SECOND DIVISION

[G.R. No. 177407. February 9, 2011.]

RICO
ROMMEL ATIENZA, petitioner, vs. BOARD OF MEDICIN
E and EDITHA SIOSON, respondents.

DECISION

NACHURA, J p:
Before us is a petition for review on certiorari under Rule
45 of the Rules of Court, assailing the Decision 1 dated
September 22, 2006 of the Court of Appeals (CA) in-CA-G.R.
SP No. 87755. The CA dismissed the petition for certiorari filed
by petitioner Rico Rommel Atienza (Atienza), which, in turn,
assailed the Orders 2 issued by public
respondent Board of Medicine (BOM) in Administrative Case
No. 1882.
The facts, fairly summarized by the appellate court, follow.
Due to her lumbar pains, private respondent Editha Sioson
went to Rizal Medical Center (RMC) for check-up on
February 4, 1995. Sometime in 1999, due to the same
problem, she was referred to Dr. Pedro Lantin III of RMC
who, accordingly, ordered several diagnostic laboratory
tests. The tests revealed that her right kidney is normal. It
was ascertained, however, that her left kidney is non-
functioning and non-visualizing. Thus, she underwent
kidney operation in September, 1999.
On February 18, 2000, private respondent's husband,
Romeo Sioson (as complainant), filed a complaint for gross
negligence and/or incompetence before the [BOM] against
the doctors who allegedly participated in the fateful kidney
operation, namely: Dr. Judd dela Vega, Dr. Pedro Lantin, III,
Dr. Gerardo Antonio Florendo and petitioner Rico
Rommel Atienza.
It was alleged in the complaint that the gross negligence
and/or incompetence committed by the said doctors,
including petitioner, consists of the removal of private
respondent's fully functional right kidney, instead of the
left non-functioning and non-visualizing kidney.
The complaint was heard by the [BOM]. After complainant
Romeo Sioson presented his evidence, private respondent
Editha Sioson, also named as complainant there, filed her
formal offer of documentary evidence. Attached to the
formal offer of documentary evidence are her Exhibits "A"
to "D," which she offered for the purpose ofproving that
her kidneys were both in their proper anatomical locations
at the time she was operated. She described her exhibits,
as follows: ADaEIH
"EXHIBIT 'A' the certified photocopy of the X-ray
Request form dated December 12, 1996, which is also
marked as Annex '2' as it was actually originally the Annex
to . . . Dr. Pedro Lantin, III's counter affidavit filed with the
City Prosecutor of Pasig City in connection with the criminal
complaint filed by [Romeo Sioson] with the said office, on
which are handwritten entries which are the
interpretation of the results of the ultrasound examination.
Incidentally, this exhibit happens to be the same as or
identical to the certified photocopy of the document
marked as Annex '2' to the Counter-Affidavit dated March
15, 2000, filed by . . . Dr. Pedro Lantin, III, on May 4, 2000,
with this Honorable Board in answer to this complaint;
"EXHIBIT 'B' the certified photo copy of the X-ray
request form dated January 30, 1997, which is also marked
as Annex '3' as it was actually likewise originally an Annex
to . . . Dr. Pedro Lantin, III's counter-affidavit filed with the
Office of the City Prosecutor of Pasig City in connection
with the criminal complaint filed by the herein complainant
with the said office, on which are handwritten entries
which are the interpretation of the results of the
examination. Incidentally, this exhibit happens to be also
the same as or identical to the certified photo copy of the
document marked as Annex '3' which is likewise dated
January 30, 1997, which is appended as such Annex '3' to
the counter-affidavit dated March 15, 2000, filed by . . . Dr.
Pedro Lantin, III on May 4, 2000, with this
Honorable Board in answer to this complaint.
"EXHIBIT 'C' the certified photocopy of the X-ray request
form dated March 16, 1996, which is also marked as Annex
'4,' on which are handwritten entries which are the
interpretation of the results of the examination.
"EXHIBIT 'D' the certified photocopy of the X-ray
request form dated May 20, 1999, which is also marked as
Annex '16,' on which are handwritten entries which are the
interpretation of the results of the examination.
Incidentally, this exhibit appears to be the draft of the
typewritten final report of the same examination which is
the document appended as Annexes '4' and '1'
respectively to the counter-affidavits filed by . . . Dr. Judd
dela Vega and Dr. Pedro Lantin, III in answer to the
complaint. In the case of Dr. dela Vega however, the
document which is marked as Annex '4' is not a certified
photocopy, while in the case of Dr. Lantin, the document
marked as Annex '1' is a certified photocopy. Both
documents are of the same date and typewritten contents
are the same as that which are written on Exhibit 'D.'
Petitioner filed his comments/objections to private
respondent's [Editha Sioson's] formal offer of exhibits. He
alleged that said exhibits are inadmissible because the
same are mere photocopies, not properly identified and
authenticated, and intended to establish matters which are
hearsay. He added that the exhibits are incompetent to
prove the purpose for which they are offered.
Dispositions of the Board of Medicine
The formal offer of documentary exhibits of private
respondent [Editha Sioson] was admitted by the [BOM] per
its Order dated May 26, 2004. It reads:
"The Formal Offer of Documentary Evidence of [Romeo
Sioson], the Comments/Objections of [herein
petitioner] Atienza, [therein respondents] De la Vega and
Lantin, and the Manifestation of [therein] respondent
Florendo are hereby ADMITTED by the [BOM] for whatever
purpose they may serve in the resolution of this case.
"Let the hearing be set on July 19, 2004 all at 1:30 p.m. for
the reception of the evidence of the respondents.
"SO ORDERED."
Petitioner moved for reconsideration of the
abovementioned Order basically on the same reasons
stated in his comment/objections to the formal
offer of exhibits.
The [BOM] denied the motion for
reconsideration of petitioner in its Order dated October 8,
2004. It concluded that it should first admit the evidence
being offered so that it can determine its probative value
when it decides the case. According to the Board, it can
determine whether the evidence is relevant or not if it will
take a look at it through the process of admission. . . . . 3
Disagreeing with the BOM, and as previously adverted
to, Atienza filed a petition for certiorari with the CA, assailing
the BOM's Orders which admitted Editha Sioson's (Editha's)
Formal Offer of Documentary Evidence. The CA dismissed the
petition for certiorari for lack of merit. HaECDI
Hence, this recourse positing the following issues:
I. PROCEDURAL ISSUE:
WHETHER PETITIONER ATIENZA AVAILED OF THE PROPER
REMEDY WHEN HE FILED THE PETITION
FOR CERTIORARI DATED 06 DECEMBER 2004 WITH THE
COURTOF APPEALS UNDER RULE 65 OF THE
RULES OF COURT TO ASSAIL THE ORDERS DATED 26 MAY
2004 AND 08 OCTOBER 2004 OF RESPONDENT BOARD.
II. SUBSTANTIVE ISSUE:
WHETHER THE COURT OF APPEALS COMMITTED GRAVE
REVERSIBLE ERROR AND DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE
WITH LAW AND THE APPLICABLE DECISIONS OF THE
HONORABLE COURT WHEN IT UPHELD THE
ADMISSION OF INCOMPETENT AND INADMISSIBLE
EVIDENCE BY RESPONDENT BOARD, WHICH CAN RESULT IN
THE DEPRIVATION OF PROFESSIONAL LICENSE A
PROPERTY RIGHT OR ONE'S LIVELIHOOD. 4
We find no reason to depart from the ruling of the CA.
Petitioner is correct when he asserts that a petition
for certiorari is the proper remedy to assail the Orders of the
BOM, admitting in evidence the exhibits ofEditha. As the
assailed Orders were interlocutory, these cannot be the
subject of an appeal separate from the judgment that
completely or finally disposes of the case. 5 At that stage,
where there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, the only and remaining
remedy left to petitioner is a petition for certiorari under Rule
65 of the Rules of Court on the ground of grave
abuse of discretion amounting to lack or excess of jurisdiction.
However, the writ of certiorari will not issue absent a showing
that the BOM has acted without or in excess of jurisdiction or
with grave abuse of discretion. Embedded in the CA's finding
that the BOM did not exceed its jurisdiction or act in grave
abuse of discretion is the issue of whether the
exhibits of Editha contained in her Formal
Offer of Documentary Evidence are inadmissible.
Petitioner argues that the exhibits formally offered in
evidence by Editha: (1) violate the best evidence rule; (2)
have not been properly identified and authenticated; (3) are
completely hearsay; and (4) are incompetent to prove their
purpose. Thus, petitioner contends that the exhibits are
inadmissible evidence.
We disagree.
To begin with, it is well-settled that the rules of evidence are
not strictly applied in proceedings before administrative
bodies such as the BOM. 6 Although trial courts are enjoined
to observe strict enforcement of the rules of evidence, 7 in
connection with evidence which may appear to be of doubtful
relevancy, incompetency, or admissibility, we have held that:
[I]t is the safest policy to be liberal, not rejecting them on
doubtful or technical grounds, but admitting them unless
plainly irrelevant, immaterial or incompetent, for the
reason that their rejection places them beyond the
consideration of the court, if they are thereafter found
relevant or competent; on the other hand, their admission,
if they turn out later to be irrelevant or incompetent, can
easily be remedied by completely discarding them or
ignoring them. 8
From the foregoing, we emphasize the distinction between
the admissibility of evidence and the probative weight to be
accorded the same pieces of evidence.PNOC Shipping and
Transport Corporation v. Court of Appeals 9 teaches:
Admissibility of evidence refers to the question of whether
or not the circumstance (or evidence) is to be considered
at all. On the other hand, the probative value ofevidence
refers to the question of whether or not it proves an
issue. CIaHDc
 Second, petitioner's insistence that the admission of Editha's
exhibits violated his substantive rights leading to the
loss of his medical license is misplaced. Petitioner mistakenly
relies on Section 20, Article I of the Professional Regulation
Commission Rules of Procedure, which reads:
Section 20. Administrative investigation shall be
conducted in accordance with these Rules. The
Rules of Court shall only apply in these proceedings by
analogy or on a suppletory character and whenever
practicable and convenient. Technical errors in the
admission of evidence which do not prejudice the
substantive rights ofeither party shall not vitiate the
proceedings. 10
As pointed out by the appellate court, the admission of the
exhibits did not prejudice the substantive rights of petitioner
because, at any rate, the fact sought to be proved thereby,
that the two kidneys of Editha were in their proper anatomical
locations at the time she was operated on, is presumed under
Section 3, Rule 131of the Rules of Court:
Sec. 3. Disputable presumptions. The following
presumptions are satisfactory if uncontradicted, but may
be contradicted and overcome by other evidence:
xxx xxx xxx
(y) That things have happened according to the ordinary
course of nature and the ordinary habits of life.
The exhibits are certified photocopies of X-ray Request Forms
dated December 12, 1996, January 30, 1997, March 16, 1996,
and May 20, 1999, filed in connection with Editha's medical
case. The documents contain handwritten entries interpreting
the results of the examination. These exhibits were actually
attached as annexes to Dr. Pedro Lantin III's counter affidavit
filed with the Office of the City Prosecutor of Pasig City, which
was investigating the criminal complaint for negligence filed
by Editha against the doctors of Rizal Medical Center (RMC)
who handled her surgical procedure. To lay the predicate for
her case, Editha offered the exhibits in evidence to prove that
her "kidneys were both in their proper anatomical locations at
the time" of her operation.
The fact sought to be established by the
admission of Editha's exhibits, that her "kidneys were both in
their proper anatomical locations at the time" of her
operation, need not be proved as it is covered by mandatory
judicial notice. 11
Unquestionably, the rules of evidence are merely the means
for ascertaining the truth respecting a matter of fact. 12 Thus,
they likewise provide for some facts which are established and
need not be proved, such as those covered by judicial notice,
both mandatory and discretionary. 13 Laws of nature
involving the physical sciences, specifically
biology, 14 include the structural make-up and
composition of living things such as human beings. In this
case, we may take judicial notice that Editha's kidneys before,
and at the time of, her operation, as with most human beings,
were in their proper anatomical locations.
Third, contrary to the assertion of petitioner, the best
evidence rule is inapplicable. Section 3 of Rule 130 provides:
1. Best Evidence Rule
Sec. 3. Original document must be produced;
exceptions. When the subject of inquiry is the
contents of a document, no evidence shall be admissible
other than the original document itself, except in the
following cases:
(a) When the original has been lost or destroyed, or
cannot be produced in court, without bad faith on the
part of the offeror;
(b) When the original is in the custody or under the
control of the party against whom the evidence is offered,
and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or
other documents which cannot be examined in court
without great loss of time and the fact sought to be
established from them is only the general result of the
whole; and CAIaDT
(d) When the original is a public record in the custody of a
public officer or is recorded in a public office.
The subject of inquiry in this case is whether respondent
doctors before the BOM are liable for gross negligence in
removing the right functioning kidney ofEditha instead of the
left non-functioning kidney, not the proper anatomical
locations of Editha's kidneys. As previously discussed, the
proper anatomical locations ofEditha's kidneys at the
time of her operation at the RMC may be established not only
through the exhibits offered in evidence.
Finally, these exhibits do not constitute hearsay
evidence of the anatomical locations of Editha's kidneys. To
further drive home the point, the anatomical positions,
whether left or right, of Editha's kidneys, and the
removal of one or both, may still be established through a
belated ultrasound or x-ray of her abdominal area.
In fact, the introduction of secondary evidence, such as
copies of the exhibits, is allowed. 15 Witness Dr. Nancy
Aquino testified that the Records Office of RMC no longer had
the originals of the exhibits "because [it] transferred from the
previous building, . . . to the new building." 16 Ultimately,
since the originals cannot be produced, the BOM properly
admitted Editha's formal offer of evidence and, thereafter, the
BOM shall determine the probative value thereof when it
decides the case.
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals in CA-G.R. SP No. 87755 is AFFIRMED. Costs
against petitioner.
SO ORDERED.
Peralta, Del Castillo, * Villarama, Jr. ** and Mendoza, JJ., concur.
||| (Atienza v. Board of Medicine, G.R. No. 177407, [February 9,
2011], 657 PHIL 536-546)
 THIRD DIVISION

[G.R. No. 176240. October 17, 2008.]

ROLANDO SASAN, SR., LEONILO DAYDAY, MODESTO

AGUIRRE, ALEJANDRO ARDIMER, ELEUTERIO SACIL,
WILFREDO JUEGOS, PETRONILO CARCEDO and CESAR
PACIENCIA, petitioners, vs. NATIONAL LABOR RELATIO
NS COMMISSION 4TH DIVISION, EQUITABLE-PCI
BANK and HELPMATE, INC.,respondents.

DECISION

CHICO-NAZARIO, J p:
Assailed in this Petition for Review under Rule 45 of the Rules
of Court are the Decision 1 dated 24 April 2006 of the Court of
Appeals in CA-G.R. SP No. 79912, which affirmed the Decision
dated 22 January 2003 of
the National Labor Relations Commission (NLRC) in NLRC Case
No. V-000241-2002 finding that Helpmate, Inc. (HI) is a
legitimate independent job contractor and that the petitioners
were not illegally dismissed from work; and the
Resolution 2 dated 31 October 2006 of the same court denying
the Motion for Reconsideration filed by the petitioners. TIDHCc
Respondent Equitable-PCI Bank (E-PCIBank), 3 a banking entity
duly organized and existing under and by virtue of Philippine
laws, entered into a Contract for Services 4with HI, a domestic
corporation primarily engaged in the business of providing
janitorial and messengerial services. Pursuant to their contract,
HI shall hire and assign workers to E-PCIBank to perform
janitorial/messengerial and maintenance services. The contract
was impliedly renewed year after year. Petitioners
Rolando Sasan, Sr.,5 Leonilo Dayday, 6 Modesto
Aguirre, 7 Alejandro Ardimer, 8 Eleuterio Sacil, 9 Wilfredo
Juegos, 10 Petronilo Carcedo, 11 and Cesar Peciencia 12 were
among those employed and assigned to E-PCIBank at its
branch along Gorordo Avenue, Lahug, Cebu City, as well as to
its other branches in the Visayas. 13
On 23 July 2001, petitioners filed with the Arbitration Branch of
the NLRC in Cebu City separate complaints 14 against E-
PCIBank and HI for illegal dismissal, with claims for separation
pay, service incentive leave pay, allowances, damages,
attorney's fees and costs. Their complaints were docketed
as NLRC RAB-VII Case No. 07-1381-2001 and raffled
to Labor Arbiter Jose G. Gutierrez (Labor Arbiter Gutierrez) for
their proper disposition. Subsequently, on 22 August 2001, the
petitioners 15 amended their complaints to include a claim for
13th month-pay.
Several conciliation hearings were scheduled by Labor Arbiter
Gutierrez but the parties still failed to arrive at a mutually
beneficial settlement; hence, Labor Arbiter Gutierrez ordered
that they submit their respective position papers.
In their position papers, petitioners claimed that they had
become regular employees of E-PCIBank with respect to the
activities for which they were employed, having continuously
rendered janitorial and messengerial services to the bank for
more than one year; that E-PCIBank had direct control and
supervision over the means and methods by which they were
to perform their jobs; and that their dismissal by HI was null
and void because the latter had no power to do so since they
had become regular employees of E-PCIBank.
 For its part, E-PCIBank averred that it entered into a Contract
for Services with HI, an independent job contractor which hired
and assigned petitioners to the bank to perform janitorial and
messengerial services thereat. It was HI that paid petitioners'
wages, monitored petitioners' daily time records (DTR) and
uniforms, and exercised direct control and supervision over the
petitioners and that therefore HI has every right to terminate
their services legally. E-PCIBank could not be held liable for
whatever misdeed HI had committed against its
employees. TSacCH
HI, on the other hand, asserted that it was an independent job
contractor engaged in the business of providing janitorial and
related services to business establishments, and E-PCIBank
was one of its clients. Petitioners were its employees, part of its
pool of janitors/messengers assigned to E-PCIBank. The
Contract for Services between HI and E-PCIBank expired on 15
July 2000. E-PCIBank no longer renewed said contract with HI
and, instead, bidded out its janitorial requirements to two other
job contractors, Able Services and Puritan. HI designated
petitioners to new work assignments, but the latter refused to
comply with the same. Petitioners were not dismissed by HI,
whether actually or constructively, thus, petitioners' complaints
before the NLRC were without basis.
Labor Arbiter Gutierrez focused on the following issues: (a)
whether petitioners were regular employees of HI; (b) whether
petitioners were illegally dismissed from their employment;
and (c) whether petitioners were entitled to their money
claims.
On 7 January 2002, on the basis of the parties' position papers
and documentary evidence, Labor Arbiter Gutierrez rendered a
Decision finding that HI was not a legitimate job contractor on
the ground that it did not possess the required substantial
capital or investment to actually perform the job, work, or
service under its own account and responsibility as required
under the Labor Code. 16 HI is therefore a labor-only
contractor and the real employer of petitioners is E-PCIBank
which is held liable to petitioners. According to Labor Arbiter
Gutierrez:
[T]he undisputed facts show that the [herein petitioners]
were made to perform not only as janitors but also as
messengers, drivers and one of them even worked as an
electrician. For us, these jobs are not only directly related
to the main business of the principal but are, likewise
deemed necessary in the conduct of respondent Equitable-
PCI Bank's principal business. Thus, based on the above,
we so declare that the [petitioners] are employees of
respondent Equitable-PCI Bank. And having worked with
respondent Equitable-PCI Bank for more than one (1) year,
they are deemed regular employees. They cannot,
therefore, be removed from employment without cause
and without due process, which is wanting in this case.
Hence, the severance of their employment in the guise of
termination of contract is illegal. 17
In the dispositive portion of his 7 January 2002
Decision, Labor Arbiter Gutierrez awarded to petitioners the
following amounts: DHEcCT
I. CESAR PACIENCIA
a) Backwages
July 15, 2001 to January 8, 2002
= P190.00 per day
= 5 months and 6 days
= 136 days x P190.00 = P25,840.00
b) Separation Pay
June 10, 1996 to July 15, 2001
= 5 years
= P190.00 x 26 days x 5 years/2 = P12,350.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total P43,130.00
=========
II Dominador Suico, Jr. (did not file
Amended Complaint)
a) Backwages
July 15, 2001 to January 15, 2002
same as Paciencia = P25,840.00
b) Separation Pay
Feb. 2, 1999 to July 15, 2001
= P190.00 x 26 days x 2.5 years/2 = P6,175.00

Total = P32,015.00
=========
III Roland Mosquera (did not file
Amended Complaint)
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
March 8, 1998 to July 15, 2001
= P190.00 x 26 days x 3 yrs./2
= P7,410.00

Total = P33,250.00
IV Petronillo Carcedo
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
Sept. 16, 1984 to July 15, 2001
= P190.00 x 26 days x 17 yrs./2 = P41,990.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P72,770.00
========
V Rolando Sasan, Sr.
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
October 1989 to July 15, 2001
= P190.00 x 26 days x 12 yrs./2 = P29,640.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P60,420.00
VI Leonilo Dayday
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
Feb. 8, 1983 to July 15, 2001
= P190.00 x 26 days x 18 yrs./2 = P44,460.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P75,240.00
=========
VII Eleuterio Sacil
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
June 2, 1992 to July 15, 2001
= P190.00 x 26 days x 9 yrs./2 = P22,230.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P53,010.00
========
VIII Mario Juntilla
a) Backwages
(same as Pacencia) = P25,840.00
b) Separation Pay
October 7, 1987 to July 15, 2001
= P190.00 x 26 days x 14 yrs./2 = P34,580.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P65,360.00
 ========
IX Wilfredo Juegos
a) Backwages
(same as Pacencia) = P25,840.00
b) Separation Pay
July 23, 1990 to July 15, 2001
= P190.00 x 26 days x 11 yrs./2 = P27,170.00
c) 13th Month Pay
= P190.00 x 26 days = P4,840.00

Total = P57,950.00
========
X Modesto Aguirre
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
= Jan. 5, 1992 to July 15, 2001
= P190.00 x 26 days x 9.5 yrs./2 = P23,465.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P54,245.00
========
XI Alejandro Ardimer
a) Backwages
(same as Paciencia) = P25,840.00
b) Separation Pay
= Jan. 20, 1990 to July 15, 2001
= P190.00 x 26 days x 11.5 yrs./2 = P28,405.00
c) 13th Month Pay
= P190.00 x 26 days = P4,940.00

Total = P59,185.00
========
xxx xxx xxx
WHEREFORE, the foregoing premises considered,
judgment is hereby rendered directing the respondents
Equitable PCI Bank and Helpmate, Inc. to pay jointly and
solidarily the complainants as follows:
1. Cesar Paciencia - P43,130.00
2. Dominador Suico, Jr. - 32,015.00
3. Roland Mosquera - 33,250.00
4. Petronilo Carceda - 72,770.00
5. Roland Sasan, Sr. - 60,420.00
6. Leonilo Dayday - 75,240.00
7. Eleuterio Sacil - 53,010.00
8. Mario Juntilla - 65,360.00
9. Wilfredo Juegos - 57,950.00
10. Modesto Aguirre - 54,245.00
11. Alejandro Ardimer - 59,185.00

TOTAL - P606,575.00 18
===========
 Aggrieved by the decision of Labor Arbiter Gutierrez,
respondents E-PCIBank and HI appealed the same to the NLRC,
4th Division, stationed in Cebu City. Their appeals were
docketed as NLRC Case No. V-000241-2002. In support of its
allegation that it was a legitimate job contractor, HI submitted
before the NLRC several documents which it did not present
before Labor Arbiter Gutierrez. These are: CDESIA

1. Certificate of Filing of Certificate of Increase of Capital

Stock, Certificate of Filing Amended Articles of
Incorporation, and General Information Sheet Stock
Corporation of HI showing therein that it increased its
authorized capital stock from P1,500,000.00 to
P20,000,000.00 on 12 March 1999 with the Securities and
Exchange Commission;
2. Audited Financial Statement of HI showing therein that
it has Total Assets of P20,939,935.72 as of 31 December
2000;
3. Transfer Certificate of Title No. 110173 and Tax
Declaration No. GR2K-09-063-00582 registered under the
name of HI showing that it has a parcel of land with Market
Value of P1,168,860.00 located along Rizal Avenue (now
Bacalso Avenue), Cebu City, and
4. Tax Declaration No. GR2K-09-063-00583 registered
under the name of HI showing that it has a commercial
building constructed on the preceding lot located along
Bacalso Avenue, Cebu City with market value of
P2,515,170.00. 19
The NLRC promulgated its Decision on 22 January 2003
modifying the ruling of Labor Arbiter Gutierrez. The NLRC took
into consideration the documentary evidence presented by HI
for the first time on appeal and, on the basis thereof, declared
HI as a highly capitalized venture with sufficient capitalization,
which cannot be considered engaged in "labor-only
contracting". CAaDSI
On the charge of illegal dismissal, the NLRC ruled that:
The charge of illegal dismissal was prematurely filed. The
record shows that barely eight (8) days from 15 July 2001
when the complainants were placed on a temporary "off-
detail", they filed their complaints on 23 July 2001 and
amended their complaints on 22 August 2001 against the
respondents on the presumption that their services were
already terminated. Temporary "off-detail" is not
equivalent to dismissal. . . . . 20
The NLRC deleted Labor Arbiter Gutierrez's award of
backwages and separation pay, but affirmed his award for 13th
month pay and attorney's fees equivalent to ten percent (10%)
of the 13th month pay, to the petitioners. 21 Thus,
the NLRC decreed in its 22 January 2003 Decision, the payment
of the following reduced amounts to petitioners:
WHEREFORE, premises considered, the decision
of Labor Arbiter Jose G. Gutierrez dated 7 January 2002 is
MODIFIED, to wit:
Ordering respondents Helpmate, Inc. and Equitable PCI
Bank to jointly and severally 22 pay the complainants of
their 13th month pay and attorney's fees in the aggregate
amount of Forty-Three Thousand Four Hundred Seventy-
Two and 00/100 (P43,472.00), broken down as follows:
1. Aguirre, Modesto - P5,434.00
2. Ardimer, Alejandro - 5,434.00
3. Carcedo, Petronilo - 5,434.00
4. Dayday, Leonilo - 5,434.00
5. Juegos, Wilfredo - 5,434.00
6. Juntilla, Mario - 5,434.00
7. Paciencia, Cesar - 5,434.00
8. Sacil, Eleuterio - 5,434.00

TOTAL P43,472.00 23
=========
Petitioners' Motion for Reconsideration was denied by
the NLRC in its Resolution dated 1 July 2003. 24 aHICDc
Distressed by the decision of the NLRC, petitioners sought
recourse with the Court of Appeals by filing a Petition
for Certiorari 25 under Rule 65 of the 1997 Rules of Civil
Procedure docketed as CA-G.R. SP No. 79912.
In its Decision dated 24 April 2006, the Court of Appeals
affirmed the findings of the NLRC that HI was a legitimate job
contractor and that it did not illegally dismiss petitioners:
As to the question of whether or not, as a legitimate
independent job contractor, respondent HI illegally
dismissed the petitioners. We rule in the negative.
It is undisputed that the contract between respondent HI
and its client E-PCIBank expired on July 15, 2000. The
record shows that after said expiration, respondent HI
offered the petitioners new work assignments to various
establishments which are HI's clients. The petitioners,
therefore, were not even placed on "floating status". They
simply refused, without justifiable reason, to assume their
new work assignments which refusal was tantamount to
abandonment. There being no illegal dismissal, petitioners
are not entitled to backwages or separation pay. 26
The fallo of the 24 April 2006 Decision of the appellate court
reads:
WHEREFORE, in view of the foregoing premises, judgment
is hereby rendered by us DENYING the petition filed in this
case and AFFIRMING the decision of the NLRC, Fourth
Division, in NLRC Case No. V-000145-2003 promulgated on
June 22, 2003. 27
Petitioners now come before us via the instant Petition raising
the following issues:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
ACTED IN EXCESS OF THEIR JURISDICTION AND/OR
COMMITTED GRAVE ABUSE OF DISCRETION IN UPHOLDING
THE NLRC 4TH DIVISION'S DECISION AND GRAVELY ERRED
IN:
I. ACCEPTING AND APPRECIATING THE PIECES OF
EVIDENCE SUBMITTED BY RESPONDENTS DURING APPEAL,
ALL EXISTING DURING THE TIME THE NLRC RAB 7'S TRIAL,
CONTRARY TO THIS HONORABLE COURT'S PREVIOUS
ESTABLISHED DECISIONS. EHITaS
II. REVERSING, WITHOUT ANY LEGAL BASIS, THE FACTUAL
FINDING OF NLRC RAB 7 THAT THE RESPONDENT HI
WAS LABOR ONLY CONTRACTOR.
III. RULING, WITHOUT ANY LEGAL BASIS, THAT THE
ILLEGAL DISMISSAL COMPLAINTS WERE PREMATURELY
FILED. 28
Before proceeding to the substantive issues, we first address
the procedural issues raised by petitioners.
Petitioners object to the acceptance and consideration by
the NLRC of the evidence presented by HI for the first time on
appeal. This is not a novel procedural issue, however, and our
jurisprudence is already replete with cases 29 allowing
the NLRC to admit evidence, not presented before
the Labor Arbiter, and submitted to theNLRC for the first time
on appeal. Technical rules of evidence are not binding
in labor cases. Labor officials should use every reasonable
means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or
procedure, all in the interest of due process. 30
 The submission of additional evidence before the NLRC is not
prohibited by its New Rules of Procedure. After all, rules of
evidence prevailing in courts of law or equity are not
controlling in labor cases. The NLRC and labor arbiters are
directed to use every and all reasonable means to ascertain
the facts in each case speedily and objectively, without regard
to technicalities of law and procedure all in the interest of
substantial justice. In keeping with this directive, it has been
held that the NLRCmay consider evidence, such as documents
and affidavits, submitted by the parties for the first time on
appeal. The submission of additional evidence on appeal does
not prejudice the other party for the latter could submit
counter-evidence. 31
In Clarion Printing House,
Inc. v. National Labor Relations Commission, 32 we again
emphasized that:
[T]he NLRC is not precluded from receiving evidence, even
for the first time on appeal, because technical rules of
procedure are not binding in labor cases.
The settled rule is that the NLRC is not precluded from
receiving evidence on appeal as technical rules of
evidence are not binding in labor cases. In
fact, labor officials are mandated by the Labor Code to use
every and all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to
technicalities of law or procedure, all in the interest of due
process. Thus, in Lawin Security
Services v. NLRC, and Bristol Laboratories Employees'
Association-DFA v. NLRC, we held that even if the evidence
was not submitted to the labor arbiter, the fact that it was
duly introduced on appeal to the NLRC is enough basis for
the latter to be more judicious in admitting the same,
instead of falling back on the mere technicality that said
evidence can no longer be considered on appeal. Certainly,
the first course of action would be more consistent with
equity and the basic notions of fairness. TIAEac
For the same reasons, we cannot find merit in petitioners'
protestations against the documentary evidence submitted by
HI because they were mere photocopies. Evidently, petitioners
are invoking the best evidence rule, espoused in Section 3,
Rule 130 of the Rules of Court. It provides that:
Section 3. Original document must be produced;
exceptions. When the subject of inquiry is the contents
of a document, no evidence shall be admissible other than
the original document itself . . . .
The above provision explicitly mandates that when the subject
of inquiry is the contents of a document, no evidence shall be
admissible other than the original document itself.
Notably, certified true copies of these documents,
acceptable under the Rules of Court 33 were furnished to the
petitioners. Even assuming that petitioners were given mere
photocopies, again, we stress that proceedings before
the NLRC are not covered by the technical rules of evidence
and procedure as observed in the regular courts. Technical
rules of evidence do not apply if the decision to grant the
petition proceeds from an examination of its sufficiency as well
as a careful look into the arguments contained in position
papers and other documents. 34
Petitioners had more than adequate opportunity when they
filed their motion for reconsideration before the NLRC, their
Petition to the Court of Appeals and even to this Court, to
refute or present their counter-evidence to the documentary
evidence presented by HI. Having failed in this respect,
petitioners cannot now be heard to complain about these
documentary evidences presented by HI upon which
the NLRC and the Court of Appeals based its finding that HI is a
legitimate job contractor.
 The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, a fair and
reasonable opportunity to explain one's side. It is also an
opportunity to seek a reconsideration of the action or ruling
complained of. It is not the denial of the right to be heard but
denial of the opportunity to be heard that constitutes violation
of due process of law. Petitioners herein were afforded every
opportunity to be heard and to seek reconsideration of the
adverse judgment against them. They had every opportunity to
strengthen their positions by presenting their own substantial
evidence to controvert those submitted by E-PCIBank and HI
before the NLRC, and even before the Court of Appeals. It
cannot win its case by merely raising unsubstantiated doubt or
relying on the weakness of the adverse parties'
evidence. CaASIc

We now proceed to the resolution of the substantive issues

submitted by petitioners for our consideration, particularly,
whether HI is a labor-only contractor and E-PCIBank should be
deemed petitioners' principal employer; and whether
petitioners were illegally dismissed from their employment.
Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out
to a contractor or subcontractor the performance or completion
of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the
premises of the principal. 35 A person is considered engaged
in legitimate job contracting or subcontracting if the following
conditions concur:
(a) The contractor or subcontractor carries on a distinct
and independent business and undertakes to perform the
job, work or service on its own account and under its own
responsibility according to its own manner and method,
and free from the control and direction of the principal in
all matters connected with the performance of the work
except as to the results thereof;
(b) The contractor or subcontractor has substantial capital
or investment; and
(c) The agreement between the principal and contractor or
subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health
standards, free exercise of the right to self-organization,
security of tenure, and social and welfare benefits. 36
In contrast, labor-only contracting, a prohibited act, is an
arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or
service for a principal. 37 In labor-only contracting, the
following elements are present:
(a) The contractor or subcontractor does not have
substantial capital or investment to actually perform the
job, work or service under its own account and
responsibility; and
(b) The employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which
are directly related to the main business of the
principal. 38
In distinguishing between permissible job contracting and
prohibited labor-only contracting, 39 we elucidated
in Vinoya v. National Labor Relations Commission, 40 that it is
not enough to show substantial capitalization or investment in
the form of tools, equipment, etc. Other facts that may be
considered include the following: whether or not the contractor
is carrying on an independent business; the nature and extent
of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of specified
pieces of work; the control and supervision of the work to
another; the employer's power with respect to the hiring, firing
and payment of the contractor's workers; the control of the
premises; the duty to supply premises, tools, appliances,
materials and labor; and the mode and manner or terms of
payment. 41 Simply put, the totality of the facts and the
surrounding circumstances of the case are to be
considered. 42 Each case must be determined by its own facts
and all the features of the relationship are to be considered. 43
In the case at bar, we find substantial evidence to support the
finding of the NLRC, affirmed by the Court of Appeals, that HI is
a legitimate job contractor.
We take note that HI has been issued by the Department
of Labor and Employment (DOLE) Certificate of
Registration 44 Numbered VII-859-1297-048. The said
certificate states among other things:
"CERTIFICATE OF REGISTRATION
Numbered VII-859-1297-048
is issued to
HELPMATE, INCORPORATED
330 N. Bacalso Avenue, Cebu City
for having complied with the requirements as provided for
under the Labor Code, as amended, and its Implementing
Rules and having paid the registration fee in the amount of
ONE HUNDRED PESOS (P100.00) per Official Receipt
Number 9042769, dated October 16, 1997.
In witness whereof, and by authority vested in me by
the Labor Code, as amended, and its Implementing Rules
specifically Department Order No. 10 series of 1997, I have
hereunto set my hand and affixed the Official on this 23rd
day of December 1997." 45 CEIHcT
Having been issued by a public officer, this certification carries
with it the presumption that it was issued in the regular
performance of official duty. 46 In the absence of proof,
petitioner's bare assertion cannot prevail over this
presumption. Moreover, the DOLE being the agency primarily
responsible for regulating the business of independent job
contractors, we can presume in the absence of evidence to the
contrary that it thoroughly evaluated the requirements
submitted by HI as a precondition to the issuance of the
Certificate of Registration.
The evidence on record also shows that HI is carrying on a
distinct and independent business from E-PCIBank. The
employees of HI are assigned to clients to perform janitorial
and messengerial services, clearly distinguishable from the
banking services in which E-PCIBank is engaged.
Despite the afore-mentioned compliance by HI with the
requisites for permissible job contracting, Labor Arbiter
Gutierrez still declared that HI was engaged in prohibited labor-
only contracting because it did not possess substantial capital
or investment to actually perform the job, work or service
under its own account or responsibility. Both the NLRC and the
Court of Appeals ruled to the contrary, and we agree.
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, tools,
equipments, implements, machineries and work premises,
actually and directly used by the contractor or subcontractor in
the performance or completion of the job, work or service
contracted out. 47 An independent contractor must have either
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others. The
law does not require both substantial capital and investment in
the form of tools, equipment, machineries, etc. 48 It is enough
that it has substantial capital. In the case of HI, it has proven
both.
We have expostulated that once it is established that an entity
such as in this case, HI has substantial capital, it was no longer
necessary to adduce further evidence to prove that it does not
fall within the purview of "labor-only" contracting. 49 There is
even no need for HI to refute the contention of petitioners that
some of the activities they performed such as those of
messengerial services are directly related to the principal
business of E-PCIBank.
In any event, we have earlier declared that while these
services rendered by the petitioners as janitors, messengers
and drivers are considered directly related to the principal
business of a bank, in this case E-PCIBank, nevertheless, they
are not necessary in the conduct of its (E-PCIBANK's) principal
business. 50
HI has substantial capital in the amount of P20,939,935.72. It
has its own building where it holds office and it has been
engaged in business for more than a decade now. 51 As
observed by the Court of Appeals, surely, such a well-
established business entity cannot be considered a labor-only
contractor.
Etched in an unending stream of cases are four standards in
determining the existence of an employer-employee
relationship, namely: (a) the manner of selection and
engagement of the putative employee; (b) the mode of
payment of wages; (c) the presence or absence of power of
dismissal; and, (d) the presence or absence of control of the
putative employee's conduct. Most determinative among these
factors is the so-called "control test". 52
The presence of the first requisite for the existence of an
employer-employee relationship to wit, the selection and
engagement of the employee is shown by the fact that it was
HI which selected and engaged the services of petitioners as
its employees. This is fortified by the provision in the contract
of services between HI and E-PCIBank which states:
Selection, Engagement, Discharge. [HI] shall have
exclusive discretion in the selection, engagement,
investigation, discipline and discharge of its employees. 53
 On the second requisite regarding the payment of wages, it
was HI who paid petitioners their wages and who provided their
daily time records and uniforms and other materials necessary
for the work they performed. Therefore, it is HI who is
responsible for petitioner's claims for wages and other
employee's benefits. Precisely, the contract of services
between HI and E-PCIBank reveals the following:
Indemnity for Salaries and Benefits, etc. [HI] shall be
responsible for the salaries, allowances, overtime and
holiday pay, and other benefits of its personnel including
withholding taxes. 54
As to the third requisite on the power to control the
employee's conduct, and the fourth requisite regarding the
power of dismissal, again E-PCIBank did not have the power to
control petitioners with respect to the means and methods by
which their work was to be accomplished. It likewise had no
power of dismissal over the petitioners. All that E-PCIBank
could do was to report to HI any untoward act, negligence,
misconduct or malfeasance of any employee assigned to the
premises. The contract of services between E-PCIBank and HI is
noteworthy. It states: EaScHT
[HI] shall have the entire charge, control and supervision
over all its employees who may be fielded to [E-PCIBank].
For this purpose, [HI] shall assign a regular supervisor of its
employees who may be fielded to the Bank and which
regular supervisor shall exclusively supervise and control
the activities and functions defined in Section 1
hereof. . . . . 55
All these circumstances establish that HI undertook said
contract on its account, under its own responsibility, according
to its own manner and method, and free from the control and
direction of E-PCIBank. Where the control of the principal is
limited only to the result of the work, independent job
contracting exists. The janitorial service agreement between E-
PCIBank and HI is definitely a case of permissible job
contracting.

Considering the foregoing, plus taking judicial notice of the

general practice in private, as well as in government
institutions and industries, of hiring an independent contractor
to perform special services, 56 ranging from janitorial, security
and even technical services, we can only conclude that HI is a
legitimate job contractor. As such legitimate job contractor, the
law creates an employer-employee relationship between HI and
petitioners 57 which renders HI liable for the latter's claims.
In view of the preceding conclusions, petitioners will never
become regular employees of E-PCIBank regardless of how
long they were working for the latter. 58
We further rule that petitioners were not illegally dismissed by
HI. Upon the termination of the Contract of Service between HI
and E-PCIBank, petitioners cannot insist to continue to work for
the latter. Their pull-out from E-PCIBank did not constitute
illegal dismissal since, first, petitioners were not employees of
E-PCIBank; and second,they were pulled out from said
assignment due to the non-renewal of the Contract of Service
between HI and E-PCIBank. At the time they filed their
complaints with theLabor Arbiter, petitioners were not even
dismissed by HI; they were only "off-detail" pending their re-
assignment by HI to another client. And when they were
actually given new assignments by HI with other
clients, 59 petitioners even refused the same. As
the NLRC pronounced, petitioners' complaint for illegal
dismissal is apparently premature.
WHEREFORE, premises considered, the Petition is DENIED for
lack of merit. The Decision dated 24 April 2006 and Resolution
dated 31 October 2006 of the Court of Appeals are AFFIRMED.
Costs against petitioners.
SO ORDERED.
 Ynares-Santiago, Austria-Martinez, Azcuna * and Nachura,
JJ., concur.

||| (Sasan, Sr. v. National Labor Relations Commission, G.R. No.

176240, [October 17, 2008], 590 PHIL 685-711)

FIRST DIVISION

[G.R. No. 157943. September 4, 2013.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

GILBERT REYES WAGAS, accused-appellant.

