
P35,462,869.12 pursuant to the Deed of Sale and Purchase of Shares of Stock executed by Antonio M.
Garcia on July 15, 1988. By reason of such payment, sale with the knowledge and consent of Antonio
M. Garcia, FCI and CEIC, as party-in-interest to FCI, are subrogated by operation of law to the rights of
SBTC. The Court is not unaware of the citation in CEIC's reply that "as between two (2) attaching
creditors, the one whose claims was first registered on the books of the corporation enjoy priority."
(Samahang Magsasaka, Inc. vs. Chua Gan, 96 Phil. 974.)

The issues raised in the two cases, as formulated by the Court of Appeals, are as follows:

The Court holds that a levy on the shares of corporate stock to be valid and binding on third persons,
the notice of attachment or garnishment must be registered and annotated in the stock and transfer
books of the corporation, more so when the shares of the corporation are listed and traded in the stock
exchange, as in this case. As a matter of fact, in the CONSORTIUM's motion of August 30, 1989, they
specifically move to "order the Corporate Secretary of CHEMPHIL to enter in the stock and transfer
books of CHEMPHIL the Sheriff's Certificate of Sale dated August 22, 1989." This goes to show that,
contrary to the arguments of the CONSORTIUM, in order that attachment, garnishment and/or
encumbrances affecting rights and ownership on shares of a corporation to be valid and binding, the
same has to be recorded in the stock and transfer books.

WHETHER OR NOT THE ATTACHMENT OF SHARES OF STOCK, IN ORDER TO BIND THIRD

PERSONS, MUST BE RECORDED IN THE STOCK AND TRANSFER BOOK OF THE
CORPORATION; AND

Since neither CEIC nor FCI had notice of the CONSORTIUM's attachment of July 19, 1985, CEIC's
shares of stock in CHEMPHIL, legally acquired from Antonio M. Garcia, cannot be levied upon in
execution to satisfy his judgment debts. At the time of the Sheriff's levy on execution, Antonio M. Garcia
has no more in CHEMPHIL which could be levied upon. 29
xxx xxx xxx

I
WHETHER OR NOT, UNDER THE PECULIAR CIRCUMSTANCES OF THE CASE, THE TRIAL
COURT ERRED IN DISMISSING THE COUNTERCLAIMS OF THE CONSORTIUM IN CIVIL CASE
NO. 8527;
II
WHETHER OR NOT THE DISMISSAL OF CIVIL CASE NO. 8527 RESULTED IN THE DISCHARGE OF
THE WRIT OF ATTACHMENT ISSUED THEREIN EVEN AS THE CONSORTIUM APPEALED THE
ORDER DISMISSING CIVIL CASE NO. 8527;
III
WHETHER OR NOT THE JUDGMENT BASED ON COMPROMISE RENDERED BY THIS COURT ON
MAY 22, 1989 HAD THE EFFECT OF DISCHARGING THE ATTACHMENTS ISSUED IN CIVIL CASE
NO. 8527;
IV

V
WHETHER OR NOT FERRO CHEMICALS, INC. (FCI), AND ITS SUCCESSOR-IN-INTEREST, CEIC,
WERE SUBROGATED TO THE RIGHTS OF SECURITY BANK & TRUST COMPANY (SBTC) IN A
SEPARATE CIVIL ACTION. (This issue appears to be material as SBTC is alleged to have obtained an
earlier attachment over the same Chemphil shares that the consortium seeks to recover in the case at
bar). 33
On 6 April 1990, the PCIB separately filed with the Court of Appeals a petition for certiorari, prohibition
andmandamus with a prayer for the issuance of a writ of preliminary injunction (CA-G.R. No. SP20474), likewise, assailing the very same orders dated 19 December 1989 and 5 March 1990, subject
of CA-G.R. No. 26511. 34

On 30 June 1993, the Court of Appeals (Twelfth Division) in CA-G.R. No. 26511 and CA-G.R. No.
20467 rendered a decision reversing the orders of the trial court and confirming the ownership of the
consortium over the disputed shares. CEIC's motion for reconsideration was denied on 29 October
1993. 35
In ruling for the consortium, the Court of Appeals made the following ratiocination: 36
On the first issue, it ruled that the evidence offered by the consortium in support of its counterclaims,
coupled with the failure of Dynetics and Garcia to prosecute their case, was sufficient basis for the RTC
to pass upon and determine the consortium's counterclaims.
The Court of Appeals found no application for the ruling in Dalman v. City Court of Dipolog, 134 SCRA
243 (1985) that "a person cannot eat his cake and have it at the same time. If the civil case is
dismissed, so also is the counterclaim filed therein" because the factual background of the present
action is different. In the instant case, both Dynetics and Garcia and the consortium presented
testimonial and documentary evidence which clearly should have supported a judgment on the merits in
favor of the consortium. As the consortium correctly argued, the net atrocious effect of the Regional Trial
Court's ruling is that it allows a situation where a party litigant is forced to plead and prove compulsory
counterclaims only to be denied those counterclaims on account of the adverse party's failure to
prosecute his case. Verily, the consortium had no alternative but to present its counterclaims in Civil
Case No. 8527 since its counterclaims are compulsory in nature.
On the second issue, the Court of Appeals opined that unless a writ of attachment is lifted by a special
order specifically providing for the discharge thereof, or unless a case has been finally dismissed
against the party in whose favor the attachment has been issued, the attachment lien subsists. When
the consortium, therefore, took an appeal from the Regional Trial Court's orders of March 25, 1988 and
May 20, 1988, such appeal had the effect of preserving the consortium's attachment liens secured at
the inception of Civil Case No. 8527, invoking the rule in Olib v. Pastoral,188 SCRA 692 (1988) that
where the main action is appealed, the attachment issued in the said main case is also considered
appealed.
Anent the third issue, the compromise agreement between the consortium and Garcia dated 17 January
1989 did not result in the abandonment of its attachment lien over his properties. Said agreement was
approved by the Court of Appeals in a Resolution dated 22 May 1989. The judgment based on the
compromise agreement had the effect of preserving the said attachment lien as security for the
satisfaction of said judgment (citing BF Homes, Inc. v. CA, 190 SCRA 262, [1990]).
As to the fourth issue, the Court of Appeals agreed with the consortium's position that the attachment of
shares of stock in a corporation need not be recorded in the corporation's stock and transfer book in
order to bind third persons.
Section 7(d), Rule 57 of the Rules of Court was complied with by the consortium (through the Sheriff of
the trial court) when the notice of garnishment over the Chemphil shares of Garcia was served on the
president of Chemphil on July 19, 1985. Indeed, to bind third persons, no law requires that an
attachment of shares of stock be recorded in the stock and transfer book of a corporation. The
statement attributed by the Regional Trial Court to the Supreme Court in Samahang Magsasaka,
Inc.vs. Gonzalo Chua Guan, G.R. No. L-7252, February 25, 1955 (unreported), to the effect that "as

between two attaching creditors, the one whose claim was registered first on the books of the
corporation enjoys priority," is an obiter dictum that does not modify the procedure laid down in Section
7(d), Rule 57 of the Rules of Court.
Therefore, ruled the Court of Appeals, the attachment made over the Chemphil shares in the name of
Garcia on July 19, 1985 was made in accordance with law and the lien created thereby remained valid
and subsisting at the time Garcia sold those shares to FCI (predecessor-in-interest of appellee CEIC) in
1988.
Anent the last issue, the Court of Appeals rejected CEIC's subrogation theory based on Art. 1302 (2) of
the New Civil Code stating that the obligation to SBTC was paid by Garcia himself and not by a third
party (FCI).
The Court of Appeals further opined that while the check used to pay SBTC was a FCI corporate check,
it was funds of Garcia in FCI that was used to pay off SBTC. That the funds used to pay off SBTC were
funds of Garcia has not been refuted by FCI or CEIC. It is clear, therefore, that there was an attempt on
the part of Garcia to use FCI and CEIC as convenient vehicles to deny the consortium its right to make
itself whole through an execution sale of the Chemphil shares attached by the consortium at the
inception of Civil Case No. 8527. The consortium, therefore, is entitled to the issuance of the Chemphil
shares of stock in its favor. The Regional Trial Court's order of September 4, 1989, should, therefore, be
reinstated in toto.
Accordingly, the question of whether or not the attachment lien in favor of SBTC in the SBTC case is
superior to the attachment lien in favor of the consortium in Civil Case No. 8527 becomes immaterial
with respect to the right of intervenor-appellee CEIC. The said issue would have been relevant had
CEIC established its subrogation to the rights of SBTC.
On 26 March 1993, the Court of Appeals (Special Ninth Division) in CA-G.R. No. SP 20474 rendered a
decision denying due course to and dismissing PCIB's petition for certiorari on grounds that PCIB
violated the rule against forum-shopping and that no grave abuse of discretion was committed by
respondent Regional Trial Court in issuing its assailed orders dated 19 December 1989 and 5 March
1990. PCIB's motion for reconsideration was denied on 11 January 1994. 37
On 7 July 1993, the consortium, with the exception of PISO, assigned without recourse all its rights and
interests in the disputed shares to Jaime Gonzales. 38
On 3 January 1994, CEIC filed the instant petition for review docketed as G.R. Nos. 112438-39 and
assigned the following errors:
I.
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN SETTING ASIDE AND REVERSING
THE ORDERS OF THE REGIONAL TRIAL COURT DATED DECEMBER 5, 1989 AND MARCH 5, 1990
AND IN NOT CONFIRMING PETITIONER'S OWNERSHIP OVER THE DISPUTED CHEMPHIL
SHARES AGAINST THE FRIVOLOUS AND UNFOUNDED CLAIMS OF THE CONSORTIUM.
II.
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED:

(1) In not holding that the Consortium's attachment over the disputed Chemphil shares did not vest any
priority right in its favor and cannot bind third parties since admittedly its attachment on 19 July 1985
was not recorded in the stock and transfer books of Chemphil, and subordinate to the attachment of
SBTC which SBTC registered and annotated in the stock and transfer books of Chemphil on 2 July
1985, and that the Consortium's attachment failed to comply with Sec. 7(d), Rule 57 of the Rules as
evidenced by the notice of garnishment of the deputy sheriff of the trial court dated 19 July 1985 (annex
"D") which the sheriff served on a certain Thelly Ruiz who was neither President nor managing agent of
Chemphil;
(2) In not applying the case law enunciated by this Honorable Supreme Court inSamahang Magsasaka,
Inc. vs. Gonzalo Chua Guan, 96 Phil. 974 that as between two attaching creditors, the one whose claim
was registered first in the books of the corporation enjoys priority, and which respondent Court
erroneously characterized as mere obiter dictum;
(3) In not holding that the dismissal of the appeal of the Consortium from the order of the trial court
dismissing its counterclaim against Antonio M. Garcia and the finality of the compromise agreement
which ended the litigation between the Consortium and Antonio M. Garcia in the Dynetics
case had ipso jure discharged the Consortium's purported attachment over the disputed shares.
III.
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT CEIC HAD
BEEN SUBROGATED TO THE RIGHTS OF SBTC SINCE CEIC'S PREDECESSOR IN INTEREST
HAD PAID SBTC PURSUANT TO THE DEED OF SALE AND PURCHASE OF STOCK EXECUTED BY
ANTONIO M. GARCIA ON JULY 15, 1988, AND THAT BY REASON OF SUCH PAYMENT, WITH THE
CONSENT AND KNOWLEDGE OF ANTONIO M. GARCIA, FCI AND CEIC, AS PARTY IN INTEREST
TO FCI, WERE SUBROGATED BY OPERATION OF LAW TO THE RIGHTS OF SBTC.
IV.
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED AND MADE UNWARRANTED
INFERENCES AND CONCLUSIONS, WITHOUT ANY SUPPORTING EVIDENCE, THAT THERE WAS
AN ATTEMPT ON THE PART OF ANTONIO M. GARCIA TO USE FCI AND CEIC AS CONVENIENT
VEHICLES TO DENY THE CONSORTIUM ITS RIGHTS TO MAKE ITSELF WHOLE THROUGH AN
EXECUTION OF THE CHEMPHIL SHARES PURPORTEDLY ATTACHED BY THE CONSORTIUM ON
19 JULY 1985. 39
On 2 March 1994, PCIB filed its own petition for review docketed as G.R. No. 113394 wherein it raised
the following issues:
I. RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN RENDERING THE
DECISION AND RESOLUTION IN QUESTION (ANNEXES A AND B) IN DEFIANCE OF LAW AND
JURISPRUDENCE BY FINDING RESPONDENT CEIC AS HAVING BEEN SUBROGATED TO THE
RIGHTS OF SBTC BY THE PAYMENT BY FCI OF GARCIA'S DEBTS TO THE LATTER DESPITE THE
FACT THAT
A. FCI PAID THE SBTC DEBT BY VIRTUE OF A CONTRACT BETWEEN FCI AND GARCIA, THUS,
LEGAL SUBROGATION DOES NOT ARISE;

B. THE SBTC DEBT WAS PAID BY GARCIA HIMSELF AND NOT BY FCI, HENCE, SUBROGATION
BY PAYMENT COULD NOT HAVE OCCURRED;
C. FCI DID NOT ACQUIRE ANY RIGHT OVER THE DISPUTED SHARES AS SBTC HAD NOT YET
LEVIED UPON NOR BOUGHT THOSE SHARES ON EXECUTION. ACCORDINGLY, WHAT FCI
ACQUIRED FROM SBTC WAS SIMPLY A JUDGMENT CREDIT AND AN ATTACHMENT LIEN TO
SECURE ITS SATISFACTION.
II. RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN SUSTAINING THE
ORDERS OF THE TRIAL COURT DATED DECEMBER 19, 1989 AND MARCH 5, 1990 WHICH
DENIED PETITIONER'S OWNERSHIP OVER THE DISPUTED SHARES NOTWITHSTANDING
PROVISIONS OF LAW AND EXTANT JURISPRUDENCE ON THE MATTER THAT PETITIONER AND
THE CONSORTIUM HAVE PREFERRED SENIOR RIGHTS THEREOVER.
III. RESPONDENT COURT OF APPEAL COMMITTED SERIOUS ERROR IN CONCLUDING THAT
THE DISMISSAL OF THE COMPLAINT AND THE COUNTERCLAIM IN CIVIL CASE NO. 8527 ALSO
RESULTED IN THE DISCHARGE OF THE WRIT OF ATTACHMENT DESPITE THE RULINGS OF
THIS HONORABLE COURT IN BF HOMES VS. COURT OF APPEALS, G.R. NOS. 76879 AND 77143,
OCTOBER 3, 1990, 190 SCRA 262, AND IN OLIB VS. PASTORAL, G.R. NO. 81120, AUGUST 20,
1990, 188 SCRA 692 TO THE CONTRARY.
IV. RESPONDENT COURT OF APPEALS EXCEEDED ITS JURISDICTION IN RULING ON THE
MERITS OF THE MAIN CASE NOTWITHSTANDING THAT THOSE MATTERS WERE NOT ON
APPEAL BEFORE IT.
V. RESPONDENT COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT
PETITIONER IS GUILTY OF FORUM SHOPPING DESPITE THE FACT THAT SC CIRCULAR NO. 2891 WAS NOT YET IN FORCE AND EFFECT AT THE TIME THE PETITION WAS FILED BEFORE
RESPONDENT APPELLATE COURT, AND THAT ITS COUNSEL AT THAT TIME HAD ADEQUATE
BASIS TO BELIEVE THAT CERTIORARI AND NOT AN APPEAL OF THE TRIAL COURT'S ORDERS
WAS THE APPROPRIATE RELIEF. 40
As previously stated, the issue boils down to who is legally entitled to the disputed shares of Chemphil.
We shall resolve this controversy by examining the validity of the claims of each party and, thus,
determine whose claim has priority.
CEIC's claim
CEIC traces its claim over the disputed shares to the attachment lien obtained by SBTC on 2 July 1985
against Antonio Garcia in Civil Case No. 10398. It avers that when FCI, CEIC's predecessor-in-interest,
paid SBTC the due obligations of Garcia to the said bank pursuant to the Deed of Absolute Sale and
Purchase of Shares of Stock, 41 FCI, and later CEIC, was subrogated to the rights of SBTC, particularly
to the latter's aforementioned attachment lien over the disputed shares.
CEIC argues that SBTC's attachment lien is superior as it was obtained on 2 July 1985, ahead of the
consortium's purported attachment on 19 July 1985. More importantly, said CEIC lien was duly recorded
in the stock and transfer books of Chemphil.

CEIC's subrogation theory is unavailing.

By definition, subrogation is "the transfer of all the rights of the creditor to a third person, who
substitutes him in all his rights. It may either be legal or conventional. Legal subrogation is that which
takes place without agreement but by operation of law because of certain acts; this is the subrogation
referred to in article 1302. Conventional subrogation is that which takes place by agreement of the
parties . . ." 42
CEIC's theory is premised on Art. 1302 (2) of the Civil Code which states:

part of FCI's payment for the acquisition of the disputed shares. The FCI check should not be taken at
face value, the attendant circumstances must also be considered.
The aforequoted contractual stipulation in the Deed of Sale dated 15 July 1988 between Antonio Garcia
and FCI is nothing more but an arrangement for the sake of convenience. Payment was to be effected
in the aforesaid manner so as to prevent money from changing hands needlessly. Besides, the very
purpose of Garcia in selling the disputed shares and his other properties was to "settle certain civil suits
filed against him." 44

(1) When a creditor pays another creditor who is preferred, even without the debtor's knowledge;

Since the money used to discharge Garcia's debt rightfully belonged to him, FCI cannot be considered
a third party payor under Art. 1302 (2). It was but a conduit, or as aptly categorized by respondents,
merely an agent as defined in Art. 1868 of the Civil Code:

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the
debtor;

Art. 1868. By the contract of agency a person binds himself to render some service or to do something
in representation or on behalf of another, with the consent or authority of the latter.

(3) When, even without the knowledge of the debtor, a person interested in the fulfillment of the
obligation pays, without prejudice to the effects of confusion as to the latter's share. (Emphasis ours.)

FCI was merely fulfilling its obligation under the aforementioned Deed of Sale.

Art. 1302. It is presumed that there is legal subrogation:

Despite, however, its multitudinous arguments, CEIC presents an erroneous interpretation of the
concept of subrogation. An analysis of the situations involved would reveal the clear inapplicability of
Art. 1302 (2).
Antonio Garcia sold the disputed shares to FCI for a consideration of P79,207,331.28. FCI, however,
did not pay the entire amount to Garcia as it was obligated to deliver part of the purchase price directly
to SBTC pursuant to the following stipulation in the Deed of Sale:
Manner of Payment
Payment of the Purchase Price shall be made in accordance with the following order of
preferenceprovided that in no instance shall the total amount paid by the Buyer exceed the Purchase
Price:
a. Buyer shall pay directly to the Security Bank and Trust Co. the amount determined by the Supreme
Court as due and owing in favor of the said bank by the Seller.
The foregoing amount shall be paid within fifteen (15) days from the date the decision of the Supreme
Court in the case entitled "Antonio M. Garcia, et al. vs. Court of Appeals, et al." G.R. Nos. 82282-83
becomes final and executory. 43 (Emphasis ours.)
Hence, when FCI issued the BA check to SBTC in the amount of P35,462,869.62 to pay Garcia's
indebtedness to the said bank, it was in effect paying with Garcia's money, no longer with its own,
because said amount was part of the purchase price which FCI owed Garcia in payment for the sale of
the disputed shares by the latter to the former. The money "paid" by FCI to SBTC, thus properly
belonged to Garcia. It is as if Garcia himself paid his own debt to SBTC but through a third party FCI.
It is, therefore, of no consequence that what was used to pay SBTC was a corporate check of FCI. As
we have earlier stated, said check no longer represented FCI funds but Garcia's money, being as it was

Additionally, FCI is not a disinterested party as required by Art. 1302 (2) since the benefits of the
extinguishment of the obligation would redound to none other but itself. 45 Payment of the judgment debt
to SBTC resulted in the discharge of the attachment lien on the disputed shares purchased by FCI. The
latter would then have a free and "clean" title to said shares.
In sum, CEIC, for its failure to fulfill the requirements of Art. 1302 (2), was not subrogated to the rights of
SBTC against Antonio Garcia and did not acquire SBTC's attachment lien over the disputed shares
which, in turn, had already been lifted or discharged upon satisfaction by Garcia, through FCI, of his
debt to the said bank. 46
The rule laid down in the case of Samahang Magsasaka, Inc. v. Chua Guan, 47 that as between two
attaching creditors the one whose claim was registered ahead on the books of the corporation enjoys
priority, clearly has no application in the case at bench. As we have amply discussed, since CEIC was
not subrogated to SBTC's right as attaching creditor, which right in turn, had already terminated after
Garcia paid his debt to SBTC, it cannot, therefore, be categorized as an attaching creditor in the present
controversy. CEIC cannot resurrect and claim a right which no longer exists. The issue in the instant
case, then, is priority between an attaching creditor (the consortium) and a purchaser (FCI/CEIC) of the
disputed shares of stock and not between two attaching creditors the subject matter of the
aforestated Samahang Magsasaka case.
CEIC, likewise, argues that the consortium's attachment lien over the disputed Chemphil shares is
null and void and not binding on third parties due to the latter's failure to register said lien in the stock
and transfer books of Chemphil as mandated by the rule laid down by the Samahang Magsasaka
v. Chua Guan. 48
The attachment lien acquired by the consortium is valid and effective. Both the Revised Rules of Court
and the Corporation Code do not require annotation in the corporation's stock and transfer books for the
attachment of shares of stock to be valid and binding on the corporation and third party.

Section 74 of the Corporation Code which enumerates the instances where registration in the stock and
transfer books of a corporation provides:

In the Law Dictionary of "Words and Phrases", third series, volume 7, p. 5867, the word "transfer" is
defined as follows:

Sec. 74. Books to be kept; stock transfer agent.

"Transfer" means any act by which property of one person is vested in another, and "transfer of shares",
as used in Uniform Stock Transfer Act (Comp. St. Supp. 690), implies any means whereby one may be
divested of and another acquire ownership of stock. (Wallach vs. Stein [N.J.], 136 A., 209, 210.)

xxx xxx xxx

Stock corporations must also keep a book to be known as the stock and transfer book, in which must
be kept a record of all stocks in the names of the stockholders alphabetically arranged; the installments
paid and unpaid on all stock for which subscription has been made, and the date of payment of any
settlement; a statement of every alienation, sale or transfer of stock made, the date thereof, and by and
to whom made; and such other entries as the by-laws may prescribe. The stock and transfer book shall
be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be
open for inspection by any director or stockholder of the corporation at reasonable hours on business
days. (Emphasis ours.)

xxx xxx xxx

xxx xxx xxx

Although the Monserrat case refers to a chattel mortgage over shares of stock, the same may be
applied to the attachment of the disputed shares of stock in the present controversy since an
attachment does not constitute an absolute conveyance of property but is primarily used as a means "to
seize the debtor's property in order to secure the debt or claim of the creditor in the event that a
judgment is rendered." 51

Section 63 of the same Code states:

Sec. 63. Certificate of stock and transfer of shares. The capital stock of stock corporations shall be
divided into shares for which certificates signed by the president or vice-president, countersigned by the
secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in
accordance with the by-laws. Shares of stock so issued are personal property and may be transferred
by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person
legally authorized to make the transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation so as to show the names of the
parties to the transaction, the date of the transfer, the number of the certificate or certificates and the
number of shares transferred.
No shares of stock against which the corporation holds any unpaid claim shall be transferable in the
books of the corporation. (Emphasis ours.)
Are attachments of shares of stock included in the term "transfer" as provided in Sec. 63 of the
Corporation Code? We rule in the negative. As succinctly declared in the case of Monserrat
v. Ceron, 49 "chattel mortgage over shares of stock need not be registered in the corporation's stock and
transfer book inasmuch as chattel mortgage over shares of stock does not involve a "transfer of
shares," and that only absolute transfers of shares of stock are required to be recorded in the
corporation's stock and transfer book in order to have "force and effect as against third persons."
xxx xxx xxx
The word "transferencia" (transfer) is defined by the "Diccionario de la Academia de la Lengua
Castellana" as "accion y efecto de transfeir" (the act and effect of transferring); and the verb "transferir",
as "ceder or renunciar en otro el derecho o dominio que se tiene sobre una cosa, haciendole dueno de
ella" (to assign or waive the right in, or absolute ownership of, a thing in favor of another, making him
the owner thereof).

In the case of Noble vs. Ft. Smith Wholesale Grocery Co. (127 Pac., 14, 17; 34 Okl., 662; 46 L.R.A.
[N.S.], 455), cited in Words and Phrases, second series, vol. 4, p. 978, the following appears:
A "transfer" is the act by which the owner of a thing delivers it to another with the intent of passing the
rights which he has in it to the latter, and a chattel mortgage is not within the meaning of such term.
xxx xxx xxx. 50

Known commentators on the Corporation Code expound, thus:

xxx xxx xxx
Shares of stock being personal property, may be the subject matter of pledge and chattel mortgage.
Such collateral transfers are however not covered by the registration requirement of Section 63, since
our Supreme Court has held that such provision applies only to absolute transfers thus, the registration
in the corporate books of pledges and chattel mortgages of shares cannot have any legal
effect. 52 (Emphasis ours.)
xxx xxx xxx
The requirement that the transfer shall be recorded in the books of the corporation to be valid as against
third persons has reference only to absolute transfers or absolute conveyance of the ownership or title
to a share.
Consequently, the entry or notation on the books of the corporation of pledges and chattel mortgages
on shares is not necessary to their validity (although it is advisable to do so) since they do not involve
absolute alienation of ownership of stock (Monserrat vs. Ceron, 58 Phil. 469 [1933]; Chua Guan vs.
Samahang Magsasaka, Inc., 62 Phil. 472 [1935].) To affect third persons, it is enough that the date and
description of the shares pledged appear in a public instrument. (Art. 2096, Civil Code.) With respect to
a chattel mortgage constituted on shares of stock, what is necessary is its registration in the Chattel
Mortgage Registry. (Act No. 1508 and Art. 2140, Civil Code.) 53

CEIC's reliance on the Samahang Magsasaka case is misplaced. Nowhere in the said decision was it
categorically stated that annotation of the attachment in the corporate books is mandatory for its validity
and for the purpose of giving notice to third persons.
The only basis, then, for petitioner CEIC's claim is the Deed of Sale under which it purchased the
disputed shares. It is, however, a settled rule that a purchaser of attached property acquires it subject to
an attachment legally and validly levied thereon. 54
Our corollary inquiry is whether or not the consortium has indeed a prior valid and existing attachment
lien over the disputed shares.
Jaime Gonzales' /Consortium's Claim
Is the consortium's attachment lien over the disputed shares valid?
CEIC vigorously argues that the consortium's writ of attachment over the disputed shares of Chemphil
is null and void, insisting as it does, that the notice of garnishment was not validly served on the
designated officers on 19 July 1985.
To support its contention, CEIC presented the sheriff's notice of garnishment 55 dated 19 July 1985
which showed on its face that said notice was received by one Thelly Ruiz who was neither the
president nor managing agent of Chemphil. It makes no difference, CEIC further avers, that Thelly Ruiz
was the secretary of the President of Chemphil, for under the above-quoted provision she is not among
the officers so authorized or designated to be served with the notice of garnishment.
We cannot subscribe to such a narrow view of the rule on proper service of writs of attachment.
A secretary's major function is to assist his or her superior. He/she is in effect an extension of the latter.
Obviously, as such, one of her duties is to receive letters and notices for and in behalf of her superior,
as in the case at bench. The notice of garnishment was addressed to and was actually received by
Chemphil's president through his secretary who formally received it for him. Thus, in one case, 56 we
ruled that the secretary of the president may be considered an "agent" of the corporation and held that
service of summons on him is binding on the corporation.
Moreover, the service and receipt of the notice of garnishment on 19 July 1985 was duly acknowledged
and confirmed by the corporate secretary of Chemphil, Rolando Navarro and his successor Avelino
Cruz through their respective certifications dated 15 August 1989 57 and 21 August 1989. 58
We rule, therefore, that there was substantial compliance with Sec. 7(d), Rule 57 of the Rules of Court.
Did the compromise agreement between Antonio Garcia and the consortium discharge the latter's
attachment lien over the disputed shares?
CEIC argues that a writ of attachment is a mere auxiliary remedy which, upon the dismissal of the case,
dies a natural death. Thus, when the consortium entered into a compromise agreement, 59 which
resulted in the termination of their case, the disputed shares were released from garnishment.
We disagree. To subscribe to CEIC's contentions would be to totally disregard the concept and purpose
of a preliminary attachment.

A writ of preliminary attachment is a provisional remedy issued upon order of the court where an action
is pending to be levied upon the property or properties of the defendant therein, the same to be held
thereafter by the Sheriff as security for the satisfaction of whatever judgment might be secured in said
action by the attaching creditor against the defendant. 60 (Emphasis ours.)
Attachment is a juridical institution which has for its purpose to secure the outcome of the trial, that is,
the satisfaction of the pecuniary obligation really contracted by a person or believed to have been
contracted by him, either by virtue of a civil obligation emanating from contract or from law, or by virtue
of some crime or misdemeanor that he might have committed, and the writ issued, granted it, is
executed by attaching and safely keeping all the movable property of the defendant, or so much thereof
may be sufficient to satisfy the plaintiff's demands . . . 61 (Emphasis ours.)
The chief purpose of the remedy of attachment is to secure a contingent lien on defendant's property
until plaintiff can, by appropriate proceedings, obtain a judgment and have such property applied to its
satisfaction, or to make some provision for unsecured debts in cases where the means of satisfaction
thereof are liable to be removed beyond the jurisdiction, or improperly disposed of or concealed, or
otherwise placed beyond the reach of creditors. 62 (Emphasis ours.)
We reiterate the rule laid down in BF Homes, Inc. v. CA 63 that an attachment lien continues until the
debt is paid, or sale is had under execution issued on the judgment or until judgment is satisfied, or the
attachment discharged or vacated in the same manner provided by law. We expounded in said case
that:
The appointment of a rehabilitation receiver who took control and custody of BF has not necessarily
secured the claims of Roa and Mendoza. In the event that the receivership is terminated with such
claims not having been satisfied, the creditors may also find themselves without security therefor in the
civil action because of the dissolution of the attachment. This should not be permitted. Having
previously obtained the issuance of the writ in good faith, they should not be deprived of its protection if
the rehabilitation plan does not succeed and the civil action is resumed.
xxx xxx xxx
As we ruled in Government of the Philippine Islands v. Mercado:
Attachment is in the nature of a proceeding in rem. It is against the particular property. The attaching
creditor thereby acquires specific lien upon the attached property which ripens into a judgment against
the res when the order of sale is made. Such a proceeding is in effect a finding that the property
attached is an indebted thing and a virtual condemnation of it to pay the owner's debt. The law does not
provide the length of time an attachment lien shall continue after the rendition of judgment, and it must
therefore necessarily continue until the debt is paid, or sale is had under execution issued on the
judgment or until judgment is satisfied, or the attachment discharged or vacated in some manner
provided by law.
It has been held that the lien obtained by attachment stands upon as high equitable grounds as a
mortgage lien:
The lien or security obtained by an attachment even before judgment, is a fixed and positive security, a
specific lien, and, although whether it will ever be made available to the creditor depends on

contingencies, its existence is in no way contingent, conditioned or inchoate. It is a vested interest, an

actual and substantial security, affording specific security for satisfaction of the debt put in suit, which
constitutes a cloud on the legal title, and is as specific as if created by virtue of a voluntary act of the
debtor and stands upon as high equitable grounds as a mortgage. (Corpus Juris Secundum, 433, and
authorities therein cited.)
xxx xxx xxx
The case at bench admits of a peculiar character in the sense that it involves a compromise agreement.
Nonetheless, the rule established in the aforequoted cases still applies, even more so since the terms of
the agreement have to be complied with in full by the parties thereto. The parties to the compromise
agreement should not be deprived of the protection provided by an attachment lien especially in an
instance where one reneges on his obligations under the agreement, as in the case at bench, where
Antonio Garcia failed to hold up his own end of the deal, so to speak.
Moreover, a violation of the terms and conditions of a compromise agreement entitles the aggrieved
party to a writ of execution.
In Abenojar & Tana v. CA, et al., 64 we held:
The non-fulfillment of the terms and conditions of a compromise agreement approved by the Court
justifies execution thereof and the issuance of the writ for said purpose is the Court's ministerial duty
enforceable by mandamus.
Likewise we ruled in Canonizado v. Benitez: 65
A judicial compromise may be enforced by a writ of execution. If a party fails or refuses to abide by the
compromise, the other party may enforce the compromise or regard it as rescinded and insist upon his
original demand.
If we were to rule otherwise, we would in effect create a back door by which a debtor can easily escape
his creditors. Consequently, we would be faced with an anomalous situation where a debtor, in order to
buy time to dispose of his properties, would enter into a compromise agreement he has no intention of
honoring in the first place. The purpose of the provisional remedy of attachment would thus be lost. It
would become, in analogy, a declawed and toothless tiger.
From the foregoing, it is clear that the consortium and/or its assignee Jaime Gonzales have the better
right over the disputed shares. When CEIC purchased the disputed shares from Antonio Garcia on 15
July 1988, it took the shares subject to the prior, valid and existing attachment lien in favor of and
obtained by the consortium.

are so interwoven and dependent on each other as to be inseparable, a reversal of the appealed
decision as to those who appealed, operates as a reversal to all and will inure to the benefit of those
who did not join the appeal (Tropical Homes vs. Fortun, 169 SCRA 80, p. 90, citing Alling vs. Wenzel,
133 111. 264-278; 4 C.J. 1206). Such principal, premised upon communality of interest of the parties, is
recognized in this jurisdiction (Director of Lands vs. Reyes, 69 SCRA 415). The four other banks which
were part of the consortium, filed their notice of appeal under date of March 16, 1990, furnishing a copy
thereof upon the lawyers of petitioner. The petition for certiorari in the present case was filed on April 10,
1990, long after the other members of the consortium had appealed from the assailed order of
December 19, 1989.
We view with skepticism PCIB's contention that it did not join the consortium because it "honestly
believed thatcertiorari was the more efficacious and speedy relief available under the
circumstances." 67 Rule 65 of the Revised Rules of Court is not difficult to understand. Certiorari is
available only if there is no appeal or other plain, speedy and adequate remedy in the ordinary course of
law. Hence, in instituting a separate petition for certiorari, PCIB has deliberately resorted to forumshopping.
PCIB cannot hide behind the subterfuge that Supreme Court Circular 28-91 was not yet in force when it
filed thecertiorari proceedings in the Court of Appeals. The rule against forum-shopping has long been
established. 68Supreme Court Circular 28-91 merely formalized the prohibition and provided the
appropriate penalties against transgressors.
It alarms us to realize that we have to constantly repeat our warning against forum-shopping. We
cannot over-emphasize its ill-effects, one of which is aptly demonstrated in the case at bench where we
are confronted with two divisions of the Court of Appeals issuing contradictory decisions 69 one in favor
of CEIC and the other in favor of the consortium/Jaime Gonzales.
Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one
forum, of seeking another (and possibly favorable) opinion in another forum (other than by appeal or the
special civil action of certiorari), or the institution of two (2) or more actions or proceedings grounded on
the same cause on the supposition that one or the other court would make a favorable
disposition, 70 has been characterized as an act of malpractice that is prohibited and condemned as
trifling with the Courts and abusing their processes. It constitutes improper conduct which tends to
degrade the administration of justice. It has also been aptly described as deplorable because it adds to
the
congestion
of
the
already
heavily
burdened
dockets
of
the
courts. 71

We uphold the decision of the Court of Appeals finding PCIB guilty of forum-shopping. 66

WHEREFORE, premises considered the appealed decision in G.R. Nos. 112438-39 is hereby
AFFIRMED and the appealed decision in G.R. No. 113394, insofar as it adjudged the CEIC the rightful
owner of the disputed shares, is hereby REVERSED. Moreover, for wantonly resorting to forumshopping, PCIB is hereby REPRIMANDED and WARNED that a repetition of the same or similar acts in
the future shall be dealt with more severely.

The Court of Appeals opined:

SO ORDERED.

Forum Shopping in G.R. No. 113394

True it is, that petitioner PCIB was not a party to the appeal made by the four other banks belonging to
the consortium, but equally true is the rule that where the rights and liabilities of the parties appealing

PANGANIBAN, J.:

x x x. On February 25, 1993, Labor Arbiter Irenarco Rimando of the National Labor Relations
Commission, Regional Arbitration Branch, Cordillera Administrative Region, Baguio City, issued a Writ
of Execution (x x x) in NLRC Case No. RAB-1-0313-84 to enforce the decision rendered by the
Supreme Court on May 18, 1992 in G.R. No. 89070 (Benguet Electric Cooperative, Inc. vs. NLRC, 209
SCRA 55). The Writ of Execution was issued on motion of Benguet Electric Cooperative (BENECO for
short) to collect the amount of P344,000.00 which it paid to Peter Cosalan during the pendency of the
case before the Supreme Court, on the basis of its decision ordering the respondent board members to
reimburse petitioner BENECO any amount that it may be compelled to pay to respondent Cosalan by
virtue of the decision of Labor Arbiter Amado T. Adquilen.

The profession of law exacts the highest standards from its members and brooks no violation of its code
of conduct. Accordingly, a lawyer who trifles with judicial processes, engages in forum shopping and
blatantly lies in his pleadings must be sanctioned.

After issuance of the writ of execution, the respondent, as new counsel for the losing litigant-members
of the BENECO Board of Directors, filed a Motion for Clarification with the Third Division of the Supreme
Court in G.R. No. 89070, the minute resolution to wit: to note without action the aforesaid motion.

[A.C. No. 4058. March 12, 1998]

BENGUET
ELECTRIC
FLORES, respondent.

COOPERATIVE,

INC. complainant,

vs. ATTY.

ERNESTO

B.

DECISION

The Case

This is an administrative complaint against Atty. Ernesto Flores filed by Benguet Electric Cooperative,
Inc. (BENECO) before this Court on July 5, 1993, seeking his removal or suspension from the bar for
forum shopping, which amounted to grave misconduct, x x x unduly delaying the administration of
justice, and violating with impunity his oath of office and applicable laws and jurisprudence.[1]
After the respondent submitted his Comment, dated August 21, 1993, we referred the case to the
Integrated Bar of the Philippines (IBP) on September 27, 1993 for investigation, report and
recommendation. On August 15, 1997, we received a resolution from the IBP Board of Governors,
finding respondent guilty of violating Canons 10 and 12 of the Code of Professional Responsibility and
recommending his suspension from the practice of law for a period of six months, viz:
RESOLUTION NO. XII-97-149
Adm. Case NO. 4058
Benguet Electric Cooperative, Inc. vs.
Atty. Ernesto B. Flores
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and
Recommendation of the Investigating Commissioner in the above-entitled case, hereinmade [sic] part of
this Resolution/Decision as Annex A; and finding the recommendation therein to be fully supported by
the evidence on record and the applicable laws and rules, Respondent Atty. Ernesto Flores is hereby
SUSPENDED from the practice of law for six (6) months for violating the provision of Canon[s] 10 and
12 of the Code of Professional Responsibility.[2]
The Facts

Because the parties[3] agreed to dispense with the presentation of testimonial evidence, the case was
submitted for resolution on the basis of their documentary evidence. As found by Investigating
Commissioner Plaridel C. Jose, the facts are as follows:

Thereafter, the respondent instituted a suit docketed as Civil Case NO. 2738-R (x x x) with the Regional
Trial Court, Branch 7, Baguio City, seeking to enjoin the defendants Clerk of Court, et al. from levying on
their properties in satisfaction of the said writ of execution. That case, however, was dismissed by the
Presiding Judge Clarence Villanueva in his Order dated March 18, 1993 (x x x).
Accordingly, the Office of the Clerk of Court, MTC, Baguio City, through Sheriff III Wilfredo Mendez,
proceeded to levy on the properties of the losing board members of BENECO.Thus, a sale at public
auction was set on June 1, 1993, at 10:00 oclock in the morning in front of the Baguio City Hall, per
Sheriffs Notice of Sale dated May 4, 1993 (x x x), of the properties of Abundio Awal and Nicasio
Aliping[,] two of the losing members of the Board of Directors of BENECO in the aforementioned case.
Respondent claims in his comment (x x x) that Branch 7, motu proprio, dismissed Civil Case No. 2738R for lack of jurisdiction on March 18,1993, which dismissal was [sic] became final due to respondents
failure to perfect an appeal therefrom which claim according to the complainant, constitute[s] deliberate
misrepresentation, if not falsehood, because the respondent indeed interposed an appeal such that on
May 11, 1993, the RTC 7 of Baguio City transmitted the entire record of Civil Case No. 2738-R to the
Court of Appeals per certified machine copy of the letter transmittal of same date (x x x).
While respondent never essentially intended to assail the issuance by the NLRC of the Writ of
Execution x x x nor sought to undo it (x x x) the complaint in Civil Case No. 2738-R which he filed prays
for the immediate issuance of a temporary restraining order and/or preliminary writ of injunction for
defendants Clerk of Court and Ex-Officio City Sheriff to cease and desist from enforcing the execution
and levy of the writ of execution issued by the NLRC-CAR, pending resolution of the main action in said
court (x x x) which complainant likewise claims as an unprocedural maneuver to frustrate the execution
of the decision of the Supreme Court in G.R. No. 89070 in complete disregard of settled jurisprudence
that regular courts have no jurisdiction to hear and decide questions which arise and are incidental to
the enforcement of decisions, orders and awards rendered in labor cases citing the case of Cangco vs.
CA, 199 SCRA 677, a display of gross ignorance of the law.
On May 26, 1993, respondent again filed for Abundio Awal and Nicasio Aliping with the Regional Trial
Court, Branch 9, La Trinidad, Benguet, separate complaints for Judicial Declaration of Family Home
Constituted, Ope Lege, and thus Exempt from Levy and Execution the subject properties with
Damages, etc. docketed as Civil Cases Nos. 93-F-0414 (x x x) and 93-F-0415 (x x x), which are

essentially similar actions to enjoin the enforcement of the judgment rendered in NLRC Case No. RAB1-0313-84. He also filed an urgent Motion Ex-parte (x x x) praying for temporary restraining order in
these two (2) cases.
The complainant further alleges that respondents claim for damages against the defendant Sheriff is
another improper and unprocedural maneuver which is likewise a violation of respondents oath not to
sue on groundless suit since the said Sheriff was merely enforcing a writ of execution as part of his job.
Recommendation of the IBP

As noted earlier, Investigating Commissioner Plaridel C. Jose recommended, and the IBP Board of
Governors concurred, that respondent be suspended from the bar for six months for:
1. Falsehood, for stating in his comment before this Court that the order of the RTC dismissing the
complaint in Civil Case No. 2738-R was not appealed on time
2. Failure to comply with Supreme Court Circular No. 28-91 on forum shopping
Commissioner Jose ratiocinated:
A cursory glance of (sic) x x x the complaint filed by the respondent in Civil Case No. 2738-R before the
RTC of Baguio City, which complaint was signed and verified under oath by the respondent, reveals that
it lacks the certification required by Supreme Court Circular No. 28-91 which took effect on January 1,
1992 to the effect that to the best of his knowledge, no such action or proceeding is pending in the
Supreme Court, Court of Appeals or different divisions thereof or any tribunal or agency. If there is any
other action pending, he must state the status of the same. If he should learn that a similar action or
proceeding has been filed or pending before the Supreme Court, Court of Appeals or different divisions
thereof or any tribunal or agency[,] he should notify the court, tribunal or agency within five (5) days
from such notice.
Among the other penalties, the said circular further provides that the lawyer may also be subjected to
disciplinary proceedings for non-compliance thereof.
In sum, it is clear that the respondent violated the provisions of Canon[s] 10 and 12 of the Code of
Professional Responsibility under which the lawyer owes candor, fairness and good faith to the court
and exert[s] every effort and consider[s] it his duty to assist in the speedy and efficient administration of
justice.[4]
This Courts Ruling

We adopt and affirm the recommendation of the IBP suspending the respondent from the bar, but we
increase the period from six (6) months to one (1) year and six (6) months.
Forum Shopping

Circular No. 28-91,[5] dated September 4, 1991 which took effect on January 1, 1992, requires a
certificate of non-forum shopping to be attached to petitions filed before this Court and the Court of
Appeals. This circular was revised on February 8, 1994. The IBP found that the respondent had violated

it, because the complaint he filed before the RTC of Baguio City lack[ed] the certification required by
Supreme Court Circular No. 28-91.[6]
We distinguish. Respondents failure to attach the said certificate cannot be deemed a violation of the
aforementioned circular, because the said requirement applied only to petitions filed with this Court and
the Court of Appeals.[7] Likewise inapplicable is Administrative Circular No. 04-94 dated February 8,
1994 which extended the requirement of a certificate of non-forum shopping to all initiatory pleadings
filed in all courts and quasi-judicial agencies other than this Court and the Court of Appeals. Circular No.
04-94 became effective only on April 1, 1994, but the assailed complaint for injunction was filed on
March 18, 1993, and the petition for the constitution of a family home was instituted on May 26, 1993.
Be that as it may, respondent is still guilty of forum shopping. In Chemphil Export and Import
Corporation vs. Court of Appeals,[8] this Court declared that (t)he rule against forum shopping has long
been established and subsequent circulars[9] of this Court merely formalized the prohibition and
provided the appropriate penalties against transgressors. The prohibition is found in Section 1(e) of
Rule 16 and Section 4 of Rule 2 of the 1964 Rules of Court, which provide:
SECTION 1. Grounds. -- Within the time for pleading, a motion to dismiss the action may be made on
any of the following grounds:
xxx xxx xxx
(e) That there is another action pending between the same parties for the same cause;
xxx xxx xxx[10]
SEC. 4. Effect of splitting a single cause of action. -- If two or more complaints are brought for different
parts of a single cause of action, the filing of the first may be pleaded in abatement of the other or
others, in accordance with section 1 (e) of Rule 16, and a judgment upon the merits in any one is
available as a bar in the others.[11]
The prohibition is also contained in Circular No. 28-91. This circular did not only require that a
certification of non-forum shopping be attached to the petitions filed before this Court or the Court of
Appeals; it also decreed that forum shopping constituted direct contempt of court and could subject the
offending lawyer to disciplinary action. The third paragraph thereof reads:
3. Penalties.
(a) Any violation of this Circular shall be a cause for the summary dismissal of the multiple petition or
complaint.
(b) Any willful and deliberate forum shopping by any party and his lawyer wit the filing of multiple
petitions and complaints to ensure favorable action shall constitute direct contempt of court.
(c) The submission of false certification under Par. 2 of the Circular shall likewise constitute contempt of
Court, without prejudice to the filing of criminal action against the guilty party. The lawyer may also be
subjected to disciplinary proceedings. (Underscoring supplied.)