DECISION

BERSAMIN, J p:
The Bill of Rights guarantees the right of an accused to be
presumed innocent until the contrary is proved. In order to
overcome the presumption of innocence, the Prosecution is
required to adduce against him nothing less than proof beyond
reasonable doubt. Such proof is not only in relation to the
elements of the offense, but also in relation to the identity of
the offender. If the Prosecution fails to discharge its heavy
burden, then it is not only the right of the accused to be freed,
it becomes the Court's constitutional duty to acquit him.
The Case
Gilbert R. Wagas appeals his conviction for estafa under the
decision rendered on July 11, 2002 by the Regional Trial Court,
Branch 58, in Cebu City (RTC), meting on him the
indeterminate penalty of 12 years of prision mayor, as
minimum, to 30 years of reclusion perpetua, as maximum.
 Antecedents
Wagas was charged with estafa under the information that
reads:
That on or about the 30th day of April, 1997, and for
sometime prior and subsequent thereto, in the City of
Cebu, Philippines, and within the jurisdiction of this
Honorable Court, the said accused, with deliberate intent,
with intent to gain and by means of false pretenses or
fraudulent acts executed prior to or simultaneously with
the commission of the fraud, to wit: knowing that he did
not have sufficient funds deposited with the Bank of
Philippine Islands, and without informing Alberto Ligaray of
that circumstance, with intent to defraud the latter, did
then and there issue Bank of the Philippine Islands Check
No. 0011003, dated May 08, 1997 in the amount of
P200,000.00, which check was issued in payment of an
obligation, but which check when presented for
encashment with the bank, was dishonored for the reason
"drawn against insufficient funds" and inspite of notice and
several demands made upon said accused to make good
said check or replace the same with cash, he had failed
and refused and up to the present time still fails and
refuses to do so, to the damage and prejudice of Alberto
Ligaray in the amount aforestated.
CONTRARY TO LAW.1
After Wagas entered a plea of not guilty, 2 the pre-trial was
held, during which the Defense admitted that the check
alleged in the information had been dishonored due to
insufficient funds. 3 On its part, the Prosecution made no
admission. 4
At the trial, the Prosecution presented complainant Alberto
Ligaray as its lone witness. Ligaray testified that on April 30,
1997, Wagas placed an order for 200 bags of rice over the
telephone; that he and his wife would not agree at first to the
proposed payment of the order by postdated check, but
because of Wagas' assurance that he would not disappoint
them and that he had the means to pay them because he had
a lending business and money in the bank, they relented and
accepted the order; that he released the goods to Wagas on
April 30, 1997 and at the same time received Bank of the
Philippine Islands (BPI) Check No. 0011003 for P200,000.00
payable to cash and postdated May 8, 1997; that he later
deposited the check with Solid Bank, his depository bank, but
the check was dishonored due to insufficiency of funds; 5 that
he called Wagas about the matter, and the latter told him that
he would pay upon his return to Cebu; and that despite
repeated demands, Wagas did not pay him. 6 cTEICD
On cross-examination, Ligaray admitted that he did not
personally meet Wagas because they transacted through
telephone only; that he released the 200 bags of rice directly
to Robert Caada, the brother-in-law of Wagas, who signed the
delivery receipt upon receiving the rice. 7
After Ligaray testified, the Prosecution formally offered the
following: (a) BPI Check No. 0011003 in the amount of
P200,000.00 payable to "cash;" (b) the return slip dated May
13, 1997 issued by Solid Bank; (c) Ligaray's affidavit;
and (d) the delivery receipt signed by Caada. After the RTC
admitted the exhibits, the Prosecution then rested its case. 8
In his defense, Wagas himself testified. He admitted having
issued BPI Check No. 0011003 to Caada, his brother-in-law,
not to Ligaray. He denied having any telephone conversation or
any dealings with Ligaray. He explained that the check was
intended as payment for a portion of Caada's property that he
wanted to buy, but when the sale did not push through, he did
not anymore fund the check. 9
On cross-examination, the Prosecution confronted Wagas with
a letter dated July 3, 1997 apparently signed by him and
addressed to Ligaray's counsel, wherein he admitted owing
Ligaray P200,000.00 for goods received, to wit:
This is to acknowledge receipt of your letter dated June
23, 1997 which is self-explanatory. It is worthy also to
discuss with you the environmental facts of the case for
your consideration, to wit:
1. It is true that I obtained goods from your client worth
P200,000.00 and I promised to settle the same last May
10, 1997, but to no avail. On this point, let me inform you
that I sold my real property to a buyer in Manila, and
promised to pay the consideration on the same date as I
promised with your client. Unfortunately, said buyer
likewise failed to make good with such obligation. Hence, I
failed to fulfill my promise resultant thereof. (sic)
2. Again, I made another promise to settle said obligation
on or before June 15, 1997, but still to no avail attributable
to the same reason as aforementioned.(sic)
3. To arrest this problem, we decided to source some funds
using the subject property as collateral. This other means
is resorted to for the purpose of settling the herein
obligation. And as to its status, said funds will be
rele[a]sed within thirty (30) days from today.
In view of the foregoing, it is my sincere request and
promise to settle said obligation on or before August 15,
1997.
Lastly, I would like to manifest that it is not my intention to
shy away from any financial obligation. SaDICE
xxx xxx xxx
Respectfully yours,
(SGD.) GILBERT R. WAGAS 10
Wagas admitted the letter, but insisted that it was Caada who
had transacted with Ligaray, and that he had signed the letter
only because his sister and her husband (Caada) had begged
him to assume the responsibility. 11 On redirect
examination, Wagas declared that Caada, a seafarer, was
then out of the country; that he signed the letter only to
accommodate the pleas of his sister and Caada, and to avoid
jeopardizing Caada's application for overseas
employment. 12 The Prosecution subsequently offered and the
RTC admitted the letter as rebuttal evidence. 13
Decision of the RTC
As stated, the RTC convicted Wagas of estafa on July 11,
2002, viz.:
WHEREFORE, premises considered, the Court finds the
accused GUILTY beyond reasonable doubt as charged and
he is hereby sentenced as follows:
1. To suffer an indeterminate penalty of from twelve (12)
years of pris[i]on mayor, as minimum, to thirty (30) years
of reclusion perpetua as maximum;
2. To indemnify the complainant, Albert[o] Ligaray in the
sum of P200,000.00; CAHaST
3. To pay said complainant the sum of P30,000.00 by way
of attorney's fees; and
4. the costs of suit.
SO ORDERED. 14
The RTC held that the Prosecution had proved beyond
reasonable doubt all the elements constituting the crime
of estafa, namely: (a) that Wagas issued the postdated check
as payment for an obligation contracted at the time the check
was issued; (b) that he failed to deposit an amount sufficient to
cover the check despite having been informed that the check
had been dishonored; and (c) that Ligaray released the goods
upon receipt of the postdated check and upon Wagas'
assurance that the check would be funded on its date.
 Wagas filed a motion for new trial and/or
reconsideration, 15 arguing that the Prosecution did not
establish that it was he who had transacted with Ligaray and
who had negotiated the check to the latter; that the records
showed that Ligaray did not meet him at any time; and that
Ligaray's testimony on their alleged telephone conversation
was not reliable because it was not shown that Ligaray had
been familiar with his voice. Wagas also sought the reopening
of the case based on newly discovered evidence,
specifically: (a) the testimony of Caada who could not testify
during the trial because he was then out of the country,
and (b) Ligaray's testimony given against Wagas in another
criminal case for violation of Batas Pambansa Blg. 22.
On October 21, 2002, the RTC denied the motion for new trial
and/or reconsideration, opining that the
evidence Wagas desired to present at a new trial did not
qualify as newly discovered, and that there was no compelling
ground to reverse its decision. 16 DSAEIT
Wagas appealed directly to this Court by notice of appeal. 17
Prior to the elevation of the records to the Court, Wagas filed a
petition for admission to bail pending appeal. The RTC granted
the petition and fixed Wagas' bond at
P40,000.00. 18 Wagas then posted bail for his provisional
liberty pending appeal. 19
The resolution of this appeal was delayed by incidents bearing
on the grant of Wagas' application for bail. On November 17,
2003, the Court required the RTC Judge to explain
why Wagas was out on bail. 20 On January 15, 2004, the RTC
Judge submitted to the Court a so-called manifestation and
compliance which the Court referred to the Office of the Court
Administrator (OCA) for evaluation, report, and
recommendation. 21 On July 5, 2005, the Court, upon the
OCA's recommendation, directed the filing of an administrative
complaint for simple ignorance of the law against the RTC
Judge. 22 On September 12, 2006, the Court directed the OCA
to comply with its July 5, 2005 directive, and to cause the filing
of the administrative complaint against the RTC Judge. The
Court also directed Wagas to explain why his bail should not be
cancelled for having been erroneously granted. 23 Finally, in its
memorandum dated September 27, 2006, the OCA manifested
to the Court that it had meanwhile filed the administrative
complaint against the RTC Judge. 24
Issues
In this appeal, Wagas insists that he and Ligaray were neither
friends nor personally known to one other; that it was highly
incredible that Ligaray, a businessman, would have entered
into a transaction with him involving a huge amount of money
only over the telephone; that on the contrary, the evidence
pointed to Caada as the person with whom Ligaray had
transacted, considering that the delivery receipt, which had
been signed by Caada, indicated that the goods had been
"Ordered by ROBERT CAADA," that the goods had been
received by Caada in good order and condition, and that there
was no showing that Caada had been acting on behalf
ofWagas; that he had issued the check to Caada upon a
different transaction; that Caada had negotiated the check to
Ligaray; and that the element of deceit had not been
established because it had not been proved with certainty that
it was him who had transacted with Ligaray over the
telephone. AcHSEa
The circumstances beg the question: did the Prosecution
establish beyond reasonable doubt the existence of all the
elements of the crime of estafa as charged, as well as the
identity of the perpetrator of the crime?
Ruling
The appeal is meritorious.
Article 315, paragraph 2 (d) of the Revised Penal Code, as
amended, provides:
Article 315. Swindling (estafa). Any person who shall
defraud another by any of the means mentioned
hereinbelow shall be punished by:
xxx xxx xxx
2. By means of any of the following false pretenses or
fraudulent acts executed prior to or simultaneously with
the commission of the fraud:
xxx xxx xxx
(d) By postdating a check, or issuing a check in payment
of an obligation when the offender had no funds in the
bank, or his funds deposited therein were not sufficient to
cover the amount of the check. The failure of the drawer of
the check to deposit the amount necessary to cover his
check within three (3) days from receipt of notice from the
bank and/or the payee or holder that said check has been
dishonored for lack or insufficiency of funds shall be prima
facie evidence of deceit constituting false pretense or
fraudulent act. ICaDHT
In order to constitute estafa under this statutory provision, the
act of postdating or issuing a check in payment of an obligation
must be the efficient cause of the defraudation. This means
that the offender must be able to obtain money or property
from the offended party by reason of the issuance of the check,
whether dated or postdated. In other words, the Prosecution
must show that the person to whom the check was delivered
would not have parted with his money or property were it not
for the issuance of the check by the offender. 25
The essential elements of the crime charged are that: (a) a
check is postdated or issued in payment of an obligation
contracted at the time the check is issued; (b) lack or
insufficiency of funds to cover the check; and (c) damage to
the payee thereof. 26 It is the criminal fraud or deceit in the
issuance of a check that is punishable, not the non-payment of
a debt. 27 Prima facie evidence of deceit exists by law upon
proof that the drawer of the check failed to deposit the amount
necessary to cover his check within three days from receipt of
the notice of dishonor.
The Prosecution established that Ligaray had released the
goods to Caada because of the postdated check the latter had
given to him; and that the check was dishonored when
presented for payment because of the insufficiency of funds.
In every criminal prosecution, however, the identity of the
offender, like the crime itself, must be established by proof
beyond reasonable doubt. 28 In that regard, the Prosecution
did not establish beyond reasonable doubt that it
was Wagas who had defrauded Ligaray by issuing the check.
Firstly, Ligaray expressly admitted that he did not personally
meet the person with whom he was transacting over the
telephone, thus:
Q: On April 30, 1997, do you remember having a
transaction with the accused in this case?
A: Yes, sir. He purchased two hundred bags of rice from
me.
Q: How did this purchase of rice transaction started? (sic)
A: He talked with me over the phone and told me
that he would like to purchase two hundred bags of
rice and he will just issue a check. 29
Even after the dishonor of the check, Ligaray did not
personally see and meet whoever he had dealt with and to
whom he had made the demand for payment, and that he had
talked with him only over the telephone, to wit:
Q: After the check was (sic) bounced, what did you do
next? STcaDI
A: I made a demand on them.
Q: How did you make a demand?
A: I called him over the phone.
Q: Who is that "him" that you are referring to?
A: Gilbert Wagas. 30
Secondly, the check delivered to Ligaray was made payable to
cash. Under the Negotiable Instruments Law, this type of check
was payable to the bearer and could be negotiated by mere
delivery without the need of an indorsement. 31 This rendered
it highly probable that Wagas had issued the check not to
Ligaray, but to somebody else like Caada, his brother-in-law,
who then negotiated it to Ligaray. Relevantly,
Ligaray confirmed that he did not himself see or
meet Wagas at the time of the transaction and thereafter, and
expressly stated that the person who signed for and received
the stocks of rice was Caada.
It bears stressing that the accused, to be guilty of estafa as
charged, must have used the check in order to defraud the
complainant. What the law punishes is the fraud or deceit, not
the mere issuance of the worthless check. Wagas could not be
held guilty of estafa simply because he had issued the check
used to defraud Ligaray. The proof of guilt must still clearly
show that it had been Wagas as the drawer who had defrauded
Ligaray by means of the check.
Thirdly, Ligaray admitted that it was Caada who received the
rice from him and who delivered the check to him. Considering
that the records are bereft of any showing that Caada was
then acting on behalf of Wagas, the RTC had no factual and
legal bases to conclude and find that Caada had been acting
for Wagas. This lack of factual and legal bases for the RTC to
infer so obtained despite Wagas being Caada's brother-in-law.
Finally, Ligaray's declaration that it was Wagas who had
transacted with him over the telephone was not reliable
because he did not explain how he determined that the person
with whom he had the telephone conversation was
really Wagas whom he had not yet met or known before then.
We deem it essential for purposes of reliability and
trustworthiness that a telephone conversation like that one
Ligaray supposedly had with the buyer of rice to be first
authenticated before it could be received in evidence. Among
others, the person with whom the witness conversed by
telephone should be first satisfactorily identified by voice
recognition or any other means. 32 Without the authentication,
incriminating another person just by adverting to the telephone
conversation with him would be all too easy. In this respect, an
identification based on familiarity with the voice of the caller,
or because of clearly recognizable peculiarities of the caller
would have sufficed. 33 The identity of the caller could also be
established by the caller's self-identification, coupled with
additional evidence, like the context and timing of the
telephone call, the contents of the statement challenged,
internal patterns, and other distinctive characteristics, and
disclosure of knowledge of facts known peculiarly to the
caller. 34
Verily, it is only fair that the caller be reliably identified first
before a telephone communication is accorded probative
weight. The identity of the caller may be established by direct
or circumstantial evidence. According to one ruling of the
Kansas Supreme Court:
Communications by telephone are admissible in evidence
where they are relevant to the fact or facts in issue, and
admissibility is governed by the same rules of evidence
concerning face-to-face conversations except the party
against whom the conversations are sought to be used
must ordinarily be identified. It is not necessary that the
witness be able, at the time of the conversation, to identify
the person with whom the conversation was had, provided
subsequent identification is proved by direct or
circumstantial evidence somewhere in the development of
the case. The mere statement of his identity by the
party calling is not in itself sufficient proof of such
identity, in the absence of corroborating
circumstances so as to render the conversation
admissible. However, circumstances preceding or
following the conversation may serve to sufficiently
identify the caller. The completeness of the
identification goes to the weight of the evidence
rather than its admissibility, and the responsibility
lies in the first instance with the district court to
determine within its sound discretion whether the
threshold of admissibility has been met. 35 (Bold
emphasis supplied) CHTcSE
Yet, the Prosecution did not tender any plausible explanation
or offer any proof to definitely establish that it had
been Wagas whom Ligaray had conversed with on the
telephone. The Prosecution did not show through Ligaray
during the trial as to how he had determined that his caller
was Wagas. All that the Prosecution sought to elicit from him
was whether he had known and why he had known Wagas, and
he answered as follows:
Q: Do you know the accused in this case?
A: Yes, sir.
Q: If he is present inside the courtroom [. . .]
A: No, sir. He is not around.
Q: Why do you know him?
A: I know him as a resident of Compostela because
he is an ex-mayor of Compostela. 36
During cross-examination, Ligaray was allowed another
opportunity to show how he had determined that his caller
was Wagas, but he still failed to provide a satisfactory showing,
to wit:
Q: Mr. Witness, you mentioned that you and the accused
entered into [a] transaction of rice selling, particularly with
these 200 sacks of rice subject of this case, through
telephone conversation? SIcCEA
A: Yes, sir.
Q: But you cannot really ascertain that it was the
accused whom you are talking with?
A: I know it was him because I know him.
Q: Am I right to say [that] that was the first time
that you had a transaction with the accused through
telephone conversation, and as a consequence of
that alleged conversation with the accused through
telephone he issued a check in your favor?
A: No. Before that call I had a talk[ ] with the
accused.
Q: But still through the telephone?
A: Yes, sir.
Q: There was no instant (sic) that the accused went
to see you personally regarding the 200 bags rice
transaction?
A: No. It was through telephone only.
Q: In fact[,] you did not cause the delivery of these
200 bags of rice through the accused himself?
A: Yes. It was through Robert.
Q: So, after that phone call[,] you deliver[ed]
th[ose] 200 sacks of rice through somebody other
than the accused?
A: Yes, sir. 37
Ligaray's statement that he could tell that it was Wagas who
had ordered the rice because he "know[s]" him was still vague
and unreliable for not assuring the certainty of the
identification, and should not support a finding of Ligaray's
familiarity with Wagas as the caller by his voice. It was evident
from Ligaray's answers that Wagas was not even an
acquaintance of Ligaray's prior to the transaction. Thus, the
RTC's conclusion that Ligaray had transacted with Wagas had
no factual basis. Without that factual basis, the RTC was
speculating on a matter as decisive as the identification of the
buyer to be Wagas. DIESHT
The letter of Wagas did not competently establish that he was
the person who had conversed with Ligaray by telephone to
place the order for the rice. The letter was admitted exclusively
as the State's rebuttal evidence to controvert or impeach the
denial of Wagas of entering into any transaction with Ligaray
on the rice; hence, it could be considered and appreciated only
for that purpose. Under the law of evidence, the court shall
consider evidence solely for the purpose for which it is
offered, 38not for any other purpose. 39 Fairness to the
adverse party demands such exclusivity. Moreover, the high
plausibility of the explanation of Wagas that he had signed the
letter only because his sister and her husband had pleaded
with him to do so could not be taken for granted.
It is a fundamental rule in criminal procedure that the State
carries the onus probandi in establishing the guilt of the
accused beyond a reasonable doubt, as a consequence of the
tenet ei incumbit probation, qui dicit, non qui negat, which
means that he who asserts, not he who denies, must
prove, 40 and as a means of respecting the presumption of
innocence in favor of the man or woman on the dock for a
crime. Accordingly, the State has the burden of proof to show:
(1) the correct identification of the author of a crime, and (2)
the actuality of the commission of the offense with the
participation of the accused. All these facts must be proved by
the State beyond reasonable doubt on the strength of its
evidence and without solace from the weakness of the defense.
That the defense the accused puts up may be weak is
inconsequential if, in the first place, the State has failed to
discharge the onus of his identity and culpability. The
presumption of innocence dictates that it is for the Prosecution
to demonstrate the guilt and not for the accused to establish
innocence. 41 Indeed, the accused, being presumed innocent,
carries no burden of proof on his or her shoulders. For this
reason, the first duty of the Prosecution is not to prove the
crime but to prove the identity of the criminal. For even if the
commission of the crime can be established, without
competent proof of the identity of the accused beyond
reasonable doubt, there can be no conviction. 42
There is no question that an identification that does not
preclude a reasonable possibility of mistake cannot be
accorded any evidentiary force. 43 Thus, considering that the
circumstances of the identification of Wagas as the person who
transacted on the rice did not preclude a reasonable possibility
of mistake, the proof of guilt did not measure up to the
standard of proof beyond reasonable doubt demanded in
criminal cases. Perforce, the accused's constitutional right of
presumption of innocence until the contrary is proved is not
overcome, and he is entitled to an acquittal, 44 even though
his innocence may be doubted. 45
Nevertheless, an accused, though acquitted of estafa, may still
be held civilly liable where the preponderance of the
established facts so warrants. 46 Wagas as the admitted
drawer of the check was legally liable to pay the amount of it
to Ligaray, a holder in due course. 47 Consequently, we
pronounce and hold him fully liable to pay the amount of the
dishonored check, plus legal interest of 6% per annum from the
finality of this decision.
WHEREFORE, the Court REVERSES and SETS ASIDE the
decision rendered on July 11, 2002 by the Regional Trial Court,
Branch 58, in Cebu City; and ACQUITS Gilbert R.Wagas of the
crime of estafa on the ground of reasonable doubt,
but ORDERS him to pay Alberto Ligaray the amount of
P200,000.00 as actual damages, plus interest of 6% per
annum from the finality of this decision. LLpr
No pronouncement on costs of suit.
SO ORDERED.
Sereno, C.J., Villarama, Jr., Reyes and Perlas-
Bernabe, * JJ., concur.

Footnotes
||| (People v. Wagas, G.R. No. 157943, [September 4, 2013])

SECOND DIVISION

[G.R. No. 186228. March 15, 2010.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

ANTONIO LAUGA Y PINA ALIAS TERIO, accused-
appellant.

DECISION

PEREZ, J p:
Before Us for final review is the trial court's conviction of the
appellant for the rape of his thirteen-year old daughter.
Consistent with the ruling of this Court in People v.
Cabalquinto, 1 the real name and the personal circumstances
of the victim, and any other information tending to establish
or compromise her identity, including those of her immediate
family or household members, are not disclosed in this
decision.
The Facts
In an Information dated 21 September 2000, 2 the appellant
was accused of the crime of QUALIFIED RAPE allegedly
committed as follows:
That on or about the 15th day of March 2000, in the
evening, at Barangay xxx, municipality of xxx, province of
Bukidnon, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being the
father of AAA with lewd design, with the use of force and
intimidation, did then and there, willfully, unlawfully and
criminally have carnal knowledge with his own daughter
AAA, a 13 year[s]old minor against her will. 3
On 12 October 2000, appellant entered a plea of not
guilty. 4 During the pre-trial conference, the prosecution and
the defense stipulated and admitted: (a) the correctness of
the findings indicated in the medical certificate of the
physician who examined AAA; (b) that AAA was only thirteen
(13) years old when the alleged offense was committed; and
(c) that AAA is the daughter of the appellant. 5 On trial, three
(3) witnesses testified for the prosecution, namely: victim
AAA; 6 her brother BBB; 7 and one Moises Boy
Banting, 8 a "bantay bayan" in the barangay. Their
testimonies revealed the following: HScAEC
In the afternoon of 15 March 2000, AAA was left alone at
home. 9 AAA's father, the appellant, was having a drinking
spree at the neighbor's place. 10 Her mother decided to leave
because when appellant gets drunk, he has the habit of
mauling AAA's mother. 11 Her only brother BBB also went out
in the company of some neighbors. 12
At around 10:00 o'clock in the evening, appellant woke AAA
up; 13 removed his pants, slid inside the blanket covering
AAA and removed her pants and underwear; 14 warned her
not to shout for help while threatening her with his
fist; 15 and told her that he had a knife placed above her
head. 16 He proceeded to mash her breast, kiss her
repeatedly, and "inserted his penis inside her vagina." 17
 Soon after, BBB arrived and found AAA crying. 18 Appellant
claimed he scolded her for staying out late. 19 BBB decided
to take AAA with him. 20 While on their way to their maternal
grandmother's house, AAA recounted her harrowing
experience with their father. 21 Upon reaching their
grandmother's house, they told their grandmother and uncle
of the incident, 22 after which, they sought the assistance of
Moises Boy Banting. 23
Moises Boy Banting found appellant in his house wearing only
his underwear. 24 He invited appellant to the police
station, 25 to which appellant obliged. At the police outpost,
he admitted to him that he raped AAA because he was unable
to control himself. 26
The following day, AAA submitted herself to physical
examination. 27 Dra. Josefa Arlita L. Alsula, Municipal Health
Officer of x x x, Bukidnon, issued the Medical Certificate,
which reads:
hyperemic vulvae with 4 o'clock & 6 o'clock freshly
lacerated hymen; (+) minimal to moderate bloody
discharges 2 to an alleged raping incident 28
On the other hand, only appellant testified for the defense.
He believed that the charge against him was ill-motivated
because he sometimes physically abuses his wife in front of
their children after engaging in a heated argument, 29 and
beats the children as a disciplinary measure. 30 He went
further to narrate how his day was on the date of the alleged
rape.
He alleged that on 15 March 2000, there was no food
prepared for him at lunchtime. 31 Shortly after, AAA
arrived. 32 She answered back when confronted. 33This
infuriated him that he kicked her hard on her buttocks. 34
Appellant went back to work and went home again around 3
o'clock in the afternoon. 35 Finding nobody at home, 36 he
prepared his dinner and went to sleep.37
 Later in the evening, he was awakened by the members of
the "Bantay Bayan" headed by Moises Boy Banting. 38 They
asked him to go with them to discuss some matters. 39 He
later learned that he was under detention because AAA
charged him of rape. 40 SEcITC
On 8 July 2006, the Regional Trial Court, Branch 9, Malaybalay
City, Bukidnon, rendered its decision 41 in Criminal Case No.
10372-0, finding appellant guilty of rape qualified by
relationship and minority, and sentenced him to suffer the
penalty of reclusion perpetua. 42 It also ordered him to
indemnify AAA P50,000.00 as moral damages, and
P50,000.00 as civil indemnity with exemplary damages of
P25,000.00. 43
On 30 September 2008, the decision of the trial court was
AFFIRMED with MODIFICATIONS 44 by the Court of Appeals in
CA-G.R. CR HC No. 00456-MIN. 45 The appellate court found
that appellant is not eligible for parole and it increased both
the civil indemnity and moral damages from P50,000.00 to
P75,000.00. 46
On 24 November 2008, the Court of Appeals gave due course
to the appellant's notice of appeal. 47 This Court required the
parties to simultaneously file their respective supplemental
briefs, 48 but both manifested that they will no longer file
supplemental pleadings. 49
The lone assignment of error in the appellant's brief is that,
the trial court gravely erred in finding him guilty as charged
despite the failure of the prosecution to establish his guilt
beyond reasonable doubt, 50 because: (1) there were
inconsistencies in the testimonies of AAA and her brother
BBB; 51 (2) his extrajudicial confession before Moises Boy
Banting was without the assistance of a counsel, in violation
of his constitutional right; 52 and (3) AAA's accusation was ill-
motivated. 53
Our Ruling
Appellant contests the admissibility in evidence of his alleged
confession with a "bantay bayan" and the credibility of the
witnesses for the prosecution.
Admissibility in Evidence of an
Extrajudicial Confession before
a "Bantay Bayan"
Appellant argues that even if he, indeed, confessed to Moises
Boy Banting, a "bantay bayan," the confession was
inadmissible in evidence because he was not assisted by a
lawyer and there was no valid waiver of such requirement. 54
The case of People v. Malngan 55 is the authority on the
scope of the Miranda doctrine provided for under Article III,
Section 12 (1) 56 and (3) 57 of the Constitution.
In Malngan, appellant questioned the admissibility of her
extrajudicial confessions given to the barangay chairman and
a neighbor of the private complainant. This Court
distinguished. Thus:
Arguably, the barangay tanods, including
the Barangay Chairman, in this particular instance, may be
deemed as law enforcement officer for purposes of
applying Article III, Section 12(1) and (3), of the
Constitution. When accused-appellant was brought to the
barangay hall in the morning of 2 January 2001, she was
already a suspect, actually the only one, in the fire that
destroyed several houses . . . . She was, therefore, already
under custodial investigation and the rights guaranteed
by . . . [the] Constitution should have already been
observed or applied to her. Accused-appellant's confession
to Barangay Chairman . . . was made in response to the
'interrogation' made by the latter admittedly conducted
without first informing accused-appellant of her rights
under the Constitution or done in the presence of counsel.
For this reason, the confession of accused-appellant, given
to Barangay Chairman . . ., as well as the lighter found . . .
in her bag are inadmissible in evidenceagainst
her . . . . TSaEcH
[But such does] not automatically lead to her acquittal. . . .
[T]he constitutional safeguards during custodial
investigations do not apply to those not elicited
through questioning by the police or their
agents but given in an ordinary manner whereby the
accused verbally admits . . . as . . . in the case at bar when
accused-appellant admitted to Mercedita Mendoza, one of
the neighbors . . . [of the private
complainant]. 58 (Emphasis supplied)
Following the rationale behind the ruling in Malngan, this
Court needs to ascertain whether or not a "bantay
bayan" may be deemed a law enforcement officer within the
contemplation of Article III, Section 12 of the Constitution.
In People of the Philippines v. Buendia, 59 this Court had the
occasion to mention the nature of a "bantay bayan," that is,
"a group of male residents living in [the] area organized for
the purpose of keeping peace in their community[,which is] an
accredited auxiliary of the . . . PNP." 60
Also, it may be worthy to consider that pursuant to Section 1
(g) of Executive Order No. 309 issued on 11 November 1987,
as amended, a Peace and Order Committee in
each barangay shall be organized "to serve as implementing
arm of the City/Municipal Peace and Order Council at
the Barangay level." 61 The composition of the Committee
includes, among others: (1) the Punong Barangay as
Chairman; (2) the Chairman of the Sangguniang Kabataan; (3)
a Member of theLupon Tagapamayapa; (4) a Barangay
Tanod; and (5) at least three (3) Members of
existing Barangay-Based Anti-Crime or neighborhood
Watch Groups or a Non Government Organization
Representative well-known in his community. 62
 This Court is, therefore, convinced that barangay-based
volunteer organizations in the nature of watch groups, as in
the case of the "bantay bayan," are recognized by the local
government unit to perform functions relating to the
preservation of peace and order at the barangay level. Thus,
without ruling on the legality of the actions taken by Moises
Boy Banting, and the specific scope of duties and
responsibilities delegated to a "bantay bayan," particularly on
the authority to conduct a custodial investigation, any inquiry
he makes has the color of a state-related function and
objective insofar as the entitlement of a suspect to his
constitutional rights provided for under Article III, Section 12
of the Constitution, otherwise known as the Miranda Rights, is
concerned.
We, therefore, find the extrajudicial confession of appellant,
which was taken without a counsel, inadmissible in evidence.
Be that as it may, We agree with the Court of Appeals that
the conviction of the appellant was not deduced solely from
the assailed extrajudicial confession but "from the confluence
of evidence showing his guilt beyond reasonable doubt." 63
Credibility of the Witnesses for the Prosecution
Appellant assails the inconsistencies in the testimonies of
AAA and her brother BBB. AAA testified that BBB
accompanied her to the house of their grandmother.
Thereafter, they, together with her relatives, proceeded to
look for a "bantay bayan." On the other hand, BBB testified
that he brought her sister to the house of their "bantay
bayan" after he learned of the incident. TCEaDI
Citing Bartocillo v. Court of Appeals, 64 appellant argues that
"where the testimonies of two key witnesses cannot stand
together, the inevitable conclusion is that one or both must be
telling a lie, and their story a mere concoction." 65
 The principle, however, is not applicable in the case at bar.
In Bartocillo, the two testimonies could not simply stand
together because:
On one hand, if we are to believe Susan, Orlando could not
have possibly seen the hacking incident since he had
accompanied Vicente home. On the other hand, if we are
to accept the testimony of Orlando, then Susan could not
have possibly witnessed the hacking incident since she
was with Vicente at that time.
Here, the testimony of AAA does not run contrary to that of
BBB. Both testified that they sought the help of a "bantay
bayan." Their respective testimonies differ only as to when
the help was sought for, which this Court could well attribute
to the nature of the testimony of BBB, a shortcut version of
AAA's testimony that dispensed with a detailed account of the
incident.
At any rate, the Court of Appeals is correct in holding that the
assailed inconsistency is too trivial to affect the veracity of the
testimonies. 66 In fact, inconsistencies which refer to minor,
trivial or inconsequential circumstances even strengthen the
credibility of the witnesses, as they erase doubts that such
testimonies have been coached or rehearsed. 67
Appellant's contention that AAA charged him of rape only
because she bore grudges against him is likewise
unmeritorious. This Court is not dissuaded from giving full
credence to the testimony of a minor complainant by motives
of feuds, resentment or revenge. 68 As correctly pointed out
by the Court of Appeals:
Indeed, mere disciplinary chastisement is not strong
enough to make daughters in a Filipino family invent a
charge that would not only bring shame and humiliation
upon them and their families but also bring their fathers
into the gallows of death. 69 The Supreme Court has
repeatedly held that it is unbelievable for a daughter to
charge her own father with rape, exposing herself to the
ordeal and embarrassment of a public trial and subjecting
her private parts to examination if such heinous crime was
not in fact committed. 70 No person, much less a woman,
could attain such height of cruelty to one who has sired
her, and from whom she owes her very existence, and for
which she naturally feels loving and lasting
gratefulness. 71 Even when consumed with revenge, it
takes a certain amount of psychological depravity for a
young woman to concoct a story which would put her own
father to jail for the most of his remaining life and drag the
rest of the family including herself to a lifetime of
shame. 72 It is highly improbable for [AAA] against whom
no proof of sexual perversity or loose morality has been
shown to fake charges much more against her own father.
In fact her testimony is entitled to greater weight since her
accusing words were directed against a close
relative. 73 AcSEHT
Elements of Rape
Having established the credibility of the witnesses for the
prosecution, We now examine the applicability of the Anti-
Rape Law of 1997 74 to the case at bar.
The law provides, in part, that rape is committed, among
others, "[b]y a man who shall have carnal knowledge of a
woman" "through force, threat or intimidation." 75 The death
penalty shall be imposed if it is committed with
aggravating/qualifying circumstances, which include, "[w]hen
the victim is under eighteen (18) years of age and the
offender is a parent." 76
The consistent and forthright testimony of AAA detailing how
she was raped, culminating with the penetration of appellant's
penis into her vagina, suffices to prove that appellant had
carnal knowledge of her. When a woman states that she has
been raped, she says in effect all that is necessary to show
that rape was committed. 77 Further, when such testimony
corresponds with medical findings, there is sufficient basis to
conclude that the essential requisites of carnal knowledge
have been established. 78
The Court of Appeals pointed out that the element of force or
intimidation is not essential when the accused is the father of
the victim, inasmuch as his superior moral ascendancy or
influence substitutes for violence and intimidation. 79 At any
rate, AAA was actually threatened by appellant with his fist
and a knife allegedly placed above AAA's head. 80
It may be added that the self-serving defense of appellant
cannot prevail over the positive and straightforward testimony
of AAA. Settled is the rule that, "alibi is an inherently weak
defense that is viewed with suspicion because it is easy to
fabricate." 81 "Alibi and denial must be supported by strong
corroborative evidence in order to merit
credibility." 82 Moreover, for the defense of alibi to prosper,
the accused must establish two elements (1) he was not at
the locus delicti at the time the offense was committed; and
(2) it was physically impossible for him to be at the scene at
the time of its commission. 83 Appellant failed in this wise.
Aggravating/Qualifying Circumstances
The presence of the qualifying circumstances of minority and
relationship with the offender in the instant case has likewise
been adequately established. Both qualifying circumstances
were specifically alleged in the Information, stipulated on and
admitted during the pre-trial conference, and testified to by
both parties in their respective testimonies. Also, such
stipulation and admission, as correctly pointed out by the
Court of Appeals, are binding upon this Court because they
are judicial admissions within the contemplation of Section 4,
Rule 129 of the Revised Rules of Court. It provides:
Sec. 4. Judicial admissions. An admission, verbal or
written, made by a party in the course of the
proceedings in the same case, does not require
proof.The admission may be contradicted only by showing
that it was made through palpable mistake or that no such
admission was made. ASHaTc
Penalty
Finally, in increasing the amount of civil indemnity and
damages each from P50,000.00 to P75,000.00, the Court of
Appeals correctly considered controlling jurisprudence to the
effect that where, as here, the rape is committed with any of
the qualifying/aggravating circumstances warranting the
imposition of the death penalty, the victim is entitled to
P75,000.00 as civil indemnity ex delicto 84 and P75,000.00 as
moral damages. 85 However, the award of exemplary
damages should have been increased from P25,000.00 to
P30,000.00. 86 Also, the penalty of reclusion perpetua in
lieu of death was correctly imposed considering that the
imposition of the death penalty upon appellant would have
been appropriate were it not for the enactment of Republic
Act No. 9346, or An Act Prohibiting the Imposition of Death
Penalty in the Philippines. 87 We further affirm the ruling of
the Court of Appeals on appellant's non-eligibility for parole.
Sec. 3 of Republic Act No. 9346 clearly provides that "persons
convicted of offenses punished with reclusion perpetua, or
whose sentences will be reduced to reclusion perpetua by
reason of the law, shall not be eligible for parole."
WHEREFORE, the Decision of the Court of Appeals dated 30
September 2008 in CA-G.R. CR HC No. 00456-MIN is
hereby AFFIRMED. Appellant
Antonio Lauga isGUILTY beyond reasonable doubt of qualified
rape, and is hereby sentenced to suffer the penalty
of reclusion perpetua without eligibility for parole and to pay
AAA P75,000.00 as civil indemnity, P75,000.00 as moral
damages, and P30,000.00 as exemplary damages.
SO ORDERED. EICSTa
Carpio, Brion, Del Castillo and Abad, JJ., concur.
Footnotes
||| (People v. Lauga y Pina, G.R. No. 186228, [March 15, 2010],
629 PHIL 522-536)

THIRD DIVISION

[G.R. No. 155208. March 27, 2007.]

NENA LAZALITA * TATING, petitioner, vs.

FELICIDAD TATING MARCELLA, represented by
SALVADOR MARCELLA, CARLOS TATING, and the
COURT OF APPEALS, respondents.

DECISION

AUSTRIA-MARTINEZ, J p:
Assailed in the Special Civil Action for Certiorari before the
Court are the Decision 1 dated February 22, 2002 and the
Resolution dated August 22, 2002 of the Court of Appeals (CA)
in CA-G.R. CV No. 64122, which affirmed the Decision 2 of the
Regional Trial Court (RTC) of Cadiz City, Negros Occidental,
Branch 60.
The present case arose from a controversy involving a parcel
of land denominated as Lot 56 of Subdivision plan Psd-31182,
located at Abelarde St., Cadiz City, Negros Occidental. The
subject lot, containing an area of 200 square meters, was
owned by Daniela Solano Vda. de Tating (Daniela) as evidenced
by Transfer Certificate of Title (TCT) No. T-4393 issued by the
Registry of Deeds of the City of Cadiz. 3
 On October 14, 1969, Daniela sold the subject property to her
granddaughter, herein petitioner Nena Lazalita Tating (Nena).
The contract of sale was embodied in a duly notarized Deed of
Absolute Sale executed by Daniela in favor of
Nena. 4 Subsequently, title over the subject property was
transferred in the name of Nena. 5 She declared the property
in her name for tax purposes and paid the real estate taxes
due thereon for the years 1972, 1973, 1975 to 1986 and
1988. 6 However, the land remained in possession of Daniela.
On December 28, 1977, Daniela executed a sworn statement
claiming that she had actually no intention of selling the
property; the true agreement between her and Nena was
simply to transfer title over the subject property in favor of the
latter to enable her to obtain a loan by mortgaging the subject
property for the purpose of helping her defray her business
expenses; she later discovered that Nena did not secure any
loan nor mortgage the property; she wants the title in the
name of Nena cancelled and the subject property reconveyed
to her. 7
Daniela died on July 29, 1988 8 leaving her children as her
heirs, namely: Ricardo, Felicidad, Julio, Carlos and Cirilo who
predeceased Daniela and was represented by herein petitioner.
In a letter dated March 1, 1989, Carlos informed Nena that
when Daniela died they discovered the sworn statement she
executed on December 28, 1977 and, as a consequence, they
are demanding from Nena the return of their rightful shares
over the subject property as heirs of Daniela. 9 Nena did not
reply. Efforts to settle the case amicably proved futile. DETcAH
Hence, on September 6, 1989, Carlos and Felicidad,
represented by her son Salvador, filed a complaint with the RTC
of Cadiz City, Negros Occidental against Nena praying for the
nullification of the Deed of Absolute Sale executed by Daniela
in her favor, cancellation of the TCT issued in the name of
Nena, and issuance of a new title and tax declaration in favor
of the heirs of Daniela. 10 The complaint also prayed for the
award of moral and exemplary damages as well as attorney's
fees and litigation expenses. On March 19, 1993, the plaintiffs
filed an amended complaint with leave of court for the purpose
of excluding Ricardo as a party plaintiff, he having died
intestate and without issue in March 1991. 11 He left Carlos,
Felicidad, Julio, and Nena as his sole heirs.
In her Answer, Nena denied that any fraud or
misrepresentation attended the execution of the subject Deed
of Absolute Sale. She also denied having received the letter of
her uncle, Carlos. She prayed for the dismissal of the
complaint, and in her counterclaim, she asked the trial court
for the award of actual, exemplary and moral damages as well
as attorney's fees and litigation expenses. 12
Trial ensued. On November 4, 1998, the RTC rendered
judgment with the following dispositive portion:
WHEREFORE, in view of all the foregoing, judgment is
hereby rendered in favor of the plaintiffs and against the
defendant, and hereby declaring the document of sale
dated October 14, 1969 (Exh. "Q") executed between
Daniela Solano Vda. de Tating and Nena Lazalita Tating as
NULL and VOID and further ordering:
1. The Register of Deeds of Cadiz City to cancel TCT No.
5975 and in lieu thereof to issue a new title in the names
of Carlos Tating, Pro-indiviso owner of one-fourth (1/4)
portion of the property; Felicidad Tating Marcella, Pro-
indiviso owner of one-fourth (1/4) portion; Julio Tating, Pro-
indiviso owner of one-fourth (1/4) portion and Nena
Lazalita Tating, Pro-indiviso owner of one-fourth (1/4)
portion, all of lot 56 after payment of the prescribed fees;
2. The City Assessor of the City of Cadiz to cancel Tax
Declaration No. 143-00672 and in lieu thereof issue a new
Tax Declaration in the names of CarlosTating, 1/4 Pro-
indiviso portion; Felicidad Tating Marcella, 1/4 Pro-indiviso
portion; Julio Tating, 1/4 Pro-indiviso portion; and Nena
Lazalita Tating, 1/4 Pro-indiviso portion, all of lot 56 as well
as the house standing thereon be likewise declared in the
names of the persons mentioned in the same proportions
as above-stated after payment of the prescribed fees;
3. The defendant is furthermore ordered to pay plaintiffs
the sum of P20,000.00 by way of moral damages,
P10,000.00 by way of exemplary damages, P5,000.00 by
way of attorney's fees and P3,000.00 by way of litigation
expenses; and to
4. Pay the costs of suit. aCIHcD
SO ORDERED. 13
Nena filed an appeal with the CA. On February 22, 2002, the
CA rendered its Decision affirming the judgment of the RTC. 14
Nena's Motion for Reconsideration was denied by the CA in its
Resolution dated August 22, 2002. 15
Hence, herein petition for certiorari anchored on the ground
that the CA "has decided the instant case without due regard
to and in violation of the applicable laws and Decisions of this
Honorable Court and also because the Decision of the Regional
Trial Court, which it has affirmed, is not supported by and is
even against the evidence on record." 16
At the outset, it must be stated that the filing of the instant
petition for certiorari under Rule 65 of the Rules of Court is
inappropriate. Considering that the assailed Decision and
Resolution of the CA finally disposed of the case, the proper
remedy is a petition for review under Rule 45 of the Rules of
Court.
The Court notes that while the instant petition is denominated
as a Petition for Certiorari under Rule 65 of the Rules of Court,
there is no allegation that the CA committed grave abuse of
discretion. On the other hand, the petition actually avers errors
of judgment, rather than of jurisdiction, which are the proper
subjects of a petition for review on certiorari. Hence, in
accordance with the liberal spirit pervading the Rules of Court
and in the interest of justice, the Court decided to treat the
present petition for certiorari as having been filed under Rule
45, especially considering that it was filed within the
reglementary period for filing the same. 17
As to the merits of the case, petitioner contends that the case
for the private respondents rests on the proposition that the
Deed of Absolute Sale dated October 14, 1969 is simulated
because Daniela's actual intention was not to dispose of her
property but simply to help petitioner by providing her with a
collateral. Petitioner asserts that the sole evidence which
persuaded both the RTC and the CA in holding that the subject
deed was simulated was the Sworn Statement of Daniela dated
December 28, 1977. However, petitioner argues that said
Sworn Statement should have been rejected outright by the
lower courts considering that Daniela has long been dead when
the document was offered in evidence, thereby denying
petitioner the right to cross-examine her. TAEDcS
Petitioner also contends that while the subject deed was
executed on October 14, 1969, the Sworn Statement was
purportedly executed only on December 28, 1977 and was
discovered only after the death of Daniela in
1994. 18 Petitioner argues that if the deed of sale is indeed
simulated, Daniela would have taken action against the
petitioner during her lifetime. However, the fact remains that
up to the time of her death or almost 20 years after the Deed
of Absolute Sale was executed, she never uttered a word of
complaint against petitioner.
Petitioner further asserts that the RTC and the CA erred in
departing from the doctrine held time and again by the
Supreme Court that clear, strong and convincing evidence
beyond mere preponderance is required to show the falsity or
nullity of a notarial document. Petitioner also argues that the
RTC and the CA erred in its pronouncement that the transaction
between Daniela and petitioner created a trust relationship
between them because of the settled rule that where the terms
of a contract are clear, it should be given full effect.
In their Comment and Memorandum, private respondents
contend that petitioner failed to show that the CA or the RTC
committed grave abuse of discretion in arriving at their
assailed judgments; that Daniela's Sworn Statement is
sufficient evidence to prove that the contract of sale by and
between her and petitioner was merely simulated; and that, in
effect, the agreement between petitioner and Daniela created
a trust relationship between them.
The Court finds for the petitioner.
The CA and the trial court ruled that the contract of sale
between petitioner and Daniela is simulated. A contract is
simulated if the parties do not intend to be bound at all
(absolutely simulated) or if the parties conceal their true
agreement (relatively simulated). 19 The primary
consideration in determining the true nature of a contract is
the intention of the parties. 20 Such intention is determined
from the express terms of their agreement as well as from their
contemporaneous and subsequent acts. 21

In the present case, the main evidence presented by private

respondents in proving their allegation that the subject deed of
sale did not reflect the true intention of the parties thereto is
the sworn statement of Daniela dated December 28, 1977. The
trial court admitted the said sworn statement as part of private
respondents' evidence and gave credence to it. The CA also
accorded great probative weight to this document. IcHDCS
There is no issue in the admissibility of the subject sworn
statement. However, the admissibility of evidence should not
be equated with weight of evidence. 22 The admissibility of
evidence depends on its relevance and competence while the
weight of evidence pertains to evidence already admitted and
its tendency to convince and persuade. 23 Thus, a particular
item of evidence may be admissible, but its evidentiary weight
depends on judicial evaluation within the guidelines provided
by the rules of evidence. 24 It is settled that affidavits are
classified as hearsay evidence since they are not generally
prepared by the affiant but by another who uses his own
language in writing the affiant's statements, which may thus
be either omitted or misunderstood by the one writing
them. 25 Moreover, the adverse party is deprived of the
opportunity to cross-examine the affiant. 26 For this reason,
affidavits are generally rejected for being hearsay, unless the
affiants themselves are placed on the witness stand to testify
thereon. 27 The Court finds that both the trial court and the CA
committed error in giving the sworn statement probative
weight. Since Daniela is no longer available to take the witness
stand as she is already dead, the RTC and the CA should not
have given probative value on Daniela's sworn statement for
purposes of proving that the contract of sale between her and
petitioner was simulated and that, as a consequence, a trust
relationship was created between them.
Private respondents should have presented other evidence to
sufficiently prove their allegation that Daniela, in fact, had no
intention of disposing of her property when she executed the
subject deed of sale in favor of petitioner. As in all civil cases,
the burden is on the plaintiff to prove the material allegations
of his complaint and he must rely on the strength of his
evidence and not on the weakness of the evidence of the
defendant. 28 Aside from Daniela's sworn statement, private
respondents failed to present any other documentary evidence
to prove their claim. Even the testimonies of their witnesses
failed to establish that Daniela had a different intention when
she entered into a contract of sale with petitioner. EcHTCD
In Suntay v. Court of Appeals, 29 the Court ruled that the most
protuberant index of simulation is the complete absence, on
the part of the vendee, of any attempt in any manner to assert
his rights of ownership over the disputed property. 30 In the
present case, however, the evidence clearly shows that
petitioner declared the property for taxation and paid realty
taxes on it in her name. Petitioner has shown that from 1972 to
1988 she religiously paid the real estate taxes due on the said
lot and that it was only in 1974 and 1987 that she failed to pay
the taxes thereon. While tax receipts and declarations and
receipts and declarations of ownership for taxation purposes
are not, in themselves, incontrovertible evidence of ownership,
they constitute at least proof that the holder has a claim of title
over the property. 31 The voluntary declaration of a piece of
property for taxation purposes manifests not only one's sincere
and honest desire to obtain title to the property and announces
his adverse claim against the State and all other interested
parties, but also the intention to contribute needed revenues to
the Government. 32 Such an act strengthens one's bona fide
claim of acquisition of ownership. 33 On the other hand,
private respondents failed to present even a single tax receipt
or declaration showing that Daniela paid taxes due on the
disputed lot as proof that she claims ownership thereof. The
only Tax Declaration in the name of Daniela, which private
respondents presented in evidence, refers only to the house
standing on the lot in controversy. 34 Even the said Tax
Declaration contains a notation that herein petitioner owns the
lot (Lot 56) upon which said house was built.
Moreover, the Court agrees with petitioner that if the subject
Deed of Absolute Sale did not really reflect the real intention of
Daniela, why is it that she remained silent until her death; she
never told any of her relatives regarding her actual purpose in
executing the subject deed; she simply chose to make known
her true intentions through the sworn statement she executed
on December 28, 1977, the existence of which she kept secret
from her relatives; and despite her declaration therein that she
is appealing for help in order to get back the subject lot, she
never took any concrete step to recover the subject property
from petitioner until her death more than ten years later.
It is true that Daniela retained physical possession of the
property even after she executed the subject Absolute Deed of
Sale and even after title to the property was transferred in
petitioner's favor. In fact, Daniela continued to occupy the
property in dispute until her death in 1988 while, in the
meantime, petitioner continued to reside in Manila. However, it
is well-established that ownership and possession are two
entirely different legal concepts. 35 Just as possession is not a
definite proof of ownership, neither is non-possession
inconsistent with ownership. The first paragraph of Article 1498
of the Civil Code states that when the sale is made through a
public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot clearly
be inferred. Possession, along with ownership, is transferred to
the vendee by virtue of the notarized deed of
conveyance. 36 Thus, in light of the circumstances of the
present case, it is of no legal consequence that petitioner did
not take actual possession or occupation of the disputed
property after the execution of the deed of sale in her favor
because she was already able to perfect and complete her
ownership of and title over the subject property.
As to Daniela's affidavit dated June 9, 1983, submitted by
petitioner, which confirmed the validity of the sale of the
disputed lot in her favor, the same has no probative value, as
the sworn statement earlier adverted to, for being hearsay.
Naturally, private respondents were not able to cross-examine
the deceased-affiant on her declarations contained in the said
affidavit.
However, even if Daniela's affidavit of June 9, 1983 is
disregarded, the fact remains that private respondents failed to
prove by clear, strong and convincing evidence beyond mere
preponderance of evidence 37 that the contract of sale
between Daniela and petitioner was simulated. The legal
presumption is in favor of the validity of contracts and the
party who impugns its regularity has the burden of proving its
simulation. 38 Since private respondents failed to discharge
the burden of proving their allegation that the contract of sale
between petitioner and Daniela was simulated, the
presumption of regularity and validity of the October 14, 1969
Deed of Absolute Sale stands.
Considering that the Court finds the subject contract of sale
between petitioner and Daniela to be valid and not fictitious or
simulated, there is no more necessity to discuss the issue as to
whether or not a trust relationship was created between them.
WHEREFORE, the petition is GRANTED. The assailed Decision
and Resolution of the Court of Appeals in CA-G.R. CV No.
64122, affirming the Decision of the Regional Trial Court of
Cadiz City, Negros Occidental, Branch 60, in Civil Case No. 278-
C, are REVERSED AND SET ASIDE. The complaint of the private
respondents is DISMISSED.
No costs.
SO ORDERED.
||| (Tating v. Marcella, G.R. No. 155208, [March 27, 2007], 548
PHIL 19-32)

THIRD DIVISION

[G.R. No. 107518. October 8, 1998.]