The foregoing were substantially reproduced in Revised Circular No. 28-91 [12] and Administrative
Circular No. 04-94.[13]
In a long line of cases, this Court has held that forum shopping exists when, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another,
[14]
or when he institutes two or more actions or proceedings grounded on the same cause, on the
gamble that one or the other court would make a favorable disposition. [15] The most important factor in
determining the existence of forum shopping is the vexation caused the courts and parties-litigants by a
party who asks different courts to rule on the same or related causes or grant the same or substantially
the same reliefs.[16]
After this Court rendered its Decision[17] in Benguet Electric Cooperative, Inc. vs. National Labor
Relations Commission, et al.[18] and upon motion of BENECO, Labor Arbiter Irenarco R. Rimando
issued a writ of execution[19] ordering the clerk of court and ex officio city sheriff of the Municipal Trial
Court of Baguio City to levy on and sell at public auction personal and real property of the members of
the Board of Directors of BENECO.
On March 18, 1993, Respondent Flores, acting as counsel for BENECO Board Members Victor Laoyan,
Nicasio Aliping, Lorenzo Pilando and Abundio Awal, filed with the RTC an injunction suit praying for the
issuance of a temporary restraining order (TRO) to preserve the status quo as now obtaining between
the parties, as well as a writ of preliminary preventive injunction ordering the clerk of court and the ex
officio city sheriff of the MTC of Baguio to cease and desist from enforcing by execution and levy the
writ of execution from the NLRC-CAR, pending resolution of the main action raised in court.[20]
When this injunction case was dismissed, Respondent Flores filed with another branch of the RTC two
identical but separate actions both entitled Judicial Declaration of Family Home Constituted, ope
lege, Exempt from Levy and Execution; with Damages, etc., docketed as Civil Case Nos. 93-F-0414
and 93-F-0415.[21] The said complaints were supplemented by an Urgent Motion Ex Parte[22] which
prayed for an order to temporarily restrain Sheriff Wilfredo V. Mendez from proceeding with the auction
sale of plaintiffs property to avoid rendering ineffectual and functus [oficio] any judgment of the court
later in this [sic] cases, until further determined by the court.
Civil Case Nos. 93-F-0414 and 93-F-0415 are groundless suits. Modequillo vs. Breva,[23] reiterated
in Manacop vs. Court of Appeals,[24] shows the frivolity of these proceedings:
Under the Family Code, a family home is deemed constituted on a house and lot from the time it is
occupied as a family residence. There is no need to constitute the same judicially or extrajudicially as
required in the Civil Code. If the family actually resides in the premises, it is, therefore, a family home as
contemplated by law. Thus, the creditors should take the necessary precautions to protect their interest
before extending credit to the spouses or head of the family who owns the home.
xxx.
The exemption provided as aforestated is effective from the time of the constitution of the family home
as such, and lasts so long as any of its beneficiaries actually resides therein.
Adhering to the Courts declaration in said cases, the subject properties are deemed constituted as
family homes by operation of law under Article 153 of the Family Code.

The suits for the constitution of a family home were not only frivolous and unnecessary; they were
clearly asking for reliefs identical to the prayer previously dismissed by another branch of the
RTC, i.e., to forestall the execution of a final judgment of the labor arbiter. That they
were filed ostensibly for the judicial declaration of a family home was a mere smoke screen; in essence,
their real objective was to restrain or delay the enforcement of the writ of execution. In his deliberate
attempt to obtain the same relief in two different courts, Respondent Flores was obviously shopping for
a friendly forum which would capitulate to his improvident plea for an injunction and was thereby trifling
with the judicial process.[25]
We remind the respondent that, under the Code of Professional Responsibility,[26] he had a duty to
assist in the speedy and efficient administration of justice. [27] The Code also enjoins him from unduly
delaying a case by impeding the execution of a judgment or by misusing court processes.[28]
In consonance with Millare vs. Montero[29] and Garcia vs. Francisco,[30] respondent should be
suspended from the practice of law for one year. In Millare, the respondent filed with different courts a
total of six appeals, complaints and petitions which frustrated and delayed the execution of a final
judgment. Holding that respondent made a mockery of the judicial processes and disregarded canons
of professional ethics in intentionally frustrating the rights of a litigant in whose favor a judgment in the
case was rendered [and], thus, abused procedural rules to defeat the ends of substantial justice, [31] this
Court suspended the respondent from the practice of law for one year.
In Garcia, the respondent was also suspended for one year from the practice of law, for violating the
proscription against forum shopping. This Court held that he deserve[d] to be sanctioned, not only as a
punishment for his misconduct but also as a warning to other lawyers who may be influenced by his
example.[32]
Falsehood

The investigating commissioner also held respondent liable for committing a falsehood because, in this
administrative case, he stated in his comment that he had not perfected an appeal on the dismissal of
his petition for injunction. In his said comment, the respondent stated:
Branch 7 (of the RTC) motu proprio, dismissed the case for lack of jurisdiction on March 18, 1993. Not
having perfected an appeal on the dismissal, the order of dismissal became final under the Rules 15
days after its receipt by respondent on record, or before April 6, 1993. So that today this case is no
longer pending.
xxx.
It should be noted that when Civil Case Nos. 93-F-0414 and 93-F-0415 for family homes and damages
were filed in the court below on May 26, 1993, Civil Case NO. 2378-R which seems to give basis to the
present Complaint was deemed terminated, there being no appeal formally taken and perfected in
accordance with the Rules.
xxx.

And that precisely was the primal reason why respondent decided not to appeal any further anymore
[sic] the order of dismissal for lack of jurisdiction of the court below in Civil Case No. 2738, and let it be
deemed final by the Rules and jurisprudence.[33] (Underscoring supplied.)
The indelible fact, however, is that respondent did file an appeal which was perfected later on. The
original records of the injunction suit had been transmitted to the appellate court. [34]Moreover, the Court
of Appeals issued a resolution dismissing the appeal. [35] Thus, in denying that he had appealed the
decision of the RTC, respondent was making a false statement.
Respondent argues that the withdrawal of his appeal means that no appeal was made under Section 2
of Rule 50 of the Rules of Court. The pertinent provisions of Rule 50[36]read:
SEC. 2. Effect of dismissal.-- Fifteen (15) days after the dismissal of an appeal, the clerk shall return to
the court below the record on appeal with a certificate under the seal of the court showing that the
appeal has been dismissed. Upon the receipt of such certificate in the lower court the case shall stand
there as though no appeal had ever been taken, and the judgment of the said court may be enforced
with the additional costs allowed by the appellate court upon dismissing the appeal.
xxx xxx xxx
SEC. 4. Withdrawal of appeal.-- An appeal may be withdrawn as of right at any time before the filing of
appellees brief. x x x. The withdrawal of an appeal shall have the same effect as that of a dismissal in
accordance with section 2 of this rule.
Respondents explanation misses the point. True, he withdrew his appeal. But it is likewise true that he
had actually filed an appeal, and that this was perfected. False then is his statement that no appeal was
perfected in the injunction suit. Worse, he made the statement before this Court in order to exculpate
himself, though in vain, from the charge of forum shopping.
A lawyer must be a disciple of truth. Under the Code of Professional Responsibility, he owes candor,
fairness and good faith to the courts.[37] He shall neither do any falsehood, nor consent to the doing of
any. He also has a duty not to mislead or allow the courts to be misled by any artifice.[38]
For this offense, we suspend the respondent from the practice of law for another year. True, in Ordonio
vs. Eduarte,[39] Porac Trucking, Inc. vs. Court of Appeals [40] and Erectors, Inc. vs. NLRC,[41] we imposed
a suspension of only six months for a similar malfeasance. But in Flores case, his falsehood is
aggravated by its brazenness, for it was committed in an attempt, vain as it was, to cover up his forum
shopping.
Before we close, we note that this simple case was referred to the IBP on September 27, 1993. It was
deemed submitted for resolution per the investigating commissioners order dated May 10,
1995. However, the investigating commissioner submitted his report only on May 5, 1997. Moreover, the
IBP transmitted its recommendation to the Court only through a letter dated July 31, 1997, which was
received by the Office of the Bar Confidant on August 15, 1997. Why it took the IBP almost four years to
finish its investigation of the case and over two years from the date the parties filed their last pleadings
to resolve it escapes us. After all, the case did not require any trial-type investigation, and the parties
submitted only documentary evidence to prove or rebut their respective cases. Thus, we find it
opportune to urge the IBP to hasten the disposition of administrative cases and to remind it that this

Court gives it only ninety days to finish its investigation, report and recommendation. Should it require
more time, it should file with the Court a request for extension, giving the reason for such request.
WHEREFORE, for trifling with judicial processes by resorting to forum shopping, Respondent Ernesto
B. Flores is hereby SUSPENDED from the practice of law for a period of ONE (1) YEAR and, for
violating his oath and the Canon of Professional Responsibility to do no falsehood, he
is SUSPENDED for another period of ONE (1) YEAR, resulting in a total period of TWO (2) YEARS,
effective upon finality of this Decision. He is WARNED that a repetition of a similar misconduct will be
dealt with more severely.
Let a copy of this Decision be included in his files which are with the Office of the Bar Confidant, and
circularized to all courts and to the Integrated Bar of the Philippines.
SO ORDERED.

G.R. No. 75349 October 13, 1986

ROSALINA BUAN, RODOLFO TOLENTINO, TOMAS MERCADO, CECILIA MORALES, LIZA
OCAMPO, Quiapo Church Vendors, for themselves and all others similarly situated as
themselves, petitioners,
vs.
OFFICER-IN-CHARGE GEMILIANO C. LOPEZ, JR., OFFICE OF THE MAYOR OF
MANILA, respondent.

NARVASA, J.:
On August 5, 1986 petitioners instituted in this Court a special civil action for prohibition to the end that
respondent Gemiliano C. Lopez, Jr., acting as Mayor of the City of Manila, be "perpetually prohibited
from arbitrarily, whimsically and capriciously revoking or cancelling ... their licenses or permits (as
hawkers or street vendors) and threatening the physical demolition of their respective business stalls in
the places specified in such licenses or permits. 1 They also sought a temporary restraining order in
view of Mayor Lopez' actual threats of physical demolition of their respective small business
establishment at 12:00 noon today." This the Court granted on the same day. 2
Petitioners claim to be five of about 130 "licensed and duly authorized vendors of ... religious articles,
medicine herbs and plants around the Quiapo Church, ... Manila," bringing suit 'for themselves and all
others similarly situated as themselves." 3 They allege that their licenses "were revoked or cancelled (by
respondent Mayor) for reasons unknown to them which is tantamount to deprivation of property without
due process of laws," written notice of such cancellation having been served on them on or about May
30 (actually May 3), 1986; that the revocation of their licenses was beyond respondent Mayor's
competence, since Section 171 (n) of the Local Government Code (B.P. Blg. 337) authorizes the same
only "for violation of the law or ordinances or conditions upon which they have been granted " and no
such violation had been committed by them; 4 but this notwithstanding, respondent Mayor "had given

(them) an ultimatum of 7:00 up to 12:00 o'clock in the afternoon" (of August 5, 1986) to vacate the
premises where their respective stalls are situated or suffer physical demolition thereof. 5
In the light of the facts disclosed by the pleadings 6 and at the hearing of the case on August 13, 1986,
the petition must be given short shrift.
The action must in the first place be abated on the ground of lis pendens, or more correctly, auter
action pendant pendency Of another action between the same parties for the same cause. 7
It appears that on July 7, 1986 there was filed in the Regional Trial Court of Manila, docketed as Civil
Case No. 8636563, a special civil action of "prohibition with preliminary injunction" against Acting Manila
City Mayor Gemiliano Lopez, Jr. 8 It was filed by Samahang Kapatiran Sa Hanapbuhay Ng Bagong
Lipunan, Inc." (hereafter, simply "Samahan") composed, according to the petition, of "some 300
individual owners and operators of separate business stalls ... mostly at the periphery immediately
0beyond the fence of the Quiapo Church." The president of the Samahan is Rosalina Buan and its
Press Relations Officer, Liza Ocampo. 9 Rosalina Buan and Liza Ocampo are two of the five petitioners
in the case at bar, 10 described in the petition before this Court as suing "for themselves and all others
similarly situated as themselves": i.e., vendors "around the Quiapo Church." 11 The three other
petitioners also appear to be Samahan members. 12
The petition in Case No. 86-36563 is grounded on the same facts as those in the case at bar: the
members of theSamahan had been legitimately engaged "in their respective business of selling sundry
merchandise, more particularly religious articles, flowers and ornamental plants, and medicinal herbs;"
they had been religiously paying "the corresponding license and permit fees imposed by prevailing
ordinances of the City of Manila," but this notwithstanding they had been given written notice dated May
3, 1986 emanating from the Mayor's Office, advising of the cancellation of their permits and their
possible relocation to another site; and these acts "are unjust, illegal arbitrary, oppressive and constitute
grave abuse of discretion on the part of the respondent.
There thus exists between the action before this Court and RTC Case No. 86-36563 Identity of parties,
or at least such parties as represent the same interests in both actions, as well as Identity of rights
asserted and relief prayed for, the relief being founded on the same facts, and the Identity on the two
preceding particulars is such that any judgment rendered in the other action, will regardless of which
party is successful, amount to res adjudicata in the action under consideration: all the requisites, in fine,
of auter action pendant. 13
Indeed, the petitioners in both actions, described in their petitions as vendors of religious articles, herbs
and plants, and sundry merchandise around the Quiapo Church or its "periphery," have incurred not
only the sanction of dismissal of their case before this Court in accordance with Rule 16 of the Rules of
Court, but also the punitive measure of dismissal of both their actions, that in this Court and that in the
Regional Trial Court as well Quite recently, upon substantially Identical factual premises, the Court en
banc had occasion to condemn and penalize the act of litigants of hearing the same suit in different
courts, aptly described as "forum-shopping," viz:
The acts of petitioners constitute a clear case of forum shopping, an act of malpractice that is
proscribed and condemned as trifling with the courts and abusing their processes. It is improperconduct
that tends to degrade the administration of justice. The rule has been formalized in Section 17 of the

Interim Rules and Guidelines issued by this Court on January 11, 1983 in connection with the
implementation of the Judiciary Reorganization Act, specifically with the grant in Section 9 of B.P. Blg.
129 of equal original jurisdiction to the Intermediate Appellate Court to issue writs of mandamus,
prohibition, etc., and auxiliary writs or processes, whether or not in aid Of its appellate jurisdiction. Thus,
the cited Rule provides that no such petition may be filed in the Intermediate Appellate Court 'if another
similar petition has been filed or is still pending in the Supreme Court' and vice-versa. The Rule orders
that "A violation of the rule shall constitute contempt of court and shall be a cause for the summary
dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or
party concerned." The rule applies with equal force where the party having filed an action in the
Supreme Court shops for the same remedy of prohibition and a restraining order or injunction in the
regional trial court (or vice-versa). ... 14
As already observed, there is between the action at bar and RTC Case No. 86-36563, an Identity as
regards parties, or interests represented, rights asserted and relief sought, as well as basis thereof, to a
degree sufficient to give rise to the ground for dismissal known as auter action pendant or
lis pendens 15 That same Identity puts into operation the sanction Of twin dismissals just mentioned. The
application of this sanction will prevent any further delay in the settlement of the controversy which
might ensue from attempts to seek reconsideration of or to appeal from the Order of the Regional Trial
Court in Civil Case No. 86-36563 promulgated on July 15, 1986, which dismissed the petition upon
grounds which appear persuasive. 16
It would seem that after the filing by Rosalina Buan and Liza Ocampo (president and press relations
officer, respectively, of the Quiapo Church vendors' association known as the Samahan) of the petition
in this case, "for themselves and all others similarly situated as themselves" (i.e., the members of
the Samahan; who are vendors in the area of Quiapo Church) they came to the belated that in view of
the pendency of the Identical action filed by them in the Regional Trial Court (Case No. 86-36563), they
were vulnerable to the accusation of "forum shopping," and thus amenable to its dire consequences.
This explains the filing in this Court by their lawyers of a "MANIFESTATION WITH AFFIDAVIT OF
WITHDRAWAL" on August 11, 1986, 17 another "MANIFESTATION AND MOTION" on August 29, 1986,
and an "URGENT MANIFESTATION AND MOTION TO STRIKE-OUT THE NAME ROSALINA BUAN
AND LIZA OCAMPO" on September 13, 1986. In these manifestations the case is made that the five (5)
petitioners in the action before this Court who are members of the Samahan"were forcibly brainwashed
and guarded by ... (Atty. Reynaldo Aralar) and his associates to accede to the invitation of the said
counsel ... to appear for them and file the case before the Honorable Court knowingly (sic) that he was
furnished the status quo-order of the same case pending before the Regional Trial Court Branch 45 of
Manila," and/or said Atty. Aralar and his associates had perpetrated "piracy" of clients and "should be
condemned and suspended for committing act of shopping for courts." The claim does not inspire belief.
It is so out of the ordinary as to require clear and convincing evidence of its actuality, which is lacking in
this case. It is also belied by the fact that Rosalina Buan and Liza Ocampo themselves were among
those who verified the petition at bar before a notary public. 18 And the claim is undermined by the
misrepresentation in Buan's and Ocampo's "Joint Affidavit of Withdrawal" that the status quo order in
RTC Case No. 8636563 was still subsisting and the case still pending trial 19 when in truth, the case had
already been dismissed and the restraining order lifted by Order of July 27, 1986.
Yet another reason exists for the denial of the petition. Not one of the petitioners or the "others similarly
situated as themselves" had a valid and subsisting license or permit as of the date of the filing of their

petition in this Court, August 5, 1986, all licenses and permits having expired prior thereto. 20 This is
confirmed by the few receipts submitted by petitioners 21 which all set out expiry dates before August 5,
1986. The petitioners thus have no basis whatever to postulate a right to ply their trade in the Quiapo
area or elsewhere. The argument that the non-renewal by the municipal authorities of their licenses was
in effect a cancellation or revocation thereof without cause is puerile.

Gavino boarded the vessel at the quarantine anchorage and stationed himself in the bridge, with the
master of the vessel, Victor Kavankov, beside him. After a briefing of Gavino by Kavankov of the
particulars of the vessel and its cargo, the vessel lifted anchor from the quarantine anchorage and
proceeded to the Manila International Port. The sea was calm and the wind was ideal for docking
maneuvers.

Finally, the action for prohibition has become moot and academic by the occurrence of the acts sought
to be inhibited. The petitioners' permits and licenses have all expired; hence, there can be no occasion
whatsoever to speak of the inhibition of any revocation or cancellation thereof. And the "physical
demolition of their respective business stalls" has already been consummated.

When the vessel reached the landmark (the big church by the Tondo North Harbor) one-half mile from
the pier, Gavino ordered the engine stopped. When the vessel was already about 2,000 feet from the
pier, Gavino ordered the anchor dropped. Kavankov relayed the orders to the crew of the vessel on the
bow. The left anchor, with two (2) shackles were dropped.However, the anchor did not take hold as
expected. The speed of the vessel did not slacken. A commotion ensued between the crew members. A
brief conference ensued between Kavankov and the crew members. When Gavino inquired what was
all the commotion about, Kavankov assured Gavino that there was nothing of it.

WHEREFORE, the petition is denied for lack of merit, and the Regional Trial Court is commanded to
dismiss Civil Case No. 86-36563 and to conduct no further proceedings in connection therewith save in
accordance with and in implementation of this Decision. Costs against petitioners.
SO ORDERED.

[G.R. No. 130068. October 1, 1998]

FAR EASTERN SHIPPING COMPANY, petitioner, vs. COURT OF APPELAS and PHILIPPINE
PORTS AUTHORITY, respondents.
[G.R. No. 130150. October 1, 1998]
MANILA PILOTS ASSOCIATION, petitioner, vs. PHILIPPINE PORTS AUTHORITY and FAR
EASTERN SHIPPING COMPANY, respondents.
DECISION
REGALADO, J.:
These consolidated petitions for review on certiorari seek in unison to annul and set aside the
decision[1] of respondent Court of Appeals of November 15, 1996 and its resolution [2]dated July 31, 1997
in CA-G.R. CV No. 24072, entitled Philippine Ports Authority, Plaintiff-Appellee vs. Far Eastern Shipping
Company, Senen C. Gavino and Manila Pilots Association.Defendants-Appellants, which affirmed with
modification the judgment of the trial court holding the defendants-appellants therein solidarily liable for
damages in favor of herein private respondent.
There is no dispute about the facts as found by the appellate court, thus -x x x On June 20, 1980, the M/V PAVLODAR, flying under the flagship of the USSR, owned and
operated by the Far Eastern Shipping Company (FESC for brevitys sake), arrived at the Port of Manila
from Vancouver, British Columbia at about 7:00 oclock in the morning. The vessel was assigned Berth 4
of the Manila International Port, as its berthing space. Captain Roberto Abellana was tasked by the
Philippine Port Authority to supervise the berthing of the vessel. Appellant Senen Gavino was assigned
by the appellant Manila Pilots Association (MPA for brevitys sake) to conduct docking maneuvers for the
safe berthing of the vessel to Berth No. 4.