PNOC SHIPPING AND TRANSPORT CORPORATION, pe

titioner, vs. HONORABLE COURT OF APPEALS and
MARIA EFIGENIA FISHING CORPORATION,respondents.

SYLLABUS
 1. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; MUST BE PROVED
WITH A REASONABLE DEGREE OF CERTAINTY. A party is
entitled to adequate compensation only for such pecuniary loss
actually suffered and duly proved. Indeed, basic is the rule that
to recover actual damages, the amount of loss must not only
be capable of proof but must actually be proven with a
reasonable degree of certainty, premised upon competent
proof or best evidence obtainable of the actual amount thereof.
The claimant is duty-bound to point out specific facts that
afford a basis for measuring whatever compensatory damages
are borne. A court cannot merely rely on speculations,
conjectures, or guesswork as to the fact and
amount of damages as well as hearsay or uncorroborated
testimony whose truth is suspect. cdasia
2. ID.; ID.; ID.; DEFINED. Under Article 2199 of the Civil
Code, actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained.
They proceed from a sense of natural justice and are designed
to repair the wrong that has been done, to compensate for the
injury inflicted and not to impose a penalty. In actions based on
torts or quasi-delicts, actual damages include all the natural
and probable consequences of the act or omission
complained of. There are two kinds of actual or compensatory
damages; one is the loss of what a person already possesses
(dao emergente), and the other is the failure to receive as a
benefit that which would have pertained to him (lucro cesante).
3. REMEDIAL LAW; EVIDENCE; TESTIMONY OF WITNESSES;
CONFINED TO PERSONAL KNOWLEDGE. We hold, however,
that the price quotations are ordinary private writings which
under the Revised Rules of Court should have been proffered
along with then testimony of the authors thereof. Del Rosario
could not have testified on the veracity of the contents of the
writings even though he was the seasoned owner of a fishing
fleet because he was not the one who issued the price
quotations. Section 36, Rule 130 of the Revised
Rules of Court provides that a witness can testify only to those
facts that he knows of his personal knowledge.
4. ID.; ID.; HEARSAY EVIDENCE; PRICE QUOTATIONS PARTAKE
THE NATURE THEREOF; CASE AT BAR. The price quotations
presented as exhibits partake of the nature of hearsay
evidence considering that the persons who issued them were
not presented as witnesses.
5. ID.; ID.; ID.; DEFINED. Any evidence, whether oral or
documentary, is hearsay if its probative value is not based on
the personal knowledge of the witness but on the
knowledge of another person who is not on the witness stand.
Hearsay evidence, whether objected to or not, has no
probative value unless the proponent can show that the
evidence falls within the exceptions to the hearsay evidence
rule. On this point, we believe that the exhibits do not fall
under any of the exceptions provided under Sections 37 to
47 of Rule 130.
6. ID.; ID.; COMMERCIAL LISTS; REQUISITES. Under Section
45 of the aforesaid Rule, a document is a commercial list if: (1)
it is a statement of matters of interest to persons engaged in
an occupation; (2) such statement is contained in a list,
register, periodical or other published compilation; (3) said
compilation is published for the use of persons engaged in that
occupation, and (4) it is generally used and relied upon by
persons in the same occupation.
7. ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. Based on
the above requisites, it is our considered view that Exhibits B,
C, D, E, F and H are not "commercial lists" for these do not
belong to the category of "other published compilations" under
Section 45 aforequoted. Under the principle of ejusdem
generis, "(w)here general words follow an
enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed
in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically
mentioned." The exhibits mentioned are mere price quotations
issued personally to Del Rosario who requested for them from
dealers of equipment similar to the ones lost at the
collision of the two vessels. These are not published in any list,
register, periodical or other compilation on the relevant subject
matter. Neither are these "market reports or quotations" within
the purview of "commercial lists" as these are not "standard
handbooks or periodicals, containing data of everyday
professional need and relied upon in the work of the
occupation." These are simply letters responding to the
queries of Del Rosario.
8. ID.; ID.; ADMISSIBILITY AND PROBATIVE VALUE;
DISTINGUISHED. Admissibility of evidence refers to the
question of whether or not the circumstance (or evidence) is to
be considered at all. On the other hand, the probative
value of evidence refers to the question of whether or not it
proves an issue. Thus, a letter may be offered in evidence and
admitted as such but its evidentiary weight depends upon the
observance of the rules on evidence. Accordingly, the
author of the letter should be presented as witness to provide
the other party to the litigation the opportunity to question him
on the contents of the letter. Being mere hearsay evidence,
failure to present the author of the letter renders its contents
suspect. As earlier stated, hearsay evidence, whether objected
to or not, has no probative value.
9. CIVIL LAW; DAMAGES; NOMINAL DAMAGES; EXPLAINED.
Nominal damages are awarded in every obligation arising from
law, contracts, quasi-contracts, acts or omissions punished by
law, and quasi-delicts, or in every case where property right
has been invaded. Under Article 2223 of the Civil Code, "(t)he
adjudication ofnominal damages shall preclude further contest
upon the right involved and all accessory questions, as
between the parties to the suit, or their respective heirs and
assigns." Actually, nominal damages are damages in name
only and not in fact. Where these are allowed, they are not
treated as an equivalent of a wrong inflicted but simply in
recognition of the existence of a technical injury. However, the
amount to be awarded as nominal damages shall be equal or
at least commensurate to the injury sustained by private
respondent considering the concept and purpose of such
damages. The amount of nominal damages to be awarded may
also depend on certain special reasons extant in the
case. aSIATD
10. ID.; ID.; ID.; ALLEGATIONS IN THE COMPLAINTS CAN BE
THE BASIS FOR ITS DETERMINATION; CASE AT BAR. Applying
now such principles to the instant case, we have on record the
fact that petitioner's vessel Petroparcel was at fault as well as
private respondent's complaint claiming the
amount of P692,680.00 representing the fishing nets, boat
equipment and cargoes that sunk with the M/V Maria Efigenia
XV. In its amended complaint, private respondent alleged that
the vessel had an actual value of P800,000.00 but it had been
paid insurance in the amount of P200,000.00 and, therefore, it
claimed only the amount of P600,000.00. Ordinarily, the
receipt of insurance payments should diminish the total
value of the vessel quoted by private respondent in his
complaint considering that such payment is causally related to
the loss for which it claimed compensation. This Court believes
that such allegations in the original and amended complaints
can be the basis for determination of a fair amount of nominal
damages inasmuch as a complaint alleges the ultimate facts
constituting the plaintiff's cause of action. Private respondent
should be bound by its allegations on the amount of its claims.
11. REMEDIAL LAW; COURTS; JURISDICTION; NOT AFFECTED
FOR FAILURE TO PAY DOCKET FEE IN ACCORDANCE WITH THE
AMENDED COMPLAINT. Its failure to pay the docket fee
corresponding to its increased claim for damages under the
amended complaint should not be considered as having
curtailed the lower court's jurisdiction. Pursuant to the ruling
in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid
docket fee should be considered as a lien on the judgment
even though private respondent specified the
amount of P600,000.00 as its claim for damages in its
amended complaint.
12. ID.; ID.; ID.; PRINCIPLE OF ESTOPPEL. APPLIES; CASE AT
BAR. Moreover, we note that petitioner did not question at
all the jurisdiction of the lower court on the
ground of insufficient docket fees in its answer to both the
amended complaint and the second amended complaint. It did
so only in its motion for reconsideration ofthe decision of the
lower court after it had received an adverse decision. As
this Court held in Pantranco North Express,
Inc. v. Court of Appeals, participation in all stages of the case
before the trial court, that included invoking its authority in
asking for affirmative relief, effectively barred petitioner by
estoppel from challenging thecourt's jurisdiction. Notably, from
the time it filed its answer to the second amended complaint
on April 16, 1985, petitioner did not question the lower court's
jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower court's decision that
petitioner raised the question of the lowercourt's
lack of jurisdiction. Petitioner thus foreclosed its right to raise
the issue of jurisdiction by its own inaction TICAcD

DECISION

ROMERO, J p:
A party is entitled to adequate compensation only for such
pecuniary loss actually suffered and duly proved. 1 Indeed,
basic is the rule that to recover actual damages, the
amount of loss must not only be capable of proof but must
actually be proven with a reasonable degree of certainty,
premised upon competent proof or best evidence
obtainable of the actual amount thereof. 2 The claimant is
duty-bound to point out specific facts that afford a basis for
measuring whatever compensatory damages are
borne. 3 A court cannot merely rely on speculations,
conjectures, or guesswork as to the fact and
amount of damages 4 as well as hearsay 5 or uncorroborated
testimony whose truth is suspect. 6 Such are the
jurisprudential precepts that the Court now applies in resolving
the instant petition.

The records disclose that in the early morning of September

21, 1977, the M/V Maria Efigenia XV , owned by private
respondent Maria Efigenia Fishing Corporation, was navigating
the waters near Fortune Island in Nasugbu, Batangas on its
way to Navotas, Metro Manila when it collided with the
vessel Petroparcel which at the time was owned by the Luzon
Stevedoring Corporation (LSC).
After investigation was conducted by the Board of Marine
Inquiry, Philippine Coast Guard Commandant Simeon N.
Alejandro rendered a decision finding thePetroparcel at fault.
Based on this finding by the Board and after unsuccessful
demands on petitioner, 7 private respondent sued the LSC and
the Petroparcel captain, Edgardo Doruelo, before the
then Court of First Instance of Caloocan City, paying thereto
the docket fee of one thousand two hundred fifty-two pesos
(P1,252.00) and the legal research fee of two pesos
(P2.00). 8 In particular, private respondent prayed for an
award of P692,680.00, allegedly representing the value of the
fishing nets, boat equipment and cargoes of M/V Maria Efgenia
XV , with interest at the legal rate plus 25% thereof as
attorney's fees. Meanwhile, during the pendency of the case,
petitioner PNOC Shipping and Transport Corporation sought to
be substituted in place of LSC as it had already acquired
ownership of the Petroparcel. 9
 For its part, private respondent later sought the
amendment of its complaint on the ground that the original
complaint failed to plead for the recovery of the lost
valueof the hull of M/V Maria Efgenia XV . 10 Accordingly, in
the amended complaint, private respondent averred
that M/V Maria Efigenia XV had an actual value ofP800,000.00
and that, after deducting the insurance
payment of P200,000.00, the amount of P600,000.00 should
likewise be claimed. The amended complaint also alleged that
inflation resulting from the devaluation of the Philippine peso
had affected the replacement value of the hull of the vessel, its
equipment and its lost cargoes, such that there should be a
reasonable determination thereof. Furthermore, on
account of the sinking of the vessel, private respondent
supposedly incurred unrealized profits and lost business
opportunities that would thereafter be proven. 11
Subsequently, the complaint was further amended to include
petitioner as a defendant 12 which the lower court granted in
its order of September 16, 1985. 13 After petitioner had filed
its answer to the second amended complaint, on February 5,
1987, the lower court issued a pre-trial order 14 containing,
among other things, a stipulations of facts, to wit:
"1. On 21 September 1977, while the fishing boat
'M/V MARIA EFIGENIA' owned by plaintiff was navigating in
the vicinity of Fortune Island in Nasugbu, Batangas, on its
way to Navotas, Metro Manila, said fishing boat was hit by
the LSCO tanker 'Petroparcel' causing the former to sink.
2. The Board of Marine Inquiry conducted an
investigation of this marine accident and on 21 November
1978, the Commandant of the Philippine Coast Guard, the
Honorable Simeon N. Alejandro, rendered a decision
finding the cause of the accident to be the reckless and
imprudent manner in which Edgardo Doruelo navigated the
LSCO 'Petroparcel' and declared the latter vessel at fault.
 3. On 2 April 1978, defendant Luzon
Stevedoring Corporation (LUSTEVECO), executed in
favor of PNOC Shipping and Transport Corporation a
Deed of Transfer involving several tankers, tugboats,
barges and pumping stations, among which was the LSCO
Petroparcel.
4. On the same date on 2 April 1979 (sic)
defendant PNOC STC again entered into an
Agreement of Transfer with co-defendant Lusteveco
whereby all the business properties and other assets
appertaining to the tanker and bulk oil departments
including the motor tanker LSCO Petroparcel of defendant
Lusteveco were sold toPNOC STC.
5. The aforesaid agreement stipulates, among others,
that PNOC-STC assumes, without qualifications, all
obligations arising from and by virtue of all rights it
obtained over the LSCO 'Petroparcel'.
6. On 6 July 1979, another agreement between defendant
LUSTEVECO and PNOC-STC was executed wherein
Board of Marine Inquiry Case No. 332 (involving the sea
accident of 21 September 1977) was specifically identified
and assumed by the latter.
7. On 23 June 1979, the decision of Board of Marine
Inquiry was affirmed by the Ministry of National Defense, in
its decision dismissing the appeal of Capt. Edgardo Doruelo
and Chief mate Anthony Estenzo of LSCO 'Petroparcel'.
8. LSCO 'Petroparcel' is presently owned and operated
by PNOC-STC and likewise Capt. Edgardo Doruelo is still in
their employ.
9. As a result of the sinking of M/V Maria Efigenia caused
by the reckless and imprudent manner in which LSCO
Petroparcel was navigated by defendant Doruelo, plaintiff
suffered actual damages by the loss of its fishing nets,
boat equipments (sic) and cargoes, which went down with
the ship when it sank the replacement valueof which
should be left to the sound discretion of this
Honorable Court."
After trial, the lower court 15 rendered on November 18, 1989
its decision disposing of Civil Case No. C-9457 as follows:
"WHEREFORE, and in view of the foregoing, judgment is
hereby rendered in favor of the plaintiff and against the
defendant PNOC Shipping & Transport Corporation, to pay
the plaintiff:
a. The sum of P6,438,048.00 representing the value of the
fishing boat with interest from the date of the filing of the
complaint at the rate of 6% per annum;
b. The sum of P50,000.00 as and for attorney's fees; and
c. The costs of suit.
The counterclaim is hereby DISMISSED for lack of merit.
Likewise, the case against defendant Edgardo Doruelo is
hereby DISMISSED, for lack of jurisdiction.
SO ORDERED."
In arriving at the above disposition, the lower court cited the
evidence presented by private respondent consisting of the
testimony of its general manager and sole witness, Edilberto
del Rosario. Private respondent's witness testified
that M/V Maria Efgenia XV was owned by private respondent
per Exhibit A, a certificate ofownership issued by the Philippine
Coast Guard showing that M/V Maria Efgenia XV was a wooden
motor boat constructed in 1965 with 128.23 gross tonnage.
According to him, at the time the vessel sank, it was then
carrying 1,060 tubs (baeras) of assorted fish the
value of which was never recovered. Also lost with the vessel
were two cummins engines (250 horsepower), radar,
pathometer and compass. He further added that with the
loss of his flagship vessel in his fishing fleet of fourteen (14)
vessels, he was constrained to hire the services of counsel
whom he paid P10,000 to handle the case at the
Board of Marine Inquiry and P50,000.00 for commencing suit
for damages in the lower court.
As to the award of P6,438,048.00 in actual damages, the
lower court took into account the following
pieces of documentary evidence that private respondent
proffered during trial:
(a) Exhibit A certified xerox copy of the
certificate of ownership of M/V Maria Efgenia XV;
(b) Exhibit B a document titled "Marine Protest"
executed by Delfin Villarosa, Jr. on September 22, 1977
stating that as a result of the collision, the M/V Maria
Efigenia XV sustained a hole at its left side that caused it
to sink with its cargo of 1,050 baeras valued at P170,000
00;
(c) Exhibit C a quotation for the construction of a 95-
footer trawler issued by Isidoro A. Magalong of I. A.
Magalong Engineering and Construction on January 26,
1987 to Del Rosario showing that construction of such
trawler would cost P2,250,000.00;
(d) Exhibit D pro forma invoice No. PSPI-05/87-NAV
issued by E.D. Daclan of Power Systems, Incorporated on
January 20, 1987 to Del Rosario showing that two (2)
units of CUMMINS Marine Engine model N855-M, 195 bhp.
at 1800 rpm. would cost P1,160,000.00;
(e) Exhibit E quotation of prices issued by Scan Marine
Inc. on January 20, 1987 to Del Rosario showing that a
unit of Furuno Compact Daylight Radar, Model FR-604D,
would cost P100,000.00 while a unit of Furuno Color Video
Sounder, Model FCV-501 would cost P45,000.00 so that the
two units would cost P145,000.00;
(f) Exhibit F quotation of prices issued by Seafgear
Sales, Inc. on January 21, 1987 to Del Rosario showing that
two (2) rolls of nylon rope (5" cir. X 300fl.) would cost
P140,000.00; two (2) rolls of nylon rope (3" cir. X 240fl.),
P42,750.00; one (1) binocular (7 x 50), P1,400.00, one (1)
compass (6"), P4,000.00 and 50 pcs. of floats, P9,000.00 or
a total of P197,150.00;
(g) Exhibit G retainer agreement between Del Rosario
and F. Sumulong Associates Law Offices stipulating an
acceptance fee of P5,000.00, per appearance
fee ofP400.00, monthly retainer of P500.00, contingent
fee of 20% of the total amount recovered and that
attorney's fee to be awarded by the court should be given
to Del Rosario; and
(h) Exhibit H price quotation issued by Seafgear Sales,
Inc. dated April 10, 1987 to Del Rosario showing the
cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x
100mtrs., P70,000.00; 50 rolls of 400/18 5kts 100md x
100mtrs., P81,500.00; 50 rolls of 400/18 8kts. 100md x
100mtrs., P116,000.00, and 50 rolls of 400/18 10kts.
100md x 100mtrs., P146,500 and baera (tub) at P65.00
per piece or a total of P414,065.00.
The lower court held that the prevailing replacement
value of P6,438,048.00 of the fishing boat and all its equipment
would regularly increase at 30% every year from the date the
quotations were given.
On the other hand, the lower court noted that petitioner only
presented Lorenzo Lazaro, senior estimator at PNOC Dockyard
& Engineering Corporation, as sole witness and it did not
bother at all to offer any documentary evidence to support its
position. Lazaro testified that the price quotations submitted by
private respondent were "excessive" and that as an expert
witness, he used the quotations of his suppliers in making his
estimates. However, he failed to present such
quotations of prices from his suppliers, saying that he could not
produce a breakdown of the costs of his estimates as it was "a
sort of secret scheme." For this reason, the
lower court concluded:

"Evidently, the quotation of prices submitted by the

plaintiff relative to the replacement value of the fishing
boat and its equipments in the tune of P6,438,048.00
which were lost due to the recklessness and
imprudence of the herein defendants were not rebutted by
the latter with sufficient evidence. The defendants through
their sole witness Lorenzo Lazaro relied heavily on said
witness' bare claim that the amount aforesaid is excessive
or bloated, but they did not bother at all to present any
documentary evidence to substantiate such claim.
Evidence to be believed, must not only proceed from the
mouth of the credible witness, but it must be credible in
itself (Vda. de Bonifacio vs. B.L.T. Bus Co., Inc. L-26810,
August 31, 1970)."
Aggrieved, petitioner filed a motion for the
reconsideration of the lower court's decision contending that:
(1) the lower court erred in holding it liable for damages; that
the lower court did not acquire jurisdiction over the case by
paying only P1,252.00 as docket fee; (2) assuming that plaintiff
was entitled to damages, the lower courterred in awarding an
amount greater than that prayed for in the second amended
complaint; and (3) the lower court erred when it failed to
resolve the issues it had raised in its
memorandum. 16 Petitioner likewise filed a supplemental
motion for reconsideration expounding on whether the
lower court acquired jurisdiction over the subject matter of the
case despite therein plaintiff's failure to pay the prescribed
docket fee. 17
On January 25, 1990, the lower court declined reconsideration
for lack of merit. 18 Apparently not having received the order
denying its motion for reconsideration, petitioner still filed a
motion for leave to file a reply to private respondent's
opposition to said motion. 19 Hence, on February 12, 1990, the
lower court denied said motion for leave to file a reply on the
ground that by the issuance of the order of January 25, 1990,
said motion had become moot and academic. 20
Unsatisfied with the lower court's decision, petitioner elevated
the matter to the Court of Appeals which, however, affirmed
the same in toto on October 14, 1992. 21 On petitioner's
assertion that the award of P6,438,048.00 was not convincingly
proved by competent and admissible evidence,
the Court of Appeals ruled that it was not necessary to qualify
Del Rosario as an expert witness because as the owner of the
lost vessel, "it was well within his knowledge and competency
to identify and determine the equipment installed and the
cargoes loaded" on the vessel. Considering the documentary
evidence presented as in the nature of market reports or
quotations, trade journals, trade circulars and price lists,
the Court of Appeals held, thus:
"Consequently, until such time as the
Supreme Court categorically rules on the admissibility or
inadmissibility of this class of evidence, the
reception of these documentary exhibits (price quotations)
as evidence rests on the sound discretion of the trial court.
In fact, where the lower court is confronted with evidence
which appears to be of doubtful admissibility, the judge
should declare in favor of admissibility rather than of non-
admissibility (The Collector of Palakadhari, 124 [1899], p
43, cited in Francisco, Revised Rules of Court, Evidence,
Volume VII, Part I, 1990 Edition, p. 18). Trial courts are
enjoined to observe the strict enforcement of the
rules ofevidence which crystallized through constant use
and practice and are very useful and effective aids in the
search for truth and for the effective
administration ofjustice. But in connection with evidence
which may appear to be of doubtful relevancy or
incompetency or admissibility, it is the safest policy to be
liberal, not rejecting them on doubtful or technical
grounds, but admitting them unless plainly
irrelevant, material or incompetent, for the reason that
their rejection places them beyond the
consideration of the court. If they are thereafter found
relevant or competent, can easily be remedied by
completely discarding or ignoring them.
(Banaria vs.Banaria, et al., CA. No. 4142, May 31,
1950; cited in Francisco, Supra)." [Emphasis supplied].
Stressing that the alleged inadmissible documentary exhibits
were never satisfactorily rebutted by appellant's own sole
witness in the person of Lorenzo Lazaro, the
appellate court found that petitioner ironically situated itself in
an "inconsistent posture by the fact that its own witness,
admittedly an expert one, heavily relies on the very same
pieces of evidence (price quotations) appellant has so
vigorously objected to as inadmissible evidence." Hence, it
concluded:
". . . The amount of P6,438,048.00 was duly established at
the trial on the basis of appellee's documentary exhibits
(price quotations) which stood uncontroverted, and which
already included the amount by way of adjustment as
prayed for in the amended complaint. There was therefore
no need for appellee to amend the second amended
complaint in so far as to the claim for damages is
concerned to conform with the evidence presented at the
trial. The amount of P6,438,048.00 awarded is clearly
within the relief prayed for in appellee's second amended
complaint."
On the issue of lack of jurisdiction, the respondent court held
that following the ruling in Sun Insurance
Ltd. v. Asuncion, 22 the additional docket fee that may later on
be declared as still owing the court may be enforced as a lien
on the judgment.
Hence, the instant recourse.
In assailing the Court of Appeals' decision, petitioner posits the
view that the award of P6,438,048 as actual damages should
have been in light of these considerations, namely: (1) the
trial court did not base such award on the actual value of the
vessel and its equipment at the time of loss in 1977; (2) there
was no evidence on extraordinary inflation that would warrant
an adjustment of the replacement cost of the lost vessel,
equipment and cargo; (3) the value of the lost cargo and the
prices quoted in respondent's documentary evidence only
amount to P4,336,215.00; (4) private respondent's failure to
adduce evidence to support its claim for unrealized profit and
business opportunities; and (5) private respondent's failure to
prove the extent and actual value of damages sustained as a
result of the 1977 collision of the vessels. 23
Under Article 2199 of the Civil Code, actual or compensatory
damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. They proceed from a
sense of natural justice and are designed to repair the wrong
that has been done, to compensate for the injury inflicted and
not to impose a penalty. 24 In actions based on torts or quasi-
delicts, actual damages include all the natural and probable
consequences of the act or omission complained of. 25 There
are two kinds of actual or compensatory damages: one is the
loss of what a person already possesses (dao emergente),
and the other is the failure to receive as a benefit that which
would have pertained to him (lucro cesante). 26 Thus:
"Where goods are destroyed by the wrongful act of the
defendant the plaintiff is entitled to their value at the
time of destruction, that is, normally, the sum of money
which he would have to pay in the market for identical or
essentially similar goods, plus in a proper case damages
for the loss of use during the period before replacement. In
other words, in the case of profit-earning chattels, what
has to be assessed is the value of the chattel to its owner
as a going concern at the time and place of the loss, and
this means, at least in the case of ships, that regard must
be had to existing and pending engagements. . .
. . . If the market value of the ship reflects the fact that it
is in any case virtually certain of profitable employment,
then nothing can be added to that value in
respect ofcharters actually lost, for to do so would be pro
tanto to compensate the plaintiff twice over. On the other
hand, if the ship is valued without reference to its actual
future engagements and only in the light of its profit-
earning potentiality, then it may be necessary to add to
the value thus assessed the anticipated profit on a charter
or other engagement which it was unable to fulfill. What
the court has to ascertain in each case is the 'capitalize
value of the vessel as a profit-earning machine not in the
abstract but in view of the actual circumstances,'
without, of course, taking into account considerations
which were too remote at the time of the
loss." 27 [Emphasis supplied].
As stated at the outset, to enable an injured party to recover
actual or compensatory damages, he is required to prove the
actual amount of loss with reasonable degree of certainty
premised upon competent proof and on the best evidence
available. 28 The burden of proof is on the party who would be
defeated if no evidence would be presented on either side. He
must establish his case by a preponderance of evidence which
means that the evidence, as a whole, adduced by one side is
superior to that of the other. 29 In other words, damages
cannot be presumed and courts, in making an award must
point out specific facts that could afford a basis for measuring
whatever compensatory or actual damages are borne. 30
In this case, actual damages were proven through the sole
testimony of private respondent's general manager and certain
pieces of documentary evidence. Except for Exhibit B where
the value of the 1,050 baeras of fish were pegged at their
September 1977 value when the collision happened, the
pieces of documentary evidence proffered by private
respondent with respect to items and equipment lost show
similar items and equipment with corresponding prices in early
1987 or approximately ten (10) years after the collision.
Noticeably, petitioner did not object to the exhibits in
terms of the time index for valuation of the lost goods and
equipment. In objecting to the same pieces of evidence,
petitioner commented that these were not duly authenticated
and that the witness (Del Rosario) did not have personal
knowledge on the contents of the writings and neither was he
an expert on the subjects thereof. 31 Clearly ignoring
petitioner's objections to the exhibits, the lowercourt admitted
these pieces of evidence and gave them due weight to arrive
at the award of P6,438,048.00 as actual damages.

The exhibits were presented ostensibly in the course of Del

Rosario's testimony. Private respondent did not present any
other witnesses especially those whose signatures appear in
the price quotations that became the bases of the award. We
hold, however, that the price quotations are ordinary private
writings which under the Revised Rules of Court should have
been proffered along with the testimony of the authors thereof.
Del Rosario could not have testified on the veracity of the
contents of the writings even though he was the seasoned
owner of a fishing fleet because he was not the one who issued
the price quotations. Section 36, Rule 130 ofthe Revised
Rules of Court provides that a witness can testify only to those
facts that he knows of his personal knowledge.
For this reason, Del Rosario's claim that private respondent
incurred losses in the total amount of P6,438,048 00 should be
admitted with extreme caution considering that, because it
was a bare assertion, it should be supported by independent
evidence. Moreover, because he was the owner of private
respondent corporation 32whatever testimony he would give
with regard to the value of the lost vessel, its equipment and
cargoes should be viewed in the light of his self-interest
therein. We agree with the Court of Appeals that his testimony
as to the equipment installed and the cargoes loaded on the
vessel should be given credence 33 considering his familiarity
thereto. However, we do not subscribe to the conclusion that
his valuation of such equipment, cargo and the vessel itself
should be accepted as gospel truth.34 We must, therefore,
examine the documentary evidence presented to support Del
Rosario's claim as regards the amount of losses.
The price quotations presented as exhibits partake of the
nature of hearsay evidence considering that the persons who
issued them were not presented as witnesses. 35Any evidence,
whether oral or documentary, is hearsay if its probative value
is not based on the personal knowledge of the witness but on
the knowledge of another person who is not on the witness
stand. Hearsay evidence, whether objected to or not, has no
probative value unless the proponent can show that the
evidence falls within the exceptions to the hearsay evidence
rule. 36 On this point, we believe that the exhibits do not fall
under any of the exceptions provided under Sections 37 to
47of Rule 130. 37
It is true that one of the exceptions to the hearsay rule
pertains to "commercial lists and the like" under Section 45,
Rule 130 of the Revised Rules on Evidence. In this respect,
the Court of Appeals considered private respondent's exhibits
as "commercial lists." It added, however, that these exhibits
should be admitted in evidence "until such time as the
Supreme Court categorically rules on the admissibility or
inadmissibility of this class of evidence" because "the
reception of these documentary exhibits (price quotations) as
evidence rests on the sound discretion of the
trial court." 38 Reference to Section 45, Rule 130, however,
would show that the conclusion ofthe Court of Appeals on the
matter was arbitrarily arrived at. This rule states:
 "Commercial lists and the like.
Evidence of statements of matters of interest to persons
engaged in an occupation contained in a list, register,
periodical, or other published compilation is admissible as
tending to prove the truth of any relevant matter so stated
if that compilation is published for use by persons engaged
in that occupation and is generally used and relied upon by
them there."
Under Section 45 of the aforesaid Rule, a document is a
commercial list if: (1) it is a statement of matters of interest to
persons engaged in an occupation; (2) such statement is
contained in a list, register, periodical or other published
compilation; (3) said compilation is published for the
use of persons engaged in that occupation, and (4) it is
generally used and relied upon by persons in the same
occupation.
Based on the above requisites, it is our considered view that
Exhibits B, C, D, E, F and H 39 are not "commercial lists" for
these do not belong to the category of "other published
compilations" under Section 45 aforequoted. Under the
principle of ejusdem generis, "(w)here general words follow an
enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed
in their widest extent, but are to be held as applying only to
persons or things ofthe same kind or class as those specifically
mentioned." 40 The exhibits mentioned are mere price
quotations issued personally to Del Rosario who requested for
them from dealers of equipment similar to the ones lost at the
collision of the two vessels. These are not published in any list,
register, periodical or other compilation on the relevant subject
matter. Neither are these "market reports or quotations" within
the purview of "commercial lists" as these are not "standard
handbooks or periodicals, containing data of everyday
professional need and relied upon in the work of the
occupation." 41 These are simply letters responding to the
queries of Del Rosario. Thus, take for example Exhibit D which
reads:
"January 20, 1987
PROFORMA INVOICE NO. PSPI-05/87-NAV
MARIA EFIGINIA FISHING CORPORATION
Navotas, Metro Manila
Attention: MR. EDDIE DEL ROSARIO
Gentlemen:
In accordance to your request, we are pleased to quote
our Cummins Marine Engine, to wit.
Two (2) units CUMMINS Marine Engine model N855-M, 195
bhp. at 1800 rpm., 6-cylinder in-line, 4-stroke cycle, natural
aspirated, 5 1/2 in. x 6 in. bore and stroke, 855 cu. In.
displacement, keel-cooled, electric starting coupled with
Twin-Disc Marine gearbox model MG-509, 4.5:1 reduction
ratio, includes oil cooler, companion flange, manual and
standard accessories as per attached sheet.
Price FOB Manila P580,000.00/unit
Total FOB Manila P1,160,000.00
TERMS: CASH
DELIVERY: 60-90 days from date of order.
VALIDITY: Subject to our final confirmation.
WARRANTY: One (1) full year against factory defect.
Very truly yours,
POWER SYSTEMS, INC.
(Sgd.)
E.D. Daclan"
To be sure, letters and telegrams are admissible in evidence
but these are, however, subject to the general
principles of evidence and to various rules relating to
documentary evidence. 42 Hence, in one case, it was held that
a letter from an automobile dealer offering an allowance for an
automobile upon purchase of a new automobile after repairs
had been completed, was not a "price current" or "commercial
list" within the statute which made such items presumptive
evidence of the value of the article specified therein. The letter
was not admissible in evidence as a "commercial list" even
though the clerk of the dealer testified that he had written the
letter in due course of business upon instructions of the
dealer. 43
But even on the theory that the Court of Appeals correctly
ruled on the admissibility of those letters or communications
when it held that unless "plainly irrelevant, immaterial or
incompetent," evidence should better be admitted rather than
rejected on "doubtful or technical grounds," 44 the same
pieces of evidence, however, should not have been
given probative weight. This is a distinction we wish to point
out. Admissibility of evidence refers to the question of whether
or not the circumstance (or evidence) is to considered at
all. 45 On the other hand, the probative value of evidence
refers to the question of whether or not it proves an
issue. 46Thus, a letter may be offered in evidence and
admitted as such but its evidentiary weight depends upon the
observance of the rules on evidence. Accordingly, the
author of the letter should be presented as witness to provide
the other party to the litigation the opportunity to question him
on the contents of the letter. Being mere hearsay evidence,
failure to present the author of the letter renders its contents
suspect. As earlier stated, hearsay evidence, whether objected
to or not, has no probative value. Thus:
"The courts differ as to the weight to be given to hearsay
evidence admitted without objection. Some hold that when
hearsay has been admitted without objection, the same
may be considered as any other properly admitted
testimony. Others maintain that it is entitled to no more
consideration than if it had been excluded.
The rule prevailing in this jurisdiction is the latter one. Our
Supreme Court held that although the
question of admissibility of evidence can not be raised for
the first time on appeal, yet if the evidence is hearsay it
has no probative value and should be disregarded whether
objected to or not. 'If no objection is made' quoting
Jones on Evidence 'it (hearsay) becomes evidence by
reason of the want of such objection even though its
admission does not confer upon it any new attribute in
point ofweight. Its nature and quality remain the same, so
far as its intrinsic weakness and incompetency to satisfy
the mind are concerned, and as opposed to direct primary
evidence, the latter always prevails.
The failure of the defense counsel to object to the
presentation of incompetent evidence, like hearsay
evidence or evidence that violates the rules of res inter
alios acta, or his failure to ask for the striking out of the
same does not give such evidence any probative value.
But admissibility of evidence should not be equated with
weight ofevidence. Hearsay evidence whether objected to
or not has no probative value." 47
Accordingly, as stated at the outset, damages may not be
awarded on the basis of hearsay evidence. 48
Nonetheless, the non-admissibility of said exhibits does not
mean that it totally deprives private respondent of any redress
for the loss of its vessel. This is because inLufthansa German
Airlines v. Court of Appeals, 49 the Court said:
"In the absence of competent proof on the actual damage
suffered, private respondent is 'entitled to nominal
damages which, as the law says, is adjudicated in order
that a right of the plaintiff, which has been violated or
invaded by defendant, may be vindicated and recognized,
and not for the purpose of indemnifying the plaintiff for any
loss suffered." [Emphasis supplied].

Nominal damages are awarded in every obligation arising from

law, contracts, quasi-contracts, acts or omissions punished by
law, and quasi-delicts, or in every case where property right
has been invaded. 50 Under Article 2223 of the Civil Code,
"(t)he adjudication of nominal damages shall preclude further
contest upon the right involved and all accessory questions, as
between the parties to the suit, or their respective heirs and
assigns."
Actually, nominal damages are damages in name only and not
in fact. Where these are allowed, they are not treated as an
equivalent of a wrong inflicted but simply in recognition of the
existence of a technical injury. 51 However, the amount to be
awarded as nominal damages shall be equal or at least
commensurate to the injury sustained by private respondent
considering the concept and purpose of such damages. 52 The
amount of nominal damages to be awarded may also depend
on certain special reasons extant in the case. 53
Applying now such principles to the instant case, we have on
record the fact that petitioner's vessel Petroparcel was at fault
as well as private respondent's complaint claiming the
amount of P692,680.00 representing the fishing nets, boat
equipment and cargoes that sunk with the M/V Maria Efigenia
XV . In its amended complaint, private respondent alleged that
the vessel had an actual value of P800,000.00 but it had been
paid insurance in the amount of P200,000.00 and, therefore, it
claimed only the amount of P600,000.00. Ordinarily, the
receipt of insurance payments should diminish the total
value of the vessel quoted by private respondent in his
complaint considering that such payment is causally related to
the loss for which it claimed compensation. This Court believes
that such allegations in the original and amended complaints
can be the basis for determination of a fair amount of nominal
damages inasmuch as a complaint alleges the ultimate facts
constituting the plaintiffs cause of action. 54 Private
respondent should be bound by its allegations on the
amount of its claims.
With respect to petitioner's contention that the lower court did
not acquire jurisdiction over the amended complaint increasing
the amount of damages claimed to P600,000.00, we agree with
the Court of Appeals that the lower court acquired jurisdiction
over the case when private respondent paid the docket fee
corresponding to its claim in its original complaint. Its failure to
pay the docket fee corresponding to its increased claim for
damages under the amended complaint should not be
considered as having curtailed the lower court's jurisdiction.
Pursuant to the ruling in Sun Insurance
Office, Ltd. (SIOL) v. Asuncion, 55 the unpaid docket fee should
be considered as a lien on the judgment even though private
respondent specified the amount of P600,000.00 as its claim
for damages in its amended complaint.
Moreover, we note that petitioner did not question at all the
jurisdiction of the lower court on the ground of insufficient
docket fees in its answers to both the amended complaint and
the second amended complaint. It did so only in its motion for
reconsideration of the decision of the lower court after it had
received an adverse decision. As this Court held in Pantranco
North Express, Inc. v. Court of Appeals, 56 participation in all
stages of the case before the trial court, that included invoking
its authority in asking for affirmative relief, effectively barred
petitioner by estoppel from challenging the court's jurisdiction.
Notably, from the time it filed its answer to the second
amended complaint on April 16, 1985, 57 petitioner did not
question the lower court's jurisdiction. It was only on December
29, 1989 58 when it filed its motion for reconsideration of the
lower court's decision that petitioner raised the question of the
lower court's lack of jurisdiction. Petitioner thus foreclosed its
right to raise the issue of jurisdiction by its own inaction.
WHEREFORE, the challenged
decision of the Court of Appeals dated October 14, 1992 in CA-
G.R. CV No. 26680 affirming that of the Regional
Trial Court of Caloocan City, Branch 121, is hereby MODIFIED
insofar as it awarded actual damages to private respondent
Maria Efigenia Fishing Corporation in the
amount of P6,438,048.00 for lackof evidentiary bases therefor.
Considering the fact, however, that (1) technically petitioner
sustained injury but which, unfortunately, was not adequately
and properly proved, and (2) this case has dragged on for
almost two decades, we believe that an award of Two Million
(P2,000.000.00) 59 in favor of private respondent as and for
nominal damages is in order.
No pronouncement as to costs.
SO ORDERED.
Kapunan and Purisima, JJ ., concur.
Narvasa, C .J ., is on leave.
||| (PNOC Shipping and Transport Corp. v. Court of Appeals,
G.R. No. 107518, [October 8, 1998], 358 PHIL 38-63)

FIRST DIVISION

[G.R. No. 93833. September 28, 1995.]

SOCORRO
D. RAMIREZ, petitioner, vs. HONORABLE COURT OF AP
PEALS and ESTER S. GARCIA, respondent. cdll

E. Voltaire Garcia for petitioner.

Cesar V . Chavez for private respondent.