After Gavino noticed that the anchor did not take hold, he ordered the engines half-astern. Abellana,
who was then on the pier apron, noticed that the vessel was approaching the pier fast.Kavankov
likewise noticed that the anchor did not take hold. Gavino thereafter gave the full-astern code. Before
the right anchor and additional shackles could be dropped, the bow of the vessel rammed into the apron
of the pier causing considerable damage to the pier. The vessel sustained damage too. (Exhibit 7-Far
Eastern Shipping). Kavankov filed his sea protest (Exhibit 1-Vessel). Gavino submitted his report to the
Chief Pilot (Exhibit 1-Pilot) who referred the report to the Philippine Ports Authority (Exhibit 2-Pilot)
Abellana likewise submitted his report of the incident (Exhibit B).
Per contract and supplemental contract of the Philippine Ports Authority and the contractor for the
rehabilitation of the damaged pier, the same cost the Philippine Ports Authority the amount
of P1,126,132.25 (Exhibits D and E).[3]
On January 10, 1983, the Philippine Ports Authority (PPA, for brevity), through the Solicitor General,
filed before the Regional Trial Court of Manila, Branch 39, a complaint for a sum of money against Far
Eastern Shipping Co., Capt. Senen C. Gavino and the Manila Pilots Association, docketed as Civil Case
No. 83-14958,[4] praying that the defendants therein be held jointly and severally liable to pay the
plaintiff actual and exemplary damages plus costs of suit. In a decision dated August 1, 1985, the trial
court ordered the defendants therein jointly and severally to pay the PPA the amount of P1,053,300.00
representing actual damages and the cost of suit.[5]
The defendants appealed to the Court of Appeals and raised the following issues: (1) Is the pilot of a
commercial vessel, under compulsory pilotage, solely liable for the damage caused by the vessel to the
pier, at the port of destination, for his negligence? And (2) Would the owner of the vessel be liable
likewise if the damage is caused by the concurrent negligence of the master of vessel and the pilot
under a compulsory pilotage?
As stated at the outset, respondent appellate court affirmed the findings of the court a quo except that it
found no employer-employee relationship existing between herein private respondents Manila Pilots
Association (MPA, for short) and Capt. Gavino.[6] This being so, it ruled instead that the liability of MPA is
anchored, not on Article 2180 of the Civil Code, but on the provisions of Customs Administrative Order
No. 15-65,[7] and accordingly modified said decision of the trial court by holding MPA, along with its codefendants therein, still solidarily liable to PPA but entitled MPA to reimbursement from Capt. Gavino for

such amount of the adjudged pecuniary liability in excess of the amount equivalent to seventy-five
percent (75%) of its prescribed reserve fund.[8]
Neither Far Eastern Shipping Co. (briefly, FESC) nor MPA was happy with the decision of the Court of
Appeals and both of them elevated their respective plaints to us via separate petitions for review
on certiorari.
In G.R. No. 130068, which was assigned to the Second Division of this Court, FESC imputed that the
Court of Appeals seriously erred:
1. in not holding Senen C. Gavino and the Manila Pilots Association as the parties solely responsible for
the resulting damages sustained by the pier deliberately ignoring the established jurisprudence on the
matter.
2. in holding that the master had not exercised the required diligence demanded from him by the
circumstances at the time the incident happened;
3. in affirming the amount of damages sustained by the respondent Philippine Ports Authority despite a
strong and convincing evidence that the amount is clearly exorbitant and unreasonable;
4. in not awarding any amount of counterclaim prayed for by the petitioner in its answer; and
5. in not granting herein petitioner's claim against pilot Senen C. Gavino and Manila Pilots' Association
in the event that it be held liable.[9]
Petitioner asserts that since the MV PAVLODAR was under compulsory pilotage at the time of the
incident, it was a compulsory pilot, Capt. Gavino, who was in command and had complete control in the
navigation and docking of the vessel. It is the pilot who supersedes the master for the time being in the
command and navigation of a ship and his orders must be obeyed in all respects connected with her
navigation. Consequently, he was solely responsible for the damage caused upon the pier apron, and
not the owners of the vessel. It claims that the master of the boat did not commit any act of negligence
when he failed to countermand or overrule the orders of the pilot because he did not see any justifiable
reason to do so. In other words, the master cannot be faulted for relying absolutely on the competence
of the compulsory pilot. If the master does not observe that a compulsory pilot is incompetent or
physically incapacitated, the master is justified in relying on the pilot.[10]
Respondent PPA, in its comment, predictably in full agreement with the ruling of respondent court on
the solidary liability of FESC, MPA and Capt. Gavino, stresses the concurrent negligence of Capt.
Gavino, the harbor pilot, and Capt. Viktor Kabankov,* shipmaster of MV Pavlodar, as the basis of their
solidary liability for damages sustained by PPA. It posits that the vessel was being piloted by Capt.
Gavino with Capt. Kabankov beside him all the while on the bridge of the vessel, as the former took
over the helm of MV Pavlodar when it rammed and damaged the apron of the pier of Berth No. 4 of the
Manila International Port. Their concurrent negligence was the immediate and proximate cause of the
collision between the vessel and the pier - Capt. Gavino, for his negligence in the conduct of docking
maneuvers for the safe berthing of the vessel; and Capt. Kabankov, for failing to countermand the
orders of the harbor pilot and to take over and steer the vessel himself in the face of imminent danger,
as well as for merely relying on Capt. Gavino during the berthing procedure.[11]

On the other hand, in G.R. No. 130150, originally assigned to the Court's First Division and later
transferred to the Third Division, MPA, now as petitioner in this case, avers the respondent court's
errors consisted in disregarding and misinterpreting Customs Administrative Order No. 15-65 which
limits the liability of MPA. Said pilots' association asseverates that it should not be held solidarily liable
with Capt. Gavino who, as held by respondent court, is only a member, not an employee, thereof. There
being no employer-employee relationship, neither can MPA be held liable for any vicarious liability for
the respective exercise of profession by its members nor be considered a joint tortfeasor as to be held
jointly and severally liable.[12] It further argues that there was erroneous reliance on Customs
Administrative Order No. 15-65 and the constitution and by-laws of MPA, instead of the provisions of the
Civil Code on damages which, being a substantive law, is higher in category than the aforesaid
constitution and by-laws of a professional organization or an administrative order which bears no
provision classifying the nature of the liability of MPA for the negligence its member pilots.[13]
As for Capt. Gavino, counsel for MPA states that the former had retired from active pilotage services
since July 28, 1994 and has ceased to be a member of petitioner pilots' association. He is not joined as
a petitioner in this case since his whereabouts are unknown.[14]
FESC's comment thereto relied on the competence of the Court of Appeals in construing provisions of
law or administrative orders as basis for ascertaining the liability of MPA, and expressed full accord with
the appellate court's holding of solidary liability among itself, MPA and Capt. Gavino. It further avers that
the disputed provisions of Customs Administrative Order No. 15-65 clearly established MPA's solidary
liability.[15]
On the other hand, public respondent PPA, likewise through representations by the Solicitor General,
assumes the same supportive stance it took in G.R. No. 130068 in declaring its total accord with the
ruling of the Court of Appeals that MPA is solidarily liable with Capt. Gavino and FESC for damages,
and in its application to the fullest extent of the provisions of Customs Administrative Order No. 15-65 in
relation to MPA's constitution and by-laws which spell out the conditions of and govern their respective
liabilities. These provisions are clear and ambiguous as regards MPA's liability without need for
interpretation or construction. Although Customs Administrative Order No. 15-65 is a mere regulation
issued by an administrative agency pursuant to delegated legislative authority to fix details to implement
the law, it is legally binding and has the same statutory force as any valid statute.[16]
Upon motion[17] by FESC dated April 24, 1998 in G.R. No. 130150, said case was consolidated with
G.R. No. 130068.[18]
Prefatorily, on matters of compliance with procedural requirements, it must be mentioned that the
conduct of the respective counsel for FESC and PPA leaves much to be desired, to the displeasure and
disappointment of this Court.
Section 2, Rule 42 of the 1997 Rules of Civil Procedure [19] incorporates the former Circular No. 28-91
which provided for what has come to be known as the certification against forum shopping as an
additional requisite for petitions filed with the Supreme Court and the Court of Appeals, aside from the
other requirements contained in pertinent provisions of the Rules of Court therefor, with the end in view
of preventing the filing of multiple complaints involving the same issues in the Supreme Court, Court of
Appeals or different divisions thereof or any other tribunal or agency.

More particularly, the second paragraph of Section 2, Rule 42 provides:

xxxxxxxxx
The petitioner shall also submit together with the petition a certification under oath that he has not
therefore commenced any other action involving the same issues in the Supreme Court, the Court of
Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or
proceeding, he must state the status of the same; and if he should thereafter learn that a similar action
or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals or different
divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts
and other tribunal or agency thereof within five (5) days therefrom. (Italics supplied.)
For petitions for review filed before the Supreme Court, Section 4(e), Rule 45 specifically requires that
such petition shall contain a sworn certification against forum shopping as provided in the last
paragraph of Section 2, Rule 42.
The records show that the law firm of Del Rosario and Del Rosario through its associate, Atty. Herbert
A. Tria, is the counsel of record for FESC in both G.R. No. 130068 and G.R. No. 130150.
G.R. No. 130068, which is assigned to the Court's Second Division, commenced with the filing by FESC
through counsel on August 22, 1997 of a verified motion for extension of time to file its petition for thirty
(30) days from August 28, 1997 or until September 27, 1997. [20] Said motion contained the following
certification against forum shopping[21] signed by Atty. Herbert A. Tria as affiant:
CERTIFICATION
AGAINST FORUM SHOPPING
I/we hereby certify that I/we have not commenced any other action or proceeding involving the same
issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; that to the best of
my own knowledge, no such action or proceeding is pending in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; that if I/we should thereafter learn that a similar action or
proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or any other
tribunal or agency, I/we undertake to report that fact within five (5) days therefrom to this Honorable
Court.
This motion having been granted, FESC subsequently filed its petition on September 26, 1997, this time
bearing a "verification and certification against forum-shopping" executed by one Teodoro P. Lopez on
September 24, 1997,[22] to wit:
VERIFICATION AND CERTIFICATION
AGAINST FORUM SHOPPING
in compliance with Section 4(e), Rule 45 in relation to Section 2, Rule 42 of the Revised Rules of Civil
Procedure
I, Teodoro P. Lopez, of legal age, after being duly sworn, depose and state:

1. That I am the Manager, Claims Department of Filsov Shipping Company, the local agent of petitioner
in this case.
2. That I have caused the preparation of this Petition for Review on Certiorari.
3. That I have read the same and the allegations therein contained are true and correct based on the
records of this case.
4. That I certify that petitioner has not commenced any other action or proceeding involving the same
issues in the Supreme Court or Court of Appeals, or any other tribunal or agency, that to the best of my
own knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals or
any other tribunal or agency, that I should thereafter learn that a similar action or proceeding has been
filed or is pending before the Supreme Court, the Court of Appeals, or any other tribunal or agency, I
undertake to report the fact within five (5) days therefrom to this Honorable Court. (Italics supplied for
emphasis.)
Reviewing the records, we find that the petition filed by MPA in G.R. No. 130150 then pending with the
Third Division was duly filed on August 29, 1997 with a copy thereof furnished on the same date by
registered mail to counsel for FESC.[23] Counsel of record for MPA, Atty. Jesus P. Amparo, in his
verification accompanying said petition dutifully revealed to the Court that-xxxxxxxxx
3. Petitioner has not commenced any other action or proceeding involving the same issues in his
Honorable Court, the Court of Appeals or different Divisions thereof, or any other tribunal or agency, but
to the best of his knowledge, there is an action or proceeding pending in this Honorable Court, entitled
Far Eastern Shipping Co., Petitioner, vs. Philippine Ports Authority and Court of Appeals with a Motion
for Extension of time to file Petition for Review by Certiorari filed sometime on August 18, 1997. If
undersigned counsel will come to know of any other pending action or claim filed or pending he
undertakes to report such fact within five (5) days to this Honorable Court.[24] (Italics supplied.)
Inasmuch as MPA's petition in G.R. No. 130150 was posted by registered mail on August 29, 1997 and
taking judicial notice of the average period of time it takes local mail to reach its destination, by
reasonable estimation it would be fair to conclude that when FESC filed its petition in G.R. No. 130068
on September 26, 1997, it would already have received a copy of the former and would then have
knowledge of the pendency of the other petition initially filed with the First Division. It was therefore
incumbent upon FESC to inform the Court of that fact through its certification against forum
shopping. For failure to make such disclosure, it would appear that the aforequoted certification
accompanying the petition in G.R. No. 130068 is defective and could have been a ground for dismissal
thereof.
Even assuming that FESC has not yet received its copy of MPA's petition at the time it filed its own
petition and executed said certification, its signatory did state "that if I should thereafter learn that a
similar action or proceeding has been filed or is pending before the Supreme Court, the Court of
Appeals or any other tribunal or agency, I undertake to report the fact within five (5) days therefrom in
this Honorable Court."[25] Scouring the records page by page in this case, we find that no manifestation
concordant with such undertaking was then or at any other time thereafter ever filed by FESC nor was
there any attempt to bring such matter to the attention of the Court. Moreover, it cannot feign non-

knowledge of the existence of such other petition because FESC itself filed the motion for consolidation
in G.R. No. 130150 of these two cases on April 24, 1998.

with the requirement under Section 2, Rule 42 in relation to Section 4, Rule 45, and constitutes a valid
cause for dismissal of the petition.

It is disturbing to note that counsel for FESC, the law firm of Del Rosario and Del Rosario, displays an
unprofessional tendency of taking the Rules for granted, in this instance exemplified by its pro
forma compliance therewith but apparently without full comprehension of and with less than faithful
commitment to its undertakings to this Court in the interest of just, speedy and orderly administration of
court proceedings.

Hence, the initial certification appended to the motion for extension of time to file petition n G.R. No.
130068 executed in behalf of FESC by Atty. Tria is procedurally deficient. But considering that it was a
superfluity at that stage of the proceeding, it being unnecessary to file such a certification with a mere
motion for extension, we shall disregard such error. Besides, the certification subsequently executed by
Teodoro P. Lopez in behalf of FESC cures that defect to a certain extent, despite the inaccuracies
earlier pointed out. In the same vein, we shall consider the verification signed in behalf of MPA by its
counsel, Atty. Amparo, in G.R. No. 130150 as substantial compliance inasmuch as it served the purpose
of the Rules of informing the Court of the pendency of another action or proceeding involving the same
issues.

As between the lawyer and the courts, a lawyer owes candor, fairness and good faith to the court. [26] He
is an officer of the court exercising a privilege which is indispensable in the administration of justice.
[27]
Candidness, especially towards the courts, is essential for the expeditious administration of
justice. Courts are entitled to expect only complete honesty from lawyers appearing and pleading before
them.[28] Candor in all dealings is the very essence of honorable membership in the legal profession.
[29]
More specifically, a lawyer is obliged to observe the rules of procedure and not to misuse them to
defeat the ends of justice.[30] It behooves a lawyer, therefore, to exert every effort and consider it his duty
to assist in the speedy and efficient administration of justice. [31] Being an officer of the court, a lawyer
has a responsibility in the proper administration of justice. Like the court itself, he is an instrument to
advance its ends -- the speedy, efficient, impartial, correct and inexpensive adjudication of cases and
the prompt satisfaction of final judgments. A lawyer should not only help attain these objectives but
should likewise avoid any unethical or improper practices that impede, obstruct or prevent their
realization, charged as he is with the primary task of assisting in the speedy and efficient administration
of justice.[32]
Sad to say, the members of said law firm sorely failed to observe their duties as responsible members
of the Bar. Their actuations are indicative of their predisposition to take lightly the avowed duties of
officers of the Court to promote respect for law and for legal processes. [33] We cannot allow this state of
things to pass judicial muster.
In view of the fact that at around the time these petitions were commenced, the 1997 Rules of Civil
Procedure had just taken effect, the Court treated infractions of the new Rules then with relative
liberality in evaluating full compliance therewith. Nevertheless, it would do well to remind all concerned
that the penal provisions of Circular No. 28-91 which remain operative provides, inter alia:
3. Penalties.xxxxxxxxx
(c) The submission of a false certification under Par. 2 of the Circular shall likewise constitute contempt
of court, without prejudice to the filing of criminal action against the guilty party. The lawyer may also be
subjected to disciplinary proceedings.
It must be stressed that the certification against forum shopping ordained under the Rules is to be
executed by the petitioner, and not by counsel. Obviously it is the petitioner, and not always the counsel
whose professional services have been retained for a particular case, who is in the best position to
know whether he or it actually filed or caused the filing of a petition in that case. Hence, a certification
against forum shopping by counsel is a defective certification. It is clearly equivalent to non-compliance

It bears stressing that procedural rules are instruments in the speedy and efficient administration of
justice. They should be used to achieve such end and not to derail it.[34]
Counsel for PPA did not make matters any better. Despite the fact that, save for the Solicitor General at
the time, the same legal team of the Office of the Solicitor General (OSG, for short) composed of
Assistant Solicitor General Roman G. Del Rosario and Solicitor Luis F. Simon, with the addition of
Assistant Solicitor General Pio C. Guerrero very much later in the proceedings, represented PPA
throughout the appellate proceedings in both G.R. No. 130068 and G.R. No. 130150 and was
presumably fully acquainted with the facts and issues of the case, it took the OSG an inordinately and
almost unreasonably long period of time to file its comment, thus unduly delaying the resolution of these
cases. It took several changes of leadership in the OSG -- from Silvestre H. Bello III to Romeo C. dela
Cruz and, finally, Ricardo P. Galvez -- before the comment in behalf of PPA was finally filed.
In G.R. No. 130068, it took eight (8) motions for extension of time totaling 210 days, a warning that no
further extensions shall be granted, and personal service on the Solicitor General himself of the
resolution requiring the filing of such comment before the OSG indulged the Court with the long required
comment on July 10, 1998.[35] This, despite the fact that said office was required to file its comment way
back on November 12, 1997.[36] A closer scrutiny of the records likewise indicates that petitioner FESC
was not even furnished a copy of said comment as required by Section 5, Rule 42. Instead, a copy
thereof was inadvertently furnished to MPA which, from the point of view of G.R. No. 130068, was a
non-party.[37] The OSG fared slightly better in G.R. No. 130150 in that it took only six (6) extensions, or a
total of 180 days, before the comment was finally filed. [38] And while it properly furnished petitioner MPA
with a copy of its comment, it would have been more desirable and expedient in this case to have
furnished its therein co-respondent FESC with a copy thereof, if only as a matter of professional
courtesy.[39]
This undeniably dilatory disinclination of the OSG to seasonably file required pleadings constitutes
deplorable disservice to the tax-paying public and can only be categorized as censurable inefficiency on
the part of the government law office. This is most certainly professionally unbecoming of the OSG.
Another thing that baffles the Court is why the OSG did not take the initiative of filing a motion for
consolidation in either G.R. No. 130068 or G.R. No. 130150, considering its familiarity with the
background of the case and if only to make its job easier by having to prepare and file only one
comment. It could not have been unaware of the pendency of one or the other petition because, being

counsel for respondent in both cases, petitioner is required to furnish it with a copy of the petition under
pain of dismissal of the petition for failure otherwise.[40]

from one berth or another, every vessel engaged in coastwise and foreign trade shall be under
compulsory pilotage. x x x

Besides, in G.R. 130068, it prefaces its discussions thus --

In case of compulsory pilotage, the respective duties and responsibilities of the compulsory pilot and the
master have been specified by the same regulation in this wise:

Incidentally, the Manila Pilots' Association (MPA), one of the defendants-appellants in the case before
the respondent Court of Appeals, has taken a separate appeal from the said decision to this Honorable
Court, which was docketed as G.R. No. 130150 and entitled "Manila Pilots' Association, Petitioner,
versus Philippine Ports Authority and Far Eastern Shipping Co., Respondents.[41]
Similarly, in G.R. No. 130150, it states Incidentally, respondent Far Eastern Shipping Co. (FESC) had also taken an appeal from the said
decision to this Honorable Court, docketed as G.R. No. 130068, entitled "Far Eastern Shipping Co. vs.
Court of Appeals and Philippine Ports Authority."[42]
We find here a lackadaisical attitude and complacency on the part of the OSG in the handling of its
cases and an almost reflexive propensity to move for countless extensions, as if to test the patience of
the Court, before favoring it with the timely submission of required pleadings.
It must be emphasized that the Court can resolve cases only as fast as the respective parties in a case
file the necessary pleadings. The OSG, be needlessly extending the pendency of these cases through
its numerous motions for extension, came very close to exhausting this Court's forbearance and has
regrettably fallen short of its duties as the People's Tribune.
The OSG is reminded that just like other members of the Bar, the canons under the Code of
Professional Responsibility apply with equal force on lawyers in government service in the discharge of
their official tasks.[43] These ethical duties are rendered even more exacting as to them because, as
government counsel, they have the added duty to abide by the policy of the State to promote a high
standard of ethics in public service.[44] Furthermore, it is incumbent upon the OSG, as part of the
government bureaucracy, to perform and discharge its duties with the highest degree of
professionalism, intelligence and skill[45] and to extend prompt, courteous and adequate service to the
public.[46]
Now, on the merits of the case. After a judicious examination of the records of this case, the pleadings
filed, and the evidence presented by the parties in the two petitions, we find no cogent reason to
reverse and set aside the questioned decision. While not entirely a case of first impression, we shall
discuss the issues seriatim and, correlatively by way of a judicial once-over, inasmuch as the matters
raised in both petitions beg for validation and updating of well worn maritime jurisprudence. Thereby, we
shall write finis to the endless finger-pointing in this shipping mishap which has been stretched beyond
the limits of judicial tolerance.
The Port of Manila is within the Manila Pilotage District which is under compulsory pilotage pursuant to
Section 8, Article III of Philippine Ports Authority Administrative Order No. 03-85,[47] which provides that:
SEC. 8. Compulsory Pilotage Service.- For entering a harbor and anchoring thereat, or passing through
rivers or straits within a pilotage district, as well as docking and undocking at any pier/wharf, or shifting

SEC. 11. Control of vessels and liability for damage. - On compulsory pilotage grounds, the Harbor
Pilot, providing the service to a vessel shall be responsible for the damage caused to a vessel or to life
and property at ports due to his negligence or fault. He can only be absolved from liability if the accident
is caused by force majeure or natural calamities provided he has exercised prudence and extra
diligence to prevent or minimize damage.
The Master shall retain overall command of the vessel even on pilotage grounds whereby he can
countermand or overrule the order or command of the Harbor Pilot on board. In such event, any
damage caused to a vessel or to life and property at ports by reason of the fault or negligence of the
Master shall be the responsibility and liability of the registered owner of the vessel concerned without
prejudice to recourse against said Master.
Such liability of the owner or Master of the vessel or its pilots shall be determined by competent
authority in appropriate proceedings in the light of the facts and circumstances of each particular case.
SEC. 32. Duties and responsibilities of the Pilot or Pilots' Association. - The duties and responsibilities
of the Harbor Pilot shall be as follows:
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f) a pilot shall be held responsible for the direction of a vessel from the time he assumes his work as a
pilot thereof until he leaves it anchored or berthed safely; Provided, however, that his responsibility shall
cease at the moment the Master neglects or refuses to carry out his order.
Customs Administrative Order No. 15-65 issued twenty years earlier likewise provided in Chapter I
thereof for the responsibilities of pilots:
Par. XXXIX. - A Pilot shall be held responsible for the direction of a vessel from the time he assumes
control thereof until he leaves it anchored free from shoal; Provided, That his responsibility shall cease
at the moment the master neglects or refuses to carry out his instructions.
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Par. XLIV. - Pilots shall properly and safely secure or anchor vessels under their control when requested
to do so by the master of such vessels.
I. G.R. No. 130068
Petitioner FESC faults the respondent court with serious error in not holding MPA and Capt. Gavino
solely responsible for the damages caused to the pier. It avers that since the vessel was under
compulsory pilotage at the time with Capt. Gavino in command and having exclusive control of the
vessel during the docking maneuvers, then the latter should be responsible for damages caused to the

pier.[48] It likewise holds the appellate court in error for holding that the master of the ship, Capt.
Kabankov, did not exercise the required diligence demanded by the circumstances.[49]
We start our discussion of the successive issues bearing in mind the evidentiary rule in American
jurisprudence that there is a presumption of fault against a moving vessel that strikes a stationary object
such as a dock or navigational aid. In admiralty, this presumption does more than merely require the
ship to go forward and produce some evidence on the presumptive matter. The moving vessel must
show that it was without fault or that the collision was occasioned by the fault of the stationary object or
was the result of inevitable accident. It has been held that such vessel must exhaust every reasonable
possibility which the circumstances admit and show that in each, they did all that reasonable care
required.[50] In the absence of sufficient proof in rebuttal, the presumption of fault attaches to a moving
vessel which collides with a fixed object and makes a prima facie case of fault against the vessel.
[51]
Logic and experience support this presumption:

In line with such established doctrines, Chapter II of Customs Administrative Order No. 15-65 prescribes
the rules of compulsory pilotage in the covered pilotage districts, among which is the Manila Pilotage
District, viz. -PARAGRAPH I. - Pilotage for entering a harbor and anchoring thereat, as well as docking and
undocking in any pier or shifting from one berth to another shall be compulsory, except Government
vessels and vessels of foreign governments entitled to courtesy, and other vessels engaged solely in
river or harbor work, or in a daily ferry service between ports which shall be exempt from compulsory
pilotage provisions of these regulations: provided, however, that compulsory pilotage shall not apply in
pilotage districts whose optional pilotage is allowed under these regulations.

The common sense behind the rule makes the burden a heavy one. Such accidents simply do not occur
in the ordinary course of things unless the vessel has been mismanaged in some way. It is not sufficient
for the respondent to produce witnesses who testify that as soon as the danger became apparent
everything possible was done to avoid an accident. The question remains, How then did the collision
occur? The answer must be either that, in spite of the testimony of the witnesses, what was done was
too little or too late or, if not, then the vessel was at fault for being in a position in which an unavoidable
collision would occur.[52]

Pursuant thereto, Capt. Gavino was assigned to pilot MV Pavlodar into Berth 4 of the Manila
International Port. Upon assuming such office as compulsory pilot, Capt. Gavino is held to the
universally accepted high standards of care and diligence required of a pilot, whereby he assumes to
have skill and knowledge in respect to navigation in the particular waters over which his license extends
superior to and more to be trusted than that of the master.[57] A pilot should have a thorough knowledge
of general and local regulations and physical conditions affecting the vessel in his charge and the
waters for which he is licensed, such as a particular harbor or river. He is not held to the highest
possible degree of skill and care, but must have and exercise the ordinary skill and care demanded by
the circumstances, and usually shown by an expert in his profession. Under extraordinary
circumstances, a pilot must exercise extraordinary care.[58]

The task, therefore, in these cases is to pinpoint who was negligent - the master of the ship, the harbor
pilot or both.

In Atlee vs. The Northwestern Union Packet Company,[59] Mr. Justice Miller spelled out in great detail the
duties of a pilot:

A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or out of ports,
or in certain waters. In a broad sense, the term "pilot" includes both (1) those whose duty it is to guide
vessels into or out of ports, or in particular waters and (2) those entrusted with the navigation of vessels
on the high seas.[53] However, the term "pilot" is more generally understood as a person taken on board
at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port.

x x x (T)he pilot of a river steamer, like the harbor pilot, is selected for his personal knowledge of the
topography through which he steers his vessel. In the long course of a thousand miles in one of these
rivers, he must be familiar with the appearance of the shore on each side of the river as he goes
along. Its banks, towns, its landings, its houses and trees, are all landmarks by which he steers his
vessel. The compass is of little use to him. He must know where the navigable channel is, in its relation
to all these external objects, especially in the night. He must also be familiar with all dangers that are
permanently located in the course of the river, as sand-bars, snags, sunken rocks or trees or
abandoned vessels or barges. All this he must know and remember and avoid. To do this, he must be
constantly informed of the changes in the current of the river, of the sand-bars newly made, of logs or
snags, or other objects newly presented, against which his vessel might be injured.

[54]

Under English and American authorities, generally speaking, the pilot supersedes the master for the
time being in the command and navigation of the ship, and his orders must be obeyed in all matters
connected with her navigation. He becomes the master pro hac vice and should give all directions as to
speed, course, stopping and reversing, anchoring, towing and the like. And when a licensed pilot is
employed in a place where pilotage is compulsory, it is his duty to insist on having effective control of
the vessel, or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take
entire charge of the vessel, but is deemed merely the adviser of the master, who retains command and
control of the navigation even on localities where pilotage is compulsory.[55]
It is quite common for states and localities to provide for compulsory pilotage, and safety laws have
been enacted requiring vessels approaching their ports, with certain exceptions, to take on board pilots
duly licensed under local law. The purpose of these laws is to create a body of seamen thoroughly
acquainted with the harbor, to pilot vessels seeking to enter or depart, and thus protect life and property
from the dangers of navigation.[56]

xxxxxxxxx
It may be said that this is exacting a very high order of ability in a pilot. But when we consider the value
of the lives and property committed to their control, for in this they are absolute masters, the high
compensation they receive, the care which Congress has taken to secure by rigid and frequent
examinations and renewal of licenses, this very class of skill, we do not think we fix the standard too
high.
Tested thereby, we affirm respondent court's finding that Capt. Gavino failed to measure up to such
strict standard of care and diligence required of pilots in the performance of their duties. Witness this
testimony of Capt. Gavino:

Court:
You have testified before that the reason why the vessel bumped the pier was because the anchor was
not released immediately or as soon as you have given the order. Do you remember having stated that?
A Yes, your Honor.
Q And you gave this order to the captain of the vessel?
A Yes, your Honor.
Q By that testimony, you are leading the Court to understand that is that anchor was released
immediately at the time you gave the order, the incident would not have happened. Is that correct?
A Yes, sir, but actually it was only a presumption on my part because there was a commotion between
the officers who are in charge of the dropping of the anchor and the captain. I could not understand their
language, it was in Russian, so I presumed the anchor was not dropped on time.

Every man who offers his services to another, and is employed, assumes to exercise in the employment
such skills he possesses, with a reasonable degree of diligence. In all these employments where
peculiar skill is requisite, if one offers his services he is understood as holding himself out to the public
as possessing the degree of skill commonly possessed by others in the same employment, and if his
pretensions are unfounded he commits a species of fraud on every man who employs him in reliance
on his public profession.[64]
Furthermore, there is an obligation on all persons to take the care which, under ordinary circumstances
of the case, a reasonable and prudent man would take, and the omission of that care constitutes
negligence.[65] Generally, the degree of care required is graduated according to the danger a person or
property attendant upon the activity which the actor pursues or the instrumentality which he uses. The
greater the danger the greater the degree of care required. What is ordinary under extraordinary of
conditions is dictated by those conditions; extraordinary risk demands extraordinary care. Similarly, the
more imminent the danger, the higher the degree of care.[66]

Q So, you are not sure whether it was really dropped on time or not?

We give our imprimatur to the bases for the conclusion of the Court of Appeals that Capt. Gavino was
indeed negligent in the performance of his duties:

A I am not sure, your Honor.

xxxxxxxxx

xxxxxxxxx

x x x As can be gleaned from the logbook, Gavino ordered the left anchor and two (2) shackles dropped
at 8:30 o'clock in the morning. He ordered the engines of the vessel stopped at 8:31 o'clock. By then,
Gavino must have realized that the anchor did not hit a hard object and was not clawed so as to reduce
the momentum of the vessel. In point of fact, the vessel continued travelling towards the pier at the
same speed. Gavino failed to react. At 8:32 o'clock, the two (2) tugboats began to push the stern part of
the vessel from the port side but the momentum of the vessel was not contained. Still, Gavino did not
react. He did not even order the other anchor and two (2) more shackles dropped to arrest the
momentum of the vessel. Neither did he order full-astern. It was only at 8:34 o'clock, or four (4)
minutes, after the anchor was dropped that Gavino reacted. But his reaction was even (haphazard)
because instead of arresting fully the momentum of the vessel with the help of the tugboats, Gavino
ordered merely "half-astern". It took Gavino another minute to order a "full-astern". By then, it was too
late.The vessel's momentum could no longer be arrested and, barely a minute thereafter, the bow of the
vessel hit the apron of the pier. Patently, Gavino miscalculated. He failed to react and undertake
adequate measures to arrest fully the momentum of the vessel after the anchor failed to claw to the
seabed. When he reacted, the same was even (haphazard). Gavino failed to reckon the bulk of the
vessel, its size and its cargo. He erroneously believed that only one (1) anchor would suffice and even
when the anchor failed to claw into the seabed or against a hard object in the seabed, Gavino failed to
order the other anchor dropped immediately. His claim that the anchor was dropped when the vessel
was only 1,000 feet from the pier is but a belated attempt to extricate himself from the quagmire of his
own insouciance and negligence. In sum, then, Appellants' claim that the incident was caused by "force
majeure" is barren of factual basis.

Q You are not even sure what could have caused the incident. What factor could have caused the
incident?
A Well, in this case now, because either the anchor was not dropped on time or the anchor did not hold,
that was the cause of the incident, your Honor.[60]
It is disconcertingly riddled with too much incertitude and manifests a seeming indifference for the
possibly injurious consequences his commands as pilot may have. Prudence required that he, as pilot,
should have made sure that his directions were promptly and strictly followed. As correctly noted by the
trial court Moreover, assuming that he did indeed give the command to drop the anchor on time, as pilot he should
have seen to it that the order was carried out, and he could have done this in a number of ways, one of
which was to inspect the bow of the vessel where the anchor mechanism was installed. Of course,
Captain Gavino makes reference to a commotion among the crew members which supposedly caused
the delay in the execution of the command. This account was reflected in the pilot's report prepared four
hours later, but Capt. Kavankov, while not admitting whether or not such a commotion occurred,
maintained that the command to drop anchor was followed "immediately and precisely." Hence, the
Court cannot give much weight or consideration to this portion of Gavino's testimony."[61]
An act may be negligent if it is done without the competence that a reasonable person in the position of
the actor would recognize as necessary to prevent it from creating an unreasonable risk of harm to
another.[62] Those who undertake any work calling for special skills are required not only to exercise
reasonable care in what they do but also possess a standard minimum of special knowledge and ability.
[63]

xxxxxxxxx
The harbor pilots are especially trained for this job. In the Philippines, one may not be a harbor pilot
unless he passed the required examination and training conducted then by the Bureau of Custom,
under Customs Administrative Order No. 15-65, now under the Philippine Ports Authority under PPA

Administrative Order 63-85. Paragraph XXXIX of the Customs Administrative Order No. 15-65 provides
that "the pilot shall be held responsible for the direction of the vessel from the time he assumes control
thereof, until he leaves it anchored free from shoal: Provided, that his responsibility shall cease at the
moment the master neglects or refuse(s) to carry out his instructions." The overall direction regarding
the procedure for docking and undocking the vessel emanates from the harbor pilot. In the present
recourse, Gavino failed to live up to his responsibilities and exercise reasonable care or that degree of
care required by the exigencies of the occasion. Failure on his part to exercise the degree of care
demanded by the circumstances is negligence (Reese versus Philadelphia & RR Co. 239 US 463, 60 L
ed. 384, 57 Am Jur. 2d 12age 418).[67]
This affirms the findings of the trial court regarding Capt. Gavino's negligence:
This discussion should not however, divert the court from the fact that negligence in manuevering the
vessel must be attributed to Capt. Senen Gavino. He was an experienced pilot and by this time should
have long familiarized himself with the depth of the port and the distance he could keep between the
vessel and port in order to berth safely.[68]
The negligence on the part of Capt. Gavino is evident; but Capt. Kabankov is no less responsible for the
allision. His unconcerned lethargy as master of the ship in the face of troublous exigence constitutes
negligence.
While it is indubitable that in exercising his functions a pilot-is in sole command of the ship [69] and
supersedes the master for the time being in the command and navigation of a ship and that he
becomes master pro hac vice of a vessel piloted by him,[70] there is overwhelming authority to the effect
that the master does not surrender his vessel to the pilot and the pilot is not the master. The master is
still in command of the vessel notwithstanding the presence of a pilot. There are occasions when the
master may and should interfere and even displace the pilot, as when the pilot is obviously incompetent
or intoxicated and the circumstances may require the master to displace a compulsory pilot because of
incompetency or physical incapacity. If, however, the master does not observe that a compulsory pilot is
incompetent or physically incapacitated, the master is justified in relying on the pilot, but not blindly.[71]
The master is not wholly absolved from his duties while a pilot is on board his vessel, and may advise
with or offer suggestions to him. He is still in command of the vessel, except so far as her navigation is
concerned, and must cause the ordinary work of the vessel to be properly carried on and the usual
precaution taken. Thus, in particular, he is bound to see that there is sufficient watch on deck, and that
the men are attentive to their duties, also that engines are stopped, towlines cast off, and the anchors
clear and ready to go at the pilot's order.[72]
A perusal of Capt. Kabankov's testimony makes it apparent that he was remiss in the discharge of his
duties as master of the ship, leaving the entire docking procedure up to the pilot, instead of maintaining
watchful vigilance over this risky maneuver:
Q Will you please tell us whether you have the right to intervene in docking of your ship in the harbor?
A No sir, I have no right to intervene in time of docking, only in case there is imminent danger to the
vessel and to the pier.
Q Did you ever intervene during the time that your ship was being docked by Capt. Gavino?

A No sir, I did not intervene at the time when the pilot was docking my ship.
Q Up to the time it was actually docked at the pier, is that correct'?
A No sir, I did not intervene up to the very moment when the vessel was docked.
xxxxxxxxx
Atty. Del Rosario (to the witness)
Q Mr. Witness, what happened, if any, or was there anything unusual that happened during the
docking?
A Yes sir, our ship touched the pier and the pier was damaged.
Court (to the witness)
Q When you said touched the pier, are you leading the court to understand that your ship bumped the
pier?
A I believe that my vessel only touched the pier but the impact was very weak.
Q Do you know whether the pier was damaged as a result of that slight or weak impact?
A Yes sir, after the pier was damaged.
xxxxxxxxx
Q Being most concerned with the safety of your vessel, in the maneuvering of your vessel, to the port,
did you observe anything irregular in the maneuvering by Capt. Gavino at the time he was trying to
cause the vessel to be docked at the pier?
A You mean the action of Capt. Gavino or his condition?
Court:
Q Not the actuation that conform to the safety maneuver of the ship to the harbor?
A No sir, it was a usual docking.
Q By that statement of yours, you are leading the court to understand that there was nothing irregular in
the docking of the ship?
A Yes sir, during the initial period, of the docking, there was nothing unusual that happened.
Q What about in the last portion of the docking of the ship, was there anything unusual or abnormal that
happened?
A None Your Honor, I believe that Capt. Gavino thought that the anchor could keep or hold the vessel.
Q You want us to understand, Mr. Witness, that the dropping of the anchor of the vessel was not timely?

A I don't know the depth of this port but I think, if the anchor was dropped earlier and with more
shackles, there could not have been an incident.

Q And so whatever the pilot saw, you could also see from that point of view?
A That is right.

Q So you could not precisely tell the court that the dropping of the anchor was timely because you are
not well aware of the seabed, is that correct?

Q Whatever the pilot can read from the panel of the bridge, you also could read, is that correct?

A Yes sir, that, is right.

A What is the meaning of panel'?

xxxxxxxxx

Q All indications necessary for men on the bridge to be informed of the movements of the ship?

Q Alright, Capt. Kavankov, did you come to know later whether the anchor held its ground so much so
that the vessel could not travel?

A That is right.

A It is difficult for me to say definitely. I believe that the anchor did not hold the ship.

A That is right.

Q You mean you don't know whether the anchor blades stuck to the ground to stop the ship from further
moving?

Q Now, you said that when the command to lower the anchor was given, it was obeyed, is that right?

A Yes sir, it is possible.

Q What is possible?

Q And whatever sound the captain... Capt. Gavino would hear from the bridge, you could also hear?

A This command was executed by the third mate and boatswain.

Court (to the witness)

A I think, the 2 shackles were not enough to hold the vessel.

Q Mr. Witness, earlier in today's hearing, you said that you did not intervene with the duties of the pilot
and that, in your opinion, you can only intervene if the ship is placed in imminent danger, is that correct?

Q Did you know that the 2 shackles were dropped?

A That is right, I did say that.

A Yes sir, I knew that.

Q In your observation before the incident actually happened, did you observe whether or not the ship,
before the actual incident, the ship was placed in imminent danger?.

Q If you knew that the shackles were not enough to hold the ship, did you not make any protest to the
pilot?
A No sir, after the incident, that was my assumption.
Q Did you come to know later whether that presumption is correct?
A I still don't know the ground in the harbor or the depths.
Q So from the beginning, you were not competent whether the 2 shackles were also dropped to hold
the ship?

A No sir, I did not observe.

Q By that answer, are you leading the court to understand that because you did not intervene and
because you believed that it was your duty to intervene when the vessel is placed in imminent danger to
which you did not observe any imminent danger thereof, you have not intervened in any manner to the
command of the pilot?
A That is right, sir.
xxxxxxxxx

A No sir, at the beginning, I did not doubt it because I believe Capt. Gavino to be an experienced pilot
and he should be more aware as to the depths of the harbor and the ground and I was confident in his
actions.

Q Assuming that you disagreed with the pilot regarding the step being taken by the pilot in maneuvering
the vessel. whose command will prevail, in case of imminent danger to the vessel?

xxxxxxxxx

A I did not consider the situation as having an imminent danger. I believed that the vessel will dock
alongside the pier.

Solicitor Abad (to the witness)

Q Now, you were standing with the pilot on the bridge of the vessel before the incident happened, were
you not?
A Yes sir, all the time, I was standing with the pilot.

Q You want us to understand that you did not see an imminent danger to your ship, is that what you
mean?
A Yes sir, up to the very last moment, I believed that there was no imminent danger.

Q Because of that, did you ever intervene in the command of the pilot?
A Yes sir, I did not intervene because I believed that the command of the pilot to be correct.
Solicitor Abad (to the witness)

Q Do you mean to tell us that even if the anchor was supposed to take hold of the bottom and it did not,
there was no danger to the ship?
A Yes sir, because the anchor dragged on the ground later.

Q As a captain of M/V Pavlodar, you consider docking maneuvers a serious matter, is it not?

Q And after a few moments when the anchor should have taken hold the seabed but not done (sic), as
you expected, you already were alerted that there was danger to the ship, is that correct?

A Yes sir, that is right.

A Yes sir, I was alerted but there was no danger.

Q Since it affects not only the safety of the port or pier, but also the safety of the vessel and the cargo,
is it not?

Q And you were alerted that somebody was wrong?

A That is right.
Q So that, I assume that you were watching Capt. Gavino very closely at the time he was making his
commands?

A Yes sir, I was alerted.

Q And this alert you assumed was the ordinary alertness that you have for normal docking?
A Yes sir, I mean that it was usual condition of any man in time of docking to be alert.

A I was close to him, I was hearing his command and being executed.

Q And that is the same alertness when the anchor did not hold onto the ground, is that correct?

Q And that you were also alert for any possible mistakes he might commit in the maneuvering of the
vessel?

A Yes sir, me and Capt. Gavino (thought) that the anchor will hold the ground.

A Yes sir, that is right.

Q But at no time during the maneuver did you issue order contrary to the orders Capt. Gavino made?
A No sir.
Q So that you were in full accord with all of Capt. Gavino's orders?
A Yes sir.
Q Because, otherwise, you would have issued order that would supersede his own order?
A In that case, I should take him away from his command or remove the command from him.
Court (to the witness)
Q You were in full accord with the steps being taken by Capt. Gavino because you relied on his
knowledge, on his familiarity of the seabed and shoals and other surroundings or conditions under the
sea, is that correct?
A Yes sir, that is right.
xxxxxxxxx
Solicitor Abad (to the witness)
Q And so after the anchors were ordered dropped and they did not take hold of the seabed, you were
alerted that there was danger already on hand?
A No sir, there was no imminent danger to the vessel.

Q Since, as you said that you agreed all the while with the orders of Capt. Gavino, you also therefore
agreed with him in his failure to take necessary precaution against the eventuality that the anchor will
not hold as expected?
Atty. Del Rosario:
May I ask that the question ...
Solicitor Abad:
Never mind, I will reform the question.
xxxxxxxxx
Solicitor Abad (to the witness)
Q Is it not a fact that the vessel bumped the pier?
A That is right, it bumped the pier.
Q For the main reason that the anchor of the vessel did not hold the ground as expected?
A Yes sir, that is my opinion.[73]
Further, on redirect examination, Capt. Kabankov fortified his apathetic assessment of the situation:
Q Now, after the anchor was dropped, was there any point in time that you felt that the vessel was in
imminent danger.
A No, at that time, the vessel was not in imminent danger, sir."[74]

This cavalier appraisal of the event by Capt. Kabankov is disturbingly antipodal to Capt. Gavino's
anxious assessment of the situation:
Q When a pilot is on board a vessel, it is the pilot's command which should be followed-at that moment
until the vessel is, or goes to port or reaches port?
A Yes, your Honor, but it does not take away from the Captain his prerogative to countermand the pilot.
Q In what way?
A In any case, which he thinks the pilot is not maneuvering correctly, the Captain always has the
prerogative to countermand the pilot's order.
Q But insofar as competence, efficiency and functional knowledge of the seabed which are vital or
decisive in the safety (sic) bringing of a vessel to the port, he is not competent?
A Yes, your Honor. That is why they hire a pilot in an advisory capacity, but still, the safety of the vessel
rest(s) upon the Captain, the Master of the vessel.
Q In this case, there was not a disagreement between you and the Captain of the vessel in the bringing
of the vessel to port?
A No, your Honor.
Court:
May proceed.

A When we were about more than one thousand meters from the pier. I think, the anchor was not
holding, so I immediately ordered to push the bow at a fourth quarter, at the back of the vessel in order
to swing the bow away from the pier and at the same time, I ordered for a full astern of the engine."[75]
These conflicting reactions can only imply, at the very least, unmindful disregard or, worse, neglectful
relinquishment of duty by the shipmaster, tantamount to negligence.
The findings of the trial court on this aspect is noteworthy:
For, while the pilot Gavino may indeed have been charged with the task of docking the vessel in the
berthing space, it is undisputed that the master of the vessel had the corresponding duty to
countermand any of the orders made by the pilot, aid even maneuver the vessel himself, in case of
imminent danger to the vessel and the port.
In fact, in his testimony, Capt. Kavankov admitted that all throughout the man(eu)vering procedures he
did not notice anything was going wrong, and even observed that the order given to drop the anchor,
was done at the proper time. He even ventured the opinion that the accident occurred because the
anchor failed to take hold but that this did not alarm him because there was still time to drop a second
anchor.
Under normal circumstances, the above-mentioned facts would have caused the master of a vessel to
take charge of the situation and see to the man(eu)vering of the vessel himself.Instead, Capt. Kavankov
chose to rely blindly upon his pilot, who by this time was proven ill-equipped to cope with the situation.
xxxxxxxxx

In fact, the Master of the vessel testified here that he was all along in conformity with the orders you
gave to him, and, as matter of fact, as he said, he obeyed all your orders. Can you tell, if in the course
of giving such normal orders for the saf(e) docking of the MV Pavlodar, do you remember of any
instance that the Master of the vessel did not obey your command for the safety docking of the MV
Pavlodar?

It is apparent that Gavino was negligent but Far Eastern's employee Capt. Kavankov was no less
responsible for as master of the vessel he stood by the pilot during the man(eu)vering procedures and
was privy to every move the latter made, as well as the vessel's response to each of the
commands. His choice to rely blindly upon the pilot's skills, to the point that despite being appraised of a
notice of alert he continued to relinquish control of the vessel to Gavino, shows indubitably that he was
not performing his duties with the diligence required of him and therefore may be charged with
negligence along with defendant Gavino.[76]

Atty. del Rosario:

As correctly affirmed by the Court of Appeals -

Already answered, he already said yes sir.

We are in full accord with the findings and disquisitions of the Court a quo.

Court:

In the present recourse, Captain Viktor Kavankov had been a mariner for thirty-two years before the
incident. When Gavino was (in) the command of the vessel, Kavankov was beside Gavino, relaying the
commands or orders of Gavino to the crewmembers-officers of the vessel concerned. He was thus fully
aware of the docking maneuvers and procedure Gavino undertook to dock the vessel. Irrefragably,
Kavankov was fully aware of the bulk and size of the vessel and its cargo as well as the weight of the
vessel. Kavankov categorically admitted that, when the anchor and two (2) shackles were dropped to
the sea floor, the claws of the anchor did not hitch on to any hard object in the seabed. The momentum
of the vessel was not arrested. The use of the two (2) tugboats was insufficient. The momentum of the
vessel, although a little bit arrested, continued (sic) the vessel going straightforward with its bow
towards the port (Exhibit "A-1"). There was thus a need for the vessel to move "full-astern" and to drop

Atty. Catris:

Yes, he has just answered yes sir to the Court that there was no disagreement insofar as the bringing of
the vessel safely to the port.
Atty. Catris:
But in this instance of docking of the MV Pavlodar, do you remember of a time during the course of the
docking that the MV Pavlodar was in imminent danger of bumping the pier?

the other anchor with another shackle or two '(2), for the vessel to avoid hitting the pier.Kavankov
refused to act even as Gavino failed to act. Even as Gavino gave mere "half-astern" order, Kavankov
supinely stood by. The vessel was already about twenty (20) meters away from the pier when Gavino
gave the 'full-astern" order. Even then, Kavankov did nothing to prevent the vessel from hitting the pier
simply because he relied on the competence and plan of Gavino. While the "full-astern" maneuver
momentarily arrested the momentum of the vessel, it was, by then, too late. All along, Kavankov stood
supinely beside Gavino, doing nothing but relay the commands of Gavino. Inscrutably, then, Kavankov
was negligent.