SYLLABUS

1. STATUTORY CONSTRUCTION; WHERE THE LANGUAGE OF A

STATUTE IS CLEAR AND UNAMBIGUOUS; RULE. Legislative
intent is determined principally from the language of a statute.
Where the language of a statute is clear and unambiguous, the
law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would
be either impossible or absurd or would lead to an injustice.
2. CRIMINAL LAW; ANTI-WIRE TAPPING LAW (R.A. 4200); MAKES
NO DISTINCTION AS TO WHETHER THE PARTY SOUGHT TO BE
PENALIZED OUGHT TO BE A PARTY OTHER THAN OR DIFFERENT
FROM THOSE INVOLVED IN THE PRIVATE COMMUNICATION.
Section 1 of R.A. 4200 entitled, "An Act to Prohibit and Penalize
Wire Tapping and Other Related Violations of Private
Communication and Other Purposes," clearly and unequivocally
makes it illegal for any person, not authorized by all the parties
to any private communication to secretly record such
communication by means of a tape recorder. The law makes no
distinction as to whether the party sought to be penalized by
the statute ought to be a party other than or different from
those involved in the private communication. The statute's
intent to penalize all persons unauthorized to make such
recording is underscored by the use of the qualifier "any."
Consequently, as respondent Court of Appeals correctly
concluded, "even a (person) privy to a communication who
records his private conversation with another without the
knowledge of the latter (will) qualify as a violator" under this
provisionof R.A. 4200.
3. ID.; ID.; NATURE OF CONVERSATION, IMMATERIAL TO A
VIOLATION THEREOF. The nature of the conversation is
immaterial to a violation of the statute. The substance of the
same need not be specifically alleged in the information.
What R.A. 4200 penalizes are the
acts of secretly overhearing, intercepting or recordingprivate
communications by means of the devices enumerated therein.
The mere allegation that an individual made a secret
recording of a private communication by means of a tape
recorder would suffice to constitute an offense under Section
1 of R.A. 4200. As the Solicitor General pointed out in his
COMMENT before the respondent court: "Nowhere (in the said
law) is it required that before one can be regarded as a
violator, the nature of the conversation, as well as its
communication to a third person should be professed."
4. ID.; ID.; "PRIVATE COMMUNICATION"; SCOPE. Petitioner's
contention that the phrase "private communication" in Section
1 of R.A. 4200 does not include "private conversations" narrows
the ordinary meaning of the word "communication" to a
point of absurdity. The word communicate comes from the
Latin wordcommunicare, meaning "to share or to impart." In its
ordinary signification, communication connotes
the act of sharing or imparting, as in a conversation, or
signifies the "process by which meaning or thoughts are shared
between individuals through a common system of symbols (as
language signs or gestures)." These definitions are broad
enough to include verbal or non-verbal, written or expressive
communications of "meanings or thoughts" which are likely to
include the emotionally-charged exchange, on February 22,
1988, between petitioner and private respondent, in the
privacy of the latter's office. Any doubts about the legislative
body's meaning of the phrase "private communication" are,
furthermore, put to rest by the fact that the terms
"conversation" and "communication" were interchangeably
used by Senator Taada in his Explanatory Note to the bill,
quoted below: "It has been said that innocent people have
nothing to fear from their conversations being overheard. But
this statement ignores the usual nature of conversations as
well as the undeniable fact that most, if not all, civilized people
have some aspects of their lives they do not wish to expose.
Free conversations are often characterized by exaggerations,
obscenity, agreeable falsehoods, and the expression of anti-
social desires of views not intended to be taken seriously. The
right to the privacy of communication, among others, has
expressly been assured by our Constitution. Needless to state
here, the framers ofour Constitution must have recognized the
nature of conversations between individuals and the
significance of man's spiritual nature, of his feelings and of his
intellect. They must have known that part of the pleasures and
satisfactions of life are to be found in the unaudited, and free
exchange of communication between individuals free from
every unjustifiable intrusion by whatever means." LexLibris

DECISION

KAPUNAN, J p:
A civil case for damages was filed by petitioner Socorro
D. Ramirez in the Regional Trial Court of Quezon City alleging
that the private respondent, Ester S. Garcia, in a confrontation
in the latter's office, allegedly vexed, insulted and humiliated
her in a "hostile and furious mood" and in a manner offensive
to petitioner's dignity and personality," contrary to morals,
good customs and public policy." 1
In support of her claim, petitioner produced a verbatim
transcript of the event and sought moral damages, attorney's
fees and other expenses of litigation in the
amount of P610,000.00, in addition to costs, interests and
other reliefs awardable at the trial court's discretion. The
transcript on which the civil case was based was culled from a
tape recording of the confrontation made by petitioner. 2 The
transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi)
 Good afternoon Ma'am.
Defendant Ester S. Garcia (ESG)
Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano
ka napunta rito, porke member ka na, magsumbong ka
kung ano ang gagawin ko sa iyo.
CHUCHI
Kasi, naka duty ako noon.
ESG
Tapos iniwan no. (Sic)
CHUCHI
Hindi ma'am, pero ilan beses na nila akong binalikan,
sabing ganoon.
ESG
Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag
explain ka, kasi hanggang, 10:00 p.m., kinabukasan hindi
ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply
ka sa States, nag-aapply ka sa review mo, kung
kakailanganin ang certification mo, kalimutan mo na kasi
hindi ka sa akin makakahingi.
CHUCHI
Hindi Ma'am. Kasi ang ano ko talaga noon i-cocontinue ko
up to 10:00 p.m.
ESG
Bastos ka, nakalimutan mo na kung paano ka pumasok
dito sa hotel. Magsumbong ka sa Union kung gusto mo.
Nakalimutan mo na kung paano ka nakapasok dito "Do you
think that on your own makakapasok ka kung hindi ako.
Panunumbyoyan na kita (Sinusumbatan na kita).
CHUCHI
Itutuloy ko na Ma'am sana ang duty ko.
ESG
 Kaso ilang beses na akong binabalikan doon ng mga no
(sic) ko.
ESG
Nakalimutan mo na ba kung paano ka pumasok sa hotel,
kung on your own merit alam ko naman kung gaano ka "ka
bobo" mo. Marami ang nag-aaply alam kong hindi ka
papasa.
CHUCHI
Kukuha kami ng exam noon.
ESG
Oo, pero hindi ka papasa.
CHUCHI
Eh, bakit ako ang nakuha ni Dr. Tamayo.
ESG
Kukunin ka kasi ako.
CHUCHI
Eh, di sana
ESG
Huwag mong ipagmalaki na may utak ka kasi wala kang
utak. Akala mo ba makukuha ka dito kung hindi ako.
CHUCHI
Mag-eexplain ako.
ESG
Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala
ka kung paano ka puma-rito. "Putang-ina" sasabi-sabihin
mo kamag-anak ng nanay at tatay mo ang mga magulang
ko.
ESG
Wala na akong pakialam, dahil nandito ka sa loob, nasa
labas ka puwede ka ng hindi pumasok, okey yan nasaloob
ka umalis ka doon.
 CHUCHI
Kasi M'am, binabalikan ako ng mga taga Union.
ESG
Nandiyan na rin ako, pero huwag mong kalimutan na hindi
ka makakapasok kung hindi ako. Kung hindi mo kinikilala
yan okey lang sa akin, dahil tapos ka na.
CHUCHI
Ina-ano ko ma'am na utang na loob.
ESG
Huwag na lang, hindi mo utang na loob, kasi kung baga sa
no, nilapastanganan mo ako.
CHUCHI
Paano kita nilapastanganan?
ESG
Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa
'yo. Lumabas ka na. Magsumbong ka. 3
As a result of petitioner's recording of the event and alleging
that the said act of secretly taping the confrontation was
illegal, private respondent filed a criminal case before the
Regional Trial Court of Pasay City for
violation of Republic Act 4200, entitled "An Act to prohibit and
penalize wire tapping and other related violations ofprivate
communication, and other purposes." An information charging
petitioner of violation of the said Act, dated October 6, 1988 is
quoted herewith:
INFORMATION
The Undersigned Assistant City Fiscal Accuses Socorro
D. Ramirez of Violation of Republic Act No. 4200,
committed as follows:
That on or about the 22nd day of February, 1988, in
Pasay City, Metro Manila, Philippines, and within the
jurisdiction of this honorable court, the above-named
accused, Socorro D. Ramirez not being authorized by
Ester S. Garcia to record the latter's conversation with
said accused, did then and there wilfully, unlawfully
and feloniously, with the use of a tape recorder
secretly record the said conversation and thereafter
communicate in writing the contents of the said
recording to other person.
Contrary to Law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M. CUNETA
Asst. City Fiscal
Upon arraignment, in lieu of a plea, petitioner filed a Motion
to Quash the Information on the ground that the facts charged
do not constitute an offense, particularly a violation of R.A.
4200. In an order May 3, 1989, the trial court granted the
Motion to Quash, agreeing with petitioner that 1) the facts
charged do not constitute an offense under R.A. 4200; and
that 2) the violation punished by R.A. 4200 refers to the
taping of a communication by a person other than a
participant to the communication. 4
From the trial court's Order, the private respondent filed a
Petition for Review on Certiorari with this Court, which
forthwith referred the case to the Court ofAppeals in a
Resolution (by the First Division) of June 19, 1989. cdtai

On February 9, 1990,
respondent Court of Appeals promulgated its assailed
Decision declaring the trial court's order of May 3, 1989 null
and void, and holding that:
"[T]he allegations sufficiently constitute an offense
punishable under Section 1 of R.A. 4200. In thus quashing
the information based on the ground that the facts alleged
do not constitute an offense, the respondent judge acted in
grave abuse of discretion correctible by certiorari." 5
Consequently, on February 21, 1990, petitioner filed a Motion
for Reconsideration which respondent Court of Appeals denied
in its Resolution 6 dated June 19, 1990. Hence, the instant
petition.
Petitioner vigorously argues, as her "main and principal
issue" 7 that the applicable
provision of Republic Act 4200 does not apply to the
taping of a private conversation by one of the parties to the
conversation. She contends that the provision merely refers to
the unauthorized taping of a private conversation by a party
other than those involved in the communication. 8 In relation
to this, petitioner avers that the substance or content of the
conversation must be alleged in the Information, otherwise
the facts charged would not constitute a violation of R.A.
4200. 9 Finally, petitioner argues that R.A. 4200 penalizes the
taping of a "private communication," not a "private
conversation" and that consequently, her act of secretly
taping her conversation with private respondent was not
illegal under the said act. 10
We disagree. prLL
First, legislative intent is determined principally from the
language of a statute. Where the language of a statute is
clear and unambiguous, the law is applied according to its
express terms, and interpretation would be resorted to only
where a literal interpretation would be either impossible 11 or
absurd or would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, "An Act to Prohibit and
Penalize Wire Tapping and Other Related Violations of Private
Communication and Other Purposes," provides:
SECTION 1. It shall be unlawful for any person, not being
authorized by all the parties to any private communication
or spoken word, to tap any wire or cable, or by using any
other device or arrangement, to secretly overhear,
intercept, or record such communication or spoken word
by using a device commonly known as a dictaphone or
dictagraph or detectaphone or walkie-talkie or tape
recorder, or however otherwise described.
The aforestated provision clearly and unequivocally makes it
illegal for any person, not authorized by all the parties to any
private communication to secretly record such communication
by means of a tape recorder. The law makes no distinction as
to whether the party sought to be penalized by the statute
ought to be a party other than or different from those involved
in the private communication. The statute's intent to penalize
all persons unauthorized to make such recording is
underscored by the use of the qualifier "any." Consequently,
as respondent Court of Appeals correctly concluded, "even a
(person) privy to a communication who records his private
conversation with another without the knowledge of the latter
(will) qualify as a violator" 13 under this provision of R.A.
4200.
A perusal of the Senate Congressional Records, moreover,
supports the respondent court's conclusion that in
enacting R.A. 4200 our lawmakers indeed contemplated to
make illegal, unauthorized tape recording of private
conversations or communications taken either by the parties
themselves or by third persons. Thus:
xxx xxx xxx
Senator Taada:
The qualified only 'overhear.'
Senator Padilla:
So that when it is intercepted or recorded, the
element of secrecy would not appear to be material. Now,
suppose, Your Honor, the recording is not made by all the
parties but by some parties and involved not criminal cases
that would be mentioned under Section 3 but would cover, for
example civil cases or special proceedings whereby a recording
is made not necessarily by all the parties but perhaps by some
in an effort to show the intent of the parties because the
actuation of the parties prior, simultaneous even subsequent to
the contract or the act may be indicative of their intention.
Suppose there is such a recording, would you say, Your Honor,
that the intention is to cover it within the purview of this bill or
outside?
Senator Taada:
That is covered by the purview of this bill, Your Honor.
Senator Padilla:
Even if the record should be used not in the
prosecution of offense but as evidence to be used in Civil
Cases or special proceedings?
Senator Taada:
That is right. This is a complete ban on tape recorded
conversations taken without the authorization of all the
parties.
Senator Padilla:
Now, would that be reasonable, Your Honor?
Senator Taada:
I believe it is reasonable because it is not sporting to
record the observation of one without his knowing it and
then using it against him. It is not fair, it is not
sportsmanlike. If the purpose; Your honor, is to record the
intention of the parties. I believe that all the parties should
know that the observations are being recorded.
Senator Padilla:
This might reduce the utility of recorders.
Senator Taada:
Well no. For example, I was to say that in meetings of the
board of directors where a tape recording is taken, there is
no objection to this if all the parties know. It is but fair that
the people whose remarks and observations are being
made should know that these are being recorded.
Senator Padilla:
Now, I can understand.
Senator Taada:
That is why when we take statements of persons, we say:
"Please be informed that whatever you say here may be
used against you." That is fairness and that is what we
demand. Now, in spite of that warning, he makes
damaging statements against his own interest, well, he
cannot complain any more. But if you are going to take a
recording of the observations and remarks of a person
without him knowing that it is being taped or
recorded, without him knowing that what is being recorded
may be used against him, I think it is unfair.
xxx xxx xxx
(Congressional Record, Vol. III, No. 31, p. 584, March 12,
1964)
Senator Diokno:
Do you understand, Mr. Senator, that under Section
1 of the bill as now worded, if a party secretly records a
public speech, he would be penalized under Section 1?
Because the speech is public, but the recording is done
secretly.
Senator Taada:
Well, that particular aspect is not contemplated by the
bill. It is the communication between one person and
another person not between a speaker and a public.
xxx xxx xxx
(Congressional Record, Vol. III. No. 33, p. 626, March 12,
1964)
xxx xxx xxx
 The unambiguity of the express words of the provision, taken
together with the above-quoted deliberations from the
Congressional Record, therefore plainly supports the view held
by the respondent court that the provision seeks to penalize
even those privy to the private communications. Where the
law makes no distinctions, one does not distinguish. cdlex
Second, the nature of the conversation is immaterial to a
violation of the statute. The substance of the same need not
be specifically alleged in the information. What R.A.
4200 penalizes are the
acts of secretly overhearing, intercepting or recording private
communications by means of the devices enumerated therein.
The mere allegation that an individual made a secret
recording of a private communication by means of a tape
recorder would suffice to constitute an offense under Section
1 of R.A. 4200. As the Solicitor General pointed out in his
COMMENT before the respondent court: "Nowhere (in the said
law) is it required that before one can be regarded as a
violator, the nature of the conversation, as well as its
communication to a third person should be professed." 14
Finally, petitioner's contention that the phrase "private
communication" in Section 1 of R.A. 4200 does not include
"private conversations" narrows the ordinary meaning of the
word "communication" to a point of absurdity. The word
communicate comes from the latin
word communicare, meaning "to share or to impart." In its
ordinary signification, communication connotes
the act of sharing or imparting, as in a conversation, 15 or
signifies the "process by which meanings or thoughts are
shared between individuals through a common
system of symbols (as language signs or gestures)." 16 These
definitions are broad enough to include verbal or non-verbal,
written or expressive communications of "meanings or
thoughts" which are likely to include the emotionally-charged
exchange, on February 22, 1988, between petitioner and
private respondent, in the privacy of the latter's office. Any
doubts about the legislative body's meaning of the phrase
"private communication" are, furthermore, put to rest by the
fact that the terms "conversation" and "communication" were
interchangeably used by Senator Taada in his Explanatory
Note to the bill quoted below:
"It has been said that innocent people have nothing to
fear from their conversations being overheard. But this
statement ignores the usual nature of conversations as
well as the undeniable fact that most, if not all, civilized
people have some aspects of their lives they do not wish to
expose. Free conversations are often characterized by
exaggerations, obscenity, agreeable falsehoods, and the
expression of anti-social desires of views not intended to
be taken seriously. The right to
the privacy ofcommunication, among others, has expressly
been assured by our Constitution. Needless to state here,
the framers of our Constitution must have recognized the
nature of conversations between individuals and the
significance of man's spiritual nature, of his feelings
and of his intellect. They must have known that part of the
pleasures and satisfactions of life are to be found in the
unaudited, and free exchange of communication between
individuals free from every unjustifiable intrusion by
whatever means." 17

In Gaanan vs. Intermediate Appellate Court, 18 a case which

dealt with the issue of telephone wiretapping, we held that
the use of a telephone extension for the
purpose of overhearing a private conversation without
authorization did not violate R.A. 4200 because a telephone
extension devise was neither among those devises
enumerated in Section 1 of the law nor was it similar to those
"device(s) or arrangement(s)" enumerated
therein," 19 following the principle that "penal statutes must
be construed strictly in favor of the accused." 20 The instant
case turns on a different note, because the applicable facts
and circumstances pointing to a violation of R.A. 4200 suffer
from no ambiguity, and the statute itself explicitly mentions
the unauthorized "recording" of private communications with
the use oftape-recorders as among the acts punishable. cdtai
WHEREFORE, because the law, as applied to the case at
bench is clear and unambiguous and leaves us with no
discretion, the instant petition is hereby DENIED. The decision
appealed from is AFFIRMED. Costs against petitioner.
SO ORDERED.
Padilla, Davide, Jr. and Bellosillo, JJ., concur.
Hermosisima, Jr., J., is on official leave.
||| (Ramirez v. Court of Appeals, G.R. No. 93833, [September
28, 1995], 318 PHIL 701-713)

SECOND DIVISION

[G.R. No. 110662. August 4, 1994.]

TERESITA SALCEDO-ORTANEZ, petitioner, vs. COURT

OF APPEALS, HON. ROMEO F. ZAMORA, Presiding
Judge, Br. 94, Regional Trial Court of Quezon city
and RAFAEL S. ORTANEZ, respondents.

SYLLABUS

REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; NOT

AVAILABLE TO CHALLENGE INTERLOCUTORY
ORDER OF TRIAL COURT; EXCEPTION; CASE AT BAR. The
extraordinary writ of certiorari is generally not available to
challenge an interlocutory order of a trial court. The proper
remedy in such cases is an ordinary appeal from an adverse
judgment, incorporating in said appeal the grounds for
assailing the interlocutory order. However, where the assailed
interlocutory order is patently erroneous and the
remedy of appeal would not afford adequate and expeditious
relief, the Court may allow certiorari as a mode of redress. In
the present case, the trialcourt issued the assailed order
admitting all of the evidence offered by private respondent,
including tape recordings of telephone
conversations of petitioner with unidentified persons. These
tape recordings were made and obtained when private
respondent allowed his friends from the military to wire tap his
home telephone.Rep. Act No. 4200 entitled "An Act to Prohibit
and Penalize Wire Tapping and other Related Violations of the
Privacy of Communication, and for other purposes" expressly
makes such tape recordings inadmissible in evidence. . . . .
Clearly, respondents trial court and Court of Appeals failed to
consider the afore-quoted provisionsof the law in admitting in
evidence the cassette tapes in question. Absent a clear
showing that both parties to the telephone conversations
allowed the recording of the same, the inadmissibility of the
subject tapes is mandatory under Rep. Act No. 4200.

DECISION

PADILLA, J p:
This is a petition for review under Rule 45 of the
Rules of Court which seeks to reverse the
decision * of respondent Court of Appeals in CA-G.R. SP No.
28545 entitle "Teresita Salcedo-Ortanez versus Hon. Romeo F.
Zamora, Presiding Judge, Br. 94, Regional Trial Court of Quezon
City and Rafael S. Ortanez". prcd
The relevant facts of the case are as follows:
 On 2 May 1990, private respondent Rafael S. Ortanez filed with
the Regional Trial Court of Quezon City a complaint for
annulment of marriage with damages against petitioner
Teresita Salcedo-Ortanez, on grounds of lack of marriage
license and/or psychological incapacity of the petitioner. The
complaint was docketed as Civil Case No. Q-90-5360 and
raffled to Branch 94, RTC of Quezon City presided over by
respondent Judge Romeo F. Zamora.
Private respondent, after presenting his evidence, orally
formally offered in evidence Exhibits "A" to "M"
Among the exhibits offered by private respondent were three
(3) cassette tapes of alleged telephone conversations between
petitioner and unidentified persons.
Petitioner submitted her Objection/Comment to private
respondent's oral offer of evidence on 9 June 1992; on the
same day, the trial court admitted all of private respondent's
offered evidence. Cdpr
A motion for reconsideration from petitioner was denied on 23
June 1992.
A petition for certiorari was then filed by petitioner in
the Court of Appeals assailing the admission in evidence of the
aforementioned cassette tapes.
On 10 June 1993, the Court of appeals rendered judgment
which is the subject of the present petition, which in part reads:
"It is much too obvious that the petition will have to fail,
for two basic reasons:
(1) Tape recordings are not inadmissible per se. They and
any other variant thereof can be admitted in evidence for
certain purposes, depending on how they are presented
and offered and on how the trial judge utilizes them in the
interest of truth and fairness and the even handed
administration of justice.
 (2) A petition for certiorari is notoriously inappropriate to
rectify a supposed error in admitting evidence adduced
during trial. The ruling on admissibility is interlocutory;
neither does it impinge on jurisdiction. If it is erroneous,
the ruling should be questioned in the appeal from the
judgment on the merits and not through the special civil
action of certiorari. The error, assuming gratuitously that it
exists, cannot be anymore than an error of law, properly
correctible by appeal and not by certiorari. Otherwise, we
will have the sorry spectacle of a case being subject of a
counterproductive 'ping-pong' to and from the
appellate court as often as a trial courtis perceived to have
made an error in any of its rulings with respect to
evidentiary matters in the course of trial. This we cannot
sanction.
WHEREFORE, the petition for certiorari being
devoid of merit, is hereby DISMISSED". 1
From this adverse judgment, petitioner filed the present
petition for review, stating: Cdpr
"Grounds for Allowance of the Petition"
"10. The decision of respondent [Court of Appeals] has no
basis in law nor previous decisions of the Supreme Court.
10.1 In affirming the questioned order of respondent
judge, the Court of Appeals has decided a
question of substance not theretofore determined by the
Supreme Court as the question of admissibility in
evidence of tape recordings has not, thus, far, been
addressed and decided squarely by the Supreme Court.
11. In affirming the questioned order of respondent judge,
the Court of Appeals has likewise rendered a decision in a
way not in accord with law and with applicable
decisions of the Supreme Court.
11.1 Although the questioned order is interlocutory in
nature, the same can still be [the] subject of a petition for
certiorari." 2
The main issue to be resolved is whether or not the
remedy of certiorari under Rule 65 of the Rules of Court was
properly availed of by the petitioner in the Court ofAppeals.
The extraordinary writ of certiorari is generally not available to
challenge an interlocutory order of a trial court. The proper
remedy in such cases is an ordinary appeal from an adverse
judgment, incorporating in said appeal the grounds for
assailing the interlocutory order. LLpr
However, where the assailed interlocutory order is patently
erroneous and the remedy of appeal would not afford adequate
and expeditious relief, the court may allow certiorari as a
mode of redress. 3
In the present case, the trial court issued the assailed order
admitting all of the evidence offered by private respondent,
including tape recordings of telephone
conversations of petitioner with unidentified persons. These
tape recordings were made and obtained when private
respondent allowed his friends from the military to wire tap his
home telephone. 4
Rep. Act No. 4200 entitled "An Act to Prohibit and Penalize
Wire Tapping and Other Related Violations of the
Privacy of Communication, and for other purposes" expressly
makes such tape recordings inadmissible in evidence. The
relevant provisions of Rep. Act No. 4200 are as follows:
"Section 1. It shall be unlawful for any person, not being
authorized by all the parties to any private communication
or spoken word, to tap any wire or cable, or by using any
other device or arrangement, to secretly overhear,
intercept, or record such communication or spoken word
by using a device commonly known as a dictaphone or
dictagraph or detectaphone or walkie-talkie or tape-
recorder, or however otherwise described. . . ."
"Section 4. Any communication or spoken word, or the
existence, contents, substance, purport, or meaning of the
same or any part thereof, or any information therein
contained, obtained or secured by any person in
violation of the preceding sections of this Act shall not be
admissible in evidence in any judicial, quasi-judicial,
legislative or administrative hearing or investigation."
Clearly, respondents trial court and Court of Appeals failed to
consider the afore-quoted provisions of the law in admitting in
evidence the cassette tapes in question. Absent a clear
showing that both parties to the telephone conversations
allowed to recording of the same, the inadmissibility of the
subject tapes is mandatory underRep. Act No. 4200. prLL
Additionally, it should be mentioned that the above-mentioned
Republic Act in Section 2 thereof imposes a
penalty of imprisonment of not less than six (6) months and up
to six (6) years for violation of said Act. 5
We need not address the other arguments raised by the
parties, involving the applicability of American jurisprudence,
having arrived at the conclusion that the subject cassette tapes
are inadmissible in evidence under Philippine law.
WHEREFORE, the decision of the Court of Appeals in CA-G.R.
SP No. 28545 is hereby SET ASIDE. The subject cassette tapes
are declared inadmissible in evidence.
SO ORDERED.
Narvasa, C.J., Regalado, Puno and Mendoza, JJ., concur.
||| (Salcedo-Ortanez v. Court of Appeals, G.R. No. 110662,
[August 4, 1994])
 SECOND DIVISION

[G.R. No. L-69809. October 16, 1986.]

EDGARDO A. GAANAN, petitioner, vs. INTERMEDIATE

APPELLATE COURT and PEOPLE OF THE
PHILIPPINES, respondents.

DECISION

GUTIERREZ, JR., J p:
This petition for certiorari asks for an interpretation of Republic
Act (RA) No. 4200, otherwise known as the Anti-Wiretapping
Act, on the issue of whether or not an extension telephone is
among the prohibited devices in Section 1 of the Act, such that
its use to overhear a private conversation would constitute
unlawful interception of communications between the two
parties using a telephone line.
The facts presented by the People and narrated in the
respondent court's decision are not disputed by the petitioner.
"In the morning of October 22, 1975, complainant Atty.
Tito Pintor and his client Manuel Montebon were in the
living room of complainant's residence discussing the
terms for the withdrawal of the complaint for direct assault
which they filed with the Office of the City Fiscal of Cebu
against Leonardo Laconico. After they had decided on the
proposed conditions, complainant made a telephone call to
Laconico (tsn, August 26, 1981, pp. 3-5).
"That same morning, Laconico telephoned appellant, who
is a lawyer to come to his office and advise him on the
settlement of the direct assault case because his regular
lawyer, Atty. Leon Gonzaga, went on a business trip.
According to the request, appellant went to the office of
Laconico where he was briefed about the problem. (Exhibit
'D', tsn, April 22, 1982, pp. 4-5).
"When complainant called up, Laconico requested
appellant to secretly listen to the telephone conversation
through a telephone extension so as to hear personally the
proposed conditions for the settlement. Appellant heard
complainant enumerate the following conditions for
withdrawal of the complaint for direct assault"
"(a) the P5,000.00 was no longer acceptable, and that the
figure had been increased to P8,000.00. A breakdown of
the P8,000.00 had been made together with other
demands, to wit: (a) P5,000.00 no longer for the teacher
Manuel Montebon, but for Atty. Pintor himself in persuading
his client to withdraw the case for Direct Assault against
Atty. Laconico before the Cebu City Fiscal's Office;
"(b) Public apology to be made by Atty. Laconico before
the students of Don Bosco Technical High School;
"(c) P1,000.00 to be given to the Don Bosco Faculty club;
"(d) transfer of son of Atty. Laconico to another school or
another section of Don Bosco Technical High School;
"(e) Affidavit of desistance by Atty. Laconico on the
Maltreatment case earlier filed against Manuel Montebon
at the Cebu City Fiscal's Office, whereas Montebon's
affidavit of desistance on the Direct Assault Case against
Atty. Laconico to be filed later;
"(f) Allow Manuel Montebon to continue teaching at the
Don Bosco Technical School;
"(g) Not to divulge the truth about the settlement of the
Direct Assault Case to the mass media;
"(h) P2,000.00 attorney's fees for Atty. Pintor. (tsn, August
26, 1981, pp. 47-48).
"Twenty minutes later, complainant called up again to ask
Laconico if he was agreeable to the conditions. Laconico
answered `Yes'. Complainant then told Laconico to wait for
instructions on where to deliver the money. (tsn, March 10,
1983, pp. 2-12).
"Complainant called up again and instructed Laconico to
give the money to his wife at the office of the then
Department of Public Highways. Laconico who earlier
alerted his friend Colonel Zulueta of the Criminal
Investigation Service of the Philippine Constabulary,
insisted that complainant himself should receive the
money. (tsn, March 10, 1982, pp. 26-33). When he received
the money at the Igloo Restaurant, complainant was
arrested by agents of the Philippine Constabulary.
"Appellant executed on the following day an affidavit
stating that he heard complainant demand P8,000.00 for
the withdrawal of the case for direct assault. Laconico
attached the affidavit of appellant to the complainant for
robbery/extortion which he filed against complainant. Since
appellant listened to the telephone conversation without
complainant's consent, complainant charged appellant and
Laconico with violation of the Anti-Wiretapping Act."
After trial on the merits, the lower court, in a decision dated
November 22, 1982, found both Gaanan and Laconico guilty of
violating Section 1 of Republic Act No. 4200. The two were
each sentenced to one (1) year imprisonment with costs. Not
satisfied with the decision, the petitioner appealed to the
appellate court.
On August 16, 1984, the Intermediate Appellate Court affirmed
the decision of the trial court, holding that the communication
between the complainant and accused Laconico was private in
nature and, therefore, covered by Rep. Act No. 4200; that the
petitioner overheard such communication without the
knowledge and consent of the complainant; and that the
extension telephone which was used by the petitioner to
overhear the telephone conversation between complainant and
Laconico is covered in the term "device" as provided in Rep.
Act No. 4200. LLphil
In this petition for certiorari, the petitioner assails the decision
of the appellate court and raises the following issues; (a)
whether or not the telephone conversation between the
complainant and accused Laconico was private in nature; (b)
whether or not an extension telephone is covered by the term
"device or arrangement" underRep. Act No. 4200; (c) whether
or not the petitioner had authority to listen or overhear said
telephone conversation and (d) whether or not Rep. Act No.
4200 is ambiguous and, therefore, should be construed in favor
of the petitioner.
Section 1 of Rep. Act No. 4200 provides:
"Section 1. It shall be unlawful for any person, not being
authorized by all the parties to any private communication
or spoken word, to tap any wire or cable or by using any
other device or arrangement, to secretly overhear,
intercept, or record such communication or spoken word
by using a device commonly known as a dictaphone or
dictagraph or detectaphone or walkie-talkie or
taperecorder, or however otherwise described;
It shall be unlawful for any person, be he a participant or
not in the act or acts penalized in the next preceeding
sentence, to knowingly possess any tape record, wire
record, disc record, or any other such record, or copies
thereof, of any communication or spoken word secured
either before or after the effective date of this Act in the
manner prohibited by this law; or to replay the same for
any other person or persons; or to communicate the
contents thereof, either verbally or in writing, or to furnish
transcriptions thereof, whether complete or partial, to any
other person: Provided, that the use of such record or any
copies thereof as evidence in any civil, criminal
investigation or trial of offenses mentioned in Section 3
hereof, shall not be covered by this prohibition."
We rule for the petitioner.
We are confronted in this case with the interpretation of a
penal statute and not a rule of evidence. The issue is not the
admissibility of evidence secured over an extension line of a
telephone by a third party. The issue is whether or not the
person called over the telephone and his lawyer listening to the
conversation on an extension line should both face prison
sentences simply because the extension was used to enable
them to both listen to an alleged attempt at extortion.
There is no question that the telephone conversation between
complainant Atty. Pintor and accused Atty. Laconico was
"private" in the sense that the words uttered were made
between one person and another as distinguished from words
between a speaker and a public. It is also undisputed that only
one of the parties gave the petitioner the authority to listen to
and overhear the caller's message with the use of an extension
telephone line. Obviously, complainant Pintor, a member of the
Philippine bar, would not have discussed the alleged demand
for an P8,000.00 consideration in order to have his client
withdraw a direct assault charge against Atty. Laconico filed
with the Cebu City Fiscal's Office if he knew that another
lawyer was also listening. We have to consider, however, that
affirmance of the criminal conviction would, in effect, mean
that a caller by merely using a telephone line can force the
listener to secrecy no matter how obscene, criminal, or
annoying the call may be. It would be the word of the caller
against the listener's.
Because of technical problems caused by the sensitive nature
of electronic equipment and the extra heavy loads which
telephone cables are made to carry in certain areas, telephone
users often encounter what are called "crossed lines". An
unwary citizen who happens to pick up his telephone and who
overhears the details of a crime might hesitate to inform police
authorities if he knows that he could be accused under Rep. Act
4200 of using his own telephone to secretly overhear the
private communications of the would be criminals. Surely the
law was never intended for such mischievous results. LibLex
The main issue in the resolution of this petition, however,
revolves around the meaning of the phrase "any other device
or arrangement." Is an extension of a telephone unit such a
device or arrangement as would subject the user to
imprisonment ranging from six months to six years with the
accessory penalty of perpetual absolute disqualification for a
public officer or deportation for an alien? Private secretaries
with extension lines to their bosses' telephones are sometimes
asked to use answering or recording devices to record business
conversations between a boss and another businessman.
Would transcribing a recorded message for the use of the boss
be a proscribed offense? Or for that matter, would a "party
line" be a device or arrangement under the law?
The petitioner contends that telephones or extension
telephones are not included in the enumeration of "commonly
known" listening or recording devices, nor do they belong to
the same class of enumerated electronic devices contemplated
by law. He maintains that in 1964, when Senate Bill No. 9
(later Rep. Act No. 4200) was being considered in the Senate,
telephones and extension telephones were already widely used
instruments, probably the most popularly known
communication device.

Whether or not listening over a telephone party line would be

punishable was discussed on the floor of the Senate. Yet, when
the bill was finalized into a statute, no mention was made of
telephones in the enumeration of devices "commonly known as
a dictaphone or dictagraph, detectaphone or walkie talkie or
tape recorder or however otherwise described." The omission
was not a mere oversight. Telephone party lines were
intentionally deleted from the provisions of the Act.
The respondent People argue that an extension telephone is
embraced and covered by the term "device" within the context
of the aforementioned law because it is not a part or portion of
a complete set of a telephone apparatus. It is a separate
device and distinct set of a movable apparatus consisting of a
wire and a set of telephone receiver not forming part of a main
telephone set which can be detached or removed and can be
transferred away from one place to another and to be plugged
or attached to a main telephone line to get the desired
communication coming from the other party or end.
The law refers to a "tap" of a wire or cable or the use of a
"device or arrangement" for the purpose of secretly
overhearing, intercepting, or recording the communication.
There must be either a physical interruption through a wiretap
or the deliberate installation of a device or arrangement in
order to overhear, intercept, or record the spoken words. LLpr
An extension telephone cannot be placed in the same
category as a dictaphone, dictagraph or the other devices
enumerated in Section 1 of RA No. 4200 as the use thereof
cannot be considered as "tapping" the wire or cable of a
telephone line. The telephone extension in this case was not
installed for that purpose. It just happened to be there for
ordinary office use. It is a rule in statutory construction that in
order to determine the true intent of the legislature, the
particular clauses and phrases of the statute should not be
taken as detached and isolated expressions, but the whole and
every part thereof must be considered in fixing the meaning of
any of its parts. (see Commissioner of Customs v. Esso
Estandard Eastern, Inc., 66 SCRA 113, 120).
In the case of Empire Insurance Company v. Rufino (90 SCRA
437, 443-444), we ruled:
"Likewise, Article 1372 of the Civil Code stipulates that
`however general the terms of a contract may be, they
shall not be understood to comprehend things that are
distinct and cases that are different from those upon which
the parties intended to agree.' Similarly, Article 1374 of the
same Code provides that 'the various stipulations of a
contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them
taken jointly.'
xxx xxx xxx
"Consequently, the phrase `all liabilities or obligations of
the decedent' used in paragraph 5(c) and 7(d) should be
then restricted only to those listed in the Inventory and
should not be construed as to comprehend all other
obligations of the decedent. The rule that `particularization
followed by a general expression will ordinarily be
restricted to the former' is based on the fact in human
experience that usually the minds of parties are addressed
specially to the particularization, and that the generalities,
though broad enough to comprehend other fields if they
stood alone, are used in contemplation of that upon which
the minds of the parties are centered. (Hoffman v. Eastern
Wisconsin R., etc., Co., 134 Wis. 603, 607; 115 NW 383,
cited in Francisco, Revised Rules of Court (Evidence), 1973
ed., pp. 180-181."
Hence, the phrase "device or arrangement" in Section 1 of RA
No. 4200, although not exclusive to that enumerated therein,
should be construed to comprehend instruments of the same
or similar nature, that is, instruments the use of which would
be tantamount to tapping the main line of a telephone. It refers
to instruments whose installation or presence cannot be
presumed by the party or parties being overheard because, by
their very nature, they are not of common usage and their
purpose is precisely for tapping, intercepting or recording a
telephone conversation.
An extension telephone is an instrument which is very
common especially now when the extended unit does not have
to be connected by wire to the main telephone but can be
moved from place to place within a radius of a kilometer or
more. A person should safely presume that the party he is
calling at the other end of the line probably has an extension
telephone and he runs the risk of a third party listening as in
the case of a party line or a telephone unit which shares its line
with another. As was held in the case of Rathbun v. United
States (355, U.S. 107, 2 L Ed 2d 137-138): prLL
"Common experience tells us that a call to a particular
telephone number may cause the bell to ring in more than
one ordinarily used instrument. Each party to a telephone
conversation takes the risk that the other party may have
an extension telephone and may allow another to overhear
the conversation. When such takes place there has been
no violation of any privacy of which the parties may
complain. Consequently, one element of 605, interception,
has not occurred."
In the same case, the Court further ruled that the conduct of
the party would differ in no way if instead of repeating the
message he held out his hand-set so that another could hear
out of it and that there is no distinction between that sort of
action and permitting an outsider to use an extension
telephone for the same purpose.
Furthermore, it is a general rule that penal statutes must be
construed strictly in favor of the accused. Thus, in case of
doubt as in the case at bar, on whether or not an extension
telephone is included in the phrase "device or arrangement",
the penal statute must be construed as not including an
extension telephone. In the case ofPeople v. Purisima, 86 SCRA
542, 562, we explained the rationale behind the rule:
"American jurisprudence sets down the reason for this rule
to be `the tenderness of the law of the rights of
individuals; the object is to establish a certain rule by
conformity to which mankind would be safe, and the
discretion of the court limited. (United States v. Harris, 177
US 305, 44 L Ed 780, 20 S Ct 609; Braffith v. Virgin Islands
(CA3) 26 F2d 646; Caudill v. State, 224 Ind 531, 69 NE2d
549; Jennings v. Commonwealth, 109 VA 821, 63 SE 1080,
all cited in 73 Am Jur 2d 452.) The purpose is not to enable
a guilty person to escape punishment through a
technicality but to provide a precise definition of forbidden
acts." (State v. Zazzaro, 20 A 2d 737, quoted in Martin's
Handbook on Statutory Construction, Rev. Ed. pp. 183-
184)."
In the same case of Purisima, we also ruled that in the
construction or interpretation of a legislative measure, the
primary rule is to search for and determine the intent and spirit
of the law. A perusal of the Senate Congressional Records will
show that not only did our lawmakers not contemplate the
inclusion of an extension telephone as a prohibited "device or
arrangement" but of greater importance, they were more
concerned with penalizing the act of recording than the act of
merely listening to a telephone conversation.
xxx xxx xxx
Senator Taada. Another possible objection to that is
entrapment which is certainly objectionable. It is made
possible by special amendment which Your Honor may
introduce.
Senator Diokno. Your Honor, I would feel that entrapment
would be less possible with the amendment than without
it, because with the amendment the evidence of
entrapment would only consist of government testimony
as against the testimony of the defendant. With this
amendment, they would have the right, and the
government officials and the person in fact would have the
right to tape record their conversation.
Senator Taada. In case of entrapment, it would be the
government.
Senator Diokno. In the same way, under this provision,
neither party could record and, therefore, the court would
be limited to saying: "Okay, who is more credible, the
police officers or the defendant?" In these cases, as
experienced lawyers, we know that the Court go with the
peace offices.
(Congressional Record, Vol. III, No. 33, p. 628, March 12,
1964).
xxx xxx xxx
Senator Diokno. The point I have in mind is that under
these conditions, with an agent outside listening in, he
could falsify the testimony and there is no way of checking
it. But if you allow him to record or make a recording in any
form of what is happening, then the chances of falsifying
the evidence is not very much.
Senator Taada. Your Honor, this bill is not intended to
prevent the presentation of false testimony. If we could
devise a way by which we could prevent the presentation
of false testimony, it would be wonderful. But what this bill
intends to prohibit is the use of tape record and other
electronic devices to intercept private conversations which
later on will be used in court.
(Congressional Record, Vol. III, No. 33, March 12, 1964, p.
629).
It can be readily seen that our lawmakers intended to
discourage, through punishment, persons such as government
authorities or representatives of organized groups from
installing devices in order to gather evidence for use in court or
to intimidate, blackmail or gain some unwarranted advantage
over the telephone users. Consequently, the mere act of
listening, in order to be punishable must strictly be with the
use of the enumerated devices in RA No. 4200 or others of
similar nature. We are of the view that an extension telephone
is not among such devices or arrangements.
WHEREFORE, the petition is GRANTED. The decision of the
then Intermediate Appellate Court dated August 16, 1984 is
ANNULLED and SET ASIDE. The petitioner is hereby ACQUITTED
of the crime of violation of Rep. Act No. 4200, otherwise known
as the Anti-Wiretapping Act.

SO ORDERED.
||| (Gaanan v. Intermediate Appellate Court, G.R. No. L-69809,
[October 16, 1986], 229 PHIL 139-150)

EN BANC

[G.R. No. 181881. October 18, 2011.]

BRICCIO "Ricky" A. POLLO, petitioner, vs.

CHAIRPERSON KARINA CONSTANTINO-DAVID,
DIRECTOR IV RACQUEL DE GUZMAN BUENSALIDA,
DIRECTOR IV LYDIA A. CASTILLO, DIRECTOR III
ENGELBERT ANTHONY D. UNITE AND THE CIVIL
SERVICE COMMISSION, respondents.