The authority of the master of a vessel is not in complete abeyance while a pilot, who is required by law
to be accepted, is in discharge of his functions. x x x It is the duty of the master to interfere in cases of
the pilot's intoxication or manifest incapacity, in cases of danger which he does not foresee, and in all
cases of great necessity . The master has the same power to displace the pilot that he has to remove
any subordinate officer of the vessel. He may exercise it, or not, according to his discretion. There was
evidence to support findings that plaintiff's injury was due to the negligent operation of the Atenas, and
that the master of that vessel was negligent in failing to take action to avoid endangering a vessel
situated as the City of Canton was and persons or property thereon.

xxxxxxxxx

A phase of the evidence furnished support for the inferences x x x that he negligently failed to suggest
to the pilot the danger which was disclosed, and means of avoiding such danger; and that the master's
negligence in failing to give timely admonition to the pilot proximately contributed to the injury
complained of. We are of opinion that the evidence mentioned tended to prove conduct of the pilot,
known to the master, giving rise to a case of danger or great necessity, calling for the intervention of the
master. A master of a vessel is not Without fault in acquiescing in conduct of a pilot which involves
apparent and avoidable danger, whether such danger is to the vessel upon which the pilot is, or to
another vessel, or persons or property thereon or on shore. (Italics ours.)

The stark incompetence of Kavankov is competent evidence to prove the unseaworthiness of the
vessel. It has been held that the incompetence of the navigator, the master of the vessel or its crew
makes the vessel unseaworthy (Tug Ocean Prince versus United States of America, 584 F. 2nd, page
1151). Hence, the Appellant FESC is likewise liable for the damage sustained by the Appellee."[77]
We find strong and well-reasoned support in time-tested American maritime jurisprudence, on which
much of our laws and jurisprudence on the matter are based, for the conclusions of the Court of
Appeals adjudging both Capt. Gavino and Capt. Kabankov negligent.
As early as 1869, the U.S. Supreme Court declared, through Mr. Justice Swayne, in The Steamship
China vs. Walsh,[78] that it is the duty of the master to interfere in cases of the pilot's intoxication or
manifest incapacity, in cases of danger which he does not foresee, and in all cases of great necessity.
The master has the same power to displace the pilot that he has to remove any subordinate officer of
the vessel, at his discretion.
In 1895, the U.S. Supreme Court, this time through Mr. Justice Brown, emphatically ruled that:
Nor are we satisfied with the conduct of the master in leaving the pilot in sole charge of the
vessel. While the pilot doubtless supersedes the master for the time being in the command and
navigation of the ship, and his orders must be obeyed in all matters connected with her navigation, the
master is not wholly absolved from his duties while the pilot is on board, and may advise with him, and
even displace him in case he is intoxicated or manifestly incompetent. He is still in command of the
vessel, except so far as her navigation is concerned, and bound to see that there is a sufficient watch
on deck, and that the men are attentive to their duties.
xxx (N)otwithstanding the pilot has charge, it is the duty of the master to prevent accident, and not to
abandon the vessel entirely to the pilot; but that there are certain duties he has to discharge
(notwithstanding there is a pilot on board) for the benefit of the owners. x x x that in well conducted
ships the master does not regard the presence of a duly licensed pilot in compulsory pilot waters as
freeing him from every obligation to attend to the safety of the vessel; but that, while the master sees
that his officers and crew duly attend to the pilot's orders,he himself is bound to keep a vigilant eye on
the navigation of the vessel, and, when exceptional circumstances exist, not only to urge upon the pilot
to use every precaution, but to insist upon, such being taken."[79] (Italics for emphasis.)
In Jure vs. United Fruit Co.,[80] which, like the present petitions, involved compulsory pilotage, with a
similar scenario where at and prior to the time of injury, the vessel was in the charge of a pilot with the
master on the bridge of the vessel beside said pilot, the court therein ruled:

Still in another case involving a nearly identical setting, the captain of a vessel alongside the
compulsory pilot was deemed to be negligent, since, in the words of the court, "he was in a position to
exercise his superior authority if he had deemed the speed excessive on the occasion in question. I
think it was clearly negligent of him not to have recognized the danger to any craft moored at Gravell
Dock and that he should have directed the pilot to reduce his speed as required by the local
governmental regulations. His failure amounted to negligence and renders the respondent
liable."[81] (Italics supplied.) Though a compulsory pilot might be regarded as an independent contractor,
he is at all times subject to the ultimate control of the ship's master.[82]
In sum, where a compulsory pilot is in charge of a ship, the master being required to permit him to
navigate it, if the master observes that the pilot is incompetent or physically incapable, then it is the duty
of the master to refuse to permit the pilot to act. But if no such reasons are present, then the master is
justified in relying upon the pilot, but not blindly. Under the circumstances of this case, if a situation
arose where the master, exercising that reasonable vigilance which the master of a ship should
exercise, observed, or should have observed, that the pilot was so navigating the vessel that she was
going, or was likely to go, into danger, and there was in the exercise of reasonable care and vigilance
an opportunity for the master to intervene so as to save the ship from danger, the master should have
acted accordingly.[83] The master of a vessel must exercise a degree of vigilance commensurate with the
circumstances.[84]
Inasmuch as the matter of negligence is a question of fact,[85] we defer to the findings of the trial court,
especially as this is affirmed by the Court of Appeals.[86] But even beyond that, our own evaluation is that
Capt. Kabankov's shared liability is due mainly to the fact that he failed to act when the perilous
situation should have spurred him into quick and decisive action as master of the ship. In the face of
imminent or actual danger, he did not have to wait for the happenstance to occur before
countermanding or overruling the pilot. By his own admission, Capt. Kabankov concurred with
Capt. Gavino's decisions, and this is precisely the reason why he decided not to countermand any of

the latter's orders. Inasmuch as both lower courts found Capt. Gavino negligent, by expressing full
agreement therewith Capt. Kabankov was just as negligent as Capt. Gavino.
In general, a pilot is personally liable for damages caused by his own negligence or default to the
owners of the vessel, and to third parties for damages sustained in a collision. Such negligence of the
pilot in the performance of duty constitutes a maritime tort. [87] At common law, a shipowner is not liable
for injuries inflicted exclusively by the negligence of a pilot accepted by a vessel compulsorily.[88] The
exemption from liability for such negligence shall apply if the pilot is actually in charge and solely in
fault. Since, a pilot is responsible only for his own personal negligence, he cannot be held accountable
for damages proximately caused by the default of others, [89] or, if there be anything which concurred with
the fault of the pilot in producing the accident, the vessel master and owners are liable.
Since the colliding vessel is prima facie responsible, the burden of proof is upon the party claiming
benefit of the exemption from liability. It must be shown affirmatively that the pilot was at fault, and that
there was no fault on the part of the officers or crew, which might have been conducive to the
damage. The fact that the law compelled the master to take the pilot does not exonerate the vessel from
liability. The parties who suffer are entitled to have their remedy against the vessel that occasioned the
damage, and are not under necessity to look to the pilot from whom redress is not always had for
compensation. The owners of the vessel are responsible to the injured party for the acts of the pilot, and
they must be left to recover the amount as well as they can against him. It cannot be maintained that
the circumstance of having a pilot on board, and acting in conformity to his directions operate as a
discharge of responsibility of the owners.[90] Except insofar as their liability is limited or exempted by
statute, the vessel or her owner are liable for all damages caused by the negligence or other wrongs of
the owners or those in charge of the vessel. Where the pilot of a vessel is not a compulsory one in the
sense that the owner or master of the vessel are bound to accept him, but is employed voluntarily, the
owners of the vessel are, all the more, liable for his negligent act.[91]
In the United States, the owners of a vessel are not personally liable for the negligent acts of a
compulsory pilot, but by admiralty law, the fault or negligence of a compulsory pilot is imputable to the
vessel and it may be held liable therefor in rem. Where, however, by the provisions of the statute the
pilot is compulsory only in the sense that his fee must be paid, and is not in compulsory charge of the
vessel, there is no exemption from liability. Even though the pilot is compulsory, if his negligence was
not the sole cause of the injury, but the negligence of the master or crew contributed thereto, the owners
are liable.[92] But the liability of the ship in rem does not release the pilot from the consequences of his
own negligence.[93] The rationale for this rule is that the master is not entirely absolved of responsibility
with respect to navigation when a compulsory pilot is in charge.[94]
By way of validation and in light of the aforecited guidepost rulings in American maritime cases, we
declare that our rulings during the early years of this century in City of Manila vs.Gambe, [95] China
Navigation Co., Ltd. vs. Vidal,[96] and Yap Tico & Co. vs. Anderson, et al.[97] have withstood the proverbial
test of time and remain good and relevant case law to this day.
City of Manila stands for the doctrine that the pilot who was in command and complete control of a
vessel, and not the owners, must be held responsible for an accident which was solely the result of the
mistake of the pilot in not giving proper orders, and which did not result from the failure of the owners to
equip the vessel with the most modern and improved machinery. In China Navigation Co., the pilot
deviated from the ordinary and safe course, without heeding the warnings of the ship captain. It was this

careless deviation that caused the vessel to collide with a pinnacle rock which, though uncharted, was
known to pilots and local navigators. Obviously, the captain was blameless. It was the negligence of the
pilot alone which was the proximate cause of the collision. The Court could not but then rule that The pilot in the case at bar having deviated from the usual and ordinary course followed by navigators
in passing through the strait in question, without a substantial reason, was guilty of negligence, and that
negligence having been the proximate cause of the damages, he is liable for such damages as usually
and naturally flow therefrom. x x x.
x x x (T)he defendant should have known of the existence and location of the rock upon which the
vessel struck while under his control and management. x x x.
Consistent with the pronouncements in these two earlier cases, but on a slightly different tack, the Court
in Yap Tico & Co. exonerated the pilot from liability for the accident where the order's of the pilot in the
handling of the ship were disregarded by the officers and crew of the ship. According to the Court, a
pilot is "x x x responsible for a full knowledge of the channel and the navigation only so far as he can
accomplish it through the officers and crew of the ship, and I don't see that he can be held responsible
for damage when the evidence shows, as it does in this case, that the officers and crew of the ship
failed to obey his orders." Nonetheless, it is possible for a compulsory pilot and the master of the vessel
to be concurrently negligent and thus share the blame for the resulting damage as Joint tortfeasors,
[98]
but only under the circumstances obtaining in and demonstrated by the instant petitions.
It may be said, as a general rule, that negligence in order to render a person liable need not be the sole
cause of an injury. It is sufficient that his negligence, concurring with one or more efficient causes other
than plaintiff's, is the proximate cause of the injury. Accordingly, where several causes combine to
produce injuries, a person is not relieved from liability because he is responsible for only one of them, it
being sufficient that the negligence of the person charged with injury is an efficient cause without which
the injury would not have resulted to as great an extent, and that such cause is not attributable to the
person injured. It is no defense to one of the concurrent tortfeasors that the injury would not have
resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent
tortfeasor.[99] Where several causes producing an injury are concurrent and each is an efficient cause
without which the injury would not have happened, the injury may be attributed to all or any of the
causes and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty owed
by them to the injured person was not the same. No actor's negligence ceases to be a proximate cause
merely because it does not exceed the negligence of other actors. Each wrongdoer is responsible for
the entire result and is liable as though his acts were the sole cause of the injury.[100]
There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable
for the total damage. Where the concurrent or successive negligent acts or omissions of two or more
persons, although acting independently, are in combination the direct and proximate cause of a single
injury to a third person, it is impossible to determine in what proportion each contributed to the injury
and either of them is responsible for the whole injury. Where their concurring negligence resulted in
injury or damage to a third party, they become joint tortfeasors and are solidarity liable for the resulting
damage under Article 2194[101] of the Civil Code.[102]

As for the amount of damages awarded by the trial court, we find the same to be reasonable. The
testimony of Mr. Pascual Barral, witness for PPA, on cross and redirect examination, appears to be
grounded on practical considerations:
Q So that the cost of the two additional piles as well as the (two) square meters is already included in
this -P1,300,999.77.
A Yes sir, everything. It is (the) final cost already.
Q For the eight piles.

A In piers where the piles are withdrawn or pulled out, you cannot re-drive or drive piles at the same
point. You have to redesign the driving of the piles. We cannot drive the piles at the same point where
the piles are broken or damaged or pulled out. We have to redesign, and you will note that in the
reconstruction, we redesigned such that it necessitated 8 piles.
Q Why not, why could you not drive the same number of piles and on the same spot?
A The original location was already disturbed. We cannot get required bearing capacity. The area is
already disturbed.

A Including the reduced areas and other reductions.

Q Nonetheless, if you drove the original number of piles, six, on different places, would not that have
sustained the same load?

Q (A)nd the two square meters.

A It will not suffice, sir."[103]

A Yes sir.

We quote the findings of the lower court with approval:

Q In other words, this P1,300,999.77 does not represent only for the six piles that was damaged as well
as the corresponding two piles.

With regards to the amount of damages that is to be awarded to plaintiff, the Court finds that the amount
of P1,053,300.00 is justified. Firstly, the doctrine of res ipsa loquitur best expounded upon in the
landmark case of Republic vs. Luzon Stevedoring Corp. (21 SCRA 279) establishes the presumption
that in the ordinary course of events the ramming of the dock would not have occurred if proper care
was used.

A The area was corresponding, was increased by almost two in the actual payment. That was why the
contract was decreased, the real amount was P1,124,627.40 and the final one is P1300,999.77.
Q Yes, but that P1,300,999.77 included the additional two new posts.
A It was increased.
Q Why was it increased?
A The original was 48 and the actual was 46.
Q Now, the damage was somewhere in 1980. It took place in 1980 and you started the repair and
reconstruction in 1982, that took almost two years?
A Yes sir.
Q May it not happen that by natural factors, the existing damage in 1980 was aggravated for the 2 year
period that the damage portion was not repaired?
A I don't think so because that area was at once marked and no vehicles can park, it was closed.
Q Even if or even natural elements cannot affect the damage?
A Cannot, sir.
xxxxxxxxx
Q You said in the cross-examination that there were six piles damaged by the accident, but that in the
reconstruction of the pier, PPA drove and constructed 8 piles. Will you explain to us why there was
change in the number of piles from the original number?

Secondly, the various estimates and plans justify the cost of the port construction price. The new
structure constructed not only replaced the damaged one but was built of stronger materials to forestall
the possibility of any similar accidents in the future.
The Court inevitably finds that the plaintiff is entitled to an award of P1,053,300.00 which represents
actual damages caused by the damage to Berth 4 of the Manila International Port. Co-defendants Far
Eastern Shipping, Capt. Senen Gavino and Manila Pilots Association are solidarity liable to pay this
amount to plaintiff.[104]
The Solicitor General rightly commented that the adjudicated amount of damages represents the
proportional cost of repair and rehabilitation of the damaged section of the pier.[105]
Except insofar as their liability is limited or exempted by statute, the vessel or her owners are liable for
all damages caused by the negligence or other wrongs of the owners or those in charge of the
vessel. As a general rule, the owners or those in possession and control of a vessel and the vessel are
liable for all natural and proximate damages caused to persons or property by reason of her negligent
management or navigation.[106]
FESC's imputation of PPA's failure to provide a safe and reliable berthing place is obtuse, not only
because it appears to be a mere afterthought, being tardily raised only in this petition, but also because
there is no allegation or evidence on record about Berth No. 4 being unsafe and unreliable, although
perhaps it is a modest pier by international standards. There was, therefore, no error on the part of the
Court of Appeals in dismissing FESC's counterclaim.
II. G.R. No. 130150

This consolidated case treats on whether the Court of Appeals erred in holding MPA jointly and
solidarity liable with its member pilot, Capt. Gavino, in the absence of employer-employee relationship
and in applying Customs Administrative Order No. 15-65, as basis for the adjudged solidary liability of
MPA and Capt. Gavino.
The pertinent provisions in Chapter I of Customs Administrative Order No. 15-65 are:
"PAR. XXVII.-- In all pilotage districts where pilotage is compulsory, there shall be created and
maintained by the pilots or pilots' association, in the manner hereinafter prescribed, a reserve fund
equal to P1,000.00 for each pilot thereof for the purpose of paying claims for damages to vessels or
property caused through acts or omissions of its members while rendered in compulsory pilotage
service. In Manila, the reserve fund shall be P2,000.00 for each pilot.
PAR. XXVIII.-- A pilots' association shall not be liable under these regulations for damage to any vessel,
or other property, resulting from acts of a member of an association in the actual performance of his
duty for a greater amount than seventy-five per centum (75%) of its prescribed reserve fund; it being
understood that if the association is held liable for an amount greater than the amount above-stated, the
excess shall be paid by the personal funds of the member concerned.
PAR. XXXI.-- If a payment is made from the reserve fund of an association on account of damages
caused by a member thereof, and he shall have been found at fault, such member shall reimburse the
association in the amount so paid as soon as practicable; and for this purpose, not less than twenty-five
per centum of his dividends shall be retained each month until the full amount has been returned to the
reserve fund.
PAR. XXXIV. - Nothing in these regulations shall relieve any pilots' association or members thereof,
individually or collectively, from civil responsibility for damages to life or property resulting from the acts
of members in the performance of their duties.
Correlatively, the relevant provisions of PPA Administrative Order No. 03-85, which timely amended this
applicable maritime regulation, state:
Article IV
SEC. 17. Pilots' Association -- The Pilots in a Pilotage District shall organize themselves into a Pilots'
Association or firm, the members of which shall promulgate their own By-Laws not in conflict with the
rules and regulations promulgated by the Authority. These By-Laws shall be submitted not later than
one (1) month after the organization of the Pilots' Association for approval by the General Manager of
the Authority. Subsequent amendments thereto shall likewise be submitted for approval.
SEC. 25. Indemnity Insurance and Reserve Fund-a) Each Pilots' Association shall collectively insure its membership at the rate of P50,000.00 each
member to cover in whole or in part any liability arising from any accident resulting in damage to
vessel(s), port facilities and other properties and/or injury to persons or death which any member may
have caused in the course of his performance of pilotage duties. x x x.

b) The Pilotage Association shall likewise set up and maintain a reserve fund which shall answer for any
part of the liability referred to in the immediately preceding paragraph which is left unsatisfied by the
insurance proceeds, in the following manner:
1) Each pilot in the Association shall contribute from his own account an amount of P4,000.00
(P6,000.00 in the Manila Pilotage District) to the reserve fund. This fund shall not be considered part of
the capital of the Association nor charged as an expense thereof.
2) Seventy-five percent (75%) of the reserve fund shall be set aside for use, in the payment of damages
referred to above incurred in the actual performance of pilots' duties and the excess shall be paid from
the personal funds of the member concerned.
xxxxxxxxx
5) If payment is made from the reserve fund of an Association on account of damage caused by a
member thereof who is found at fault, he shall reimburse the Association in the amount so paid as soon
as practicable; and for this purpose, not less than twenty-five percentum (25%) of his dividend shall be
retained each month until the full amount has been returned to the reserve fund. Thereafter, the pilot
involved shall be entitled to his full dividend.
6) When the reimbursement has been completed as prescribed in the preceding paragraph, the ten
percentum (10%) and the interest withheld from the shares of the other pilots in accordance with
paragraph (4) hereof shall be returned to them.
c) Liability of Pilots' Association -- Nothing in these regulations shall relieve any Pilots' Association or
members thereof, individually or collectively, from any civil, administrative and/or criminal responsibility
for damages to life or property resulting from the individual acts of its members as well as those of the
Association's employees and crew in the performance of their duties.
The Court of Appeals, while affirming the trial court's finding of solidary liability on the part of FESC,
MPA and Capt. Gavino, correctly based MPA's liability not on the concept of employer-employee
relationship between Capt. Gavino and itself, but on the provisions of Customs Administrative Order No.
15-65:
The Appellant MPA avers that, contrary to the findings and disquisitions of the Court a quo, the
Appellant Gavino was not and has never been an employee of the MPA but was only a member
thereof. The Court a quo, it is noteworthy,, did not state the factual basis on which it anchored its finding
that Gavino was the employee of MPA. We are in accord with MPA's pose.Case law teaches Us that, for
an employer-employee relationship to exist the confluence of the following elements must be
established: (1) selection and engagement of employees; (2) the payment of wages; (3) the power of
dismissal; (4) the employer's power to control the employees with respect to the means and method by
which the work is to be performed (Ruga versus NLRC, 181SCRA 266).
xxxxxxxxx
The liability of MPA for damages is not anchored on Article 2180 of the New Civil Code as erroneously
found and declared by the Court a quo but under the provisions of Customs Administrative Order No.
15-65, supra, in tandem with the by-laws of the MPA."[107]

There being no employer-employee relationship, clearly Article 2180[108] of the Civil Code is inapplicable
since there is no vicarious liability of an employer to speak of. It is so stated in American law, as follows:

the personal account of the erring pilot and subject to reimbursement in case of a finding of fault by the
member concerned. This is clarified by the Solicitor General:

The well-established rule is that pilot associations are immune to vicarious liability for the tort of their
members. They are not the employer of their members and exercise no control over them once they
take the helm of the vessel. They are also not partnerships because the members do not function as
agents for the association or for each other. Pilots' associations are also not liable for negligently
assuring, the competence of their members because as professional associations they made no
guarantee of the professional conduct of their members to the general public.[109]

Moreover, contrary to petitioners pretensions, the provisions of Customs Administrative Order No. 15-65
do not limit the liability of petitioner as a pilots' association to an absurdly small amount of seventy-five
per centum (75%) of the member pilots' contribution of P2,000.00 to the reserve fund. The law speaks
of the entire reserve fund required to be maintained by the pilots' association to answer (for) whatever
liability arising from the tortious act of its members. And even if the association is held liable for an
amount greater than the reserve fund, the association may not resist the liability by claiming to be liable
only up to seventy-five per centum (75%) of the reserve fund because in such instance it has the right to
be reimbursed by the offending member pilot for the excess."[113]

Where under local statutes and regulations, pilot associations lack the necessary legal incidents of
responsibility, they have been held not liable for damages caused by the default of a member pilot.
[110]
Whether or not the members of a pilots' association are in legal effect a copartnership depends
wholly on the powers and duties of the members in relation to one another under the provisions of the
governing statutes and regulations. The relation of a pilot to his association is not that of a servant to
the master, but of an associate assisting and participating in a common purpose. Ultimately, the rights
and liabilities between a pilots' association and an individual member depend largely upon the
constitution, articles or by-laws of the association, subject to appropriate government regulations.[111]
No reliance can be placed by MPA on the cited American rulings as to immunity from liability of a pilots'
association in light of existing positive regulation under Philippine law. The Court of Appeals properly
applied the clear and unequivocal provisions of Customs Administrative Order No. 15-65. In doing so, it
was just being consistent with its finding of the non-existence of employer-employee relationship
between MPA and Capt. Gavino precludes the application of Article 2180 of the Civil Code.
True, Customs Administrative Order No. 15-65 does not categorically characterize or label MPA's
liability as solidary in nature. Nevertheless, a careful reading and proper analysis of the correlated
provisions lead to the conclusion that MPA is solidarity liable for the negligence of its member pilots,
without prejudice to subsequent reimbursement from the pilot at fault.
Article 1207 of the Civil Code provides that there is solidary liability only when the obligation expressly
so states, or when the law or the nature of the obligation requires solidarity.Plainly, Customs
Administrative Order No. 15-65, which as an implementing rule has the force and effect of law, can
validly provide for solidary liability. We note the Solicitor General's comment hereon, to wit:
x x x Customs Administrative Order No. 15-65 may be a mere rule and regulation issued by an
administrative agency pursuant to a delegated authority to fix "the details" in the execution or
enforcement of a policy set out in the law itself. Nonetheless, said administrative order, which adds to
the procedural or enforcing provisions of substantive law, is legally binding and receives the same
statutory force upon going into effect. In that sense, it has equal, not lower, statutory force and effect as
a regular statute passed by the legislature."[112]
MPA's prayer for modification of the appellate court's decision under review by exculpating petitioner
MPA "from liability beyond seventy-five percent (75%) of Reserve Fund" is unnecessary because the
liability of MPA under Par. XXVIII of Customs Administrative Order No. 15-65 is in fact limited to
seventy-five percent (75%) of its prescribed reserve fund, any amount of liability beyond that being for

WHEREFORE, in view of all of the foregoing, the consolidated petitions for review are DENIED and the
assailed decision of the Court of Appeals is AFFIRMED in toto.
Counsel for FESC, the law firm of Del Rosario and Del Rosario, specifically its associate, Atty. Herbert
A. Tria, is REPRIMANDED and WARNED that a repetition of the same or similar acts of heedless
disregard of its undertakings under the Rules shall be dealt with more severely.
The original members of the legal team of the Office of the Solicitor General assigned to this case,
namely, Assistant Solicitor General Roman G. Del Rosario and Solicitor Luis F. Simon, are
ADMONISHED and WARNED that a repetition of the same or similar acts of unduly delaying
proceedings due to delayed filing of required pleadings shall also be dealt with more stringently.
The Solicitor General is DIRECTED to look into the circumstances of this case and to adopt provident
measures to avoid a repetition of this incident and which would ensure prompt compliance with orders
of this Court regarding the timely filing of requisite pleadings, in the interest of just, speedy and orderly
administration of justice.
Let copies of this decision be spread upon the personal records of the lawyers named herein in the
Office of the Bar Confidant. SO ORDERED.