DECISION

VILLARAMA, JR., J p:
This case involves a search of office computer assigned to a
government employee who was charged administratively and
eventually dismissed from the service. The employee's
personal files stored in the computer were used by the
government employer as evidence of misconduct.
Before us is a petition for review on certiorari under Rule
45 which seeks to reverse and set aside the Decision 1 dated
October 11, 2007 and Resolution 2 dated February 29, 2008 of
the Court of Appeals (CA). The CA dismissed the petition
for certiorari (CA-G.R. SP No. 98224) filed by petitioner Briccio
"Ricky" A. Pollo to nullify the proceedings conducted by the
Civil Service Commission (CSC) which found him guilty of
dishonesty, grave misconduct, conduct prejudicial to the best
interest of the service, and violation of Republic Act (R.A.) No.
6713 and penalized him with dismissal.
The factual antecedents:
Petitioner is a former Supervising Personnel Specialist of the
CSC Regional Office No. IV and also the Officer-in-Charge of the
Public Assistance and Liaison Division (PALD) under
the "Mamamayan Muna Hindi Mamaya Na" program of the
CSC.
On January 3, 2007 at around 2:30 p.m., an unsigned letter-
complaint addressed to respondent CSC Chairperson Karina
Constantino-David which was marked "Confidential" and sent
through a courier service (LBC) from a certain "Alan San
Pascual" of Bagong Silang, Caloocan City, was received by the
Integrated Records Management Office (IRMO) at the CSC
Central Office. Following office practice in which documents
marked "Confidential" are left unopened and instead sent to
the addressee, the aforesaid letter was given directly to
Chairperson David. ATDHSC
The letter-complaint reads:
The Chairwoman
Civil Service Commission
Batasan Hills, Quezon City
Dear Madam Chairwoman,
Belated Merry Christmas and Advance Happy New Year!
As a concerned citizen of my beloved country, I would like
to ask from you personally if it is just alright for an
employee of your agency to be a lawyer of an accused
gov't employee having a pending case in the csc. I
honestly think this is a violation of law and unfair to others
and your office.
I have known that a person have been lawyered by one of
your attorny in the region 4 office. He is the chief of the
Mamamayan muna hindi mamaya na division. He have
been helping many who have pending cases in the Csc.
The justice in our govt system will not be served if this will
continue. Please investigate this anomaly because our
perception of your clean and good office is being tainted.
Concerned Govt employee 3
Chairperson David immediately formed a team of four
personnel with background in information technology (IT), and
issued a memo directing them to conduct an investigation and
specifically "to back up all the files in the computers found in
the Mamamayan Muna (PALD) and Legal divisions." 4 After
some briefing, the team proceeded at once to the CSC-ROIV
office at Panay Avenue, Quezon City. Upon their arrival thereat
around 5:30 p.m., the team informed the officials of the CSC-
ROIV, respondents Director IV Lydia Castillo (Director Castillo)
and Director III Engelbert Unite (Director Unite) of Chairperson
David's directive.
The backing-up of all files in the hard disk of computers at the
PALD and Legal Services Division (LSD) was witnessed by
several employees, together with Directors Castillo and Unite
who closely monitored said activity. At around 6:00 p.m.,
Director Unite sent text messages to petitioner and the head of
LSD, who were both out of the office at the time, informing
them of the ongoing copying of computer files in their divisions
upon orders of the CSC Chair. The text messages received by
petitioner read:
"Gud p.m. This is Atty. Unite FYI: Co people are going over
the PCs of PALD and LSD per instruction of the Chairman. If
you can make it here now it would be better."
"All PCs of PALD and LSD are being backed up per memo
of the chair."
"CO IT people arrived just now for this purpose. We were
not also informed about this.
"We can't do anything about . . . it . . . it's a directive from
chair."
"Memo of the chair was referring to an anonymous
complaint"; "ill send a copy of the memo via mms" 5
Petitioner replied also thru text message that he was leaving
the matter to Director Unite and that he will just get a lawyer.
Another text message received by petitioner from PALD staff
also reported the presence of the team from CSC main
office: "Sir may mga taga C.O. daw sa kuarto natin." 6 At
around 10:00 p.m. of the same day, the investigating team
finished their task. The next day, all the computers in the PALD
were sealed and secured for the purpose of preserving all the
files stored therein. Several diskettes containing the back-up
files sourced from the hard disk of PALD and LSD computers
were turned over to Chairperson David. The contents of the
diskettes were examined by the CSC's Office for Legal Affairs
(OLA). It was found that most of the files in the 17 diskettes
containing files copied from the computer assigned to and
being used by the petitioner, numbering about 40 to 42
documents, were draft pleadings or letters 7 in connection with
administrative cases in the CSC and other tribunals. On the
basis of this finding, Chairperson David issued the Show-Cause
Order 8 dated January 11, 2007, requiring the petitioner, who
had gone on extended leave, to submit his explanation or
counter-affidavit within five days from notice. DIEAHc
Evaluating the subject documents obtained from petitioner's
personal files, Chairperson David made the following
observations:
Most of the foregoing files are drafts of legal pleadings or
documents that are related to or connected with
administrative cases that may broadly be lumped as
pending either in the CSCRO No. IV, the CSC-NCR, the CSC-
Central Office or other tribunals. It is also of note that most
of these draft pleadings are for and on behalves of parties,
who are facing charges as respondents in administrative
cases. This gives rise to the inference that the one who
prepared them was knowingly, deliberately and willfully
aiding and advancing interests adverse and inimical to the
interest of the CSC as the central personnel agency of the
government tasked to discipline misfeasance and
malfeasance in the government service. The number of
pleadings so prepared further demonstrates that such
person is not merely engaged in an isolated practice but
pursues it with seeming regularity. It would also be the
height of naivete or credulity, and certainly against
common human experience, to believe that the person
concerned had engaged in this customary practice without
any consideration, and in fact, one of the retrieved files
(item 13 above) appears to insinuate the collection of fees.
That these draft pleadings were obtained from the
computer assigned to Pollo invariably raises the
presumption that he was the one responsible or had a
hand in their drafting or preparation since the computer of
origin was within his direct control and disposition. 9
Petitioner filed his Comment, denying that he is the person
referred to in the anonymous letter-complaint which had no
attachments to it, because he is not a lawyer and neither is he
"lawyering" for people with cases in the CSC. He accused CSC
officials of conducting a "fishing expedition" when they
unlawfully copied and printed personal files in his computer,
and subsequently asking him to submit his comment which
violated his right against self-incrimination. He asserted that he
had protested the unlawful taking of his computer done while
he was on leave, citing the letter dated January 8, 2007 in
which he informed Director Castillo that the files in his
computer were his personal files and those of his sister,
relatives, friends and some associates and that he is not
authorizing their sealing, copying, duplicating and printing as
these would violate his constitutional right to privacy and
protection against self-incrimination and warrantless search
and seizure. He pointed out that though government property,
the temporary use and ownership of the computer issued
under a Memorandum of Receipt (MR) is ceded to the
employee who may exercise all attributes of ownership,
including its use for personal purposes. As to the anonymous
letter, petitioner argued that it is not actionable as it failed to
comply with the requirements of a formal complaint under
the Uniform Rules on Administrative Cases in the Civil
Service (URACC). In view of the illegal search, the
files/documents copied from his computer without his consent
is thus inadmissible as evidence, being "fruits of a poisonous
tree." 10
On February 26, 2007, the CSC issued Resolution No.
070382 11 finding prima facie case against the petitioner and
charging him with Dishonesty, Grave Misconduct, Conduct
Prejudicial to the Best Interest of the Service and Violation
of R.A. No. 6713 (Code of Conduct and Ethical Standards for
Public Officials and Employees). Petitioner was directed to
submit his answer under oath within five days from notice and
indicate whether he elects a formal investigation. Since the
charges fall under Section 19 of the URACC, petitioner was
likewise placed under 90 days preventive suspension effective
immediately upon receipt of the resolution. Petitioner received
a copy of Resolution No. 070382 on March 1, 2007.
Petitioner filed an Omnibus Motion (For Reconsideration, to
Dismiss and/or to Defer) assailing the formal charge as without
basis having proceeded from an illegal search which is beyond
the authority of the CSC Chairman, such power pertaining
solely to the court. Petitioner reiterated that he never aided
any people with pending cases at the CSC and alleged that
those files found in his computer were prepared not by him but
by certain persons whom he permitted, at one time or another,
to make use of his computer out of close association or
friendship. Attached to the motion were the affidavit of Atty.
Ponciano R. Solosa who entrusted his own files to be kept at
petitioner's CPU and Atty. Eric N. Estrellado, the latter being
Atty. Solosa's client who attested that petitioner had nothing to
do with the pleadings or bill for legal fees because in truth he
owed legal fees to Atty. Solosa and not to petitioner. Petitioner
contended that the case should be deferred in view of the
prejudicial question raised in the criminal complaint he filed
before the Ombudsman against Director Buensalida, whom
petitioner believes had instigated this administrative case. He
also prayed for the lifting of the preventive suspension
imposed on him. In its Resolution No. 070519 12 dated March
19, 2007, the CSC denied the omnibus motion. The CSC
resolved to treat the said motion as petitioner's answer.
On March 14, 2007, petitioner filed an Urgent
Petition 13 under Rule 65 of the Rules of Court, docketed as
CA-G.R. SP No. 98224, assailing both the January 11, 2007
Show-Cause Order and Resolution No. 070382 dated February
26, 2007 as having been issued with grave abuse of discretion
amounting to excess or total absence of jurisdiction. Prior to
this, however, petitioner lodged an administrative/criminal
complaint against respondents Directors Racquel D.G.
Buensalida (Chief of Staff, Office of the CSC Chairman) and
Lydia A. Castillo (CSC-RO IV) before the Office of the
Ombudsman, and a separate complaint for disbarment against
Director Buensalida. 14
On April 17, 2007, petitioner received a notice of hearing from
the CSC setting the formal investigation of the case on April 30,
2007. On April 25, 2007, he filed in the CA an Urgent Motion for
the issuance of TRO and preliminary injunction. 15 Since he
failed to attend the pre-hearing conference scheduled on April
30, 2007, the CSC reset the same to May 17, 2007 with
warning that the failure of petitioner and/or his counsel to
appear in the said pre-hearing conference shall entitle the
prosecution to proceed with the formal investigation ex-
parte. 16 Petitioner moved to defer or to reset the pre-hearing
conference, claiming that the investigation proceedings should
be held in abeyance pending the resolution of his petition by
the CA. The CSC denied his request and again scheduled the
pre-hearing conference on May 18, 2007 with similar warning
on the consequences of petitioner and/or his counsel's non-
appearance. 17 This prompted petitioner to file another motion
in the CA, to cite the respondents, including the hearing officer,
in indirect contempt. 18
On June 12, 2007, the CSC issued Resolution No.
071134 19 denying petitioner's motion to set aside the denial
of his motion to defer the proceedings and to inhibit the
designated hearing officer, Atty. Bernard G. Jimenez. The
hearing officer was directed to proceed with the investigation
proper with dispatch.
In view of the absence of petitioner and his counsel, and upon
the motion of the prosecution, petitioner was deemed to have
waived his right to the formal investigation which then
proceeded ex parte.
On July 24, 2007, the CSC issued Resolution No.
071420, 20 the dispositive part of which reads:
WHEREFORE, foregoing premises considered, the
Commission hereby finds Briccio A. Pollo, a.k.a. Ricky A.
Pollo GUILTY of Dishonesty, Grave Misconduct, Conduct
Prejudicial to the Best Interest of the Service and Violation
of Republic Act 6713. He is meted the penalty of
DISMISSAL FROM THE SERVICE with all its accessory
penalties, namely, disqualification to hold public office,
forfeiture of retirement benefits, cancellation of civil
service eligibilities and bar from taking future civil service
examinations. 21
On the paramount issue of the legality of the search
conducted on petitioner's computer, the CSC noted the dearth
of jurisprudence relevant to the factual milieu of this case
where the government as employer invades the private files of
an employee stored in the computer assigned to him for his
official use, in the course of initial investigation of possible
misconduct committed by said employee and without the
latter's consent or participation. The CSC thus turned to
relevant rulings of the United States Supreme Court, and cited
the leading case of O'Connor v. Ortega 22 as authority for the
view that government agencies, in their capacity as employers,
rather than law enforcers, could validly conduct search and
seizure in the governmental workplace without meeting the
"probable cause" or warrant requirement for search and
seizure. Another ruling cited by the CSC is the more recent
case of United States v. Mark L. Simons 23 which declared that
the federal agency's computer use policy foreclosed any
inference of reasonable expectation of privacy on the part of its
employees. Though the Court therein recognized that such
policy did not, at the same time, erode the respondent's
legitimate expectation of privacy in the office in which the
computer was installed, still, the warrantless search of the
employee's office was upheld as valid because a government
employer is entitled to conduct a warrantless search pursuant
to an investigation of work-related misconduct provided the
search is reasonable in its inception and scope. CaDEAT
 With the foregoing American jurisprudence as benchmark, the
CSC held that petitioner has no reasonable expectation of
privacy with regard to the computer he was using in the
regional office in view of the CSC computer use policy which
unequivocally declared that a CSC employee cannot assert any
privacy right to a computer assigned to him. Even assuming
that there was no such administrative policy, the CSC was of
the view that the search of petitioner's computer successfully
passed the test of reasonableness for warrantless searches in
the workplace as enunciated in the aforecited authorities. The
CSC stressed that it pursued the search in its capacity as
government employer and that it was undertaken in
connection with an investigation involving work-related
misconduct, which exempts it from the warrant requirement
under the Constitution. With the matter of admissibility of the
evidence having been resolved, the CSC then ruled that the
totality of evidence adequately supports the charges of grave
misconduct, dishonesty, conduct prejudicial to the best interest
of the service and violation of R.A. No. 6713 against the
petitioner. These grave infractions justified petitioner's
dismissal from the service with all its accessory penalties.
In his Memorandum 24 filed in the CA, petitioner moved to
incorporate the above resolution dismissing him from the
service in his main petition, in lieu of the filing of an appeal via
a Rule 43 petition. In a subsequent motion, he likewise prayed
for the inclusion of Resolution No. 071800 25 which denied his
motion for reconsideration.
By Decision dated October 11, 2007, the CA dismissed the
petition for certiorari after finding no grave abuse of discretion
committed by respondents CSC officials. The CA held that: (1)
petitioner was not charged on the basis of the anonymous
letter but from the initiative of the CSC after a fact-finding
investigation was conducted and the results thereof yielded
a prima facie case against him; (2) it could not be said that in
ordering the back-up of files in petitioner's computer and later
confiscating the same, Chairperson David had encroached on
the authority of a judge in view of the CSC computer policy
declaring the computers as government property and that
employee-users thereof have no reasonable expectation of
privacy in anything they create, store, send, or receive on the
computer system; and (3) there is nothing contemptuous in
CSC's act of proceeding with the formal investigation as there
was no restraining order or injunction issued by the CA.
His motion for reconsideration having been denied by the CA,
petitioner brought this appeal arguing that
I
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED
AND COMMITTED SERIOUS IRREGULARITY AND BLATANT
ERRORS IN LAW AMOUNTING TO GRAVE ABUSE OF
DISCRETION WHEN IT RULED THAT ANONYMOUS
COMPLAINT IS ACTIONABLE UNDER E.O. 292 WHEN IN
TRUTH AND IN FACT THE CONTRARY IS EXPLICITLY
PROVIDED UNDER 2nd PARAGRAPH OF SECTION 8 OF CSC
RESOLUTION NO. 99-1936, WHICH IS AN [AMENDMENT] TO
THE ORIGINAL RULES PER CSC RESOLUTION NO. 94-0521;
II
THE HONORABLE COURT GRIEVOUSLY ERRED AND
COMMITTED PALPABLE ERRORS IN LAW AMOUNTING TO
GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT
PETITIONER CANNOT INVOKE HIS RIGHT TO PRIVACY, TO
UNREASONABLE SEARCH AND SEIZURE, AGAINST SELF-
INCRIMINATION, BY VIRTUE OF OFFICE MEMORANDUM NO.
10 S. 2002, A MERE INTERNAL MEMORANDUM SIGNED
SOLELY AND EXCLUSIVELY BY RESPONDENT DAVID AND
NOT BY THE COLLEGIAL COMMISSION CONSIDERING
THAT POLICY MATTERS INVOLVING SUB[S]TANTIAL RIGHTS
CANNOT BE COVERED BY AN OFFICE MEMORANDUM
WHICH IS LIMITED TO PROCEDURAL AND ROUTINARY
INSTRUCTION;
 III
THE HONORABLE COURT GRAVELY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT
RULED THAT MEMO SEARCH DATED JANUARY 3, 2007 AND
THE TAKING OF DOCUMENTS IN THE EVENING THEREOF
FROM 7:00 TO 10:00 P.M. IS NOT GRAVE ABUSE OF
DISCRETION LIMITING THE DEFINITION [OF] GRAVE ABUSE
OF DISCRETION TO ONE INVOLVING AND TAINTED WITH
PERSONAL HOSTILITY. IT LIKEWISE ERRED IN HOLDING
THAT DATA STORED IN THE GOVERNMENT COMPUTERS
ARE GOVERNMENT PROPERTIES INCLUDING THE PERSONAL
FILES WHEN THE CONTRARY IS PROVIDED UNDER SECTION
14 OF O.M. 10 s. 2002. AND GRIEVOUSLY ERRED STILL
WHEN IT RULED THAT RESPONDENT DAVID BY VIRTUE OF
O.M. 10 DID NOT ENCROACH ON THE DUTIES AND
FUNCTIONS OF A JUDGE PURSUANT TO ARTICLE III,
SECTION 2 OF THE 1987 PHILIPPINE CONSTITUTION;
IV
THE HONORABLE COURT ERRED WHEN IT FAILED TO
CONSIDER ALL OTHER NEW ARGUMENTS, ADDITIONAL
EVIDENCE HEREUNTO SUBMITTED AS WELL AS ITS FAILURE
TO EVALUATE AND TAKE ACTION ON THE 2 MOTIONS TO
ADMIT AND INCORPORATE CSC RESOLUTION NOS. 07-1420
DATED JULY 24, 2007 AND CSC RESOLUTION 07-1800
DATED SEPTEMBER 10, 2007. IT DID NOT RULE LIKEWISE
ON THE FOUR URGENT MOTION TO RESOLVE ANCILLARY
PRAYER FOR TRO. 26
Squarely raised by the petitioner is the legality of the search
conducted on his office computer and the copying of his
personal files without his knowledge and consent, alleged as a
transgression on his constitutional right to privacy.
The right to privacy has been accorded recognition in this
jurisdiction as a facet of the right protected by the guarantee
against unreasonable search and seizure under Section 2,
Article III of the 1987 Constitution, 27 which provides:
SEC. 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be
seized.
The constitutional guarantee is not a prohibition of all searches
and seizures but only of "unreasonable" searches and
seizures. 28 But to fully understand this concept and
application for the purpose of resolving the issue at hand, it is
essential that we examine the doctrine in the light of
pronouncements in another jurisdiction. As the Court declared
in People v. Marti: 29
Our present constitutional provision on the guarantee
against unreasonable search and seizure had its origin in
the 1935 Charter which, worded as follows:
"The right of the people to be secure in their persons,
houses, papers and effects against unreasonable searches
and seizures shall not be violated, and no warrants shall
issue but upon probable cause, to be determined by the
judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched, and the
persons or things to be seized." (Sec. 1[3], Article III)
was in turn derived almost verbatim from the Fourth
Amendment to the United States Constitution. As such, the
Court may turn to the pronouncements of the United
States Federal Supreme Court and State Appellate Courts
which are considered doctrinal in this jurisdiction. 30
In the 1967 case of Katz v. United States, 31 the US Supreme
Court held that the act of FBI agents in electronically recording
a conversation made by petitioner in an enclosed public
telephone booth violated his right to privacy and constituted a
"search and seizure". Because the petitioner had a reasonable
expectation of privacy in using the enclosed booth to make a
personal telephone call, the protection of the Fourth
Amendment extends to such area. In the concurring opinion of
Mr. Justice Harlan, it was further noted that the existence of
privacy right under prior decisions involved a two-fold
requirement: first, that a person has exhibited an actual
(subjective) expectation of privacy; and second, that the
expectation be one that society is prepared to recognize as
reasonable (objective). 32
In Mancusi v. DeForte 33 which addressed the reasonable
expectations of private employees in the workplace, the US
Supreme Court held that a union employee had Fourth
Amendment rights with regard to an office at union
headquarters that he shared with other union officials, even as
the latter or their guests could enter the office. The Court thus
"recognized that employees may have a reasonable
expectation of privacy against intrusions by police."
That the Fourth Amendment equally applies to a government
workplace was addressed in the 1987 case of O'Connor v.
Ortega 34 where a physician, Dr. Magno Ortega, who was
employed by a state hospital, claimed a violation of his Fourth
Amendment rights when hospital officials investigating charges
of mismanagement of the psychiatric residency program,
sexual harassment of female hospital employees and other
irregularities involving his private patients under the state
medical aid program, searched his office and seized personal
items from his desk and filing cabinets. In that case, the Court
categorically declared that "[i]ndividuals do not lose Fourth
Amendment rights merely because they work for the
government instead of a private employer." 35 A plurality of
four Justices concurred that the correct analysis has two steps:
first, because "some government offices may be so open to
fellow employees or the public that no expectation of privacy is
reasonable", a court must consider "[t]he operational realities
of the workplace" in order to determine whether an employee's
Fourth Amendment rights are implicated; and next, where an
employee has a legitimate privacy expectation, an employer's
intrusion on that expectation "for noninvestigatory, work-
related purposes, as well as for investigations of work-related
misconduct, should be judged by the standard of
reasonableness under all the circumstances." 36 AIcECS
On the matter of government employees' reasonable
expectations of privacy in their workplace, O'Connor teaches:
. . . Public employees' expectations of privacy in their
offices, desks, and file cabinets, like similar expectations of
employees in the private sector, may be reduced by virtue
of actual office practices and procedures, or by legitimate
regulation. . . . The employee's expectation of privacy must
be assessed in the context of the employment relation. An
office is seldom a private enclave free from entry by
supervisors, other employees, and business and personal
invitees. Instead, in many cases offices are continually
entered by fellow employees and other visitors during the
workday for conferences, consultations, and other work-
related visits. Simply put, it is the nature of government
offices that others such as fellow employees,
supervisors, consensual visitors, and the general public
may have frequent access to an individual's office. We
agree with JUSTICE SCALIA that "[c]onstitutional protection
against unreasonable searches by the government does
not disappear merely because the government has the
right to make reasonable intrusions in its capacity as
employer," . . . but some government offices may be
so open to fellow employees or the public that no
expectation of privacy is reasonable. . . . Given the
great variety of work environments in the public
sector, the question of whether an employee has a
reasonable expectation of privacy must be
addressed on a case-by-case basis. 37 (Citations
omitted; emphasis supplied.)
On the basis of the established rule in previous cases, the US
Supreme Court declared that Dr. Ortega's Fourth Amendment
rights are implicated only if the conduct of the hospital officials
infringed "an expectation of privacy that society is prepared to
consider as reasonable." Given the undisputed evidence that
respondent Dr. Ortega did not share his desk or file cabinets
with any other employees, kept personal correspondence and
other private items in his own office while those work-related
files (on physicians in residency training) were stored outside
his office, and there being no evidence that the hospital had
established any reasonable regulation or policy discouraging
employees from storing personal papers and effects in their
desks or file cabinets (although the absence of such a policy
does not create any expectation of privacy where it would not
otherwise exist), the Court concluded that Dr. Ortega has a
reasonable expectation of privacy at least in his desk and file
cabinets. 38
Proceeding to the next inquiry as to whether the search
conducted by hospital officials was reasonable,
the O'Connor plurality decision discussed the following
principles:
Having determined that Dr. Ortega had a reasonable
expectation of privacy in his office, the Court of Appeals
simply concluded without discussion that the "search . . .
was not a reasonable search under the fourth
amendment." . . . "[t]o hold that the Fourth Amendment
applies to searches conducted by [public employers] is
only to begin the inquiry into the standards governing such
searches . . . [W]hat is reasonable depends on the context
within which a search takes place. . . . Thus, we must
determine the appropriate standard of reasonableness
applicable to the search. A determination of the standard
of reasonableness applicable to a particular class of
searches requires "balanc[ing] the nature and quality of
the intrusion on the individual's Fourth Amendment
interests against the importance of the governmental
interests alleged to justify the intrusion." . . . In the case
of searches conducted by a public employer, we
must balance the invasion of the employees'
legitimate expectations of privacy against the
government's need for supervision, control, and the
efficient operation of the workplace.
xxx xxx xxx
In our view, requiring an employer to obtain a warrant
whenever the employer wished to enter an employee's
office, desk, or file cabinets for a work-related purpose
would seriously disrupt the routine conduct of business and
would be unduly burdensome. Imposing unwieldy warrant
procedures in such cases upon supervisors, who would
otherwise have no reason to be familiar with such
procedures, is simply unreasonable. In contrast to other
circumstances in which we have required warrants,
supervisors in offices such as at the Hospital are hardly in
the business of investigating the violation of criminal laws.
Rather, work-related searches are merely incident to the
primary business of the agency. Under these
circumstances, the imposition of a warrant requirement
would conflict with the "common-sense realization that
government offices could not function if every employment
decision became a constitutional matter." . . . cCHITA
xxx xxx xxx
 The governmental interest justifying work-related
intrusions by public employers is the efficient and proper
operation of the workplace. Government agencies provide
myriad services to the public, and the work of these
agencies would suffer if employers were required to have
probable cause before they entered an employee's desk
for the purpose of finding a file or piece of office
correspondence. Indeed, it is difficult to give the concept of
probable cause, rooted as it is in the criminal investigatory
context, much meaning when the purpose of a search is to
retrieve a file for work-related reasons. Similarly, the
concept of probable cause has little meaning for a routine
inventory conducted by public employers for the purpose
of securing state property. . . . To ensure the efficient and
proper operation of the agency, therefore, public
employers must be given wide latitude to enter employee
offices for work-related, noninvestigatory reasons.
We come to a similar conclusion for searches conducted
pursuant to an investigation of work-related employee
misconduct. Even when employers conduct an
investigation, they have an interest substantially different
from "the normal need for law enforcement." . . . Public
employers have an interest in ensuring that their agencies
operate in an effective and efficient manner, and the work
of these agencies inevitably suffers from the inefficiency,
incompetence, mismanagement, or other work-related
misfeasance of its employees. Indeed, in many cases,
public employees are entrusted with tremendous
responsibility, and the consequences of their misconduct
or incompetence to both the agency and the public interest
can be severe. In contrast to law enforcement officials,
therefore, public employers are not enforcers of the
criminal law; instead, public employers have a direct and
overriding interest in ensuring that the work of the agency
is conducted in a proper and efficient manner. In our view,
therefore, a probable cause requirement for searches
of the type at issue here would impose intolerable
burdens on public employers. The delay in
correcting the employee misconduct caused by the
need for probable cause rather than reasonable
suspicion will be translated into tangible and often
irreparable damage to the agency's work, and
ultimately to the public interest. . . .
xxx xxx xxx
In sum, we conclude that the "special needs, beyond
the normal need for law enforcement make the . . .
probable-cause requirement impracticable," . . . for
legitimate, work-related noninvestigatory intrusions
as well as investigations of work-related
misconduct. A standard of reasonableness will neither
unduly burden the efforts of government employers to
ensure the efficient and proper operation of the workplace,
nor authorize arbitrary intrusions upon the privacy of
public employees. We hold, therefore, that public
employer intrusions on the constitutionally
protected privacy interests of government
employees for noninvestigatory, work-related
purposes, as well as for investigations of work-
related misconduct, should be judged by
the standard of reasonableness under all the
circumstances. Under this reasonableness
standard, both the inception and the scope of the
intrusion must be reasonable:
"Determining the reasonableness of any search involves a
twofold inquiry: first, one must consider 'whether the . . .
action was justified at its inception,' . . .; second, one must
determine whether the search as actually conducted 'was
reasonably related in scope to the circumstances which
justified the interference in the first place,'" . . .
 Ordinarily, a search of an employee's office by a
supervisor will be "justified at its inception" when
there are reasonable grounds for suspecting that
the search will turn up evidence that the employee
is guilty of work-related misconduct, or that the
search is necessary for a noninvestigatory work-
related purpose such as to retrieve a needed
file. . . . The search will be permissible in its scope
when "the measures adopted are reasonably related
to the objectives of the search and not excessively
intrusive in light of . . . the nature of the
[misconduct]." . . . 39 (Citations omitted; emphasis
supplied.)
Since the District Court granted summary judgment without a
hearing on the factual dispute as to the character of the search
and neither was there any finding made as to the scope of the
search that was undertaken, the case was remanded to said
court for the determination of the justification for the search
and seizure, and evaluation of the reasonableness of both the
inception of the search and its scope.
In O'Connor the Court recognized that "special needs"
authorize warrantless searches involving public employees for
work-related reasons. The Court thus laid down a balancing
test under which government interests are weighed against the
employee's reasonable expectation of privacy. This
reasonableness test implicates neither probable cause nor the
warrant requirement, which are related to law enforcement. 40
O'Connor was applied in subsequent cases raising issues on
employees' privacy rights in the workplace. One of these cases
involved a government employer's search of an office
computer, United States v. Mark L. Simons 41 where the
defendant Simons, an employee of a division of the Central
Intelligence Agency (CIA), was convicted of receiving and
possessing materials containing child pornography. Simons was
provided with an office which he did not share with anyone,
and a computer with Internet access. The agency had
instituted a policy on computer use stating that employees
were to use the Internet for official government business only
and that accessing unlawful material was specifically
prohibited. The policy also stated that users shall understand
that the agency will periodically audit, inspect, and/or monitor
the user's Internet access as deemed appropriate. CIA agents
instructed its contractor for the management of the agency's
computer network, upon initial discovery of prohibited internet
activity originating from Simons' computer, to conduct a
remote monitoring and examination of Simons' computer. After
confirming that Simons had indeed downloaded pictures that
were pornographic in nature, all the files on the hard drive of
Simon's computer were copied from a remote work station.
Days later, the contractor's representative finally entered
Simon's office, removed the original hard drive on Simon's
computer, replaced it with a copy, and gave the original to the
agency security officer. Thereafter, the agency secured
warrants and searched Simons' office in the evening when
Simons was not around. The search team copied the contents
of Simons' computer; computer diskettes found in Simons' desk
drawer; computer files stored on the zip drive or on zip drive
diskettes; videotapes; and various documents, including
personal correspondence. At his trial, Simons moved to
suppress these evidence, arguing that the searches of his
office and computer violated his Fourth Amendment rights.
After a hearing, the district court denied the motion and
Simons was found guilty as charged. CDAcIT
Simons appealed his convictions. The US Supreme Court ruled
that the searches of Simons' computer and office did not
violate his Fourth Amendment rights and the first search
warrant was valid. It held that the search remains valid under
the O'Connor exception to the warrant requirement because
evidence of the crime was discovered in the course of an
otherwise proper administrative inspection. Simons' violation of
the agency's Internet policy happened also to be a violation of
criminal law; this does not mean that said employer lost the
capacity and interests of an employer. The warrantless entry
into Simons' office was reasonable under the Fourth
Amendment standard announced in O'Connor because at the
inception of the search, the employer had "reasonable grounds
for suspecting" that the hard drive would yield evidence of
misconduct, as the employer was already aware that Simons
had misused his Internet access to download over a thousand
pornographic images. The retrieval of the hard drive was
reasonably related to the objective of the search, and the
search was not excessively intrusive. Thus, while Simons had a
reasonable expectation of privacy in his office, he did not have
such legitimate expectation of privacy with regard to the files
in his computer.
. . . To establish a violation of his rights under the Fourth
Amendment, Simons must first prove that he had a
legitimate expectation of privacy in the place searched or
the item seized. . . . And, in order to prove a legitimate
expectation of privacy, Simons must show that his
subjective expectation of privacy is one that society is
prepared to accept as objectively reasonable. . . .
xxx xxx xxx
. . . We conclude that the remote searches of Simons'
computer did not violate his Fourth Amendment rights
because, in light of the Internet policy, Simons lacked a
legitimate expectation of privacy in the files downloaded
from the Internet. Additionally, we conclude that Simons'
Fourth Amendment rights were not violated by FBIS'
retrieval of Simons' hard drive from his office.
Simons did not have a legitimate expectation of
privacy with regard to the record or fruits of his
Internet use in light of the FBIS Internet policy. The
policy clearly stated that FBIS would "audit, inspect,
and/or monitor" employees' use of the Internet,
including all file transfers, all websites visited, and
all e-mail messages, "as deemed appropriate." . . .
This policy placed employees on notice that they could not
reasonably expect that their Internet activity would be
private. Therefore, regardless of whether Simons
subjectively believed that the files he transferred from the
Internet were private, such a belief was not objectively
reasonable after FBIS notified him that it would be
overseeing his Internet use. . . . Accordingly, FBIS' actions
in remotely searching and seizing the computer files
Simons downloaded from the Internet did not violate the
Fourth Amendment.
xxx xxx xxx
The burden is on Simons to prove that he had a
legitimate expectation of privacy in his office. . . .
Here, Simons has shown that he had an office that he did
not share. As noted above, the operational realities of
Simons' workplace may have diminished his legitimate
privacy expectations. However, there is no evidence in the
record of any workplace practices, procedures, or
regulations that had such an effect. We therefore conclude
that, on this record, Simons possessed a legitimate
expectation of privacy in his office.
xxx xxx xxx
In the final analysis, this case involves an employee's
supervisor entering the employee's government office and
retrieving a piece of government equipment in which the
employee had absolutely no expectation of privacy
equipment that the employer knew contained evidence of
crimes committed by the employee in the employee's
office. This situation may be contrasted with one in which
the criminal acts of a government employee were
unrelated to his employment. Here, there was a
conjunction of the conduct that violated the employer's
policy and the conduct that violated the criminal law. We
consider that FBIS' intrusion into Simons' office to retrieve
the hard drive is one in which a reasonable employer might
engage. . . . 42 (Citations omitted; emphasis supplied.)
This Court, in Social Justice Society (SJS) v. Dangerous Drugs
Board 43 which involved the constitutionality of a provision
in R.A. No. 9165 requiring mandatory drug testing of
candidates for public office, students of secondary and tertiary
schools, officers and employees of public and private offices,
and persons charged before the prosecutor's office with certain
offenses, have also recognized the fact that there may be such
legitimate intrusion of privacy in the workplace.
The first factor to consider in the matter of reasonableness
is the nature of the privacy interest upon which the drug
testing, which effects a search within the meaning of Sec.
2, Art. III of the Constitution, intrudes. In this case, the
office or workplace serves as the backdrop for the analysis
of the privacy expectation of the employees and the
reasonableness of drug testing requirement. The
employees' privacy interest in an office is to a large
extent circumscribed by the company's work
policies, the collective bargaining agreement, if any,
entered into by management and the bargaining
unit, and the inherent right of the employer to
maintain discipline and efficiency in the
workplace. Their privacy expectation in a regulated office
environment is, in fine, reduced; and a degree of
impingement upon such privacy has been upheld.
(Emphasis supplied.) ADCETI
Applying the analysis and principles announced
in O'Connor and Simons to the case at bar, we now address the
following questions: (1) Did petitioner have a reasonable
expectation of privacy in his office and computer files?; and (2)
Was the search authorized by the CSC Chair, the copying of the
contents of the hard drive on petitioner's computer reasonable
in its inception and scope?
In this inquiry, the relevant surrounding circumstances to
consider include "(1) the employee's relationship to the item
seized; (2) whether the item was in the immediate control of
the employee when it was seized; and (3) whether the
employee took actions to maintain his privacy in the item."
These factors are relevant to both the subjective and objective
prongs of the reasonableness inquiry, and we consider the two
questions together. 44 Thus, where the employee used a
password on his computer, did not share his office with co-
workers and kept the same locked, he had a legitimate
expectation of privacy and any search of that space and items
located therein must comply with the Fourth Amendment. 45
We answer the first in the negative. Petitioner failed to prove
that he had an actual (subjective) expectation of privacy either
in his office or government-issued computer which contained
his personal files. Petitioner did not allege that he had a
separate enclosed office which he did not share with anyone,
or that his office was always locked and not open to other
employees or visitors. Neither did he allege that he used
passwords or adopted any means to prevent other employees
from accessing his computer files. On the contrary, he submits
that being in the public assistance office of the CSC-ROIV, he
normally would have visitors in his office like friends,
associates and even unknown people, whom he even allowed
to use his computer which to him seemed a trivial request. He
described his office as "full of people, his friends, unknown
people" and that in the past 22 years he had been discharging
his functions at the PALD, he is "personally assisting incoming
clients, receiving documents, drafting cases on appeals, in
charge of accomplishment report, Mamamayan Muna Program,
Public Sector Unionism, Correction of name, accreditation of
service, and hardly had anytime for himself alone, that in fact
he stays in the office as a paying customer." 46 Under this
scenario, it can hardly be deduced that petitioner had such
expectation of privacy that society would recognize as
reasonable. aASDTE
Moreover, even assuming arguendo, in the absence of
allegation or proof of the aforementioned factual
circumstances, that petitioner had at least a subjective
expectation of privacy in his computer as he claims, such is
negated by the presence of policy regulating the use of office
computers, as in Simons.
Office Memorandum No. 10, S. 2002 "Computer Use Policy
(CUP)" explicitly provides:
POLICY
1. The Computer Resources are the property of the Civil
Service Commission and may be used only for legitimate
business purposes.
2. Users shall be permitted access to Computer
Resources to assist them in the performance of their
respective jobs.
3. Use of the Computer Resources is a privilege that may
be revoked at any given time.
xxx xxx xxx
No Expectation of Privacy
4. No expectation of privacy. Users except the Members of
the Commission shall not have an expectation of privacy in
anything they create, store, send, or receive on the
computer system.
The Head of the Office for Recruitment, Examination and
Placement shall select and assign Users to handle the
confidential examination data and processes.
5. Waiver of privacy rights. Users expressly waive any
right to privacy in anything they create, store, send, or
receive on the computer through the Internet or any other
computer network. Users understand that the CSC may
use human or automated means to monitor the use
of its Computer Resources.
6. Non-exclusivity of Computer Resources. A computer
resource is not a personal property or for the exclusive use
of a User to whom a memorandum of receipt (MR) has
been issued. It can be shared or operated by other users.
However, he is accountable therefor and must insure its
care and maintenance.
xxx xxx xxx
Passwords
12. Responsibility for passwords. Users shall be
responsible for safeguarding their passwords for access to
the computer system. Individual passwords shall not be
printed, stored online, or given to others. Users shall be
responsible for all transactions made using their
passwords. No User may access the computer system with
another User's password or account.
13. Passwords do not imply privacy. Use of passwords to
gain access to the computer system or to encode
particular files or messages does not imply that Users have
an expectation of privacy in the material they create or
receive on the computer system. The Civil Service
Commission has global passwords that permit access to all
materials stored on its networked computer system
regardless of whether those materials have been encoded
with a particular User's password. Only members of the
Commission shall authorize the application of the said
global passwords. TCEaDI
xxx xxx xxx 47 (Emphasis supplied.)
The CSC in this case had implemented a policy that put its
employees on notice that they have no expectation of privacy
in anything they create, store, send or receive on the office
computers, and that the CSC may monitor the use of the
computer resources using both automated or human means.
This implies that on-the-spot inspections may be done to
ensure that the computer resources were used only for such
legitimate business purposes.
One of the factors stated in O'Connor which are relevant in
determining whether an employee's expectation of privacy in
the workplace is reasonable is the existence of a workplace
privacy policy. 48 In one case, the US Court of Appeals Eighth
Circuit held that a state university employee has not shown
that he had a reasonable expectation of privacy in his
computer files where the university's computer policy, the
computer user is informed not to expect privacy if the
university has a legitimate reason to conduct a search. The
user is specifically told that computer files, including e-mail,
can be searched when the university is responding to a
discovery request in the course of litigation. Petitioner
employee thus cannot claim a violation of Fourth Amendment
rights when university officials conducted a warrantless search
of his computer for work-related materials. 49
As to the second point of inquiry on the reasonableness of the
search conducted on petitioner's computer, we answer in the
affirmative.
The search of petitioner's computer files was conducted in
connection with investigation of work-related misconduct
prompted by an anonymous letter-complaint addressed to
Chairperson David regarding anomalies in the CSC-ROIV where
the head of the Mamamayan Muna Hindi Mamaya Na division is
supposedly "lawyering" for individuals with pending cases in
the CSC. Chairperson David stated in her sworn affidavit:
8. That prior to this, as early as 2006, the undersigned has
received several text messages from unknown sources
adverting to certain anomalies in Civil Service Commission
Regional Office IV (CSCRO IV) such as, staff working in
another government agency, "selling" cases and aiding
parties with pending cases, all done during office hours
and involved the use of government properties;
9. That said text messages were not investigated for lack
of any verifiable leads and details sufficient to warrant an
investigation;
10. That the anonymous letter provided the lead and
details as it pinpointed the persons and divisions involved
in the alleged irregularities happening in CSCRO IV;
11. That in view of the seriousness of the allegations of
irregularities happening in CSCRO IV and its effect on the
integrity of the Commission, I decided to form a team of
Central Office staff to back up the files in the computers of
the Public Assistance and Liaison Division (PALD) and Legal
Division;
xxx xxx xxx 50
A search by a government employer of an employee's office is
justified at inception when there are reasonable grounds for
suspecting that it will turn up evidence that the employee is
guilty of work-related misconduct. 51 Thus, in the 2004 case
decided by the US Court of Appeals Eighth Circuit, it was held
that where a government agency's computer use policy
prohibited electronic messages with pornographic content and
in addition expressly provided that employees do not have any
personal privacy rights regarding their use of the agency
information systems and technology, the government
employee had no legitimate expectation of privacy as to the
use and contents of his office computer, and therefore
evidence found during warrantless search of the computer was
admissible in prosecution for child pornography. In that case,
the defendant employee's computer hard drive was first
remotely examined by a computer information technician after
his supervisor received complaints that he was inaccessible
and had copied and distributed non-work-related e-mail
messages throughout the office. When the supervisor
confirmed that defendant had used his computer to access the
prohibited websites, in contravention of the express policy of
the agency, his computer tower and floppy disks were taken
and examined. A formal administrative investigation ensued
and later search warrants were secured by the police
department. The initial remote search of the hard drive of
petitioner's computer, as well as the subsequent warrantless
searches was held as valid under the O'Connor ruling that a
public employer can investigate work-related misconduct so
long as any search is justified at inception and is reasonably
related in scope to the circumstances that justified it in the first
place. 52 CAHaST
Under the facts obtaining, the search conducted on
petitioner's computer was justified at its inception and scope.
We quote with approval the CSC's discussion on the
reasonableness of its actions, consistent as it were with the
guidelines established by O'Connor:
Even conceding for a moment that there is no such
administrative policy, there is no doubt in the mind of the
Commission that the search of Pollo's computer has
successfully passed the test of reasonableness for
warrantless searches in the workplace as enunciated in the
above-discussed American authorities. It bears
emphasisthat the Commission pursued the search in
its capacity as a government employer and that it
was undertaken in connection with an investigation
involving a work-related misconduct, one of the
circumstances exempted from the warrant requirement. At
the inception of the search, a complaint was received
recounting that a certain division chief in the CSCRO No. IV
was "lawyering" for parties having pending cases with the
said regional office or in the Commission. The nature of
the imputation was serious, as it was grievously
disturbing. If, indeed, a CSC employee was found to be
furtively engaged in the practice of "lawyering" for parties
with pending cases before the Commission would be a
highly repugnant scenario, then such a case would have
shattering repercussions. It would undeniably cast clouds
of doubt upon the institutional integrity of the Commission
as a quasi-judicial agency, and in the process, render it
less effective in fulfilling its mandate as an impartial and
objective dispenser of administrative justice. It is settled
that a court or an administrative tribunal must not only be
actually impartial but must be seen to be so, otherwise the
general public would not have any trust and confidence in
it.
Considering the damaging nature of the accusation,
the Commission had to act fast, if only to arrest or limit
any possible adverse consequence or fall-out. Thus, on the
same date that the complaint was received, a search was
forthwith conducted involving the computer resources in
the concerned regional office. That it was the
computers that were subjected to the search was
justified since these furnished the easiest means for
an employee to encode and store documents.
Indeed, the computers would be a likely starting
point in ferreting out incriminating evidence.
Concomitantly, the ephemeral nature of computer
files, that is, they could easily be destroyed at a
click of a button, necessitated drastic and
immediate action. Pointedly, to impose the need to
comply with the probable cause requirement would
invariably defeat the purpose of the work-related
investigation.
Worthy to mention, too, is the fact that the Commission
effected the warrantless search in an open and transparent
manner. Officials and some employees of the regional
office, who happened to be in the vicinity, were on hand to
observe the process until its completion. In addition, the
respondent himself was duly notified, through text
messaging, of the search and the concomitant retrieval of
files from his computer.
All in all, the Commission is convinced that the warrantless
search done on computer assigned to Pollo was not, in any
way, vitiated with unconstitutionality. It was a reasonable
exercise of the managerial prerogative of the Commission
as an employer aimed at ensuring its operational
effectiveness and efficiency by going after the work-related
misfeasance of its employees. Consequently, the evidence
derived from the questioned search are deemed
admissible. 53
Petitioner's claim of violation of his constitutional right to
privacy must necessarily fail. His other argument invoking the
privacy of communication and correspondence under Section 3
(1), Article III of the 1987 Constitution is also untenable
considering the recognition accorded to certain legitimate
intrusions into the privacy of employees in the government
workplace under the aforecited authorities. We likewise find no
merit in his contention that O'Connor and Simons are not
relevant because the present case does not involve a criminal
offense like child pornography. As already mentioned, the
search of petitioner's computer was justified there being
reasonable ground for suspecting that the files stored therein
would yield incriminating evidence relevant to the investigation
being conducted by CSC as government employer of such
misconduct subject of the anonymous complaint. This situation
clearly falls under the exception to the warrantless requirement
in administrative searches defined in O'Connor.
The Court is not unaware of our decision in Anonymous Letter-
Complaint against Atty. Miguel Morales, Clerk of Court,
Metropolitan Trial Court of Manila 54 involving a branch clerk
(Atty. Morales) who was investigated on the basis of an
anonymous letter alleging that he was consuming his working
hours filing and attending to personal cases, using office
supplies, equipment and utilities. The OCA conducted a spot
investigation aided by NBI agents. The team was able to access
Atty. Morales' personal computer and print two documents
stored in its hard drive, which turned out to be two pleadings,
one filed in the CA and another in the RTC of Manila, both in the
name of another lawyer. Atty. Morales' computer was seized
and taken in custody of the OCA but was later ordered released
on his motion, but with order to the MISO to first retrieve the
files stored therein. The OCA disagreed with the report of the
Investigating Judge that there was no evidence to support the
charge against Atty. Morales as no one from the OCC personnel
who were interviewed would give a categorical and positive
statement affirming the charges against Atty. Morales, along
with other court personnel also charged in the same case. The
OCA recommended that Atty. Morales should be found guilty of
gross misconduct. The Court En Banc held that while Atty.
Morales may have fallen short of the exacting standards
required of every court employee, the Court cannot use the
evidence obtained from his personal computer against him for
it violated his constitutional right against unreasonable
searches and seizures. The Court found no evidence to support
the claim of OCA that they were able to obtain the subject
pleadings with the consent of Atty. Morales, as in fact the latter
immediately filed an administrative case against the persons
who conducted the spot investigation, questioning the validity
of the investigation and specifically invoking his constitutional
right against unreasonable search and seizure. And as there is
no other evidence, apart from the pleadings, retrieved from the
unduly confiscated personal computer of Atty. Morales, to hold
him administratively liable, the Court had no choice but to
dismiss the charges against him for insufficiency of
evidence. TacADE
The above case is to be distinguished from the case at bar
because, unlike the former which involved a personal computer
of a court employee, the computer from which the personal
files of herein petitioner were retrieved is a government-issued
computer, hence government property the use of which the
CSC has absolute right to regulate and monitor. Such
relationship of the petitioner with the item seized (office
computer) and other relevant factors and circumstances under
American Fourth Amendment jurisprudence, notably the
existence of CSC MO 10, S. 2007 on Computer Use Policy,
failed to establish that petitioner had a reasonable expectation
of privacy in the office computer assigned to him.
Having determined that the personal files copied from the
office computer of petitioner are admissible in the
administrative case against him, we now proceed to the issue
of whether the CSC was correct in finding the petitioner guilty
of the charges and dismissing him from the service.
Well-settled is the rule that the findings of fact of quasi-judicial
agencies, like the CSC, are accorded not only respect but even
finality if such findings are supported by substantial evidence.
Substantial evidence is such amount of relevant evidence
which a reasonable mind might accept as adequate to support
a conclusion, even if other equally reasonable minds might
conceivably opine otherwise. 55
The CSC based its findings on evidence consisting of a
substantial number of drafts of legal pleadings and documents
stored in his office computer, as well as the sworn affidavits
and testimonies of the witnesses it presented during the formal
investigation. According to the CSC, these documents were
confirmed to be similar or exactly the same content-wise with
those on the case records of some cases pending either with
CSCRO No. IV, CSC-NCR or the Commission Proper. There were
also substantially similar copies of those pleadings filed with
the CA and duly furnished the Commission. Further, the CSC
found the explanation given by petitioner, to the effect that
those files retrieved from his computer hard drive actually
belonged to his lawyer friends Estrellado and Solosa whom he
allowed the use of his computer for drafting their pleadings in
the cases they handle, as implausible and doubtful under the
circumstances. We hold that the CSC's factual finding regarding
the authorship of the subject pleadings and misuse of the office
computer is well-supported by the evidence on record, thus:
It is also striking to note that some of these documents
were in the nature of pleadings responding to the orders,
decisions or resolutions of these offices or directly in
opposition to them such as a petition for certiorari or a
motion for reconsideration of CSC Resolution. This
indicates that the author thereof knowingly and willingly
participated in the promotion or advancement of the
interests of parties contrary or antagonistic to the
Commission. Worse, the appearance in one of the retrieved
documents the phrase, "Eric N. Estr[e]llado, Epal kulang
ang bayad mo," lends plausibility to an inference that the
preparation or drafting of the legal pleadings was pursued
with less than a laudable motivation. Whoever was
responsible for these documents was simply doing the
same for the money a "legal mercenary" selling or
purveying his expertise to the highest bidder, so to speak.
Inevitably, the fact that these documents were
retrieved from the computer of Pollo raises the
presumption that he was the author thereof. This is
because he had a control of the said computer. More
significantly, one of the witnesses, Margarita Reyes,
categorically testified seeing a written copy of one of the
pleadings found in the case records lying on the table of
the respondent. This was the Petition for Review in the
case of Estrellado addressed to the Court of Appeals. The
said circumstances indubitably demonstrate that Pollo was
secretly undermining the interest of the Commission, his
very own employer.
To deflect any culpability, Pollo would, however, want the
Commission to believe that the documents were the
personal files of some of his friends, including one Attorney
Ponciano Solosa, who incidentally served as his counsel of
record during the formal investigation of this case. In fact,
Atty. Solosa himself executed a sworn affidavit to this
effect. Unfortunately, this contention of the respondent
was directly rebutted by the prosecution witness, Reyes,
who testified that during her entire stay in the PALD, she
never saw Atty. Solosa using the computer assigned to the
respondent. Reyes more particularly stated that she
worked in close proximity with Pollo and would have known
if Atty. Solosa, whom she personally knows, was using the
computer in question. Further, Atty. Solosa himself was
never presented during the formal investigation to confirm
his sworn statement such that the same constitutes self-
serving evidence unworthy of weight and credence. The
same is true with the other supporting affidavits, which
Pollo submitted. cAHIST
At any rate, even admitting for a moment the said
contention of the respondent, it evinces the fact that he
was unlawfully authorizing private persons to use the
computer assigned to him for official purpose, not only
once but several times gauging by the number of
pleadings, for ends not in conformity with the interests of
the Commission. He was, in effect, acting as a principal by
indispensable cooperation . . . Or at the very least, he
should be responsible for serious misconduct for
repeatedly allowing CSC resources, that is, the computer
and the electricity, to be utilized for purposes other than
what they were officially intended.
Further, the Commission cannot lend credence to the
posturing of the appellant that the line appearing in one of
the documents, "Eric N. Estrellado, Epal kulang ang bayad
mo," was a private joke between the person alluded to
therein, Eric N. Estrellado, and his counsel, Atty. Solosa,
and not indicative of anything more sinister. The same is
too preposterous to be believed. Why would such a
statement appear in a legal pleading stored in the
computer assigned to the respondent, unless he had
something to do with it? 56
Petitioner assails the CA in not ruling that the CSC should not
have entertained an anonymous complaint since Section 8
of CSC Resolution No. 99-1936 (URACC) requires a verified
complaint:
Rule II Disciplinary Cases
SEC. 8. Complaint. A complaint against a civil service
official or employee shall not be given due course unless it
is in writing and subscribed and sworn to by the
complainant. However, in cases initiated by the proper
disciplining authority, the complaint need not be under
oath.
No anonymous complaint shall be entertained
unless there is obvious truth or merit to the
allegation therein or supported by documentary or direct
evidence, in which case the person complained of may be
required to comment.
xxx xxx xxx
We need not belabor this point raised by petitioner. The
administrative complaint is deemed to have been initiated by
the CSC itself when Chairperson David, after a spot inspection
and search of the files stored in the hard drive of computers in
the two divisions adverted to in the anonymous letter as
part of the disciplining authority's own fact-finding
investigation and information-gathering found a prima
facie case against the petitioner who was then directed to file
his comment. As this Court held in Civil Service Commission v.
Court of Appeals 57
Under Sections 46 and 48 (1), Chapter 6, Subtitle A, Book
V of E.O. No. 292 and Section 8, Rule II of Uniform Rules on
Administrative Cases in the Civil Service, a complaint
may be initiated against a civil service officer or
employee by the appropriate disciplining authority,
even without being subscribed and sworn
to.Considering that the CSC, as the disciplining authority
for Dumlao, filed the complaint, jurisdiction over Dumlao
was validly acquired. (Emphasis supplied.)
As to petitioner's challenge on the validity of CSC OM 10, S.
2002 (CUP), the same deserves scant consideration. The
alleged infirmity due to the said memorandum order having
been issued solely by the CSC Chair and not the Commission as
a collegial body, upon which the dissent of Commissioner
Buenaflor is partly anchored, was already explained by
Chairperson David in her Reply to the Addendum to
Commissioner Buenaflor's previous memo expressing his
dissent to the actions and disposition of the Commission in this
case. According to Chairperson David, said memorandum order
was in fact exhaustively discussed, provision by provision in
the January 23, 2002 Commission Meeting, attended by her
and former Commissioners Erestain, Jr. and Valmores. Hence,
the Commission En Banc at the time saw no need to issue a
Resolution for the purpose and further because the CUP being
for internal use of the Commission, the practice had been to
issue a memorandum order. 58Moreover, being an
administrative rule that is merely internal in nature, or which
regulates only the personnel of the CSC and not the public, the
CUP need not be published prior to its effectivity. 59
In fine, no error or grave abuse of discretion was committed by
the CA in affirming the CSC's ruling that petitioner is guilty of
grave misconduct, dishonesty, conduct prejudicial to the best
interest of the service, and violation of R.A. No. 6713. The
gravity of these offenses justified the imposition on petitioner
of the ultimate penalty of dismissal with all its accessory
penalties, pursuant to existing rules and regulations. acHCSD
WHEREFORE, the petition for review on certiorari is DENIED.
The Decision dated October 11, 2007 and Resolution dated
February 29, 2008 of the Court of Appeals in CA-G.R. SP No.
98224 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
||| (Pollo v. Constantino-David, G.R. No. 181881, [October 18,
2011], 675 PHIL 225-300)

FIRST DIVISION

[G.R. No. 74869. July 6, 1988.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

IDEL AMINNUDIN y AHNI, defendant-appellant.

The Solicitor General, for plaintiff-appellee.

Herminio T. Llariza counsel de-officio, for defendant-appellant.

SYLLABUS

1. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHTS AGAINST

UNREASONABLE SEARCHES AND SEIZURES; WARRANTLESS
ARREST AND SEIZURE BASED ON AN INFORMER'S TIP, AT A
TIME WHEN ACCUSED WAS NOT COMMITTING A CRIME,
ILLEGAL; EVIDENCE OBTAINED, INADMISSIBLE. Where it is
not disputed that the PC officers had no warrant when they
arrested Aminnudin while he was descending the gangplank of
the M/V Wilcon 9 and seized the bag he was carrying, and that
their only justification was the tip they had earlier received
from a reliable and regular informer who reported to them
that Aminnudin was arriving in Iloilo by boat with marijuana,
the search was not an incident of a lawful arrest because there
was no warrant of arrest and warrantless arrest did not come
under the exceptions allowed by the Rules of Court. Hence, the
warrantless search was also illegal and the evidence obtained
was inadmissible.
2. ID.; ID.; ID.; ID.; NO URGENCY COULD BE INVOKED IN
PRESENT CASE TO DISPENSE WITH OBTENTION OF ARREST
AND SEARCH WARRANT. The present case presented no such
urgency. From the conflicting declarations of the PC witnesses,
it is clear that they had at least two days within which they
could have obtained a warrant to arrest and
search Aminnudin who was coming to Iloilo on the M/V Wilcon
9. His name was known. The vehicle was identified. The date of
its arrival was certain. And from the information they had
received, they could have persuaded a judge that there was
probable cause, indeed, to justify the issuance of a warrant. Yet
they did nothing. No effort was made to comply with the law.
The Bill of Rights was ignored altogether because the PC
lieutenant who was the head of the arresting team, had
determined on his own authority that a "search warrant was
not necessary."
3. ID.; ID.; ID.; ID.; ACCUSED IN CASE AT BAR WAS NOT
COMMITTING A CRIME WHEN HE WAS ARRESTED. In the case
at bar, the accused-appellant was not, at the moment of his
arrest, committing a crime nor was it shown that he was about
to do so or that he had just done so. What he was doing was
descending the gangplank of the M/V Wilcon 9 and there was
no outward indication that called for his arrest. To all
appearances, he was like any of the other passengers
innocently disembarking from the vessel. It was only when the
informer pointed to him as the carrier of the marijuana that he
suddenly became suspect and so subject to apprehension. It
was the furtive finger that triggered his arrest. The
identification by the informer was the probable cause as
determined by the officers (and not a judge) that authorized
them to pounce upon Aminnudin and immediately arrest him.
 AQUINO, J., Dissenting:
CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT AGAINST
UNREASONABLE SEARCHES AND SEIZURES; ARREST AT TIME
OF COMMISSION OF CRIME IS LAWFUL; SEARCH LIKEWISE
LAWFUL. I hold that the accused was caught in flagrante, for
he was carrying marijuana leaves in his bag at the moment of
his arrest. He was not "innocently disembarking from the
vessel." The unauthorized transportation of marijuana (Indian
hemp), which is a prohibited drug, is a crime. (Sec. 4, Rep. Act
No. 6425). Since he was committing a crime, his arrest could
be lawfully effected without a warrant (Sec. 6-a, Rule 113,
Rules of Court), and the search of his bag (which yielded the
marijuana leaves) without a search warrant was also lawful
(Sec. 12, Rule 126, Rules of Court).

DECISION

CRUZ, J p:
The accused-appellant claimed his business was selling
watches but he was nonetheless arrested, tried and found
guilty of illegally transporting marijuana. The trial court,
disbelieving him, held it was high time to put him away and
sentenced him to life imprisonment plus a fine of P20,000.00. 1
Idel Aminnudin was arrested on June 25, 1984, shortly after
disembarking from the M/V Wilcon 9 at about 8:30 in the
evening, in Iloilo City. The PC officers who were in fact waiting
for him simply accosted him, inspected his bag and finding
what looked liked marijuana leaves took him to their
headquarters for investigation. The two bundles of suspect
articles were confiscated from him and later taken to the NBI
laboratory for examination. When they were verified as
marijuana leaves, an information for violation of the Dangerous
Drugs Act was filed against him. 2 Later, the information was
amended to include Farida Ali y Hassen, who had also been
arrested with him that same evening and likewise
investigated. 3 Both were arraigned and pleaded not
guilty. 4 Subsequently, the fiscal filed a motion to dismiss the
charge against Ali on the basis of a sworn statement of the
arresting officers absolving her after a "thorough
investigation." 5 The motion was granted, and trial proceeded
only against the accused-appellant, who was eventually
convicted. 6
According to the prosecution, the PC officers had earlier
received a tip from one of their informers that the accused-
appellant was on board a vessel bound for Iloilo City and was
carrying marijuana. 7 He was identified by name. 8 Acting on
this tip, they waited for him in the evening of June 25, 1984,
and approached him as he descended from the gangplank after
the informer had pointed to him. 9 They detained him and
inspected the bag he was carrying. It was found to contain
three kilos of what were later analyzed as marijuana leaves by
an NBI forensic examiner, 10 who testified that she conducted
microscopic, chemical and chromatographic tests on them. On
the basis of this finding, the corresponding charge was then
filed against Aminnudin.
In his defense, Aminnudin disclaimed the marijuana, averring
that all he had in his bag was his clothing consisting of a jacket,
two shirts and two pairs of pants. 11 He alleged that he was
arbitrarily arrested and immediately handcuffed. His bag was
confiscated without a search warrant. At the PC headquarters,
he was manhandled to force him to admit he was carrying the
marijuana, the investigator hitting him with a piece of wood in
the chest and arms even as he parried the blows while he was
still handcuffed. 12 He insisted he did not even know what
marijuana looked like and that his business was selling watches
and sometimes cigarettes. 13 He also argued that the
marijuana he was alleged to have been carrying was not
properly identified and could have been any of several bundles
kept in the stock room of the PC headquarters. 14
The trial court was unconvinced, noting from its own
examination of the accused that he claimed to have come to
Iloilo City to sell watches but carried only two watches at the
time, traveling from Jolo for that purpose and spending
P107.00 for fare, not to mention his other
expenses. 15 Aminnudin testified that he kept the two watches
in a secret pocket below his belt but, strangely, they were not
discovered when he was bodily searched by the arresting
officers nor were they damaged as a result of his
manhandling. 1 6 He also said he sold one of the watches for
P400.00 and gave away the other, although the watches
belonged not to him but to his cousin, 17 to a friend whose full
name he said did not even know. 18 The trial court also
rejected his allegations of maltreatment, observing that he had
not sufficiently proved the injuries sustained by him. 19
There is no justification to reverse these factual findings,
considering that it was the trial judge who had immediate
access to the testimony of the witnesses and had the
opportunity to weigh their credibility on the stand. Nuances of
tone or voice, meaningful pauses and hesitation, flush of face
and dart of eyes, which may reveal the truth or expose the lie,
are not described in the impersonal record. But the trial judge
sees all of this, discovering for himself the truant fact amidst
the falsities.
The only exception we may make in this case is the trial
court's conclusion that the accused-appellant was not really
beaten up because he did not complain about it later nor did
he submit to a medical examination. That is hardly fair or
realistic. It is possible Aminnudin never had that opportunity as
he was at that time under detention by the PC authorities and
in fact has never been set free since he was arrested in 1984
and up to the present. No bail has been allowed for his release.
 There is one point that deserves closer examination, however,
and it is Aminnudin's claim that he was arrested and searched
without warrant, making the marijuana allegedly found in his
possession inadmissible in evidence against him under the Bill
of Rights. The decision did not even discuss this point. For his
part, the Solicitor General dismissed this after an all-too-short
argument that the arrest of Aminnudin was valid because it
came under Rule 113, Section 6(b) of the Rules of Court on
warrantless arrests. This made the search also valid as
incidental to a lawful arrest.
It is not disputed, and in fact it is admitted by the PC officers
who testified for the prosecution, that they had no warrant
when they arrested Aminnudin and seized the bag he was
carrying. Their only justification was the tip they had earlier
received from a reliable and regular informer who reported to
them that Aminnudin was arriving in Iloilo by boat with
marijuana. Their testimony varies as to the time they received
the tip, one saying it was two days before the
arrest, 20 another two weeks 21and a third "weeks before June
25." 22 On this matter, we may prefer the declaration of the
chief of the arresting team, Lt. Cipriano Querol, Jr., who
testified as follow:
"Q You mentioned an intelligence report, you mean with
respect to the coming of Idel Aminnudin on June 25, 1984?
"A Yes, sir.
"Q When did you receive this intelligence report?

"A Two days before June 25, 1984 and it was supported by
reliable sources.
"Q Were you informed of the coming of the Wilcon 9 and
the possible trafficking of marijuana leaves on that date?
"A Yes, sir, two days before June 25, 1984 when we
received this information from that particular informer,
prior to June 25, 1984 we have already reports of the
particular operation which was being participated by
Idel Aminnudin.
"Q You said you received an intelligence report two days
before June 25, 1984 with respect to the coming of Wilcon
9?
"A Yes, sir.
"Q Did you receive any other report aside from this
intelligence report?
"A Well, I have received also other reports but not
pertaining to the coming of Wilcon 9. For instance, report
of illegal gambling operation.
"COURT:
"Q Previous to that particular information which you said
two days before June 25, 1984, did you also receive any
report regarding the activities of Idel Aminnudin?
"A Previous to June 25, 1984 we received reports on the
activities of Idel Aminnudin.
"Q What were those activities?
"A Purely marijuana trafficking.
"Q From whom did you get that information?
"A It came to my hand which was written in a required
sheet of information, maybe for security reason and we
cannot identify the person.
"Q But you received it from your regular informer?
"A Yes, sir.
"ATTY. LLARIZA:
"Q Previous to June 25, 1984, you were more or less sure
that Idel Aminnudin is coming with drugs?
"A Marijuana, sir.
"Q And this information respecting Idel Aminnudin's
coming to Iloilo with marijuana was received by you many
days before you received the intelligence report in writing?
"A Not a report of the particular coming of Aminnudin but
his activities.
"Q You only knew that he was coming on June 25, 1984
two days before?
"A Yes, sir.
"Q You mean that before June 23, 1984 you did not know
that Aminnudin was coming?
"A Before June 23, 1984, I, in my capacity, did not know
that he was coming but on June 23, 1984 that was the time
when I received the information that he was coming.
Regarding the reports on his activities, we have reports
that he has already consummated the act of selling and
shipping marijuana stuff.
"COURT:
"Q And as a result of that report, you put him under
surveillance?
"A Yes, sir.
"Q In the intelligence report, only the name of
Idel Aminnudin was mentioned?
"A Yes, sir.
"Q Are you sure of that?
"A On the 23rd he will be coming with the woman.
"Q So that even before you received the official report on
June 23, 1984, you had already gathered information to the
effect that Idel Aminnudin was coming to Iloilo on June 25,
1984?
"A Only on the 23rd of June.
 "Q You did not try to secure a search warrant for the
seizure or search of the subject mentioned in your
intelligence report?
"A No, more.
"Q Why not?
"A Because we were very very sure that our operation will
yield positive result.
"Q Is that your procedure that whenever it will yield
positive result you do not need a search warrant anymore?
"A Search warrant is not necessary." 23
That last answer is a cavalier pronouncement, especially as it
comes from a mere lieutenant of the PC. The Supreme Court
cannot countenance such a statement. This is still a
government of laws and not of men.
The mandate of the Bill of Rights is clear:
"Sec. 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be
seized."
In the case at bar, there was no warrant of arrest or search
warrant issued by a judge after personal determination by him
of the existence of probable cause. Contrary to the averments
of the government, the accused-appellant was not caught in
flagrante nor was a crime about to be committed or had just
been committed to justify the warrantless arrest allowed under
Rule 113 of the Rules of Court. Even expediency could not be
invoked to dispense with the obtention of the warrant as in the
case of Roldan v. Arca, 24 for example. Here it was held that
vessels and aircraft are subject to warrantless searches and
seizures for violation of the customs law because these
vehicles may be quickly moved out of the locality or jurisdiction
before the warrant can be secured.
The present case presented no such urgency. From the
conflicting declarations of the PC witnesses, it is clear that they
had at least two days within which they could have obtained a
warrant to arrest and search Aminnudin who was coming to
Iloilo on the M/V Wilcon 9. His name was known. The vehicle
was identified. The date of its arrival was certain. And from the
information they had received, they could have persuaded a
judge that there was probable cause, indeed, to justify the
issuance of a warrant. Yet they did nothing. No effort was made
to comply with the law. The Bill of Rights was ignored
altogether because the PC lieutenant who was the head of the
arresting team, had determined on his own authority that
"search warrant was not necessary."
In the many cases where this Court has sustained the
warrantless arrest of violators of the Dangerous Drugs Act, it
has always been shown that they were caught red-handed, as
result of what are popularly called "buy-bust" operations of the
narcotics agents. 25 Rule 113 was clearly applicable because
at the precise time of arrest the accused was in the act of
selling the prohibited drug.
In the case at bar, the accused-appellant was not, at the
moment of his arrest, committing a crime nor was it shown that
he was about to do so or that he had just done so. What he was
doing was descending the gangplank of the M/V Wilcon 9 and
there was no outward indication that called for his arrest. To all
appearances, he was like any of the other passengers
innocently disembarking from the vessel. It was only when the
informer pointed to him as the carrier of the marijuana that he
suddenly became suspect and so subject to apprehension. It
was the furtive finger that triggered his arrest. The
identification by the informer was the probable cause as
determined by the officers (and not a judge) that authorized
them to pounce upon Aminnudin and immediately arrest him.
Now that we have succeeded in restoring democracy in our
country after fourteen years of the despised dictatorship, when
any one could be picked up at will, detained without charges
and punished without trial, we will have only ourselves to
blame if that kind of arbitrariness is allowed to return, to once
more flaunt its disdain of the Constitution and the individual
liberties its Bill of Rights guarantees.
While this is not to say that the accused-appellant is innocent,
for indeed his very own words suggest that he is lying, that fact
alone does not justify a finding that he is guilty. The
constitutional presumption is that he is innocent, and he will be
so declared even if his defense is weak as long as the
prosecution is not strong enough to convict him.
Without the evidence of the marijuana allegedly seized
from Aminnudin, the case of the prosecution must fall. That
evidence cannot be admitted, and should never have been
considered by the trial court for the simple fact is that the
marijuana was seized illegally. It is the fruit of the poisonous
tree, to use Justice Holmes' felicitous phrase. The search was
not an incident of a lawful arrest because there was no warrant
of arrest and the warrantless arrest did not come under the
exceptions allowed by the Rules of Court. Hence, the
warrantless search was also illegal and the evidence obtained
thereby was inadmissible.
The Court strongly supports the campaign of the government
against drug addiction and commends the efforts of our law-
enforcement officers against those who would inflict this
malediction upon our people, especially the susceptible youth.
But as demanding as this campaign may be, it cannot be more
so than the compulsions of the Bill of Rights for the protection
of the liberty of every individual in the realm, including the
basest of criminals. The Constitution covers with the mantle of
its protection the innocent and the guilty alike against any
manner of high-handedness from the authorities, however
praiseworthy their intentions.
Those who are supposed to enforce the law are not justified in
disregarding the rights of the individual in the name of order.
Order is too high a price for the loss of liberty. As Justice
Holmes, again, said, "I think it a less evil that some criminal
should escape than that the government should play an
ignoble part." It is simply not allowed in the free society to
violate a law to enforce another, especially if the law violated is
the Constitution itself.
We find that with the exclusion of the illegally seized
marijuana as evidence against the accused-appellant, his guilt
has not been proved beyond reasonable doubt and he must
therefore be discharged on the presumption that he is
innocent.
ACCORDINGLY, the decision of the trial court is REVERSED and
the accused-appellant is ACQUITTED. It is so ordered.
Narvasa, Gancayco and Medialdea JJ. concur.
||| (People v. Aminnudin y Ahni, G.R. No. 74869, [July 6, 1988],
246 PHIL 424-435)

FIRST DIVISION

[G.R. No. 87059. June 22, 1992.]

THE PEOPLE OF THE PHILIPPINES, plaintiff-

appellee, vs. ROGELIO MENGOTE Y TEJAS, accused-
appellant.
The Solicitor General for plaintiff-appellee.
Violeta C. Drilon counsel de oficio for accused-appellant.

SYLLABUS

1. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT AGAINST

ILLEGAL SEARCH AND SEIZURE; EVIDENCE OBTAINED IN
VIOLATION THEREOF; EFFECT; CASE AT BAR. It is submitted
in the Appellant's Brief that the revolver should not have been
admitted in evidence because of its illegal seizure, no warrant
therefor having been previously obtained. Neither could it have
been seized as an incident of a lawful arrest because the arrest
of Mengote was itself unlawful, having been also effected
without a warrant. The defense also contends that the
testimony regarding the alleged robbery in Danganan's house
was irrelevant and should also have been disregarded by the
trial court. There is no question that evidence obtained as a
result of an illegal search or seizure is inadmissible in any
proceeding for any purpose. That is the absolute prohibition of
Article III, Section 3(2), of the Constitution. This is the
celebrated exclusionary rule based on the justification given by
Judge Learned Hand that "only in case the prosecution which
itself controls the seizing officials, knows that it cannot profit
by their wrong will the wrong be repressed."
2. REMEDIAL LAW; CRIMINAL PROCEDURE; ARREST WITHOUT
WARRANT; WHEN LAWFUL; REQUISITES; NOT ESTABLISHED IN
CASE AT BAR. The Solicitor General, while conceding the
rule, maintains that it is not applicable in the case at bar. His
reason is that the arrest and search of Mengote and the seizure
of the revolver from him were lawful under Rule 113, Section 5,
of the Rules of Court. We have carefully examined the wording
of this rule and cannot see how we can agree with the
prosecution. Par. (c) of Section 5 is obviously inapplicable as
Mengote was not an escapee from a penal institution when he
was arrested. We therefore confine ourselves to determining
the lawfulness of his arrest under either Par. (a) or Par. (b) of
this section. Par. (a) requires that the person be arrested (1)
after he has committed or while he is actually committing or is
at least attempting to commit an offense, (2) in the presence of
the arresting officer. These requirements have not been
established in the case at bar. At the time of the arrest in
question, the accused-appellant was merely "looking from side
to side" and "holding his abdomen," according to the arresting
officers themselves. There was apparently no offense that had
just been committed or was being actually committed or at
least being attempted by Mengote in their presence. Par. (b) is
no less applicable because its no less stringent requirements
have also not been satisfied. The prosecution has not shown
that at the time of Mengote's arrest an offense had in fact just
been committed and that the arresting officers had personal
knowledge of facts indicating that Mengote had committed it.
All they had was hearsay information from the telephone caller,
and about a crime that had yet to be committed.

DECISION

CRUZ, J p:
Accused-appellant Rogelio Mengote was convicted of illegal
possession of firearms on the strength mainly of the stolen
pistol found on his person at the moment of his warrantless
arrest. In this appeal, he pleads that the weapon was not
admissible as evidence against him because it had been
illegally seized and was therefore the fruit of the poisonous
tree. The Government disagrees. It insists that the revolver was
validly received in evidence by the trial judge because its
seizure was incidental to an arrest that was doubtless lawful
even if admittedly without warrant.
The incident occurred shortly before noon of August 8, 1987,
after the Western Police District received a telephone call from
an informer that there were three suspicious-looking persons at
the corner of Juan Luna and North Bay Boulevard in Tondo,
Manila. A surveillance team of plainclothesmen was forthwith
dispatched to the place. As later narrated at the trial by
Patrolmen Rolando Mercado and Alberto Juan, 1 they there saw
two men "looking from side to side," one of whom was holding
his abdomen. They approached these persons and identified
themselves as policemen, whereupon the two tried to run away
but were unable to escape because the other lawmen had
surrounded them. The suspects were then searched. One of
them, who turned out to be the accused-appellant, was found
with a .38 caliber Smith and Wesson revolver with six live
bullets in the chamber. His companion, later identified as
Nicanor Morellos, had a fan knife secreted in his front right
pants pocket. The weapons were taken from them. Mengote
and Morellos were then turned over to police headquarters for
investigation by the Intelligence Division. LLpr
On August 11, 1987, the following information was filed
against the accused-appellant before the Regional Trial Court of
Manila:
The undersigned accuses ROGELIO MENGOTE y TEJAS of a
violation of Presidential Decree No. 1866, committed as
follows:
That on or about August 8, 1987, in the City of Manila,
Philippines, the said accused did then and there wilfully,
unlawfully and knowingly have in his possession and under
his custody and control a firearm, to wit:
one (1) cal. 38 "S & W" bearing
Serial No. 8720-T.
without first having secured the necessary license or
permit therefor from the proper authorities.
Besides the police officers, one other witness presented by the
prosecution was Rigoberto Danganan, who identified the
subject weapon as among the articles stolen from him during
the robbery in his house in Malabon on June 13, 1987. He
pointed to Mengote as one of the robbers. He had duly
reported the robbery to the police, indicating the articles stolen
from him, including the revolver. 2 For his part, Mengote made
no effort to prove that he owned the firearm or that he was
licensed to possess it and claimed instead that the weapon had
been "planted" on him at the time of his arrest. 3
The gun, together with the live bullets and its holster, were
offered as Exhibits A, B and C and admitted over the objection
of the defense. As previously stated, the weapon was the
principal evidence that led to Mengote's conviction for violation
of P.D. 1866. He was sentenced to reclusion perpetua. 4
It is submitted in the Appellant's Brief that the revolver should
not have been admitted in evidence because of its illegal
seizure, no warrant therefor having been previously obtained.
Neither could it have been seized as an incident of a lawful
arrest because the arrest of Mengote was itself unlawful,
having been also effected without a warrant. The defense also
contends that the testimony regarding the alleged robbery in
Danganan's house was irrelevant and should also have been
disregarded by the trial court.
The following are the pertinent provision of the Bill of Rights:
Sec. 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be
seized.
Sec. 3 (1). The privacy of communication and
correspondence shall be inviolable except upon lawful
order of the court, or when public safety or order requires
otherwise as prescribed by law.
(2) Any evidence obtained in violation of this or the
preceding section shall be inadmissible for any purpose in
any proceeding.
There is no question that evidence obtained as a result of an
illegal search or seizure is inadmissible in any proceeding for
any purpose. That is the absolute prohibition of Article III,
Section 3(2), of the Constitution. This is the celebrated
exclusionary rule based on the justification given by Judge
Learned Hand that "only in case the prosecution, which itself
controls the seizing officials, knows that it cannot profit by their
wrong will the wrong be repressed."
The Solicitor General, while conceding the rule, maintains that
it is not applicable in the case at bar. His reason is that the
arrest and search of Mengote and the seizure of the revolver
from him were lawful under Rule 113, Section 5, of the Rules of
Court reading as follows:
Sec. 5. Arrest without warrant; when lawful. A peace
officer or private person may without a warrant, arrest a
person: Cdpr
(a) When, in his presence, the person to be arrested has
committed, is actually committing, or is attempting to
commit an offense;
(b) When an offense has in fact just been committed, and
he has personal knowledge of facts indicating that the
person to be arrested has committed it; and
(c) When the person to be arrested is a prisoner who has
escaped from a penal establishment or place where he is
serving final judgment or temporarily confined while his
case is pending, or has escaped while being transferred
from one confinement to another.
In cases falling under paragraphs (a) and (b) hereof, the
person arrested without a warrant shall be forthwith
delivered to the nearest police station or jail, and he shall
be proceeded against in accordance with Rule 112, Section
7.
We have carefully examined the wording of this rule and
cannot see how we can agree with the prosecution.
Par. (c) of Section 5 is obviously inapplicable as Mengote was
not an escapee from a penal institution when he was arrested.
We therefore confine ourselves to determining the lawfulness
of his arrest under either Par. (a) or Par. (b) of this section.
Par. (a) requires that the person be arrested (1) after he has
committed or while he is actually committing or is at least
attempting to commit an offense, (2) in the presence of the
arresting officer.

These requirements have not been established in the case at

bar. At the time of the arrest in question, the accused-appellant
was merely "looking from side to side" and "holding his
abdomen," according to the arresting officers themselves.
There was apparently no offense that had just been committed
or was being actually committed or at least being attempted
by Mengote in their presence.
The Solicitor General submits that the actual existence of an
offense was not necessary as long as Mengote's acts "created
a reasonable suspicion on the part of the arresting officers and
induced in them the belief that an offense had been committed
and that the accused-appellant had committed it." The
question is, What offense? What offense could possibly have
been suggested by a person "looking from side to side" and
"holding his abdomen" and in a place not exactly forsaken?
 These are certainly not sinister acts. And the setting of the
arrest made them less so, if at all. It might have been different
if Mengote had been apprehended at an ungodly hour and in a
place where he had no reason to be, like a darkened alley at 3
o'clock in the morning. But he was arrested at 11:30 in the
morning and in a crowded street shortly after alighting from a
passenger jeep with his companion. He was not skulking in the
shadows but walking in the clear light of day. There was
nothing clandestine about his being on that street at that busy
hour in the blaze of the noonday sun.
On the other hand, there could have been a number of
reasons, all of them innocent, why his eyes were darting from
side to side and he was holding his abdomen. If they excited
suspicion in the minds of the arresting officers, as the
prosecution suggests, it has nevertheless not been shown what
their suspicion was all about. In fact, the policemen themselves
testified that they were dispatched to that place only because
of the telephone call from the informer that there were
"suspicious-looking" persons in that vicinity who were about to
commit a robbery at North Bay Boulevard. The caller did not
explain why he thought the men looked suspicious nor did he
elaborate on the impending crime. LLpr
In the recent case of People v. Malmstedt, 5 the Court
sustained the warrantless arrest of the accused because there
was a bulge in his waist that excited the suspicion of the
arresting officer and, upon inspection, turned out to be a pouch
containing hashish. In People v. Claudio, 6 the accused
boarded a bus and placed the buri bag she was carrying behind
the seat of the arresting officer while she herself sat in the seat
before him. His suspicion aroused, he surreptitiously examined
the bag, which he found to contain marijuana. He then and
there made the warrantless arrest and seizure that we
subsequently upheld on the ground that probable cause had
been sufficiently established.
 The case before us is different because there was nothing to
support the arresting officers' suspicion other than Mengote's
darting eyes and his hand on his abdomen. By no stretch of the
imagination could it have been inferred from these acts that an
offense had just been committed, or was actually being
committed, or was at least being attempted in their presence.
This case is similar to People v. Aminnudin, 7 where the Court
held that the warrantless arrest of the accused was
unconstitutional. This was effected while he was coming down
a vessel, to all appearances no less innocent than the other
disembarking passengers. He had not committed nor was he
actually committing or attempting to commit an offense in the
presence of the arresting officers. He was not even acting
suspiciously. In short, there was no probable cause that, as the
prosecution incorrectly suggested, dispensed with the
constitutional requirement of a warrant.
Par. (b) is no less applicable because its no less stringent
requirements have also not been satisfied. The prosecution has
not shown that at the time of Mengote's arrest an offense had
in fact just been committed and that the arresting officers
had personal knowledge of facts indicating that Mengote had
committed it. All they had was hearsay information from the
telephone caller, and about a crime that had yet to be
committed.
The truth is that they did not know then what offense, if at all,
had been committed and neither were they aware of the
participation therein of the accused-appellant. It was only later,
after Danganan had appeared at the police headquarters, that
they learned of the robbery in his house and of Mengote's
supposed involvement therein.8 As for the illegal possession or
the firearm found on Mengote's person, the policemen
discovered this only after he had been searched and the
investigation conducted later revealed that he was not its
owners nor was he licensed to possess it.
 Before these events, the peace officers had no knowledge
even of Mengote' identity, let alone the fact (or suspicion) that
he was unlawfully carrying a firearm or that he was involved in
the robbery of Danganan's house.
In the landmark case of People v. Burgos, 9 this Court
declared:
Under Section 6(a) of Rule 113, the officer arresting a
person who has just committed, is committing, or is about
to commit an offense must have personal knowledgeof the
fact. The offense must also be committed in is presence or
within his view. (Sayo v. Chief of Police, 80 Phil. 859).
(Emphasis supplied)
xxx xxx xxx
In arrests without a warrant under Section 6(b), however,
it is not enough that there is reasonable ground to believe
that the person to be arrested has committed a crime. A
crime must in fact or actually have been committed first.
That a crime has actually been committed is an essential
precondition. It is not enough to suspect that a crime may
have been committed. The fact of the commission of the
offense must be undisputed. The test of reasonable ground
applies only to the identity of the perpetrator. (Emphasis
supplied)
This doctrine was affirmed in Alih v. Castro, 10 thus:
If the arrest was made under Rule 113, Section 5, of the
Rules of Court in connection with a crime about to be
committed, being committed, or just committed, what was
that crime? There is no allegation in the record of such a
justification. Parenthetically, it may be observed that under
the Revised Rule 113, Section 5(b), the officer making the
arrest must have personal knowledge of the ground
therefor as stressed in the recent case of People v. Burgos.
(Emphasis supplied)
 It would be a sad day, indeed, if any person could be
summarily arrested and searched just because he is holding his
abdomen, even if it be possibly because of a stomachache, or
if a peace officer could clamp handcuffs on any person with a
shifty look on suspicion that he may have committed a criminal
act or is actually committing or attempting it. This simply
cannot be done in a free society. This is not a police state
where order is exalted over liberty or, worse, personal malice
on the part of the arresting officer may be justified in the name
of security.
There is no need to discuss the other issues raised by the
accused-appellant as the ruling we here make is sufficient to
sustain his exoneration. Without the evidence of the firearm
taken from him at the time of his illegal arrest, the prosecution
has lost its most important exhibit and must therefore fail. The
testimonial evidence against Mengote (which is based on the
said firearm) is not sufficient to prove his guilt beyond
reasonable doubt of the crime imputed to him.
We commend Atty. Violeta Calvo-Drilon for her able and
spirited defense of the accused-appellant not only in the brief
but also in the reply brief, which she did not have to file but did
so just the same to stress the constitutional rights of her client.
The fact that she was acting only as a counsel de oficio with no
expectation of material reward makes her representation even
more commendable.
The Court feels that if the peace officers had been more
mindful of the provisions of the Bill of Rights, the prosecution of
the accused-appellant might have succeeded. As it happened,
they allowed their over-zealousness to get the better of them,
resulting in their disregard of the requirements of a valid
search and seizure that rendered inadmissible the vital
evidence they had invalidly seized. LLpr
This should be a lesson to other peace officers. Their
impulsiveness may be the very cause of the acquittal of
persons who deserve to be convicted, escaping the clutches of
the law because, ironically enough, it has not been observed
by those who are supposed to enforce it.
WHEREFORE, the appealed decision is REVERSED and SET
ASIDE. The accused-appellant is ACQUITTED and ordered
released immediately unless he is validly detained for other
offenses. No costs.
SO ORDERED.
||| (People v. Mengote y Tejas, G.R. No. 87059, [June 22, 1992])

FIRST DIVISION

[G.R. No. 128587. March 16, 2007.]

PEOPLE OF THE PHILIPPINES, petitioner, vs. HON.

PERFECTO A.S. LAGUIO, JR., in his capacity as
Presiding Judge, Branch 18, RTC, Manila, and
LAWRENCE WANG Y CHEN, respondents.

DECISION

GARCIA, J p:
On pure questions of law, petitioner People of the Philippines
has directly come to this Court via this petition for review
on certiorari to nullify and set aside the Resolution 1 dated 13
March 1997 of the Regional Trial Court of Manila, Branch 18, in
Criminal Case Nos. 96-149990 to 96-149992, entitled People of
the Philippines v. Lawrence Wang y Chen, granting private
respondent Lawrence C. Wang's Demurrer to Evidence and
acquitting him of the three (3) charges filed against him,
namely: (1)Criminal Case No. 96-149990 for Violation of
Section 16, Article III in relation to Section 2 (e) (2), Article I of
Republic Act (R.A.) No. 6425 (Dangerous Drugs Act);
(2)Criminal Case No. 96-149991 for Violation of Presidential
Decree No. 1866 (Illegal Possession of Firearms); and
(3) Criminal Case No. 96-149992 for Violation of Comelec
Resolution No. 2828 in relation to R.A. No. 7166 (COMELEC Gun
Ban).
The three (3) separate Informations filed against Lawrence C.
Wang in the court of origin respectively read:
Criminal Case No. 96-149990 (Violation of Dangerous Drugs
Act):
That on or about the 17th day of May 1996, in the City of
Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession
and under his custody and control a bulk of white and
yellowish crystalline substance known as SHABU contained
in thirty-two (32) transparent plastic bags weighing
approximately 29.2941 kilograms, containing
methamphetamine hydrochloride, a regulated drug,
without the corresponding license or prescription therefor.
Contrary to law. 2
Criminal Case No. 96-149991 (Illegal Possession of
Firearms):
That on or about the 17th day of May 1996, in the City of
Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession
and under his custody and control one (1) DAEWOO Cal.
9mm, automatic pistol with one loaded magazine and one
AMT Cal. .380 9mm automatic backup pistol with magazine
loaded with ammunitions without first having secured the
necessary license or permit therefor from the proper
authorities.
Contrary to law. 3
Criminal Case No. 96-149992 (Violation of Comelec Gun
Ban):
That on or about the 17th day of May 1996, in the City of
Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession
and under his custody and control one (1) DAEWOO Cal.
9mm automatic pistol with one loaded magazine and one
(1) AMT Cal. 380 9mm automatic backup pistol with
magazine loaded with ammunitions, carrying the same
along Maria Orosa St., Ermita, Manila, which is a public
place, on the date which is covered by an election period,
without first securing the written permission or authority
from the Commission on Elections, as provided by the
COMELEC Resolution 2828 in relation to Republic Act 7166.
Contrary to law. 4
During his arraignment, accused Wang refused to enter a plea
to all the Informations and instead interposed a continuing
objection to the admissibility of the evidence obtained by the
police operatives. Thus, the trial court ordered that a plea of
"Not Guilty" be entered for him. 5 Thereafter, joint trial of the
three (3) consolidated cases followed.
The pertinent facts are as follows:
On 16 May 1996, at about 7:00 p.m., police operatives of the
Public Assistance and Reaction Against Crime of the
Department of Interior and Local Government, namely, Captain
Margallo, Police Inspector Cielito Coronel and SPO3 Reynaldo
Cristobal, arrested SPO2 Vergel de Dios, Rogelio Anoble and a
certain Arellano, for unlawful possession of methamphetamine
hydrochloride, a regulated drug popularly known as shabu. In
the course of the investigation of the three arrested persons,
Redentor Teck, alias Frank, and Joseph Junio were identified as
the source of the drug. An entrapment operation was then set
after the three were prevailed upon to call their source and
pretend to order another supply of shabu.
 At around 11:00 p.m. that same date, Redentor Teck and
Joseph Junio were arrested while they were about to hand over
another bag of shabu to SPO2 De Dios and company.
Questioned, Redentor Teck and Joseph Junio informed the
police operatives that they were working as talent manager
and gymnast instructor, respectively, of Glamour Modeling
Agency owned by Lawrence Wang. Redentor Teck and Joseph
Junio did not disclose their source of shabu but admitted that
they were working for Wang. 6 They also disclosed that they
knew of a scheduled delivery of shabu early the following
morning of 17 May 1996, and that their employer (Wang) could
be found at the Maria Orosa Apartment in Malate, Manila. The
police operatives decided to look for Wang to shed light on the
illegal drug activities of Redentor Teck and Joseph Junio. Police
Inspector Cielito Coronel and his men then proceeded to Maria
Orosa Apartment and placed the same under
surveillance. TCacIE
Prosecution witness Police Inspector Cielito Coronel testified
that at about 2:10 a.m. of 17 May 1996, Wang, who was
described to the operatives by Teck, came out of the apartment
and walked towards a parked BMW car. On nearing the car, he
(witness) together with Captain Margallo and two other police
officers approached Wang, introduced themselves to him as
police officers, asked his name and, upon hearing that he was
Lawrence Wang, immediately frisked him and asked him to
open the back compartment of the BMW car. 7 When frisked,
there was found inside the front right pocket of Wang and
confiscated from him an unlicensed AMT Cal. 380 9mm
automatic Back-up Pistol loaded with ammunitions. At the
same time, the other members of the operatives searched the
BMW car and found inside it were the following items: (a) 32
transparent plastic bags containing white crystalline substance
with a total weight of 29.2941 kilograms, which substance was
later analyzed as positive for methamphetamine hydrochloride,
a regulated drug locally known as shabu; (b) cash in the
amount of P650,000.00; (c) one electronic and one mechanical
scales; and (d) an unlicensed Daewoo 9mm Pistol with
magazine. Then and there, Wang resisted the warrantless
arrest and search. 8
On 6 December 1996, the prosecution rested its case and
upon motion, accused Wang was granted 25 days from said
date within which to file his intended Demurrer to
Evidence. 9 On 19 December 1996, the prosecution filed
a Manifestation 10 to the effect that it had rested its case only
in so far as the charge for Violation of the Dangerous Drugs
Act in Criminal Case No. 96-149990 is concerned, and not as
regards the two cases for Illegal Possession of Firearms (Crim.
Case No. 96-149991) and Violation of the Comelec Gun Ban
(Crim. Case No. 96-149992). Accordingly, trial continued.
On 9 January 1997, Wang filed his undated Demurrer to
Evidence, 11 praying for his acquittal and the dismissal of the
three (3) cases against him for lack of a valid arrest and search
warrants and the inadmissibility of the prosecution's evidence
against him. Considering that the prosecution has not yet filed
its Opposition to the demurrer, Wang filed an
Amplification 12 to his Demurrer of Evidence on 20 January
1997. On 12 February 1997, the prosecution filed its
Opposition 13 alleging that the warrantless search was legal as
an incident to the lawful arrest and that it has proven its case,
so it is now time for the defense to present its evidence.
On 13 March 1997, the respondent judge, the Hon. Perfecto
A.S. Laguio, Jr., issued the herein assailed
Resolution 14 granting Wang's Demurrer to Evidence and
acquitting him of all charges for lack of evidence, thus:
WHEREFORE, the accused's undated Demurrer to
Evidence is hereby granted; the accused is acquitted of the
charges against him for the crimes of Violation of Section
16, Article III of the Dangerous Drugs Act, Illegal Possession
of Firearms, and Violation of Comelec Gun Ban, for lack of
evidence; the 32 bags of shabu with a total weight of
29.2941 kilograms and the two unlicensed pistols, one AMT
Cal. .380 9mm and one Daewoo Cal. 9mm. are ordered
confiscated in favor of the government and the branch
clerk is directed to turn over the 32 bags of shabu to the
Dangerous Drugs Board in Intramuros, Manila, and the two
firearms to the Firearms and Explosive Units, PNP, Camp
Crame, Quezon City, for proper disposition, and the officer-
in-charge of PARAC, Department of Interior and Local
Government, is ordered to return the confiscated amount
of P650,000.00 to the accused, and the confiscated BMW
car to its registered owner, David Lee. No costs.
SO ORDERED.
Hence, this petition 15 for review on certiorari by the People,
submitting that the trial court erred
I
. . . IN HOLDING THAT THE UNDISPUTED FACTS AND
CIRCUMSTANCES DID NOT CONSTITUTE PROBABLE CAUSE
WITHIN THE CONTEMPLATION OF SECTION 2, ARTICLE III OF
THE CONSTITUTION, AND IN HOLDING THAT SUCH FACTS
AND CIRCUMSTANCES NEITHER JUSTIFIED THE
WARRANTLESS SEARCH OF ACCUSED'S VEHICLE AND THE
SEIZURE OF THE CONTRABAND THEREIN.
II
. . . IN HOLDING, IN EFFECT, THAT A WARRANTLESS
SEARCH IS CONSTITUTIONALLY ALLOWABLE AND CAN ONLY
BE VALID AS AN INCIDENT TO A LAWFUL ARREST.
III
. . . IN DECLARING THE WARRANTLESS ARREST OF THE
ACCUSED AND THE SEARCH AND SEIZURE OF HIS
HANDGUNS UNLAWFUL.
IV
. . . IN NOT DECLARING THE ACCUSED AS HAVING WAIVED,
AS A RESULT OF HIS SUBMISSION AND FAILURE TO
PROTEST THE SEARCH AND HIS ARREST, HIS
CONSTITUTIONAL RIGHT AGAINST UNREASONABLE SEARCH
AND SEIZURE AND HIS OBJECTION TO THE ADMISSION OF
THE EVIDENCE SEIZED.
V
. . . IN NOT ADMITTING IN EVIDENCE THE EVIDENCE
SEIZED AND OFFERED BY THE PROSECUTION AND IN NOT
DENYING ACCUSED'S DEMURRER TO EVIDENCE.