G.R. No. 85939

April 19, 1991

NEW PANGASINAN REVIEW, INC., petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ,
Provincial & City Sheriff Ex-Officio ALICIA BRAVO-FABIA, Deputy Sheriff ROMEO M. QUERIMIT
and CONSTANCIA C. ADAJAR, SALUD G. MAGSANO, BIENVENIDO MENESES, AMADO P.
BOLSICO, REGINO P. VELASCO, CANITO E. ABALOS, MYRNA S. MARAMBA, EPIFANIA M.
MAGSANO, JUAN D. ALCALDE, ANTONIO T. MARAMBA, TERESITA A. ADAJAR, ROBERTO F.
GARCIA, RODOLFO S. CALLANTA, PEDRO C. CALIMLIM, ALEXANDER G. URBANO, VICTORIO
B. NATIVIDAD, CRESENCIO F. RAVANCHO, ISAGANI FERNANDEZ AND JOSE N.
FERMIL respondents.

30, 1988 (Annex "Q") which affirmed the decision dated June 10, 1987 (Annex "P") of Labor Arbiter
Irenarco R. Rimando, which disposed as follows:
IN THE LIGHT OF THE FOREGOING OBSERVATIONS, it appearing that the respondent
ceased its operations by virtue of the expiration of its corporate charter, and the closure is not
due to serious business losses or financial reverses, the complainants are therefore entitled to
a separation pay, in accordance with the provisions of Art. 284 (now Art. 283) of the Labor
Code. The corporation through the Board of Liquidators are directed to pay the separation pay
of the following employees:
Name of Employees

Separation Pay

1.

Constancia Adajar

18,900.00

2.

Salud G. Magsano

13,770.00

3.

Bienvenido Meneses

12,187.50

4.

Amado P. Bolsico

16,884.00

5.

Regino P. Velasco

13,507.20

6.

Canuto E. Abalos

12,542.40

7.

Myrna S. Maramba

10,992.70

8.

Epifania M. Magsano

9.

Juan D. Alcaide

10.

Antonio T. Maramba

9,165.60

11.

Teresita A. Adajar

5,223.90

12.

Roberto F. Garcia

7,718.40

13.

Rodolfo S. Callanta

5,223.90

14.

Pedro C. Calimlim

2,894.40

15.

Alexander G. Urbano

7,123.50

MEDIALDEA, J.:

16.

Victorio B. Natividad

1,507.50

Before Us are consolidated petitions for prohibition and certiorari with prayer for restraining order and/or
writ of preliminary injunction.

17.

Cresencio Ravancho

2,040.00

18.

Isagani Fernandez

3,220.00

19.

Jose Fermil

G.R. No. 86968

April 19, 1991

LABOR ARBITER RICARDO N. OLAIREZ, NATIONAL LABOR RELATIONS COMMISSION,

SHERIFFS ALICIA BRAVO-FABIA & ROMEO QUERIMIT, CONSTANCIA ADAJAR, SALUD
MAGSANO, BIENVENIDO MENESES, AMADO BOLSICO, REGINO VELASCO, CANUTO ABALOS,
MYRNA MIRANDA, EPIFANIA MAGSANO, JUAN ALCALDE, ANTONIO MARAMBA, TERESITA
ADAJAR ROBERTO GARCIA, RODOLFO CALLANTA, PEDRO CALIMLIM, ALEXANDER URBANO,
VICTORIO NATIVIDAD, CRESENCIO RAVANCHO, ISAGANI FERNANDEZ AND JOSE N.
FERMIL, petitioners,
vs.
JUDGE TEODORO J. SISON, NEW PANGASINAN REVIEW, INC., represented by RENATO
ZABALA and PANGASINAN REVIEW INC. represented by JOSEFINA V.
FERNANDEZ, respondents.
Felipe P. de Vera for New Pangasinan Review, Inc.
Nellie M. Olairez for the Labor Arbiter.

In G.R. No. 85939

(pp. 64-65, Rollo)

11,095.20

17,340.00
TOTAL

Petitioner New Pangasinan Review Inc. (hereafter "NPRI") seeks to annul the proceedings in NLRC
Case No. SUB-RAB-1071-86, entitled "Constancia Adajar, et al. v. Pangasinan Review, Inc., dated May

9,498.00

180,764.00

The following facts, as culled from the Solicitor General's Comments, are undisputed:
1. Private respondents were employees of the Pangasinan Review, Inc. (hereafter "PRI") a
corporation engaged in the business of printing, bookbinding and publishing newspapers
whose corporate life legally expired on October 27, 1982 after fifty years of corporate
existence.
2. Notwithstanding the expiry of its corporate life, PRI, however, actually continued its business
operations until it was advised by the Securities and Exchange Commission (SEC) in a letter
dated January 10, 1985 (Annex "D", Petition) that its corporate term had already expired.
3. On January 21, 1985, the Board of Directors of PRI, complying with the SEC advice, passed
a resolution authorizing the current Board of Directors to undertake the liquidation of the
company by reason of the expiry of its corporate term.
4. Earlier, on January 20, 1985, a splinter group led by Director Anastacio T. Zamuco, together
with several others, filed with the SEC a petition for authority to allow PRI to renew its
corporate existence and to continue its usual business operations. The SEC, however, in an
Order dated May 3, 1985, denied Zamuco's petition and instead ordered them to liquidate the
assets of the company (Annex "E", Petition).
5. On April 29, 1985, the Board of Directors minus Zamuco and Mrs. Corazon C. Fernandez
who were then absent, acting as a Board of Liquidators of the company passed, inter
alia, Resolution No. 1985-2 (pp. 403-404, NLRC Record) conveying corporate properties of the
defunct PRI, to the NPRI which had been newly incorporated, thus:
That the Pangasinan Review, Inc. had only a period of three years from its dissolution
on September 23, 1982, within which to wind up its affairs.
WHEREFORE, resolved, as it is hereby resolved, as the most speedy and feasible
means of winding up its affairs, to convey the corporate properties, including the right
to publish the Courier, for the benefit of stockholders and creditors, to the New
Pangasinan Review, Inc., which was just granted a certificate of registration on March
27, 1985 by the SEC, in which case, claims against the defunct Pangasinan Review,
Inc., may be presented as long as the New Pangasinan Review, Inc., exists subject,
however, to the statute of limitations; Resolved further that as consideration of the
transfer, conveyance and assignment mentioned, the New Pangasinan Review, Inc.,
will undertake to issue and deliver unto the stockholders of the defunct Pangasinan
Review, Inc., such number of fully paid shares of the capital stock of the former of the
par value of P100.00 each, equivalent to the net book value of the assets of the
defunct Pangasinan Review, Inc., without prejudice to the rights of third parties; and
Resolved finally to constitute and authorize the President Dr. Josefina V. Fernandez
to represent the defunct Pangasinan Review, Inc., in the execution of the
aforementioned transfer or assignment of corporate properties with full power to do

and perform all and every act and thing whatsoever necessary to be done in and
about the premises. (Emphasis ours) (pp. 116-117, Rollo).
6. Pursuant to the said Resolution No. 1985-2, a Deed of assignment was executed on the
same day, April 29, 1985 by and between PRI thru its President, Josefina F. de VeneciaFernandez, and NPRI thru its treasurer, Salvacion M. Hernando (pp. 405- 407, NLRC Record)
stipulating, among others, as follows:
xxx

xxx

xxx

WHEREAS, the FIRST PARTY by action of its Board of Directors in its meeting held
on the 29th day of April, 1985, approved a proposal to transfer and convey to the
SECOND PARTY, all the properties of the FIRST PARTY, which are described in
Annex "A" hereof, in exchange for fully paid up shares of the SECOND PARTY, each
of the par value of P100.00, equal in number of shares based on the net book value
(assets minus liabilities) of the Total Assets of the FIRST PARTY, with the
understanding that the SECOND PARTY would assume and pay all the liabilities and
obligations of the FIRST PARTY of every kind as may appear outstanding and
subsisting in its books as of 19 January 1985; and
WHEREAS, the liquidation of the FIRST PARTY will not prejudice the rights of third
parties.
xxx

xxx

xxx

For the consideration mentioned in the second "WHEREAS" hereof, the FIRST
PARTY hereby transfers, conveys and assigns unto the SECOND PARTY, absolutely
and forever, effective upon the execution of this Deed, all its (the "Company's")
properties, more particularly described in the list attached hereto and made an
integral part hereof as Annex "A", with the understanding that the SECOND PARTY
shall assume and pay all its liabilities and obligations of every kind as may appear
outstanding and subsisting in its book as of 19 January 1985.
xxx

xxx

xxx

The SECOND PARTY hereby assumes, and hereby undertakes to pay, satisfy,
discharge, perform and fulfill, all the debts, liabilities, contracts; engagements and
obligations of the FIRST PARTY of every kind, as may appear outstanding and
subsisting in its books as of 19 January 1985, whether these are or thereafter to
become due, and to indemnify the FIRST PARTY, its Board of Directors and Officers,
against, and keep them free and harmless from, all actions, proceedings, claims and
demands in respect thereof.

xxx

xxx

xxx

The parties hereto hereby mutually agree to sign, execute, acknowledge and deliver,
jointly or each of them separately, such further deeds, documents, agreements,
papers and other writings as may be necessary to carry into full effect their intents
and purposes as contemplated herein. (pp. 118-119,Rollo)
On June 17, 1985, the nineteen private respondents, together with Jun Velasco, Maximo
Cerezo, Victor Quimbay and Generoso Sandaydiego III, filed with the Chairman of the Board
of Liquidators thru the SEC a written claim for payment of their separation pay and ECOLA,
copy furnished to Atty. Anastacio Zamuco, Chairman of the Board of Liquidators, and to the
Ministry of Labor and Employment at Dagupan City (p. 30, NLRC Record) where, apparently,
said claim was docketed as NLRC Case No. SUB-RAB-I-540-85 (vide, pp. 1, 4, 5, NLRC
Record). (pp. 120 and 226, Rollo)
Atty. Zamuco directed the said claimants to submit supporting papers to the Chairman or
Secretary of the Board of Liquidators so that their claims could be processed (p. 30, NLRC
Record) prompting the counsel of said claimants to move for the provisional dismissal of the
NLRC case (vide, pp. 1, 16, NLRC Record).
On October 9, 1986, however, the private respondents revived their claims with the MOLE
Dagupan Office when nothing positive was arrived at. They filed a formal complaint against
PRI for payment of their separation pay, 13th month pay, ECOLA and damages, docketed as
NLRC Case No. SUB-RAB-I-1071-86 (pp. 12-15, NLRC Record; Annex "O", Petition).
PRI contended that they were not entitled to any separation pay, 13th month pay and ECOLA
because the company had ceased to exist by reason of the expiry of its term and the private
respondents were neither removed from office nor their services terminated.
On June 10, 1987, Labor Arbiter Irenarco Rimando rendered the disputed decision.
PRI appealed. On May 30, 1988, NLRC affirmed the appealed Decision of the Labor Arbiter.
Upon receipt by the Dagupan Arbitration Branch of the record for execution of the judgment,
Labor Arbiter Dominador Saludares, who replaced Labor Arbiter Irenarco Rimando, called the
parties to a conference including Dr. Josefina V. Fernandez, President of the Pangasinan
Review, Inc., and Mr. Renato Zabala, Board Chairman of NPRI (pp. 389-393, NLRC Record;
Annex "R", Petition). However, only the private respondents appeared. Dr. Fernandez and Mr.
Zabala, filed a joint manifestation (p. 394, NLRC Record; Annex' "S", petition) that they could
not participate in the conference alleging that they have no authority to speak for their
corporation.

On October 21, 1988, the next scheduled date of the conference, Dr. Fernandez again filed a
manifestation reiterating her refusal to participate (p. 395, NLRC Record). The complainants
(herein private respondent) submitted copies of Resolution No. 1985-2 of the Board of
Pangasinan Review, Inc. (quoted under paragraph 5, above), and Deed of Assignment dated
April 29, 1985 showing assumption of the liabilities of PRI by NPRI.
On November 3, 1988, Labor Arbiter Ricardo N. Olairez, who replaced Labor Arbiter Saludares
issued a Special Order which reads as follows:
NOW, THEREFORE, in the name of the Republic of the Philippines, you are hereby
commanded to collect from the Pangasinan Review, Inc. and/or the New Pangasinan
Review, Inc. the amount of P180,764.00 by garnishing the monetary deposits of
the Pangasinan Review, Inc. and/or the New Pangasinan Review, Inc. at any of the
banks in Dagupan City or in Pangasinan Province, and if you fail to collect the said
amount including your legal and sheriffs fees, you are to proceed to the premises of
the Pangasinan Review, Inc. and sieze (sic) the Chattels and goods of the
Pangasinan Review, Inc. and/or the New Pangasinan Review, Inc. except such as are
by law exempt and make sale thereof according to the Rules of Court and deposit the
amount collected by you to the Special Disbursing Officer of this Office for proper
disposition, except the amount of your legal and sheriff s fees.
In case sufficient personal property of the Pangasinan Review, Inc. and/or New
Pangasinan Review, Inc. cannot be found to satisfy the amount of P180,764.00 and
your legal and sheriff's fees thereon, you are ordered to levy upon the real estate of
the Pangasinan Review, Inc. and/or New Pangasinan Review, Inc. and sell the same
according to the Rules of Court for the satisfaction of the balance of the amount and
your legal and sheriffs fees and that you make a return of your proceedings upon this
Writ of Execution within 60 days from today." (pp. 19-20, Rollo) (Emphasis supplied)
The Deputy Sheriff served the Writ of Execution and a Notice of Levy (Annex "W" Petition)
upon NPRI thru its Board Chairman, Mr. Renato Zabala, as well as Dr. Josefina V. Fernandez.
A notice of garnishment was also served upon the manager/cashier of the Bank of the
Philippine Islands (Bank of P.I.) Dagupan City Branch on November 7, 1988 (Annex "V",
Petition).
On November 10, 1988, NPRI filed a third party claim on the levied/garnished properties (pp.
416-418, NLRC Record; Annex "X", Petition, p. 125, Rollo, G.R. 85939, p. 10, Rollo, G.R.
86968).
On November 11, 1988, respondent Labor Arbiter Olairez issued a Release Order (p. 420,
NLRC Record; Annex "Y", Petition) on the garnished P111,910.25 deposit with the Bank of P.I.,
pursuant to which the bank released the said amount to the respondent Deputy Sheriff (Annex
"Z" Petition) who then turned over the same to the private respondents thru their counsel (p.
439, NLRC record).

Another order of release dated November 7, 1988 for the amount of P7,154.00 was not
satisfied because of the third party claim, copy of which was received by the deputy sheriff (p.
10, Rollo, G.R. 86968).
On November 14, 1988, respondent Labor Arbiter issued a Resolution (pp. 422-431, NLRC
Record) denying the third party claim and directing the Sheriff to enforce the writ of execution
already issued (pp. 115-125, Rollo).
NPRI filed this petition on December 8, 1988 in G.R. 85939, on the following issues:

Judge Teodoro J. Sison of the Regional Trial Court issued a temporary restraining order and set for
hearing NPRI's application for preliminary injunction on November 25, 1988.
Olairez filed a motion to dismiss the complaint on the ground of lack of jurisdiction. The motion was
denied in open court. His motion for reconsideration was likewise denied.
Aside from Civil Case D-9187, Dr. Josefina V. Fernandez had filed a letter-complaint with the
Ombudsman against petitioner Olairez, questioning the judgment award in the labor case. Olairez
received a copy of the complaint (1st indorsement) on January 5, 1988) requiring his comment thereon
(p. 11, Rollo, G.R. 86968).

I
WHETHER OR NOT THE PROCEEDINGS IN NLRC CASE NO. SUB-RAB-I-071-86
WERE NULL AND VOID ON THE GROUND THAT THE ACTION WAS DIRECTED
AGAINST THE DEFUNCT PANGASINAN REVIEW, INC. AND WAS FILED BEYOND
THE THREE YEAR PERIOD FOR LIQUIDATION AND WINDING UP OF
CORPORATE AFFAIRS WHICH EXPIRED ON OCTOBER 27, 1985;
II
WHETHER OR NOT THE HEREIN PRIVATE RESPONDENTS WERE ENTITLED TO
SEPARATION PAY, CONSIDERING THAT THE EMPLOYER, THE PANGASINAN
REVIEW, INC., CEASED OPERATION BY REASON OF THE EXPIRY OF ITS
CORPORATE TERM;
III
WHETHER OR NOT THE JUDGMENT IN THE SAID LABOR CASE AGAINST THE
DEFUNCT PANGASINAN REVIEW, INC., CAN BE ENFORCED AGAINST THE
PETITIONER NPRI WHICH IS A DISTINCT AND DIFFERENT CORPORATION AND
IS NOT A PARTY THERETO. (p. 228, Rollo)
In G.R. No. 86968
Also on November 14, 1988, shortly before the third party claim was denied by petitioner Olairez, NPRI
filed with the Regional Trial Court, Branch 40 at Dagupan City, a complaint against the labor arbiter and
the private respondents for injunction and damages with prayer for restraining order and/or writ of
preliminary injunction (Civil Case No. D-9187) questioning the execution of the decision in NLRC Case
No. SUB-RAB-I-071-86). Summons was served upon Olairez. Respondent Deputy Sheriff Querimit
submitted his Partial Report to the effect that the garnished amount of P111,910.24 had already been
withdrawn from the Bank of Philippine Islands and proportionately distributed to the complainants.

Hence, this petition in G.R. 86968 attributing grave abuse of discretion on the part of respondent-judge
in assuming jurisdiction over Civil Case D-9187 and issuing a temporary restraining order against the
Writ of Execution issued by the NLRC.
On January 9, 1989, We issued a temporary restraining order (TRO) in G.R. 85939 enjoining the
execution of the NLRC decision dated June 10, 1987.
In Our Resolution dated March 6, 1989. We directed the consolidation of G.R. No. 86968 with G.R. No.
85939 as they both stemmed from the monetary benefits decreed by Labor Arbiter Ricardo Olairez in
favor oil private respondents.
At the outset, We declare petitioner guilty of forum shopping when it filed, despite the pendency of G.R.
85939, Civil Case D9187 before the Regional Trial Court, Branch 40, Dagupan City. We agree with the
Solicitor General that the petition (G.R. 85939) and the action before the Regional Trial Court involve
"the same transactions, the same essential facts and circumstances":
In the action before the Regional Trial Court, as in the action before this Honorable Court, the
validity and legality of the proceedings in NLRC Case No. SUB-RAB-I-071-86 and the propriety
of implementing the decision therein against the petitioner were the basic issues. So, too, the
relief was basically the same: the prevention of such implementation or execution.
(p.130, Rollo, G.R. 85939)
In the case of Villanueva v. Adre (G.R. No. 80863, April 27, 1989, 172 SCRA 876), We stated:
There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party
seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies
not only with respect to suits filed in the courts but also in connection with litigations
commenced in the courts while an administrative proceeding is pending, as in this case, in
order to defeat administrative processes and in anticipation of an unfavorable administrative
ruling and a favorable court ruling. This is specially so, as in this case, where the court in which
the second suit was brought, has no jurisdiction. (at p. 882)

Corollarily, there is no question that in G.R. 86968, respondent judge acted without jurisdiction and
committed grave abuse of discretion in denying Olairez' motion to dismiss Civil Case D-9187. It is basic
that the RTC is not superior to but equal in rank with the NLRC and has no jurisdiction to issue the
restraining order against the execution of the NLRC decision dated June 10, 1987 (Imperial Vegetable
Worker's Union, et al. v. Benjamin A. Vega, et al., G.R. Nos. 57005-07, November 23, 1988, 167 SCRA
601). Courts cannot enjoin execution of judgment rendered by the National Labor Relations
Commission (Villanueva v. Adre, supra).
Likewise explicit in Art. 254 of the Labor Code is the prohibition against courts or other entities on the
issuance of injunction or restraining order in cases involving or growing out of labor disputes. In the
cases of "Filipino Pipe Workers Union (NLU) v. Demetrio M. Batario, Jr., and Filipino Pipe and Foundry
Corp. v. NLRC, et al., (G.R. No. 75951, July 29, 1988; G.R. No. 79417, July 29, 1988, respectively, 163
SCRA 789). Chief Justice Fernan cautioned judges of lower court in entertaining actions involving
decisions, demands or orders of the Labor Arbiters as well as the NLRC, particularly where the caption
of the complaint is "Prohibition with Preliminary Injunction" which is sufficient to put a judge on guard
(supra, p. 796).
Civil Case D-9187 of RTC, Dagupan City, Branch 40 should thus be dismissed for lack of jurisdiction.
On the issue of whether or not complainants' monetary claim had already prescribed and that they are
already barred from asserting the same, we shall not disturb the findings of fact by the NLRC; i.e. that
"complainant had sent a letter, dated June 17, 1985 to the Chairman of the Board of Liquidators,
asserting that "they wanted to avail of the benefits under BP 130, or the payment of separation pay of
15 days for every year of service computed at the rate of their last salary received" (p. 72, Rollo). We
thus uphold their ruling that while the Pangasinan Review, Inc.'s corporate charter expired on October
27, 1982, complainants' letter operates as anextra-judicial demand within the three-year period and this
interrupts the running of the pre- descriptive period.
The proceedings in NLRC Case No. SUB-RAB-I-071-86 were therefore valid and legal.
As to private respondents' right to separation pay, Art. 283 (formerly Art. 284) as amended by Sec. 15 of
BP 130 is explicit:
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to . . . the closing or cessation of operation of
the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof . . . In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year." (Emphasis supplied)

Private respondents are, therefore, entitled to their claim for separation pay at the rate of one-half (1/2)
month's, pay for every year of their service, with a fraction of at least six (6) months being considered as
one whole year.
Moreover, pursuant to Art. 110 of the Labor Code as amended by RA 6715, whenever there is
liquidation proceedings, workers enjoy first preference as regards wages due them for services
rendered during the period including other monetary claims (DBP v. NLRC, et al. G.R. Nos. 82763-62,
March 19, 1990, 183 SCRA 328), to bepaid in full before claims of the government and other creditors
may be paid:
Worker preference in case of bankruptcy.* In the event of bankruptcy, or liquidation of an
employer's business, his workers shall enjoy first preference as regards their wages and other
monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages
and monetary claims shall be paid in full before claims of the government and other creditors
may be paid.
On the question of whether the NLRC decision can legally be enforced against NPRI, it is clear that
NPRI is liable. Aside from being an assignee/transferee of the defunct PRI (pursuant to its Resolution
No. 1985-2 and the Deed of Assignment dated April 29, 1985), it categorically assumed and undertook
to "pay all the liabilities and obligations of the defunct Pangasinan Review, Inc. (PRI) of every kind." The
Resolution also stated that "claims against the defunct Pangasinan Review, Inc. may be presented as
long as the New Pangasinan Review, Inc. exists."
We likewise agree with the Solicitor General that petitioner NPRI was not denied due process:
It is (sic) likewise cannot be disputed that petitioner took over the ownership, management
operations of the Pangasinan Review, Inc. As such, petitioner has for all legal intents and
purposes thus become the successor-employer of the private respondents.
Moreover, the records show that prior to the issuance of the Special Order dated November 3,
1988 (pp. 409-412, NLRC Record; Annex 'T' Petition), which ordered that "satisfaction of the
judgment shall be enforced against the remaining undisposed assets of the defunct
Pangasinan Review, Inc. and/or the New Pangasinan Review, Inc. as the successoremployer," petitioner and counsels were notified of the conference-hearing set for October 5,
1988, but that they refused to participate therein (pp. 394-395, NLRC Record; Annex "S",
Petition). (pp. 138-139, Rollo) (Emphasis supplied).
ACCORDINGLY, in G.R. No. 85939, the NLRC decision is AFFIRMED and the petition for certiorari is
hereby DISMISSED. The temporary restraining order issued in said case is hereby SET ASIDE.
In G.R. No. 86968, the writ of certiorari is GRANTED. Civil Case No. D-9187 in the Regional Trial Court,
Branch 40, Dagupan City is ordered DISMISSED for lack of jurisdiction of the said court.