In its Resolution 16 of 9 July 1997, the Court, without giving

due course to the petition, required the public and private
respondents to comment thereon within ten days from notice.
Private respondent Wang filed his comment 17 on 18 August
1997.
On 10 September 1997, the Court required the People to file a
reply, 18 which the Office of the Solicitor General did on 5
December 1997, after several extensions. 19
On 20 October 2004, the Court resolved to give due course to
the petition and required the parties to submit their respective
memoranda, 20 which they did.
The case presents two main issues: (a) whether the
prosecution may appeal the trial court's resolution granting
Wang's demurrer to evidence and acquitting him of all the
charges against him without violating the constitutional
proscription against double jeopardy; and (b) whether there
was lawful arrest, search and seizure by the police operatives
in this case despite the absence of a warrant of arrest and/or a
search warrant.
First off, it must be emphasized that the present case is an
appeal filed directly with this Court via a petition for review
on certiorari under Rule 45 in relation to Rule 41, Section 2,
paragraph (c) of the Rules of Court raising only pure questions
of law, ordinary appeal by mere filing of a notice of appeal not
being allowed as a mode of appeal directly to this Court. Then,
too, it bears stressing that the right to appeal is neither a
natural right nor a part of due process, it being merely a
statutory privilege which may be exercised only in the manner
provided for by law (Velasco v. Court of Appeals 21 ). Although
Section 2, Rule 122 of the Rules on Criminal Procedure states
that any party may appeal, the right of the People to appeal is,
in the very same provision, expressly made subject to the
prohibition against putting the accused in double jeopardy. It
also basic that appeal in criminal cases throws the whole
records of the case wide open for review by the appellate
court, that is why any appeal from a judgment of acquittal
necessarily puts the accused in double jeopardy. In effect, the
very same Section 2 of Rule 122 of the Rules on Criminal
Procedure, disallows appeal by the People from judgments of
acquittal.
An order granting an accused's demurrer to evidence is a
resolution of the case on the merits, and it amounts to an
acquittal. Generally, any further prosecution of the accused
after an acquittal would violate the constitutional proscription
on double jeopardy. To this general rule, however, the Court
has previously made some exceptions.
The celebrated case of Galman v. Sandiganbayan 22 presents
one exception to the rule on double jeopardy, which is, when
the prosecution is denied due process of law:
No court whose Presiding Justice has received "orders or
suggestions" from the very President who by an
amendatory decree (disclosed only at the hearing of oral
arguments on November 8, 1984 on a petition challenging
the referral of the Aquino-Galman murder cases to the
Tanodbayan and Sandiganbayan instead of to a court
martial, as mandatorily required by the known P.D. 1850 at
the time providing for exclusive jurisdiction of courts
martial over criminal offenses committed by military men)
made it possible to refer the cases to the Sandiganbayan,
can be an impartial court, which is the very essence of due
process of law. As the writer then wrote, "jurisdiction over
cases should be determined by law, and not
by preselection of the Executive, which could be much too
easily transformed into a means ofpredetermining the
outcome of individual cases." This criminal collusion as to
the handling and treatment of the cases by public
respondents at the secret Malacaang conference (and
revealed only after fifteen months by Justice Manuel
Herrera) completely disqualified respondent
Sandiganbayan and voided ab initio its verdict. This
renders moot and irrelevant for now the extensive
arguments of respondents accused, particularly Generals
Ver and Olivas and those categorized as accessories, that
there has been no evidence or witness suppressed against
them, that the erroneous conclusions of Olivas as police
investigator do not make him an accessory of the crimes
he investigated and the appraisal and evaluation of the
testimonies of the witnesses presented and suppressed.
There will be time and opportunity to present all these
arguments and considerations at the remand and retrial of
the cases herein ordered before a neutral and impartial
court.
The Supreme Court cannot permit such a sham trial and
verdict and travesty of justice to stand unrectified. The
courts of the land under its aegis are courts of
law andjustice and equity. They would have no reason to
exist if they were allowed to be used as mere tools of
injustice, deception and duplicity to subvert and suppress
the truth, instead of repositories of judicial power whose
judges are sworn and committed to render impartial justice
to all alike who seek the enforcement or protection of a
right or the prevention or redress of a wrong, without fear
or favor and removed from the pressures of politics and
prejudice. More so, in the case at bar where the people and
the world are entitled to know the truth, and the integrity
of our judicial system is at stake. In life, as an accused
before the military tribunal Ninoy had pleaded in vain that
as a civilian he was entitled to due process of law and trial
in the regular civil courts before an impartial court with an
unbiased prosecutor. In death, Ninoy, as the victim of the
"treacherous and vicious assassination" and the relatives
and sovereign people as the aggrieved parties plead once
more for due process of law and a retrial before an
impartial court with an unbiased prosecutor. The Court is
constrained to declare the sham trial a mock trial the
non-trial of the century and that the predetermined
judgment of acquittal was unlawful and void ab initio.
1. No double jeopardy. It is settled doctrine that double
jeopardy cannot be invoked against this Court's setting
aside of the trial courts' judgment of dismissal or
acquittal where the prosecution which represents the
sovereign people in criminal cases is denied due
process. As the Court stressed in the 1985 case of People
vs. Bocar,
Where the prosecution is deprived of a fair opportunity to
prosecute and prove its case, its right to due process is
thereby violated.
The cardinal precept is that where there is a violation of
basic constitutional rights, courts are ousted of their
jurisdiction. Thus, the violation of the State's right to due
process raises a serious jurisdictional issue (Gumabon vs.
Director of the Bureau of Prisons, L-30026, 37 SCRA 420
[Jan. 30, 1971]) which cannot be glossed over or
disregarded at will. Where the denial of the fundamental
right of due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction
(Aducayen vs. Flores, L-30370 [May 25, 19731, 51 SCRA
78; Shell Co. vs. Enage, L-30111-12, 49 SCRA 416 Feb. 27,
1973]). Any judgment or decision rendered
notwithstanding such violation may be regarded as a
"lawless thing, which can be treated as an outlaw and slain
at sight, or ignored wherever it exhibits its head"
(Aducayen vs. Flores, supra).
Respondent Judge's dismissal order dated July 7, 1967
being null and void for lack of jurisdiction, the same does
not constitute a proper basis for a claim of double jeopardy
(Serino vs. Zosa, supra).
xxx xxx xxx
Legal jeopardy attaches only (a) upon a valid indictment,
(b) before a competent court, (c) after arraignment, (d) a
valid plea having been entered; and (e) the case was
dismissed or otherwise terminated without the express
consent of the accused (People vs. Ylagan, 58 Phil.
851). The lower court was not competent as it was ousted
of its jurisdiction when it violated the right of the
prosecution to due process.
In effect, the first jeopardy was never terminated, and the
remand of the criminal case for further hearing and/or trial
before the lower courts amounts merely to a continuation
of the first jeopardy, and does not expose the accused to a
second jeopardy.
Another exception is when the trial court commits grave
abuse of discretion in dismissing a criminal case by
granting the accused's demurrer to evidence. In point is
the fairly recent case of People v. Uy, 23 which involved the
trial court's decision which granted the two separate demurrers
to evidence filed by the two accused therein, both with leave of
court, resulting in their acquittal of their respective charges of
murder due to insufficiency of evidence. In resolving the
petition for certiorarifiled directly with this Court, we had the
occasion to explain:
The general rule in this jurisdiction is that a judgment of
acquittal is final and unappealable. People v. Court of
Appeals explains the rationale of this rule:
In our jurisdiction, the finality-of-acquittal doctrine as a
safeguard against double jeopardy faithfully adheres to the
principle first enunciated in Kepner v. United States. In this
case, verdicts of acquittal are to be regarded as absolutely
final and irreviewable. The cases of United States v. Yam
Tung Way, People v. Bringas, Gandicela v. Lutero, People v.
Cabarles, People v. Bao, to name a few, are illustrative
cases. The fundamental philosophy behind the
constitutional proscription against double jeopardy is to
afford the defendant, who has been acquitted, final repose
and safeguard him from government oppression through
the abuse of criminal processes. As succinctly observed
in Green v. United States "(t)he underlying idea, one that is
deeply ingrained in at least the Anglo-American system of
jurisprudence, is that the State with all its resources and
power should not be allowed to make repeated attempts to
convict an individual for an alleged offense, thereby
subjecting him to embarrassment, expense and ordeal and
compelling him to live in a continuing state of anxiety and
insecurity, as well as enhancing the possibility that even
though innocent, he may be found guilty." (Underscoring
supplied)

The same rule applies in criminal cases where a demurrer

to evidence is granted. As held in the case of People v.
Sandiganbayan:
The demurrer to evidence in criminal cases, such as the
one at bar, is " filed after the prosecution had rested its
case," and when the same is granted, it calls "for an
appreciation of the evidence adduced by the prosecution
and its sufficiency to warrant conviction beyond reasonable
doubt, resulting in a dismissal of the case on the merits,
tantamount to an acquittal of the accused." Such dismissal
of a criminal case by the grant of demurrer to evidence
may not be appealed, for to do so would be to place the
accused in double-jeopardy. The verdict being one of
acquittal, the case ends there. (Italics in the original)
Like any other rule, however, the above-said rule is not
absolute. By way of exception, a judgment of
acquittal in a criminal case may be assailed in a
petition forcertiorari under Rule 65 of the Rules of
Court upon a clear showing by the petitioner that
the lower court, in acquitting the accused,
committed not merelyreversible errors of
judgment but also grave abuse of
discretion amounting to lack or excess of
jurisdiction or a denial of due process, thus
rendering the assailed judgment void. (Emphasis
supplied.)
In Sanvicente v. People, 24 the Court allowed the review of a
decision of the Court of Appeals (CA) which reversed the
accused's acquittal upon demurrer to evidence filed by the
accused with leave of court, the CA ruling that the trial court
committed grave abuse of discretion in preventing the
prosecution from establishing the due execution and
authenticity of certain letter marked therein as Exhibit "LL,"
which supposedly "positively identified therein petitioner as the
perpetrator of the crime charged." The Court, in a petition
for certiorari, sustained the CA's power to review the order
granting the demurrer to evidence, explaining thus:
Under Rule 119, Section 23 of the Revised Rules of
Criminal Procedure, as amended, the trial court may
dismiss the action on the ground of insufficiency of
evidence upon a demurrer to evidence filed by the accused
with or without leave of court. In resolving accused's
demurrer to evidence, the court is merely required to
ascertain whether there is competent or sufficient
evidence to sustain the indictment or support a verdict of
guilt.
The grant or denial of a demurrer to evidence is left to the
sound discretion of the trial court and its ruling on the
matter shall not be disturbed in the absence of a grave
abuse of discretion. Significantly, once the court grants the
demurrer, such order amounts to an acquittal and any
further prosecution of the accused would violate the
constitutional proscription on double jeopardy. This
constitutes an exception to the rule that the dismissal of a
criminal case made with the express consent of the
accused or upon his own motion bars a plea of double
jeopardy. The finality-of-acquittal rule was stressed thus
in People v. Velasco:
The fundamental philosophy highlighting the finality of an
acquittal by the trial court cuts deep into the "humanity of
the laws and in jealous watchfulness over the rights of the
citizens, when brought in unequal contest with the State . .
. . Thus Green expressed the concern that "(t)he
underlying idea, one that is deeply ingrained in at least the
Anglo-American system of jurisprudence, is that the State
with all its resources and power should not be allowed to
make repeated attempts to convict an individual for an
alleged offense thereby subjecting him to embarrassment,
expense and ordeal and compelling him to live in a
continuing state of anxiety and insecurity, as well as
enhancing the possibility that even though innocent, he
may be found guilty."
It is axiomatic that on the basis of humanity, fairness and
justice, an acquitted defendant is entitled to the right of
repose as a direct consequence of the finality of his
acquittal. The philosophy underlying this rule establishing
the absolute nature of acquittals is "part of the paramount
importance criminal justice system attaches to the
protection of the innocent against wrongful conviction."
The interest in the finality-of-acquittal rule, confined
exclusively to verdicts of not guilty, is easy to understand:
it is a need for "repose", a desire to know the exact extent
of one's liability. With this right of repose, the criminal
justice system has built in a protection to insure that the
innocent, even those whose innocence rests upon a jury's
leniency, will not be found guilty in a subsequent
proceeding.
Given the far-reaching scope of an accused's right against
double jeopardy, even an appeal based on an alleged
misappreciation of evidence will not lie. The only
instance when double jeopardy will not attach is
when the trial court acted with grave abuse of
discretion amounting to lack or excess of
jurisdiction, such as where the prosecution was
denied the opportunity to present its case or where
the trial was a sham. However, while certiorari may
be availed of to correct an erroneous acquittal, the
petitioner in such an extraordinary proceeding must
clearly demonstrate that the trial court blatantly
abused its authority to a point so grave as to
deprive it of its very power to dispense justice.
(Emphasis supplied.)
By this time, it is settled that the appellate court may review
dismissal orders of trial courts granting an accused's demurrer
to evidence. This may be done via the special civil action
of certiorari under Rule 65 based on the ground of
grave abuse of discretion, amounting to lack or excess
of jurisdiction. Such dismissal order, being considered void
judgment, does not result in jeopardy. Thus, when the order of
dismissal is annulled or set aside by an appellate court in an
original special civil action via certiorari, the right of the
accused against double jeopardy is not violated.
 Unfortunately, what petitioner People of the Philippines,
through then Secretary of Justice Teofisto T. Guingona, Jr. and
then Solicitor General Silvestre H. Bello, III, filed with the Court
in the present case is an appeal by way of a petition for
review on certiorari under Rule 45 raising a pure
question of law, which is different from a petition
for certiorari under Rule 65.
In Madrigal Transport Inc. v. Lapanday Holdings
Corporation, 25 we have enumerated the distinction between
the two remedies/actions, to wit:
Appeal and Certiorari Distinguished
Between an appeal and a petition for certiorari, there are
substantial distinctions which shall be explained below.
As to the Purpose. Certiorari is a remedy designed for
the correction of errors of jurisdiction, not errors of
judgment. In Pure Foods Corporation v. NLRC, we explained
the simple reason for the rule in this light:
"When a court exercises its jurisdiction, an error
committed while so engaged does not deprive it of the
jurisdiction being exercised when the error is committed. If
it did, every error committed by a court would deprive it of
its jurisdiction and every erroneous judgment would be a
void judgment. This cannot be allowed. The administration
of justice would not survive such a rule. Consequently, an
error of judgment that the court may commit in the
exercise of its jurisdiction is not correct[a]ble through the
original civil action of certiorari."
The supervisory jurisdiction of a court over the issuance of
a writ of certiorari cannot be exercised for the purpose of
reviewing the intrinsic correctness of a judgment of the
lower court on the basis either of the law or the facts of
the case, or of the wisdom or legal soundness of the
decision. Even if the findings of the court are incorrect, as
long as it has jurisdiction over the case, such correction is
normally beyond the province of certiorari. Where the error
is not one of jurisdiction, but of an error of law or fact a
mistake of judgment appeal is the remedy.
As to the Manner of Filing. Over an appeal, the CA
exercises its appellate jurisdiction and power of review.
Over a certiorari, the higher court uses its original
jurisdiction in accordance with its power of control and
supervision over the proceedings of lower courts. An
appeal is thus a continuation of the original suit, while a
petition for certiorari is an original and independent action
that was not part of the trial that had resulted in the
rendition of the judgment or order complained of. The
parties to an appeal are the original parties to the action.
In contrast, the parties to a petition for certiorari are the
aggrieved party (who thereby becomes the petitioner)
against the lower court or quasi-judicial agency, and the
prevailing parties (the public and the private respondents,
respectively).
As to the Subject Matter. Only judgments or final
orders and those that the Rules of Court so declared are
appealable. Since the issue is jurisdiction, an original
action for certiorari may be directed against an
interlocutory order of the lower court prior to an appeal
from the judgment; or where there is no appeal or any
plain, speedy or adequate remedy.
As to the Period of Filing. Ordinary appeals should be
filed within fifteen days from the notice of judgment or
final order appealed from. Where a record on appeal is
required, the appellant must file a notice of appeal and a
record on appeal within thirty days from the said notice of
judgment or final order. A petition for review should be
filed and served within fifteen days from the notice of
denial of the decision, or of the petitioner's timely filed
motion for new trial or motion for reconsideration. In an
appeal by certiorari, the petition should be filed also within
fifteen days from the notice of judgment or final order, or
of the denial of the petitioner's motion for new trial or
motion for reconsideration.
On the other hand, a petition for certiorari should be filed
not later than sixty days from the notice of judgment,
order, or resolution. If a motion for new trial or motion for
reconsideration was timely filed, the period shall be
counted from the denial of the motion.

As to the Need for a Motion for Reconsideration. A

motion for reconsideration is generally required prior to the
filing of a petition for certiorari, in order to afford the
tribunal an opportunity to correct the alleged errors. Note
also that this motion is a plain and adequate remedy
expressly available under the law. Such motion is not
required before appealing a judgment or final
order. HAaScT
Also in Madrigal, we stressed that the special civil action
of certiorari and appeal are two different remedies mutually
exclusive; they are neither alternative nor successive. Where
appeal is available, certiorari will not prosper. In the dismissal
of a criminal case upon demurrer to evidence, appeal is not
available as such an appeal will put the accused in double
jeopardy. Certiorari, however, is allowed.
For being the wrong remedy taken by petitioner People of the
Philippines in this case, this petition is outrightly dismissible.
The Court cannot reverse the assailed dismissal order of the
trial court by appeal without violating private respondent's
right against double jeopardy.
Even assuming that the Court may treat an "appeal" as a
special civil action of certiorari, which definitely this Court has
the power to do, when there is a clear showing of grave abuse
of discretion committed by the lower court, the instant petition
will nevertheless fail on the merits as the succeeding
discussion will show.
There are actually two (2) acts involved in this case, namely,
the warrantless arrest and the warrantless search. There is no
question that warrantless search may be conducted as an
incident to a valid warrantless arrest. The law requires that
there be first a lawful arrest before a search can be made; the
process cannot be reversed.26 However, if there are valid
reasons to conduct lawful search and seizure which thereafter
shows that the accused is currently committing a crime, the
accused may be lawfully arrested in flagrante
delicto 27 without need for a warrant of arrest.
Finding that the warrantless arrest preceded the warrantless
search in the case at bar, the trial court granted private
respondent's demurrer to evidence and acquitted him of all the
three charges for lack of evidence, because the unlawful arrest
resulted in the inadmissibility of the evidence gathered from an
invalid warrantless search. The trial court's ratiocination is
quoted as follows:
The threshold issue raised by the accused in his Demurrer
to Evidence is whether his warrantless arrest and search
were lawful as argued by the prosecution, or unlawful as
asserted by the defense.
Under Section 5, Rule 113 of the New Rules of Court, a
peace officer may arrest a person without a warrant: (a)
when in his presence, the person to be arrested has
committed, is actually committing, or is attempting to
commit an offense; (b) when an offense has in fact just
been committed, and he has personal knowledge of facts
indicating that the person to be arrested has committed it,
and (c) when the person to be arrested is a prisoner who
has escaped from a penal establishment or place where he
is serving final judgment or temporarily confined while
being transferred from one confinement to another. None
of these circumstances were present when the accused
was arrested. The accused was merely walking from the
Maria Orosa Apartment and was about to enter the parked
BMW car when the police officers arrested and frisked him
and searched his car. The accused was not committing any
visible offense at the time of his arrest. Neither was there
an indication that he was about to commit a crime or that
he had just committed an offense. The unlicensed AMT
Cal.380 9mm Automatic Back-up Pistol that the accused
had in his possession was concealed inside the right front
pocket of his pants. And the handgun was bantam and slim
in size that it would not give an outward indication of a
concealed gun if placed inside the pant's side pocket as
was done by the accused. The arresting officers had no
information and knowledge that the accused was carrying
an unlicensed handgun, nor did they see him in possession
thereof immediately prior to his arrest.
Ditto on the 32 bags of shabu and the other unlicensed
Daewoo Cal. 9mm Pistol with magazine that were found
and seized from the car. The contraband items in the car
were not in plain view. The 32 bags of shabu were in the
trunk compartment, and the Daewoo handgun was
underneath the driver's seat of the car. The police officers
had no information, or knowledge that the banned articles
were inside the car, or that the accused had placed them
there. The police officers searched the car on mere
suspicion that there was shabu therein.
On this matter, pertinent portions of the testimonies of
Police Inspector Cielito Coronel and SPO3 Reynaldo are
hereunder quoted:
POLICE INSPECTOR CIELITO CORONEL'S TESTIMONY
"PROSECUTOR TO WITNESS: Direct-Examination
Q. Mr. Witness, what was your role or participation in this
case?
A. I am one of those responsible for the arrest of the
accused.
xxx xxx xxx
Q. Where did you make that arrest, Mr. Witness?
A. The apprehension was made in front of an apartment
along Maria Orosa Street, Ermita, Manila.
Q. What date was that when you arrested the accused?
A. It was on May 17, 1996, at about 2:10 a.m.
xxx xxx xxx
Q. What was the reason why you together with other
policemen effected the arrest of the accused?
A. We arrested him because of the information relayed to
us by one of those whom we have previously apprehended
in connection with the delivery of shabu somewhere also in
Ermita, Manila.
xxx xxx xxx
Q. When you established that he was somewhere at Maria
Orosa, what did you do?
A. We waited for him.
xxx xxx xxx
Q. You yourself, Mr. Witness, where did you position
yourself during that time?
A. I was inside a vehicle waiting for the accused to appear.
Q. What about your other companions where were they?
A. They were position in strategic places within the area.
Q. What happened when you and your companions were
positioned in that place?
A. That was when the accused arrived.
Q. How many of your approached him.
A. Inspector Margallo, myself and two other operatives.
Q. What happened when you approached the accused, Mr.
Witness?
A. We introduced ourselves as police officers and we
frisked him and we asked him to open the back
compartment of his car.
Q. You said you frisked him, what was the result of that?
A. He was found in possession of one back-up pistol with
one loaded magazine and likewise when the compartment
was opened several plastic bags containing white
crystalline substance suspected to be shabu (were found).
Q. What did you do when you found out Mr. Witness?
A. When the car was further search we later found another
firearm, a Daewoo Pistol at the place under the seat of the
driver.
Q. Then what happened?
A. He was brought to our headquarters at Mandaluyong for
further investigation.
Q. What about the suspected shabu that you recovered,
what did you do with that?
A. The suspected shabu that we recovered were forwarded
to the NBI for laboratory examination.
Q. Did you come to know the results?
A. It was found positive for methamphetamine
hydrochloride. (TSN, pp. 3-8, November 15, 1996).
ATTY. LOZANO TO WITNESS: CROSS
Q. You arrested Joseph Junio and Redentor Teck for alleged
transporting of shabu on May 16, 1996, at 11:00 p.m., is it
not?
A. Yes, Sir.
Q. You asked Redentor Teck where he is employed, is it
not?
A. Yes, Sir.
xxx xxx xxx
Q. Redentor Teck told you that he is a talent manager at
the Glenmore Modeling Agency, is it not?
A. Yes, Sir.
Q. The Glenmore Modeling Agency is owned by Lawrence
Wang, is it not?
A. I supposed, Sir.
Q. And that is why immediately after Redentor Teck told
you that he is an employee of the Glenmore Modeling
Agency owned by Lawrence Wang, naturally, you and your
companions look for Lawrence Wang to shed light on the
transporting of shabu by Redentor Teck and Joseph Junio, is
it not?
A. Yes, Sir.
Q. Thereafter, you spotted a person previously described
by Redentor Teck as Lawrence Wang, is it not?
A. Yes, Sir.
Q. While you were arresting Lawrence Wang, your
companions at the same time searched the BMW car
described in your affidavit of arrest, is it not?
A. Yes, Sir.
xxx xxx xxx
Q. Lawrence Wang was not inside the BMW car while the
same was searched, is it not?
A. He was outside, Sir.
Q. The driver of the car was inside the car when the arrest
and search were made, is it not?
A. He was likewise outside, Sir.
Q. Lawrence Wang did resist arrest and search is it not?
A. Yes, Sir.
Q. When you effected the arrest, there was no warrant of
arrest, is it not?
A. Yes, Sir.
Q. When the search was made on the BMW car, there was
no search warrant, is it not?
A. Yes, none, Sir. (TSN, pp. 3-12, November 15, 1996)
SPO3 REYNALDO CRISTOBAL'S TESTIMONY
PROSECUTOR TO WITNESS: DIRECT EXAMINATION
Q. What is you role or participation in this case?
A. I was one of the arresting officers and investigator, Sir.
xxx xxx xxx
Q. What kind of specific offense did the accused allegedly
do so that you arrested him, Mr. Witness?
A. He was arrested on the basis of the recovered drugs in
his possession placed inside his car.
xxx xxx xxx
Q. Mr. witness, you said that you recovered drug from the
car of the accused, please tell us the antecedent
circumstances which led you to recover or confiscate these
items?
A. Earlier in the evening about 11:00 p.m. of May 16, we
arrested one Redentor Teck and Joseph Junio.
COURT: Where did you arrest these people?
A They were arrested in Metro Manila also.
COURT: The same date?
 A. May 16, about 11:00 p.m. They were arrested and when
they were investigated, Teck mentioned the name of
Lawrence Wang as his employer. cCHITA

COURT: Why were these people, arrested?

A. For violation of R.A. 6425.
COURT: How were they arrested?
A. They were arrested while in the act of transporting
shabu or handling shabu to another previously arrested
person. It was a series of arrest.
COURT: So, this involved a series of operation?
A. Yes, Your Honor. About 11:00 p.m. of May 16, we
arrested three (3) persons, SPO2 Vergel de Dios, a certain
Arellano and a certain Rogelio Noble. When they were
arrested they divulged the name of the source.
COURT: They were arrested for what, for possession?
A. Yes, Your Honor. For unlawful possession of shabu. Then
they divulged to us the name of the person from whom
they get shabu.
COURT: Whose name did they mention:
A. One Alias Frank, who turned out to be Redentor Teck
and Joseph Junio. We let them call Redentor Teck and
Joseph Junio thru the cellphone and pretend and to order
another supply of shabu.
COURT: So there was an entrapment?
A. Yes, Your Honor.
COURT: So, these two (2) were arrested?
A. While they were about to hand over another bag of
shabu to Noble and company.
 COURT: And these two reveals (revealed) some
information to you as to the source of the shabu?
A. Yes, Your Honor.
COURT: What was the information?
A. Teck told us that he is an employee of Lawrence Wang.
COURT: What did you do when you were told about that?
A. They also told us that there was an ongoing delivery of
shabu on that morning.
COURT: When?
A. Of that date early morning of May 17, 1996.
COURT: At what place?
A. We asked them where we could find Lawrence Wang
and Teck lead us to Maria Orosa Apartment where we
conducted a stake out which lasted up to 2:00 a.m.
xxx xxx xxx
COURT: What happened during the stake out?
A. When the person of the accused was identified to us,
we saw him opening his car together with his driver.
COURT: So, he was about to leave when you saw him?
A. Probably, Sir.
COURT: What did you do?
A. We saw him opened his car and we have a suspicion
that there was a shabu inside the compartment of the car.
xxx xxx xxx
COURT: All right, when you saw the accused opened his
car, what did you do?
A. We approached him.
COURT: What happened when you approached him?
A. We suspected the shabu inside the compartment of his
car.
COURT: And this shabu that you saw inside the
compartment of the car, what did you do with that?
A. Well, he was first arrested by Captain Margallo and Lt.
Coronel while I was the one who inspected and opened the
compartment of the car and saw the shabu. (TSN, pp. 15-
24, December 16, 1996).
CLARIFICATORY QUESTIONING OF SPO3 CRISTOBAL BY THE
COURT
COURT: From your testimony and that of Police Inspector
Cielito Coronel, this Court has gathered that prior to the
arrest of the accused there were three (3) men that your
team arrested. One of whom is a police officer.
A: Yes, Sir.
xxx xxx xxx
COURT: And on the occasion of the arrest of these three
men shabu were confiscated from them?
A: Yes, Sir.
Q: And in the course of the investigation of these three
men, you were able to discover that Redentor Teck and
Joseph Junio were the source of the regulated drug that
were confiscated from the three men that you have
arrested?
A: Yes, Sir.
Q: Now, thru entrapment base[d] on your testimony you
were able to apprehend also these two men, Redentor Teck
and Joseph Junio?
A: Yes, Sir.
xxx xxx xxx
Q: These two men, Redentor Teck and Joseph Junio they
were also investigated by your team?
A: Yes, Sir.
Q: You were present while they were investigated?
A: I was the one whom investigated them.
xxx xxx xxx
Q: Did you ask Redentor and Joseph the source of shabu
that you confiscated from them at the time of the (their)
arrest?
A: Yes, Sir. They refuse to say the source, however, they
told me that they were working for the accused.
Q: You also testified that Redentor informed you that there
was another delivery of shabu scheduled that morning of
(stop) was it May 16 or 17? The other delivery that is
scheduled on?
A: On the 17th.
xxx xxx xxx
Q: Did he tell you who was to make the delivery?
A: No, Sir.
xxx xxx xxx
Q: At that time when you decided to look for the accused
to ask him to shed light on the matter concerning the
arrest of these two employees in possession of shabu. Did
you and did your team suspect the accused as being
involved in the transaction that lead (led) to the arrest of
Redentor and Joseph?
A: Yes, Sir. We suspected that he was the source of the
shabu.
xxx xxx xxx
Q: When you saw the accused walking towards his car, did
you know whether he was carrying a gun?
A: No, Sir. It cannot be seen.
Q: It was concealed?
A: Yes, Sir.
Q: So, the only time that you and your team learned that
he was in possession of the gun is when he was bodily
search?
A: Yes, Sir. That is the only time that I came to know about
when Capt. Margallo handed to me the gun.
Q: Other than walking towards his car, the accused was
not doing anything else?
A: None, Sir.
Q: That would invite your suspicion or give indication that
he was intending to do something unlawful or illegal?
A: No, Sir.
Q: When you searched the car, did the accused protest or
try to prevent your team from searching his car?
A: No, Sir." (TSN pp. 3-16, Feb. 26, 1997)
Clearly therefore, the warrantless arrest of the accused
and the search of his person and the car were without
probable cause and could not be licit. The arrest of the
accused did not fall under any of the exception to the
requirements of warrantless arrests, (Sec. 5, Rule 113,
Rules of Court) and is therefore, unlawful and derogatory of
his constitutional right of liberty. . . .
The trial court resolved the case on the basis of its findings
that the arrest preceded the search, and finding no basis to
rule in favor of a lawful arrest, it ruled that the incidental
search is likewise unlawful. Any and all pieces of evidence
acquired as a consequence thereof are inadmissible in
evidence. Thus, the trial court dismissed the case for lack of
evidence.
Contrary to its position at the trial court, the People, however,
now posits that "inasmuch as it has been shown in the present
case that the seizure without warrant of the regulated drugs
and unlicensed firearms in the accused's possession had been
validly made upon probable cause and under exigent
circumstances, then the warrantless arrest of the accused must
necessarily have to be regarded as having been made on the
occasion of the commission of the crime in flagrante delicto,
and therefore constitutionally and statutorily permissible and
lawful." 28 In effect, the People now contends that the
warrantless search preceded the warrantless arrest. Since the
case falls under an exception to the general rule requiring
search warrant prior to a valid search and seizure, the police
officers were justified in requiring the private respondent to
open his BMW car's trunk to see if he was carrying illegal
drugs.
The conflicting versions as to whether the arrest preceded the
search or vice versa, is a matter of credibility of evidence. It
entails appreciation of evidence, which may be done in an
appeal of a criminal case because the entire case is thrown
open for review, but not in the case of a petition
for certiorari where the factual findings of the trial court are
binding upon the Court. Since a dismissal order consequent to
a demurrer to evidence is not subject to appeal and reviewable
only by certiorari, the factual finding that the arrest preceded
the search is conclusive upon this Court. The only legal basis
for this Court to possibly reverse and set aside the dismissal
order of the trial court upon demurrer to evidence would be if
the trial court committed grave abuse of discretion in excess of
jurisdiction when it ruled that there was no legal basis to
lawfully effect a warrantless arrest.
The pertinent provisions of Rule 113 of the Rules on Criminal
Procedure on warrantless arrest provide:
Sec. 5. Arrest without warrant; when lawful. A peace
officer or a private person may, without a warrant, arrest a
person:
a) When, in his presence, the person to be arrested has
committed, is actually committing, or is attempting to
commit an offense;
b) When an offense has just been committed, and he has
probable cause to believe based on personal knowledge of
facts or circumstances that the person to be arrested has
committed it; and
c) When the person to be arrested is a prisoner who has
escaped from a penal establishment or place where he is
serving final judgment or is temporarily confined while his
case is pending, or has escaped while being transferred
from one confinement to another.
Section 5, above, provides three (3) instances when
warrantless arrest may be lawfully effected: (a) arrest of a
suspect in flagrante delicto; (b) arrest of a suspect where,
based on personal knowledge of the arresting officer, there is
probable cause that said suspect was the author of a crime
which had just been committed; (c) arrest of a prisoner who
has escaped from custody serving final judgment or
temporarily confined while his case is pending.
For a warrantless arrest of an accused caught in flagrante
delicto under paragraph (a) of Section 5 to be valid, two
requisites must concur: (1) the person to be arrested must
execute an overt act indicating that he has just committed, is
actually committing, or is attempting to commit a crime; and
(2) such overt act is done in the presence or within the view of
the arresting officer. 29
The facts and circumstances surrounding the present case did
not manifest any suspicious behavior on the part of private
respondent Lawrence Wang that would reasonably invite the
attention of the police. He was merely walking from the Maria
Orosa Apartment and was about to enter the parked BMW car
when the police operatives arrested him, frisked and searched
his person and commanded him to open the compartment of
the car, which was later on found to be owned by his friend,
David Lee. He was not committing any visible offense then.
Therefore, there can be no valid warrantless arrest in flagrante
delicto under paragraph (a) of Section 5. It is settled that
"reliable information" alone, absent any overt act indicative of
a felonious enterprise in the presence and within the view of
the arresting officers, is not sufficient to constitute probable
cause that would justify an in flagrante delicto arrest. 30

Neither may the warrantless arrest be justified under

paragraph (b) of Section 5. What is clearly established from the
testimonies of the arresting officers is that Wang was arrested
mainly on the information that he was the employer of
Redentor Teck and Joseph Junio who were previously arrested
and charged for illegal transport ofshabu. Teck and Junio did
not even categorically identify Wang to be their source of
the shabu they were caught with in flagrante delicto. Upon the
duo's declaration that there will be a delivery of shabu on the
early morning of the following day, May 17, which is only a few
hours thereafter, and that Wang may be found in Maria Orosa
Apartment along Maria Orosa Street, the arresting officers
conducted "surveillance" operation in front of said apartment,
hoping to find a person which will match the description of one
Lawrence Wang, the employer of Teck and Junio. These
circumstances do not sufficiently establish the existence of
probable cause based on personal knowledge as required in
paragraph (b) of Section 5.
And doubtless, the warrantless arrest does not fall under
paragraph (c) of Section 5.
The inevitable conclusion, as correctly made by the trial court,
is that the warrantless arrest was illegal. Ipso jure, the
warrantless search incidental to the illegal arrest is likewise
unlawful.
In People v. Aminnudin, 31 the Court declared as inadmissible
in evidence the marijuana found in appellant's possession
during a search without a warrant, because it had been illegally
seized, in disregard of the Bill of Rights:
In the case at bar, the accused-appellant was not, at the
moment of his arrest, committing a crime nor was it shown
that he was about to do so or that he had just done so.
What he was doing was descending the gangplank of the
M/V Wilcon 9 and there was no outward indication that
called for his arrest. To all appearances, he was like any of
the other passengers innocently disembarking from the
vessel. It was only when the informer pointed to him as the
carrier of the marijuana that he suddenly became a
suspect and so subject to apprehension. It was the fugitive
finger that triggered his arrest. The identification of the
informer was the probable cause as determined by the
officer (and not a judge) that authorized them to pounce
upon Aminnudin and immediately arrest him.
The People's contention that Wang waived his right against
unreasonable search and seizure has no factual basis. While we
agree in principle that consent will validate an otherwise illegal
search, however, based on the evidence on record, Wang
resisted his arrest and the search on his person and
belongings. 32 The implied acquiescence to the search, if there
was any, could not have been more than mere passive
conformity given under intimidating or coercive circumstances
and is thus considered no consent at all within the purview of
the constitutional guarantee. 33 Moreover, the continuing
objection to the validity of the warrantless arrest made of
record during the arraignment bolsters Wang's claim that he
resisted the warrantless arrest and search.
 We cannot close this ponencia without a word of caution: those
who are supposed to enforce the law are not justified in
disregarding the rights of the individual in the name of order.
Order is too high a price for the loss of liberty. As Justice
Holmes once said, "I think it is less evil that some criminals
should escape than that the government should play an
ignoble part." It is simply not allowed in free society to violate a
law to enforce another, especially if the law violated is the
Constitution itself.34
WHEREFORE, the instant petition is DENIED. HScCEa
SO ORDERED.
||| (People v. Laguio, Jr., G.R. No. 128587, [March 16, 2007],
547 PHIL 296-331)

SECOND DIVISION

[G.R. No. 182348. November 20, 2008.]

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.

CARLOS DELA CRUZ, accused-appellant.