Mr. Renato C. Zabala and Atty. Felipe P. de Vera, Sr., are required to show cause why they should not
be held in contempt for having filed a complaint before the Regional Trial Court of Dagupan City and the
Ombudsman on the same issue raised in this petition seeking the same prayer and relief. Atty. Felipe P.
de Vera, Sr. is likewise directed to show cause why he should not be suspended from the practice of
law by reason of his having committed an act of forum shopping, both within ten (10) days from receipt
of this decision.
Double costs against private respondent New Pangasinan Review, Inc.
SO ORDERED.

G.R. No. L-35867 June 28, 1973

FRANCISCO A. ACHACOSO, in his own behalf and in behalf of Capital Insurance & Surety Co.,
Inc.,
vs.
THE HON. COURT OF APPEALS, COTRAM, S.A., CAPITAL LIFE ASSURANCE CORP., JOAQUIN
G. GARRIDO, respondents.
Rodrigo M. Nera for petitioner.
Norberto J. Quisumbing & R.P. Mosqueda for private respondent.
RESOLUTION

TEEHANKEE, J.:
The Court censures the practice of counsels who secure repeated extensions of time to file their
pleadings and thereafter simply let the period lapse without submitting the pleading or even an
explanation or manifestation of their failure to do so. The Court herein reprimands petitioner's counsel
for such misconduct with the warning that a repetition thereof will be dealt with more severely.
Upon the filing on December 15, 1972 of the petition at bar for review of the Court of Appeals' decision
dismissing petitioner's petition for mandamus filed with said court to compel the Manila court of first
instance to allow petitioner's proposed appeal from its adverse judgment dismissing plaintiff's complaint,
the Court per its resolution of December 22, 1972 required respondents to comment thereon.
Respondents filed on February 8, 1973 an extensive eighteen page comment and petitioner's counsel,
Rodrigo M. Nera, filed on February 12, 1973 a motion for leave to file reply within 15 days from
notice alleging that there was need for such reply "in order that this Honorable Court may be fully and
completely informed of the nature of the controversy which gave rise to the instant petition." The Court
granted such leave per its resolution of February 23, 1973 and notice of such leave was served on
counsel on February 27, 1973.

On the last day for filing of the reply, viz, March 14, 1973 counsel asked for an additional 15 days
averring that "due to the pressure of urgent professional work and daily trial engagements of the
undersigned counsel during the original period granted, he has not had sufficient material time to
complete the preparation of petitioner's reply." The Court granted the requested extension per its
resolution of March 20, 1973.
On the last day of the extended period for filing of the reply, viz, March 29, 1973 counsel again asked
for still another 15-day extension stating that "due to the pressure of urgent professional work and daily
trial engagements of the undersigned counsel, he has not had sufficient material time to complete the
preparation of petitioners reply. The undersigned counsel humbly apologizes that in view of his crowded
schedule, he has been constrained to ask for this extension, but respectfully assures the Honorable
Court that this will be the last one requested.' As per its resolution of April 6, 1973, the Court granted
counsel's motion for such third and last extension.
The period for the filing of petitioner's reply lapsed on April 13, 1973 without counsel having filed any
reply manifestation explaining his failure to do so.
Accordingly, the Court in its resolution of May 24, 1973 denying the petition for review for lack of merit,
further required petitioner's counsel to show cause why discipline action should not be taken against
him for failure to file the reply after having obtained such leave and three extensions time within which
to do so.
Counsel filed in due course his verified Explanation dated June 7, 1973 stating that he was retained in
the ease "on a piece-work basis on the verbal understanding that all expenses for the preparation of
pleadings and the cost of services of stenographer-typist shall be furnished in advance by petition upon
being notified thereof," that when he asked for a third extension on March 29, 1973, he so informed
petitioner and requested him to remit the expenses for the preparation of reply as per agreement" and
that he tried to contact petitioner before the expiration of the extended period but failed to do as
petitioner "was then most of the time out of his office."
Counsel relates that it was only on May 30, 1973 when he received notice of the Court's resolution of
May 24, 1973 denying the petition and requiring his explanation long after the expiration on April 13,
1973 of the extended period for the filing of the reply that he wrote petitioner and in turn asked the
petitioner to explain the latter's failure to comply with his request for a remittance of P500.00 to cover
the necessary expenses, and that petitioner had replied that counsel's letter had been misplaced by a
clerk and hence, petitioner had "failure to act on the same."
Counsel pleads that "this counsel has not the least intention of delaying the administration of justice and
much less trifle with the resolutions and orders of this Honorable Court. The inability of this counsel to
submit the reply within the extension granted by this Honorable Court was due to supervening
circumstances which could not be attributed to this counsel and that "if this poor and humble practitioner
has been impelled to inaction it surely was not intentional on his part, the truth of the matter being that
this counsel was just helpless in the face of petitioner's failure to comply with his commitments
aforesaid;" and that "this counsel deeply regrets this incident and hereby apologizes to this Honorable
Court for all his shortcomings relative to this case, which after all were due to causes and
circumstances not of his own making and far beyond his control."

Counsel's explanation is far from satisfactory. If indeed he was not in a financial position to advance the
necessary expenses for preparing and submitting the reply, then he could have filed timely the
necessary manifestation that he was foregoing the filing of such reply on petitioner's behalf. His inaction
unduly delayed the Court's prompt disposition of the case after the filing by respondents on February 8,
1973 of their comments on the petition showing its lack of merit.
The Court would have then so disposed of the petition had it not been for petitioner's plea to be given
time and opportunity to file a reply to the comments in order to fully apprise the Court of the nature of
the controversy, which plea the Court granted in reliance on his good faith. Yet after having obtained
three extensions of time for the filing of the reply, counsel simply failed to file any reply nor to give the
Court the courtesy of any explanation or manifestation for his failure to do so.
Counsel readily perceived in his explanation that his conduct comes close to delaying the administration
of justice and trifling with the Court's processes. It does not reflect well on counsel's conduct as an
officer of the Court that after assuring the Court that the third extension requested by him "in view of his
crowded schedule" and "of urgent professional work and daily trial engagements" would be the last
within which period he would at last file the awaited reply, for him thereafter to let the period simply
lapse without any explanation whatsoever, and worse, to wait to be found out, and have the Court
require him to explain.
Considering, however, that counsel's record shows no previous infractions on his part since his
admission to the Philippine Bar in 1953, the Court is disposed to be lenient in this instance.
ACCORDINGLY, the Court hereby administers a reprimand on Atty. Rodrigo M. Nera, with the warning
that a repetition of the same or similar acts shall be dealt with more severely. Let a copy of this
resolution be filed in his personal record.

VILLASIS VS CA

FACTS: An action for quieting of title with recover of possession and damages by the private
respondent was granted by CFI. Petitioner went to the CA, they were given 45 days to submit their brief.
However, they have failed to file their brief because of their counsels utter inaction and gross
indifference and neglect since receipt of due notice to file it. They have change their counsel but the
period of filing brief had already expired.
ISSUE: WON Rule 12.01 - A lawyer shall not appear for trial unless he has adequately prepared
himself on the law and the facts of his case, the evidence he will adduce and the order of its
preferences. He should also be ready with the original documents for comparison with the copies, have
been violated.
RULING: The appellate court gave them all the time and opportunity to duly prosecute their appeal by
filing their brief in the interval to no avail. The appellate court committed no error therefore in dismissing
the appeal. Petitioners-appellants have shown no valid and justifiable reason for their inexplicable
failure to file their brief and have only themselves to blame for their counsel's utter inaction and grow
indifference and neglect in not having filed their brief for a year since receipt of due notice to file the
same.

CHEMPHIL EXPORT & IMPORT CORPORATION v. GONZALES G.R. No. 112438

39, December 12, 1995 | G.R. No. 113394, December 12, 1995
FACTS: Dynetics and Garcia filed a complaint for declaratory relief and/or injunction against
PISO, BPI, LBP, PCI Bank and RCBC or the consortium with the RTC of Makati, seeking
judicial declaration, construction and interpretation of the validity of the surety
agreement that Dynetics and Garcia entered into with the consortium
and to perpetually enjoin the latter from claiming, collecting and enforcing any purported obligations
which Dynetics and Garcia might have undertaken in the agreement.
Seven months later, Dynetics, Garcia and Matrix Management filed a complaint for declaratory
relief and/or injunction against Security Bank & Trust Co. The court granted SBTCs prayer for
the issuance of a writ of preliminary attachment, where a notice of
garnishment on the shares of Garcia in Chemphil was served on Chemphil. However,
this writ was thereafter lifted, and then reinstated.
In the meantime, the court denied the application of Dynetics and Garcia for preliminary
injunction and instead granted the consortiums prayer for a consolidated writ of preliminary
attachment (case 8527). The garnishment for this attachment was NOT
annotated in Chemphils stock and transfer book. Motion to dismiss was filed by PCI Bank
granted. MR filed by consortiumdenied.
During the pendency of the appeal, a compromise agreement was entered into between Garcia and the
consortium.
In 1988, Garcia under a Deed of Sale transferred to Ferro Chemicals (FCI) the disputed shares and oth
er properties for P79M. It was agreed that part of the purchase price shall be paid to Security
Bank for whatever judgment credits it may be adjudged against Garcia.
FCI issued a checkrefused by Security Bank because it was insufficient to cover the debt.

FCI assigned 4M shares in Chemphil to CEIC.

Garcia failed to comply with the compromise agreementconsortium filed a motion for execution
granted by the court. Garcias
properties were levied upon on execution were his 1.7M shares in Chemphil previously garnished.
The consortium acquired the disputed shares of stock in the public sale
conducted by the sheriff for P85M.
CEIC filed a motion to intervene saying that it is the owner of the sharedgranted by the court, but
limited only to the incidents covered by the order. Consortium opposed to CEICs motiontheir
attachment lien over the shares must prevail over the private sale in favor of CEIC considering that the
shares were garnished in the consortiums favor. On December 1989
Trial court granted CEICs motion and denied consortiums.
Consortium and PCIB filed separate motions for reconsideration for the aforesaid order which was
denied (March 1990). Consortium appealed to the CA and PCIB separately filed to the same court
petition for certiorari, prohibition and mandamus with a prayer for the issuance of the writ of preliminary
injunction, likewise assailing the very same orders (dated December 1989 and March 1990).
CA rendered decision confirming the ownership of Consortium over disputed shares and dismissing
PCIBs petition for certiorari on the grounds that PCIB violated the rule against forum-shopping and that
no grave abuse of discretion was committed by the Trial court issuing the assailed orders. PCIB filed to
the SC petition for review.
ISSUE: WON PCIB is guilty of forum-shopping.
RULING: The SC upholds the decision of the CA finding PCIB guilty of forum-shopping. Rule 65 of the
Rules of Court is not difficult to understand. Certiorari is available only if there is no appeal or other
plain, speedy and adequate remedy in the ordinary course of law. Hence, in instituting a separate
petition for certiorari, PCIB has deliberately resorted to forum-shopping. PCIB cannot hide behind the
subterfuge that SC Circular 28-91 was not yet in force when it filed the certiorari proceedings in the CA.
The rule against forum-shopping has long been established. SC Circular 28-91 merely formalized the
prohibition and provided the appropriate penalties against transgressors.
Forum-shopping or the act of the party against whom an adverse judgment has been rendered in one
forum, of seeking another opinion (and possibly favorable) in another forum (other than by appeal or the
special civil action for certiorari), or the institution of two (2) or more actions or proceedings grounded on
the same cause on the supposition that one or the other court would make a favorable disposition, has
been characterized as an act of malpractice that is prohibited and condemned as trifling with the Courts
and abusing their processes. It constitutes improper conduct which tends to degrade the administration
of justice. It has also been aptly described as deplorable because it adds to the congestion of the
already heavily burdened dockets of the courts.
For resorting for forum-shopping, PCIB was reprimanded and warned by the SC.

[A.C. No. 4058. March 12, 1998]

Respondent claims in his comment that Branch 7, motu proprio, dismissed Civil Case for
lack of jurisdiction which dismissal was became final due to respondents failure to
perfect an appeal there from which claim according to the complainant, constitute[s]
deliberate misrepresentation, if not falsehood, because the respondent indeed interposed
an appeal such the RTC 7 of Baguio City transmitted the entire record of case to the
Court of Appeals per certified machine copy of the letter transmittal of same date.

While respondent never essentially intended to assail the issuance by the NLRC of the
Writ of Execution nor sought to undo it the complaint which he filed prays for the
immediate issuance of a temporary restraining order and/or preliminary writ of injunction
for defendants Clerk of Court and Ex-Officio City Sheriff to cease and desist from
enforcing the execution and levy of the writ of execution issued by the NLRC-CAR,
pending resolution of the main action in said court which complainant likewise claims as
an unprocedural maneuver to frustrate the execution of the decision of the Supreme
Court in G.R. No. 89070 in complete disregard of settled jurisprudence that regular courts
have no jurisdiction to hear and decide questions which arise and are incidental to the
enforcement of decisions, orders and awards rendered in labor cases citing the case of
Cangco vs. CA, 199 SCRA 677, a display of gross ignorance of the law.

On May 26, 1993, respondent again filed for Abundio Awal and Nicasio Aliping with the
Regional Trial Court, Branch 9, La Trinidad, Benguet, separate complaints for Judicial
Declaration of Family Home Constituted, Ope Lege, and thus Exempt from Levy and
Execution the subject properties with Damages, etc. docketed as Civil Cases Nos. 93-F0414 and 93-F-0415, which are essentially similar actions to enjoin the enforcement of
the judgment rendered in NLRC Case No. RAB-1-0313-84. He also filed an urgent
Motion Ex-parte praying for temporary restraining order in these two (2) cases.

BENGUET ELECTRIC COOPERATIVE, INC. vs. ATTY. ERNESTO B. FLORES

PANGANIBAN, J.:
The Facts

On February 25, 1993, Labor Arbiter Irenarco Rimando of the National Labor Relations
Commission, Regional Arbitration Branch, Cordillera Administrative Region, Baguio City,
issued a Writ of Execution in NLRC Case No. RAB-1-0313-84 to enforce the decision
rendered by the Supreme Court on May 18, 1992 in G.R. No. 89070 (Benguet Electric
Cooperative, Inc. vs. NLRC, 209 SCRA 55).

The Writ of Execution was issued on motion of Benguet Electric Cooperative (BENECO
for short) to collect the amount of P344,000.00 which it paid to Peter Cosalan during the
pendency of the case before the Supreme Court, on the basis of its decision ordering the
respondent board members to reimburse petitioner BENECO any amount that it may be
compelled to pay to respondent Cosalan by virtue of the decision of Labor Arbiter Amado
T. Adquilen.

After issuance of the writ of execution, the respondent, as new counsel for the losing
litigant-members of the BENECO Board of Directors, filed a Motion for Clarification with
the Third Division of the Supreme Court in G.R. No. 89070, the minute resolution to
wit: to note without action the aforesaid motion.

The complainant further alleges that respondents claim for damages against the
defendant Sheriff is another improper and unprocedural maneuver which is likewise a
violation of respondents oath not to sue on groundless suit since the said Sheriff was
merely enforcing a writ of execution as part of his job.

Thereafter, the respondent instituted a suit with the Regional Trial Court, Branch 7,
Baguio City, seeking to enjoin the defendants Clerk of Court, et al. from levying on their
properties in satisfaction of the said writ of execution.

Investigating Commissioner Plaridel C. Jose recommended, and the IBP Board of

Governors concurred, that respondent be suspended from the bar for six months for:

That case, however, was dismissed by the Presiding Judge Clarence Villanueva.

Accordingly, the Office of the Clerk of Court, MTC, Baguio City, through Sheriff III
Wilfredo Mendez, proceeded to levy on the properties of the losing board members of
BENECO. Thus, a sale at public auction was set in front of the Baguio City Hall, per
Sheriffs Notice of Sale, of the properties of Abundio Awal and Nicasio Aliping, two of the
losing members of the Board of Directors of BENECO in the aforementioned case.

1. Falsehood, for stating in his comment before this Court that the order of the RTC
dismissing the complaint in Civil Case No. 2738-R was not appealed on time
2. Failure to comply with Supreme Court Circular No. 28-91 on forum shopping

Commissioner Jose ratiocinated:

A cursory glance of the complaint filed by the respondent in Case before the RTC of
Baguio City, which complaint was signed and verified under oath by the respondent, reveals
that it lacks the certification required by Supreme Court Circular No. 28-91 which took effect on
January 1, 1992 to the effect that to the best of his knowledge, no such action or proceeding is
pending in the Supreme Court, Court of Appeals or different divisions thereof or any tribunal or
agency. If there is any other action pending, he must state the status of the same. If he
should learn that a similar action or proceeding has been filed or pending before the Supreme
Court, Court of Appeals or different divisions thereof or any tribunal or agency, he should notify
the court, tribunal or agency within five (5) days from such notice.
Among the other penalties, the said circular further provides that the lawyer may also
be subjected to disciplinary proceedings for non-compliance thereof.

In a long line of cases, this Court has held that forum shopping exists when, as a result of
an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal
or certiorari) in another, or when he institutes two or more actions or proceedings
grounded on the same cause, on the gamble that one or the other court would make a
favorable disposition. The most important factor in determining the existence of forum
shopping is the vexation caused the courts and parties-litigants by a party who asks
different courts to rule on the same or related causes or grant the same or substantially
the same reliefs.

On March 18, 1993, Respondent Flores, acting as counsel for BENECO Board Members
Victor Laoyan, Nicasio Aliping, Lorenzo Pilando and Abundio Awal, filed with the RTC an
injunction suit praying for the issuance of a temporary restraining order (TRO) to
preserve the status quo as now obtaining between the parties, as well as a writ of
preliminary preventive injunction ordering the clerk of court and the ex officio city sheriff
of the MTC of Baguio to cease and desist from enforcing by execution and levy the writ
of execution from the NLRC-CAR, pending resolution of the main action raised in court.]

When this injunction case was dismissed, Respondent Flores filed with another branch of
the RTC two identical but separate actions both entitled Judicial Declaration of Family
Home Constituted, ope lege, Exempt from Levy and Execution; with Damages, etc.,
docketed as Civil Case Nos. 93-F-0414 and 93-F-0415.] The said complaints were
supplemented by an Urgent Motion Ex Parte which prayed for an order to temporarily
restrain Sheriff Wilfredo V. Mendez from proceeding with the auction sale of plaintiffs
property to avoid rendering ineffectual and functus [oficio] any judgment of the court later
in this [sic] cases, until further determined by the court.

In sum, it is clear that the respondent violated the provisions of Canon[s] 10

and 12 of the Code of Professional Responsibility under which the lawyer owes candor,
fairness and good faith to the court and exert[s] every effort and consider[s] it his duty
to assist in the speedy and efficient administration of justice.
ISSUE:
Whether or not respondent guilty of violating Canons 10 and 12 of the Code of Professional
Responsibility
Held:
We adopt and affirm the recommendation of the IBP suspending the respondent from the bar, but
we increase the period from six (6) months to one (1) year and six (6) months.

Circular No. 28-91,[5] dated September 4, 1991 which took effect on January 1, 1992,
requires a certificate of non-forum shopping to be attached to petitions filed before this
Court and the Court of Appeals. This circular was revised on February 8, 1994. The IBP
found that the respondent had violated it, because the complaint he filed before the RTC
of Baguio City lack[ed] the certification required by Supreme Court Circular No. 28-91.[6]

We distinguish. Respondents failure to attach the said certificate cannot be deemed a

violation of the aforementioned circular, because the said requirement applied only to
petitions filed with this Court and the Court of Appeals. Likewise inapplicable is
Administrative Circular No. 04-94 dated February 8, 1994 which extended the
requirement of a certificate of non-forum shopping to all initiatory pleadings filed in all
courts and quasi-judicial agencies other than this Court and the Court of
Appeals. Circular No. 04-94 became effective only on April 1, 1994, but the assailed
complaint for injunction was filed on March 18, 1993, and the petition for the constitution
of a family home was instituted on May 26, 1993.

Civil Case Nos. 93-F-0414 and 93-F-0415 are groundless suits.

The suits for the constitution of a family home were not only frivolous and unnecessary; they were
clearly asking for reliefs identical to the prayer previously dismissed by another branch of the
RTC, i.e., to forestall the execution of a final judgment of the labor arbiter. That they
were filed ostensibly for the judicial declaration of a family home was a mere smoke screen; in
essence, their real objective was to restrain or delay the enforcement of the writ of execution. In his
deliberate attempt to obtain the same relief in two different courts, Respondent Flores was obviously
shopping for a friendly forum which would capitulate to his improvident plea for an injunction and was
thereby trifling with the judicial process.[25]
We remind the respondent that, under the Code of Professional Responsibility,[26] he had a duty to
assist in the speedy and efficient administration of justice.[27] The Code also enjoins him from unduly
delaying a case by impeding the execution of a judgment or by misusing court processes.
Falsehood

The investigating commissioner also held respondent liable for committing a falsehood because,
in this administrative case, he stated in his comment that he had not perfected an appeal on the
dismissal of his petition for injunction. In his said comment, the respondent stated:
The indelible fact, however, is that respondent did file an appeal which was perfected later
on. The original records of the injunction suit had been transmitted to the appellate court. Moreover, the
Court of Appeals issued a resolution dismissing the appeal. ]Thus, in denying that he had appealed the
decision of the RTC, respondent was making a false statement.
Respondent argues that the withdrawal of his appeal means that no appeal was made under
Section 2 of Rule 50 of the Rules of Court.
Respondents explanation misses the point. True, he withdrew his appeal. But it is likewise true
that he had actually filed an appeal, and that this was perfected. False then is his statement that no
appeal was perfected in the injunction suit. Worse, he made the statement before this Court in order to
exculpate himself, though in vain, from the charge of forum shopping.

A lawyer must be a disciple of truth. Under the Code of Professional Responsibility, he owes
candor, fairness and good faith to the courts.[37] He shall neither do any falsehood, nor consent to the
doing of any. He also has a duty not to mislead or allow the courts to be misled by any artifice.[38]
RATIO:
WHEREFORE, for trifling with judicial processes by resorting to forum shopping, Respondent Ernesto
B. Flores is hereby SUSPENDED from the practice of law for a period of ONE (1) YEAR and, for
violating his oath and the Canon of Professional Responsibility to do no falsehood, he
is SUSPENDED for another period of ONE (1) YEAR, resulting in a total period of TWO (2) YEARS,
effective upon finality of this Decision. He is WARNED that a repetition of a similar miscondu