DECISION

VELASCO, JR., J p:
This is an appeal from the November 29, 2007 Decision of the
Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02286
entitled People of the Philippines v. Carlos Dela Cruzwhich
affirmed the September 16, 2005 Decision of the Regional Trial
Court (RTC), Branch 77 in San Mateo, Rizal in Criminal Case
Nos. 6517 (Illegal Possession of Firearm and Ammunition) and
6518 (Possession of Dangerous Drug). The RTC found accused-
appellant Carlos Dela Cruz guilty beyond reasonable doubt of
violation of Section 11 (2) of Republic Act No. (RA)
9165 or The Comprehensive Dangerous Drugs Act of 2002.
The Facts
On November 15, 2002, charges against accused-appellant
were made before the RTC. The Informations read as follows:
Criminal Case No. 6517
That, on or about the 20th day of October 2002, in the
Municipality of San Mateo, Province of Rizal, Philippines
and within the jurisdiction of this Honorable Court, the
above-named accused, being then a private citizen,
without any lawful authority, did then and there willfully,
unlawfully, and knowingly have in his possession and
under his custody and control One (1) Gauge Shotgun
marked ARMSCOR with Serial No. 1108533 loaded with
four (4) live ammunition, which are high powered firearm
and ammunition respectively, without first securing the
necessary license to possess or permit to carry said firearm
and ammunition from the proper authorities. HIEAcC
Criminal Case No. 6518
That on or about the 20th day of October 2002, in the
Municipality of San Mateo, Province of Rizal, Philippines
and within the jurisdiction of this Honorable Court, the
above-named accused, not being authorized by law, did
then and there willfully, unlawfully and knowingly have in
his possession, direct custody and control one (1) heat-
sealed transparent plastic bag weighing 49.84 grams of
white crystalline substance, which gave positive results for
Methamphetamine Hydrochloride, a dangerous drug. 1
Accused-appellant entered a not guilty plea and trial ensued.
The facts, according to the prosecution, showed that in the
morning of October 20, 2002, an informant tipped off the Drug
Enforcement Unit of the Marikina Police Station that wanted
drug pusher Wifredo Loilo alias "Boy Bicol" was at his nipa hut
hideout in San Mateo, Rizal. A team was organized to arrest
Boy Bicol. Once there, they saw Boy Bicol by a table talking
with accused-appellant. They shouted "Boy Bicol sumuko ka na
may warrant of arrest ka. (Surrender yourself Boy Bicol you
have a warrant of arrest.)" Upon hearing this, Boy Bicol
engaged them in a shootout and was fatally shot. Accused-
appellant was seen holding a shotgun through a window. He
dropped his shotgun when a police officer pointed his firearm
at him. The team entered the nipa hut and apprehended
accused-appellant. They saw a plastic bag of
suspected shabu, a digital weighing scale, drug paraphernalia,
ammunition, and magazines lying on the table. PO1 Calanoga,
Jr. put the markings "CVDC", the initials of accused-appellant,
on the bag containing the seized drug. TDCaSE
Accused-appellant was subsequently arrested. The substance
seized from the hideout was sent to the Philippine National
Police crime laboratory for examination and tested positive for
methamphetamine hydrochloride or shabu. He was thus
separately indicted for violation of RA 9165 and for illegal
possession of firearm.
According to the defense, accused-appellant was at Boy Bicol's
house having been asked to do a welding job for Boy Bicol's
motorcycle. While accused-appellant was there, persons who
identified themselves as police officers approached the place,
prompting accused-appellant to scamper away. He lied face
down when gunshots rang. The buy-bust team then helped him
get up. He saw the police officers searching the premises and
finding shabu and firearms, which were on top of a table or
drawer. 2 When he asked the reason for his apprehension, he
was told that it was because he was a companion of Boy Bicol.
He denied under oath that the gun and drugs seized were
found in his possession and testified that he was only invited
by Boy Bicol to get the motorcycle from his house. 3
 The RTC acquitted accused-appellant of illegal possession of
firearm and ammunition but convicted him of possession of
dangerous drugs. The dispositive portion of the RTC Decision
reads:
WHEREFORE, the Court based on insufficiency of evidence
hereby ACQUITS accused CARLOS DELA CRUZ Y
VICTORINO in Criminal Case No. 6517 for violation of P.D.
1866 as amended by RA 8294.
In Criminal Case No. 6518 for Possession of Dangerous
Drug under Section 11, 2nd paragraph of Republic Act
9165, the Court finds said accused CARLOS DELA CRUZ Y
VICTORINO, GUILTY beyond reasonable doubt and is hereby
sentenced to Life Imprisonment and to Pay a Fine of FOUR
HUNDRED THOUSAND PESOS (P400,000.00).
SO ORDERED. 4
On December 7, 2005, accused-appellant filed a Notice of
Appeal of the RTC Decision. ISHaTA
In his appeal to the CA, accused-appellant claimed that: (1)
the version of the prosecution should not have been given full
credence; (2) the prosecution failed to prove beyond
reasonable doubt that he was guilty of possession of an illegal
drug; (3) his arrest was patently illegal; and (4) the prosecution
failed to establish the chain of custody of the illegal drug
allegedly in his possession.
The CA sustained accused-appellant's conviction. 5 It pointed
out that accused-appellant was positively identified by
prosecution witnesses, rendering his uncorroborated denial and
allegation of frame-up weak. As to accused-appellant's alleged
illegal arrest, the CA held that he is deemed to have waived his
objection when he entered his plea, applied for bail, and
actively participated in the trial without questioning such
arrest.
 On the supposedly broken chain of custody of the illegal drug,
the appellate court held that accused-appellant's claim is
unpersuasive absent any evidence showing that the plastic
sachet of shabu had been tampered or meddled with.
On December 20, 2007, accused-appellant filed his Notice of
Appeal of the CA Decision.
On June 25, 2008, this Court required the parties to submit
supplemental briefs if they so desired. The parties later
signified their willingness to submit the case on the basis of the
records already with the Court.
Accused-appellant presents the following issues before us:
I
THE COURT A QUO GRAVELY ERRED IN GIVING FULL
CREDENCE TO THE VERSION OF THE PROSECUTION
II
THE COURT A QUO GRAVELY ERRED IN FINDING THE
ACCUSED-APPELLANT GUILTY OF VIOLATION OF SECTION
11, ARTICLE II, RA 9165 DESPITE THE FAILURE OF THE
PROSECUTION TO PROVE THE COMMISSION OF THE
OFFENSE CHARGED BEYOND REASONABLE DOUBT SEHaTC
III
THE COURT A QUO GRAVELY ERRED IN CONVICTING THE
ACCUSED-APPELLANT OF THE OFFENSE CHARGED DESPITE
THE PATENT ILLEGALITY OF HIS ARREST
IV
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE
ACCUSED-APPELLANT OF VIOLATION OF SECTION 11,
ARTICLE II, RA 9165 DESPITE THE FAILURE OF THE
PROSECUTION TO ESTABLISH THE CHAIN OF CUSTODY OF
THE ILLEGAL DRUG ALLEGEDLY FOUND IN HIS POSSESSION
Accused-appellant claims that the presence of all the elements
of the offense of possession of dangerous drug was not proved
beyond reasonable doubt since both actual and constructive
possessions were not proved. He asserts that the shabu was
not found in his actual possession, for which reason the
prosecution was required to establish that he had constructive
possession over the shabu. He maintains that as he had no
control and dominion over the drug or over the place where it
was found, the prosecution likewise failed to prove constructive
possession.
The Court's Ruling
The appeal has merit.
The elements in illegal possession of dangerous drug are: (1)
the accused is in possession of an item or object which is
identified to be a prohibited drug; (2) such possession is not
authorized by law; and (3) the accused freely and consciously
possessed the said drug. 6 On the third element, we have held
that the possession must be with knowledge of the accused or
that animus possidendi existed with the possession or control
of said articles. 7 Considering that as to this knowledge, a
person's mental state of awareness of a fact is involved, we
have ruled that:
Since courts cannot penetrate the mind of an accused and
thereafter state its perceptions with certainty, resort to
other evidence is necessary. Animus possidendi, as a state
of mind, may be determined on a case-to-case basis by
taking into consideration the prior or contemporaneous
acts of the accused, as well as the surrounding
circumstances. Its existence may and usually must be
inferred from the attendant events in each particular
case. 8
The prior or contemporaneous acts of accused-appellant show
that: he was inside the nipa hut at the time the buy-bust
operation was taking place; he was talking to Boy Bicol inside
the nipa hut; he was seen holding a shotgun; when PO1
Calanoga, Jr. pointed his firearm at accused-appellant, the
latter dropped his shotgun; and when apprehended, he was in
a room which had the seized shabu, digital weighing scale,
drug paraphernalia, ammunition, and magazines. Accused-
appellant later admitted that he knew what the content of the
seized plastic bag was. 9
Given the circumstances, we find that the prosecution failed to
establish possession of the shabu, whether in its actual or
constructive sense, on the part of accused-appellant.
The two buy-bust team members corroborated each other's
testimonies on how they saw Boy Bicol talking to accused-
appellant by a table inside the nipa hut. That table, they
testified, was the same table where they saw the shabu once
inside the nipa hut. This fact was used by the prosecution to
show that accused-appellant exercised dominion and control
over the shabu on the table. We, however, find this too broad
an application of the concept of constructive
possession. DEaCSA

In People v. Torres, 10 we held there was constructive

possession of prohibited drugs even when the accused was not
home when the prohibited drugs were found in the master's
bedroom of his house.
In People v. Tira, 11 we sustained the conviction of the
accused husband and wife for illegal possession of dangerous
drugs. Their residence was searched and their bed was found
to be concealing illegal drugs underneath. We held that the
wife cannot feign ignorance of the drugs' existence as she had
full access to the room, including the space under the bed.
In Abuan v. People, 12 we affirmed the finding that the
accused was in constructive possession of prohibited drugs
which had been found in the drawer located in her bedroom.
In all these cases, the accused was held to be in constructive
possession of illegal drugs since they were shown to enjoy
dominion and control over the premises where these drugs
were found.
In the instant case, however, there is no question that
accused-appellant was not the owner of the nipa hut that was
subject of the buy-bust operation. He did not have dominion or
control over the nipa hut. Neither was accused-appellant a
tenant or occupant of the nipa hut, a fact not disputed by the
prosecution. The target of the operation was Boy Bicol.
Accused-appellant was merely a guest of Boy Bicol. But in spite
of the lack of evidence pinning accused-appellant to illegal
possession of drugs, the trial court declared the following:
It cannot be denied that when the accused was talking
with Boy Bicol he knew that the shabu was on the table
with other items that were confiscated by the police
operatives. The court [surmises] that the accused and boy
Bicol were members of a gang hiding in that nipa hut
where they were caught red-handed with prohibited items
and dangerous [drugs]. 13 CHDTEA
The trial court cannot assume, based on the prosecution's
evidence, that accused-appellant was part of a gang dealing in
illegal activities. Apart from his presence in Boy Bicol's nipa
hut, the prosecution was not able to show his participation in
any drug-dealing. He was not even in possession of drugs in his
person. He was merely found inside a room with shabu, not as
the room's owner or occupant but as a guest. While he
allegedly pointed a firearm at the buy-bust team, the
prosecution curiously failed to produce the firearm that
accused-appellant supposedly used.
The prosecution in this case clearly failed to show all the
elements of the crime absent a showing of either actual or
constructive possession by the accused-appellant.
 Since accused-appellant was not in possession of the illegal
drugs in Boy Bicol's nipa hut, his subsequent arrest was also
invalid. Rule 113 of the Rules on Criminal Procedure on
warrantless arrest provides:
Sec. 5. Arrest without warrant; when lawful. A peace
officer or a private person may, without a warrant, arrest a
person:
a) When, in his presence, the person to be arrested has
committed, is actually committing, or is attempting to
commit an offense;
b) When an offense has just been committed, and he has
probable cause to believe based on personal knowledge of
facts or circumstances that the person to be arrested has
committed it; and
c) When the person to be arrested is a prisoner who has
escaped from a penal establishment or place where he is
serving final judgment or is temporarily confined while his
case is pending, or has escaped while being transferred
from one confinement to another.
The warrantless arrest of accused-appellant was effected
under Sec. 5 (a), arrest of a suspect in flagrante delicto. For
this type of warrantless arrest to be valid, two requisites must
concur: (1) the person to be arrested must execute an overt act
indicating that he has just committed, is actually committing,
or is attempting to commit a crime; and (2) such overt act is
done in the presence or within the view of the arresting
officer. 14 TEcADS
Accused-appellant's act of pointing a firearm at the buy-bust
team would have been sufficient basis for his arrest
in flagrante delicto; however, the prosecution was not able to
adequately prove that accused-appellant was committing an
offense. Although accused-appellant merely denied possessing
the firearm, the prosecution's charge was weak absent the
presentation of the alleged firearm. He was eventually
acquitted by the trial court because of this gaffe. His arrest,
independent of the buy-bust operation targeting Boy Bicol, was
therefore not lawful as he was not proved to be committing any
offense.
In sum, we find that there is insufficient evidence to show
accused-appellant's guilt beyond reasonable doubt. Having
ruled on the lack of material or constructive possession by
accused-appellant of the seized shabu and his succeeding
illegal arrest, we deem it unnecessary to deal with the other
issue raised.
WHEREFORE, the appeal is GRANTED. The CA Decision dated
November 29, 2007 in CA-G.R. CR-H.C. No. 02286 is REVERSED
and SET ASIDE. Accused-appellant Carlos Dela Cruz is
ACQUITTED of violation of Sec. 11 (2) of RA 9165 in Criminal
Case No. 6518 of the RTC, Branch 77 in San Mateo, Rizal.
SO ORDERED.
Quisumbing, Carpio-Morales, Tinga and Brion, JJ., concur.
||| (People v. Dela Cruz, G.R. No. 182348, [November 20,
2008], 592 PHIL 207-218)

EN BANC

[G.R. No. 204603. September 24, 2013.]

REPUBLIC OF THE PHILIPPINES, represented by THE

EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE,
THE SECRETARY OF FOREIGN AFFAIRS, THE
SECRETARY OF NATIONAL DEFENSE, THE SECRETARY
OF THE INTERIOR AND LOCAL GOVERNMENT, THE
SECRETARY OF FINANCE, THE NATIONAL SECURITY
ADVISER, THE SECRETARY OF BUDGET AND
MANAGEMENT, THE TREASURER OF THE
PHILIPPINES, THE CHIEF OF STAFF OF THE ARMED
FORCES OF THE PHILIPPINES, and THE CHIEF OF THE
PHILIPPINE NATIONAL POLICE, petitioners, vs.
HERMINIO HARRY ROQUE, MORO CHRISTIAN
PEOPLE'S ALLIANCE, FR. JOE DIZON, RODINIE
SORIANO, STEPHANIE ABIERA, MARIA LOURDES
ALCAIN, VOLTAIRE ALFEREZ, CZARINA MAY ALTEZ,
SHERYL BALOT, RENIZZA BATACAN, EDAN MARRI
CAETE, LEANA CARAMOAN, ALDWIN CAMANCE,
RENE DELORINO, PAULYN MAY DUMAN, RODRIGO
FAJARDO III, ANNA MARIE GO, ANNA ARMINDA
JIMENEZ, MARY ANN LEE, LUISA MANALAYSAY,
MIGUEL MUSNGI, MICHAEL OCAMPO, NORMAN
ROLAND OCANA III, WILLIAM RAGAMAT, MARICAR
RAMOS, CHERRY LOU REYES, MELISSA ANN SICAT,
CRISTINE MAE TABING, VANESSA TORNO, and HON.
JUDGE ELEUTERIO L. BATHAN, as Presiding Judge of
Regional Trial Court, Quezon City, Branch
92, respondents.

RESOLUTION

PERLAS-BERNABE, J p:
Assailed in this petition for certiorari 1 are the April 23,
2012 2 and July 31, 2012 3 Orders of the Regional Trial Court of
Quezon City, Branch 92 (RTC) in Special Civil Action (SCA) No.
Q-07-60778, denying petitioners' motion to dismiss (subject
motion to dismiss) based on the following grounds: (a) that the
Court had yet to pass upon the constitutionality of Republic Act
No. (RA) 9372, 4 otherwise known as the "Human Security Act
of 2007," in the consolidated cases of Southern Hemisphere
Engagement Network, Inc. v. Anti-Terrorism
Council 5 (Southern Hemisphere); and (b) that private
respondents' petition for declaratory relief was proper.
 The Facts
On July 17, 2007, private respondents filed a Petition 6 for
declaratory relief before the RTC, assailing the constitutionality
of the following sections of RA 9372: (a) Section 3, 7 for being
void for vagueness; 8 (b) Section 7, 9 for violating the right to
privacy of communication and due process and the privileged
nature of priest-penitent relationships; 10 (c) Section
18, 11 for violating due process, the prohibition against ex
post facto laws or bills of attainder, the Universal Declaration of
Human Rights, and the International Covenant on Civil and
Political Rights, as well as for contradicting Article 125 12 of
the Revised Penal Code, as amended; 13 (d) Section 26, 14 for
violating the right to travel; 15 and (e) Section 27, 16 for
violating the prohibition against unreasonable searches and
seizures. 17 EaIDAT
Petitioners moved to suspend the proceedings, 18 averring
that certain petitions (SC petitions) raising the issue of RA
9372's constitutionality have been lodged before the
Court. 19 The said motion was granted in an Order dated
October 19, 2007. 20
On October 5, 2010, the Court promulgated its Decision 21 in
the Southern Hemisphere cases and thereby dismissed the SC
petitions.
On February 27, 2012, petitioners filed the subject motion to
dismiss, 22 contending that private respondents failed to
satisfy the requisites for declaratory relief. Likewise, they
averred that the constitutionality of RA 9372 had already been
upheld by the Court in the Southern Hemisphere cases.
In their Comment/Opposition, 23 private respondents
countered that: (a) the Court did not resolve the issue of RA
9372's constitutionality in Southern Hemisphere as the SC
petitions were dismissed based purely on technical grounds;
and (b) the requisites for declaratory relief were met.
The RTC Ruling
 On April 23, 2012, the RTC issued an Order 24 which denied
the subject motion to dismiss, finding that the Court did not
pass upon the constitutionality of RA 9372 and that private
respondents' petition for declaratory relief was properly filed.
Petitioners moved for reconsideration 25 which was, however,
denied by the RTC in an Order dated July 31, 2012. 26 The RTC
observed that private respondents have personal and
substantial interests in the case and that it would be illogical to
await the adverse consequences of the aforesaid law's
implementation considering that the case is of paramount
impact to the Filipino people. 27
Hence, the instant petition. CSIDTc
The Issues Before the Court
The present controversy revolves around the issue of whether
or not the RTC gravely abused its discretion when it denied the
subject motion to dismiss.
Asserting the affirmative, petitioners argue that private
respondents failed to satisfy the requirements for declaratory
relief and that the Court had already sustained with finality the
constitutionality of RA 9372.
On the contrary, private respondents maintain that the
requirements for declaratory relief have been satisfied and that
the Court has yet to resolve the constitutionality of RA 9372,
negating any grave abuse of discretion on the RTC's part.
The Court's Ruling
The petition is meritorious.
An act of a court or tribunal can only be considered as with
grave abuse of discretion when such act is done in a capricious
or whimsical exercise of judgment as is equivalent to lack of
jurisdiction. 28 It is well-settled that the abuse of discretion to
be qualified as "grave" must be so patent or gross as to
constitute an evasion of a positive duty or a virtual refusal to
perform the duty or to act at all in contemplation of law. 29 In
this relation, case law states that not every error in the
proceedings, or every erroneous conclusion of law or fact,
constitutes grave abuse of discretion. 30 The degree of gravity,
as above-described, must be met. SDIaCT
Applying these principles, the Court observes that while no
grave abuse of discretion could be ascribed on the part of the
RTC when it found that the Court did not pass upon the
constitutionality of RA 9372 in the Southern Hemisphere cases,
it, however, exceeded its jurisdiction when it ruled that private
respondents' petition had met all the requisites for an action
for declaratory relief. Consequently, its denial of the subject
motion to dismiss was altogether improper.
To elucidate, it is clear that the Court, in Southern Hemisphere,
did not make any definitive ruling on the constitutionality of RA
9372. The certiorari petitions in those consolidated cases were
dismissed based solely on procedural grounds, namely: (a) the
remedy of certiorari was improper; 31 (b) petitioners therein
lack locus standi; 32and (c) petitioners therein failed to present
an actual case or controversy. 33 Therefore, there was no
grave abuse of discretion.
The same conclusion cannot, however, be reached with regard
to the RTC's ruling on the sufficiency of private respondents'
petition for declaratory relief.
Case law states that the following are the requisites for an
action for declaratory relief: first, the subject matter of the
controversy must be a deed, will, contract or other written
instrument, statute, executive order or regulation, or
ordinance; second, the terms of said documents and the
validity thereof are doubtful and require judicial
construction; third, there must have been no breach of the
documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between
persons whose interests are adverse; fifth, the issue must be
ripe for judicial determination; and sixth, adequate relief is not
available through other means or other forms of action or
proceeding. 34 SaETCI
Based on a judicious review of the records, the Court observes
that while the first, 35 second, 36 and third 37 requirements
appear to exist in this case, the fourth, fifth, and sixth
requirements, however, remain wanting.
As to the fourth requisite, there is serious doubt that an actual
justiciable controversy or the "ripening seeds" of one exists in
this case.
Pertinently, a justiciable controversy refers to an existing case
or controversy that is appropriate or ripe for judicial
determination, not one that is conjectural or merely
anticipatory. 38 Corollary thereto, by "ripening seeds" it is
meant, not that sufficient accrued facts may be dispensed
with, but that a dispute may be tried at its inception before it
has accumulated the asperity, distemper, animosity, passion,
and violence of a full blown battle that looms ahead. The
concept describes a state of facts indicating imminent and
inevitable litigation provided that the issue is not settled and
stabilized by tranquilizing declaration. 39 cACEaI
A perusal of private respondents' petition for declaratory relief
would show that they have failed to demonstrate how they are
left to sustain or are in immediate danger to sustain some
direct injury as a result of the enforcement of the assailed
provisions of RA 9372. Not far removed from the factual milieu
in the Southern Hemispherecases, private respondents only
assert general interests as citizens, and taxpayers and
infractions which the government could prospectively commit if
the enforcement of the said law would remain untrammelled.
As their petition would disclose, private respondents' fear of
prosecution was solely based on remarks of certain
government officials which were addressed to the general
public. 40 They, however, failed to show how these remarks
tended towards any prosecutorial or governmental action
geared towards the implementation of RA 9372 against them.
In other words, there was no particular, real or imminent threat
to any of them. As held in Southern Hemisphere:
Without any justiciable controversy, the petitions have
become pleas for declaratory relief, over which the Court
has no original jurisdiction. Then again, declaratory
actions characterized by "double
contingency," where both the activity the
petitioners intend to undertake and the anticipated
reaction to it of a public official are merely
theorized, lie beyond judicial review for lack of
ripeness.
The possibility of abuse in the implementation
of RA 9372 does not avail to take the present
petitions out of the realm of the surreal and merely
imagined. Such possibility is not peculiar to RA 9372 since
the exercise of any power granted by law may be abused.
Allegations of abuse must be anchored on real events
before courts may step in to settle actual
controversies involving rights which are legally
demandable and enforceable. 41 (Emphasis supplied;
citations omitted)
Thus, in the same light that the Court dismissed the SC
petitions in the Southern Hemisphere cases on the basis of,
among others, lack of actual justiciable controversy (or the
ripening seeds of one), the RTC should have dismissed private
respondents' petition for declaratory relief all the
same. cDTaSH
It is well to note that private respondents also lack the
required locus standi to mount their constitutional challenge
against the implementation of the above-stated provisions
of RA 9372 since they have not shown any direct and personal
interest in the case. 42 While it has been previously held that
transcendental public importance dispenses with the
requirement that the petitioner has experienced or is in actual
danger of suffering direct and personal injury, 43 it must be
stressed that cases involving the constitutionality of penal
legislation belong to an altogether different genus of
constitutional litigation. 44 Towards this end, compelling State
and societal interests in the proscription of harmful conduct
necessitate a closer judicial scrutiny of locus standi, 45 as in
this case. To rule otherwise, would be to corrupt the settled
doctrine of locus standi, as every worthy cause is an interest
shared by the general public. 46
As to the fifth requisite for an action for declaratory relief,
neither can it be inferred that the controversy at hand is ripe
for adjudication since the possibility of abuse, based on the
above-discussed allegations in private respondents' petition,
remain highly-speculative and merely theorized. It is well-
settled that a question is ripe for adjudication when the act
being challenged has had a direct adverse effect on the
individual challenging it. 47 This private respondents failed to
demonstrate in the case at bar.
Finally, as regards the sixth requisite, the Court finds it
irrelevant to proceed with a discussion on the availability of
adequate reliefs since no impending threat or injury to the
private respondents exists in the first place.
All told, in view of the absence of the fourth and fifth requisites
for an action for declaratory relief, as well as the irrelevance of
the sixth requisite, private respondents' petition for declaratory
relief should have been dismissed. Thus, by giving due course
to the same, it cannot be gainsaid that the RTC gravely abused
its discretion. TaCIDS
WHEREFORE, the petition is GRANTED. Accordingly, the April
23, 2012 and July 31, 2012 Orders of the Regional Trial Court of
Quezon City, Branch 92 in SCA No. Q-07-60778
are REVERSED and SET ASIDE and the petition for
declaratory relief before the said court is hereby DISMISSED.
SO ORDERED.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Del
Castillo, Abad, Perez, Reyes and Leonen, JJ., concur.
Brion and Villarama, Jr., JJ., are on leave.
Peralta, Bersamin and Mendoza, JJ., are on official leave.

||| (Republic v. Roque, G.R. No. 204603, [September 24, 2013],

718 PHIL 294-308)

THIRD DIVISION

[G.R. No. 160236. October 16, 2009.]

"G" HOLDINGS, INC., petitioner, vs. NATIONAL MINES

AND ALLIED WORKERS UNION Local 103 (NAMAWU);
SHERIFFS RICHARD H. APROSTA and ALBERTO
MUNOZ, all acting Sheriffs; DEPARTMENT OF LABOR
AND EMPLOYMENT, Region VI, Bacolod District
Office, Bacolod City, respondents.

DECISION

NACHURA, J p:
Before this Court is a petition for review on certiorari under
Rule 45 of the Rules of Court assailing the October 14, 2003
Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
75322.
The Facts
The petitioner, "G" Holdings, Inc. (GHI), is a domestic
corporation primarily engaged in the business of owning and
holding shares of stock of different companies. 2 It was
registered with the Securities and Exchange Commission on
August 3, 1992. Private respondent, National Mines and Allied
Workers Union Local 103 (NAMAWU), was the exclusive
bargaining agent of the rank and file employees of Maricalum
Mining Corporation (MMC), 3 an entity operating a copper
mine and mill complex at Sipalay, Negros Occidental. 4
MMC was incorporated by the Development Bank of the
Philippines (DBP) and the Philippine National Bank (PNB) on
October 19, 1984, on account of their foreclosure of
Marinduque Mining and Industrial Corporation's assets. MMC
started its commercial operations in August 1985. Later, DBP
and PNB transferred it to the National Government for
disposition or privatization because it had become a non-
performing asset. 5
On October 2, 1992, pursuant to a Purchase and Sale
Agreement 6 executed between GHI and Asset Privatization
Trust (APT), the former bought ninety percent (90%) of MMC's
shares and financial claims. 7 These financial claims were
converted into three Promissory Notes 8 issued by MMC in
favor of GHI totaling P500M and secured by mortgages over
MMC's properties. The notes, which were similarly worded
except for their amounts, read as follows:
PROMISSORY NOTE
-
AMOUN [Php186,550,560.00 in the second
Php114,715,360.
T note,
00
and Php248,734,080.00 in the third
note.
MAKATI, METRO MANILA, PHILIPPINES, October 2,
1992 IcSADC
For Value Received, MARICALUM MINING CORPORATION
(MMC) with postal address at 4th Floor, Manila Memorial
Park Bldg., 2283 Pasong Tamo Extension, Makati, Metro
Manila, Philippines, hereby promises to pay "G" HOLDINGS,
INC., at its office at Phimco Compound, F. Manalo Street,
Punta, Sta. Ana, Manila, the amount of PESOS ONE
HUNDRED FOURTEEN MILLION, SEVEN HUNDRED FIFTEEN
THOUSAND AND THREE HUNDRED SIXTY
(Php114,715,360.00) ["PESOS ONE HUNDRED EIGHTY SIX
MILLION FIVE HUNDRED FIFTY THOUSAND FIFE HUNDRED
AND SIXTY (Php186,550,560.00)" in the second note, and
"PESOS TWO HUNDRED FORTY EIGHT MILLION, SEVEN
HUNDRED THIRTY FOUR THOUSAND AND EIGHTY
(Php248,734,080.00)" in the third note], PHILIPPINE
CURRENCY, on or before October 2, 2002. Interest shall
accrue on the amount of this Note at a rate per annum
equal to the interest of 90-day Treasury Bills prevailing on
the Friday preceding the maturity date of every calendar
quarter.
As collateral security, MMC hereby establishes and
constitutes in favor of "G" HOLDINGS, INC., its successors
and/or assigns:
1. A mortgage over certain parcels of land, more
particularly listed and described in the Sheriff's Certificate
of Sale dated September 7, 1984 issued by the Ex-Officio
Provincial Sheriff of Negros Occidental, Rolando V. Ramirez,
with office at Bacolod City following the auction sale
conducted pursuant to the provisions of Act 3135, a copy
of which certificate of sale is hereto attached as Annex "A"
and made an integral part hereof;
2. A chattel mortgage over assets and personal properties
more particularly listed and described in the Sheriff's
Certificate of Sale dated September 7, 1984 issued by the
Ex-Officio Provincial Sheriff of Negros Occidental, Rolando
V. Ramirez, with office at Bacolod City following the auction
conducted pursuant to the provisions of Act 1508, a copy
of which Certificate of Sale is hereto attached as Annex "B"
and made an integral part hereof.
3. Mortgages over assets listed in APT Specific Catalogue
GC-031 for MMC, a copy of which Catalogue is hereby
made an integral part hereof by way of reference, as well
as assets presently in use by MMC but which are not listed
or included in paragraphs 1 and 2 above and shall include
all assets that may hereinafter be acquired by MMC.
MARICALUM MINING CORPORATION
(Maker)
xxx xxx xxx 9
Upon the signing of the Purchase and Sale Agreement and
upon the full satisfaction of the stipulated down payment, GHI
immediately took physical possession of the mine site and its
facilities, and took full control of the management and
operation of MMC. 10
Almost four years thereafter, or on August 23, 1996, a labor
dispute (refusal to bargain collectively and unfair labor
practice) arose between MMC and NAMAWU, with the latter
eventually filing with the National Conciliation and Mediation
Board of Bacolod City a notice of strike. 11 Then Labor
Secretary, now Associate Justice of this Court, Leonardo A.
Quisumbing, later assumed jurisdiction over the dispute and
ruled in favor of NAMAWU. In his July 30, 1997 Order in OS-AJ-
10-96-014 (Quisumbing Order), Secretary Quisumbing
declared that the lay-off (of workers) implemented on May 7,
1996 and October 7, 1996 was illegal and that MMC
committed unfair labor practice. He then ordered the
reinstatement of the laid-off workers, with payment of full
backwages and benefits, and directed the execution of a new
collective bargaining agreement (CBA) incorporating the
terms and conditions of the previous CBA providing for an
annual increase in the workers' daily wage. 12 In two
separate cases G.R. Nos. 133519 and 138996 filed with
this Court, we sustained the validity of the Quisumbing Order,
which became final and executory on January 26,
2000. 13 TIDcEH
On May 11, 2001, then Acting Department of Labor and
Employment (DOLE) Secretary, now also an Associate Justice
of this Court, Arturo D. Brion, on motion of NAMAWU, directed
the issuance of a partial writ of execution (Brion Writ), and
ordered the DOLE sheriffs to proceed to the MMC premises for
the execution of the same. 14 Much later, in 2006, this Court,
in G.R. Nos. 157696-97, entitled Maricalum Mining
Corporation v. Brion and NAMAWU, 15 affirmed the propriety
of the issuance of the Brion Writ.
The Brion Writ was not fully satisfied because MMC's resident
manager resisted its enforcement. 16 On motion of NAMAWU,
then DOLE Secretary Patricia A. Sto. Tomas ordered the
issuance of the July 18, 2002 Alias Writ of Execution and
Break-Open Order (Sto. Tomas Writ). 17 On October 11, 2002,
the respondent acting sheriffs, the members of the union, and
several armed men implemented the Sto. Tomas Writ, and
levied on the properties of MMC located at its compound in
Sipalay, Negros Occidental. 18
On October 14, 2002, GHI filed with the Regional Trial Court
(RTC) of Kabankalan City, Negros Occidental, Special Civil
Action (SCA) No. 1127 for Contempt with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and Writ of
Preliminary Injunction and to Nullify the Sheriff's Levy on
Properties. 19 GHI contended that the levied properties were
the subject of a Deed of Real Estate and Chattel Mortgage,
dated September 5, 1996 20 executed by MMC in favor of GHI
to secure the aforesaid P550M promissory notes; that this
deed was registered on February 24, 2000; 21 and that the
mortgaged properties were already extrajudicially foreclosed
in July 2001 and sold to GHI as the highest bidder on
December 3, 2001, as evidenced by the Certificate of Sale
dated December 4, 2001. 22
 The trial court issued ex parte a TRO effective for 72 hours,
and set the hearing on the application for a writ of
injunction. 23 On October 17, 2002, the trial court ordered the
issuance of a Writ of Injunction (issued on October 18,
2002) 24 enjoining the DOLE sheriffs from further enforcing
the Sto. Tomas Writ and from conducting any public sale of the
levied-on properties, subject to GHI's posting of a P5M
bond. 25
Resolving, among others, NAMAWU's separate motions for the
reconsideration of the injunction order and for the dismissal of
the case, the RTC issued its December 4, 2002 Omnibus
Order, 26 the dispositive portion of which reads:
WHEREFORE, premises considered, respondent NAMAWU
Local 103's Motion for Reconsideration dated October 23,
2002 for the reconsideration of the Order of this Court
directing the issuance of Writ of Injunction prayed for by
petitioner and the Order dated October 18, 2002 approving
petitioner's Injunction Bond in the amount of
P5,000,000.00 is hereby DENIED.
Respondent's Motion to Dismiss as embodied in its
Opposition to Extension of Temporary Restraining Order
and Issuance of Writ of Preliminary Injunction with Motion
to Dismiss and Suspend Period to File Answer dated
October 15, 2002 is likewise DENIED.
Petitioner's Urgent Motion for the return of the levied
firearms is GRANTED. Pursuant thereto, respondent sheriffs
are ordered to return the levied firearms and handguns to
the petitioner provided the latter puts [up] a bond in the
amount of P332,200.00. DASEac
Respondent's lawyer, Atty. Jose Lapak, is strictly warned
not to resort again to disrespectful and contemptuous
language in his pleadings, otherwise, the same shall be
dealt with accordingly.
SO ORDERED. 27
 Aggrieved, NAMAWU filed with the CA a petition
for certiorari under Rule 65, assailing the October 17, 18 and
December 4, 2002 orders of the RTC. 28
After due proceedings, on October 14, 2003, the appellate
court rendered a Decision setting aside the RTC issuances and
directing the immediate execution of the Sto. Tomas Writ. The
CA ruled, among others, that the circumstances surrounding
the execution of the September 5, 1996 Deed of Real Estate
and Chattel Mortgage yielded the conclusion that the deed
was sham, fictitious and fraudulent; that it was executed two
weeks after the labor dispute arose in 1996, but surprisingly,
it was registered only on February 24, 2000, immediately after
the Court affirmed with finality the Quisumbing Order. The CA
also found that the certificates of title to MMC's real properties
did not contain any annotation of a mortgage lien, and,
suspiciously, GHI did not intervene in the long drawn-out labor
proceedings to protect its right as a mortgagee of virtually all
the properties of MMC. 29
The CA further ruled that the subsequent foreclosure of the
mortgage was irregular, effected precisely to prevent the
satisfaction of the judgment against MMC. It noted that the
foreclosure proceedings were initiated in July 2001, shortly
after the issuance of the Brion Writ; and, more importantly,
the basis for the extrajudicial foreclosure was not the failure of
MMC to pay the mortgage debt, but its failure "to satisfy any
money judgment against it rendered by a court or tribunal of
competent jurisdiction, in favor of any person, firm or entity,
without any legal ground or reason". 30 Further, the CA
pierced the veil of corporate fiction of the two
corporations. 31 The dispositive portion of the appellate
court's decision reads: ATcaHS
WHEREFORE, in view of the foregoing considerations, the
petition is GRANTED. The October 17, 2002 and the
December 4, 2002 Order of the RTC, Branch 61 of
Kabankalan City, Negros Occidental are hereby ANNULLED
and SET ASIDE for having been issued in excess or without
authority. The Writ of Preliminary Injunction issued by the
said court is lifted, and the DOLE Sheriff is directed to
immediately enforce the Writ of Execution issued by the
Department of Labor and Employment in the case "In re:
Labor Dispute in Maricalum Mining Corporation" docketed
as OS-AJ-10-96-01 (NCMB-RB6-08-96). 32
The Issues
Dissatisfied, GHI elevated the case to this Court via the instant
petition for review on certiorari, raising the following issues:
I
WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE
BETWEEN NAMAWU AND MMC.
II
WHETHER OR NOT, ASSUMING ARGUENDO THAT THE
PERTINENT DECISION OR ORDER IN THE SAID LABOR
DISPUTE BETWEEN MMC AND NAMAWU MAY BE ENFORCED
AGAINST GHI, THERE IS ALREADY A FINAL
DEETERMINATION BY THE SUPREME COURT OF THE RIGHTS
OF THE PARTIES IN SAID LABOR DISPUTE CONSIDERING
THE PENDENCY OF G.R. NOS. 157696-97.
III
WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE
PROPERTIES UNLAWFULLY GARNISHED BY RESPONDENTS
SHERIFFS.
IV
WHETHER OR NOT THE HONORABLE HENRY D. ARLES
CORRECTLY ISSUED A WRIT OF INJUNCTION AGAINST THE
UNLAWFUL EXECUTIOIN ON GHI'S PROPERTIES.
V
WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL
AND CHATTEL MORTGAGE OVER THE SUBJECT PROPERTIES
BETWEEN MMC AND GHI MAY BE COLLATERALLY ATTACKED.
VI
WHETHER OR NOT, ASSUMING ARGUENDO THAT THE
VALIDITY OF THE SAID REAL AND CHATTEL MORTGAGE MAY
BE COLLATERALLY ATTACKED, THE SAID MORTGAGE IS
SHAM, FICTITIOUS AND FRAUDULENT.
VII
WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE
CORPORATE ENTITY FROM MMC. ESDHCa
VIII
WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE
ISSUANCE OF A RESTRAINING ORDER OR INJUNCTION
FROM TAKING POSSESSION OR BE DISPOSSESSED OF
ASSETS PURCHASED BY IT FROM APT. 33
Stripped of non-essentials, the core issue is whether, given
the factual circumstances obtaining, the RTC properly issued
the writ of injunction to prevent the enforcement of the Sto.
Tomas Writ. The resolution of this principal issue, however, will
necessitate a ruling on the following key and interrelated
questions:
1. Whether the mortgage of the MMC's properties to GHI
was a sham;
2. Whether there was an effective levy by the DOLE upon
the MMC's real and personal properties; and
3. Whether it was proper for the CA to pierce the veil of
corporate fiction between MMC and GHI.
Our Ruling
Before we delve into an extended discussion of the foregoing
issues, it is essential to take judicial cognizance of cases
intimately linked to the present controversy which had earlier
been elevated to and decided by this Court.
Judicial Notice.
Judicial notice must be taken by this Court of its Decision
in Maricalum Mining Corporation v. Hon. Arturo D. Brion and
NAMAWU, 34 in which we upheld the right of herein private
respondent, NAMAWU, to its labor claims. Upon the same
principle of judicial notice, we acknowledge our Decision
in Republic of the Philippines, through its trustee, the Asset
Privatization Trust v. "G" Holdings, Inc., 35 in which GHI was
recognized as the rightful purchaser of the shares of stocks of
MMC, and thus, entitled to the delivery of the company notes
accompanying the said purchase. These company notes,
consisting of three (3) Promissory Notes, were part of the
documents executed in 1992 in the privatization sale of MMC
by the Asset Privatization Trust (APT) to GHI. Each of these
notes uniformly contains stipulations "establishing and
constituting in favor of GHI" mortgages over MMC's real and
personal properties. The stipulations were subsequently
formalized in a separate document denominated Deed of Real
Estate and Chattel Mortgage on September 5, 1996.
Thereafter, the Deed was registered on February 4, 2000. 36
We find both decisions critically relevant to the instant
dispute. In fact, they should have guided the courts below in
the disposition of the controversy at their respective levels. To
repeat, these decisions respectively confirm the right of
NAMAWU to its labor claims 37 and affirm the right of GHI to
its financial and mortgage claims over the real and personal
properties of MMC, as will be explained below. The assailed CA
decision apparently failed to consider the impact of these two
decisions on the case at bar. Thus, we find it timely to
reiterate that: "courts have also taken judicial notice of
previous cases to determine whether or not the case pending
is a moot one or whether or not a previous ruling is applicable
to the case under consideration". 38 HIEASa
 However, the CA correctly assessed that the authority of the
lower court to issue the challenged writ of injunction depends
on the validity of the third party's (GHI's) claim of ownership
over the property subject of the writ of execution issued by
the labor department. Accordingly, the main inquiry
addressed by the CA decision was whether GHI could be
treated as a third party or a stranger to the labor dispute,
whose properties were beyond the reach of the Writ of
Execution dated December 18, 2001. 39
In this light, all the more does it become imperative to take
judicial notice of the two cases aforesaid, as they provide the
necessary perspective to determine whether GHI is such a
party with a valid ownership claim over the properties subject
of the writ of execution. In Juaban v. Espina, 40 we held that
"in some instances, courts have also taken judicial notice of
proceedings in other cases that are closely connected to the
matter in controversy. These cases may be so closely
interwoven, or so clearly interdependent, as to invoke a rule
of judicial notice". The two cases that we have taken judicial
notice of are of such character, and our review of the instant
case cannot stray from the findings and conclusions therein.
Having recognized these crucial Court rulings, situating the
facts in proper perspective, we now proceed to resolve the
questions identified above.
The mortgage
was not a sham.
Republic etc., v. "G" Holdings, Inc. acknowledged the
existence of the Purchase and Sale Agreement between the
APT and the GHI, and recounts the facts attendant to that
transaction, as follows:
The series of negotiations between the petitioner Republic
of the Philippines, through the APT as its trustee, and "G"
Holdings culminated in the execution of a purchase and
sale agreement on October 2, 1992. Under the agreement,
the Republic undertook to sell and deliver 90% of the
entire issued and outstanding shares of MMC, as well as
its company notes, to "G" Holdings in consideration of
the purchase price of P673,161,280. It also provided for a
down payment of P98,704,000 with the balance divided
into four tranches payable in installment over a period of
ten years. 41
The "company notes" mentioned therein were actually the
very same three (3) Promissory Notes amounting to P550M,
issued by MMC in favor of GHI. As already adverted to above,
these notes uniformly contained stipulations "establishing and
constituting" mortgages over MMC's real and personal
properties.
It may be remembered that APT acquired the MMC from the
PNB and the DBP. Then, in compliance with its mandate to
privatize government assets, APT sold the aforesaid MMC
shares and notes to GHI. To repeat, this Court has recognized
this Purchase and Sale Agreement in Republic, etc., v. "G"
Holdings, Inc.
The participation of the Government, through APT, in this
transaction is significant. Because the Government had
actively negotiated and, eventually, executed the agreement,
then the transaction is imbued with an aura of official
authority, giving rise to the presumption of regularity in its
execution. This presumption would cover all related
transactional acts and documents needed to consummate the
privatization sale, inclusive of the Promissory Notes. It is
obvious, then, that the Government, through APT, consented
to the "establishment and constitution" of the mortgages on
the assets of MMC in favor of GHI, as provided in the notes.
Accordingly, the notes (and the stipulations therein) enjoy the
benefit of the same presumption of regularity accorded to
government actions. Given the Government consent thereto,
and clothed with the presumption of regularity, the mortgages
cannot be characterized as sham, fictitious or
fraudulent. IHaSED
Indeed, as mentioned above, the three (3) Promissory Notes,
executed on October 2, 1992, "established and constituted" in
favor of GHI the following mortgages:
1. A mortgage over certain parcels of land, more
particularly listed and described in the Sheriff's Certificate
of Sale dated September 7, 1984 issued by the Ex-Officio
Provincial Sheriff of Negros Occidental, Rolando V. Ramirez,
with office at Bacolod City following the auction sale
conducted pursuant to the provisions of Act 3135, a copy
of which certificate of sale is hereto attached as Annex "A"
and made an integral part hereof;
2. A chattel mortgage over assets and personal properties
more particularly listed and described in the Sheriff's
Certificate of Sale dated September 7, 1984 issued by the
Ex-Officio Provincial Sheriff of Negros Occidental, Rolando
V. Ramirez, with office at Bacolod City following the auction
conducted pursuant to the provision of Act 1508, a copy of
which Certificate of Sale is hereto attached as Annex "B"
and made an integral part hereof.
3. Mortgages over assets listed in APT Specific catalogue
GC-031 for MMC, a copy of which Catalogue is hereby
made an integral part hereof by way of reference, as well
as assets presently in use by MMC but which are not listed
or included in paragraphs 1 and 2 above and shall include
all assets that may hereinafter be acquired by MMC. 42
It is difficult to conceive that these mortgages, already
existing in 1992, almost four (4) years before NAMAWU filed
its notice of strike, were a "fictitious" arrangement intended to
defraud NAMAWU. After all, they were agreed upon long
before the seeds of the labor dispute germinated.
While it is true that the Deed of Real Estate and Chattel
Mortgage was executed only on September 5, 1996, it is
beyond cavil that this formal document of mortgage was
merely a derivative of the original mortgage stipulations
contained in the Promissory Notes of October 2, 1992. The
execution of this Deed in 1996 does not detract from, but
instead reinforces, the manifest intention of the parties to
"establish and constitute" the mortgages on MMC's real and
personal properties.
Apparently, the move to execute a formal document
denominated as the Deed of Real Estate and Chattel Mortgage
came about after the decision of the RTC of Manila in Civil
Case No. 95-76132 became final in mid-1996. This conclusion
surfaces when we consider the genesis of Civil Case No. 95-
76132 and subsequent incidents thereto, as narrated
in Republic, etc. v. "G" Holdings, Inc., viz.:
Subsequently, a disagreement on the matter of when
installment payments should commence arose between
the parties. The Republic claimed that it should be on the
seventh month from the signing of the agreement while
"G" Holdings insisted that it should begin seven months
after the fulfillment of the closing conditions. AHSaTI
Unable to settle the issue, "G" Holdings filed a complaint
for specific performance and damages with the Regional
Trial Court of Manila, Branch 49, against the Republic to
compel it to close the sale in accordance with the purchase
and sale agreement. The complaint was docketed as Civil
Case No. 95-76132.
During the pre-trial, the respective counsels of the parties
manifested that the issue involved in the case was one of
law and submitted the case for decision. On June 11, 1996,
the trial court rendered its decision. It ruled in favor of "G"
Holdings and held:
"In line with the foregoing, this Court having been
convinced that the Purchase and Sale Agreement is indeed
subject to the final closing conditions prescribed by
Stipulation No. 5.02 and conformably to Rule 39, Section
10 of the Rules of Court, accordingly orders that the
Asset Privatization Trust execute the corresponding
Document of Transfer of the subject shares and
financial notes and cause the actual delivery of
subject shares and notes to "G" Holdings, Inc.,
within a period of thirty (30) days from receipt of
this Decision, and after "G" Holdings Inc., shall have paid
in full the entire balance, at its present value of
P241,702,122.86, computed pursuant to the prepayment
provisions of the Agreement. Plaintiff shall pay the balance
simultaneously with the delivery of the Deed of Transfer
and actual delivery of the shares and notes.
SO ORDERED."
The Solicitor General filed a notice of appeal on behalf of
the Republic on June 28, 1996. Contrary to the rules of
procedure, however, the notice of appeal was filed with the
Court of Appeals (CA), not with the trial court which
rendered the judgment appealed from.
No other judicial remedy was resorted to until July 2, 1999
when the Republic, through the APT, filed a petition for
annulment of judgment with the CA. It claimed that the
decision should be annulled on the ground of abuse of
discretion amounting to lack of jurisdiction on the part of
the trial court. . . .
Finding that the grounds necessary for the annulment of
judgment were inexistent, the appellate court dismissed
the petition. . . . 43
With the RTC decision having become final owing to the
failure of the Republic to perfect an appeal, it may have
become necessary to execute the Deed of Real Estate and
Chattel Mortgage on September 5, 1996, in order to enforce
the trial court's decision of June 11, 1996. This appears to be
the most plausible explanation for the execution of the Deed
of Real Estate and Chattel Mortgage only in September 1996.
Even as the parties had already validly constituted the
mortgages in 1992, as explicitly provided in the Promissory
Notes, a specific deed of mortgage in a separate document
may have been deemed necessary for registration purposes.
Obviously, this explanation is more logical and more sensible
than the strained conjecture that the mortgage was executed
on September 5, 1996 only for the purpose of defrauding
NAMAWU. HICSaD
It is undeniable that the Deed of Real Estate and Chattel
Mortgage was formally documented two weeks after NAMAWU
filed its notice of strike against MMC on August 23, 1996.
However, this fact alone cannot give rise to an adverse
inference for two reasons. First, as discussed above, the
mortgages had already been "established and constituted" as
early as October 2, 1992 in the Promissory Notes, showing the
clear intent of the parties to impose a lien upon MMC's
properties.Second, the mere filing of a notice of strike by
NAMAWU did not, as yet, vest in NAMAWU any definitive right
that could be prejudiced by the execution of the mortgage
deed.
The fact that MMC's obligation to GHI is not reflected in the
former's financial statements a circumstance made capital
of by NAMAWU in order to cast doubt on the validity of the
mortgage deed is of no moment. By itself, it does not
provide a sufficient basis to invalidate this public document.
To say otherwise, and to invalidate the mortgage deed on this
pretext, would furnish MMC a convenient excuse to absolve
itself of its mortgage obligations by adopting the simple
strategy of not including the obligations in its financial
statements. It would ignore our ruling in Republic, etc. v. "G"
Holdings, Inc., which obliged APT to deliver the MMC shares
and financial notes to GHI. Besides, the failure of the
mortgagor to record in its financial statements its loan
obligations is surely not an essential element for the validity
of mortgage agreements, nor will it independently affect the
right of the mortgagee to foreclose.
Contrary to the CA decision, Tanongon v. Samson 44 is not
"on all fours" with the instant case. There are material
differences between the two cases. At issue inTanongon was a
third-party claim arising from a Deed of Absolute Sale
executed between Olizon and Tanongon on July 29, 1997, after
the NLRC decision became final and executory on April 29,
1997. In the case at bar, what is involved is a loan with
mortgage agreement executed on October 2, 1992, well
ahead of the union's notice of strike on August 23, 1996. No
presumption of regularity inheres in the deed of sale
in Tanongon, while the participation of APT in this case clothes
the transaction in 1992 with such a presumption that has not
been successfully rebutted. In Tanongon, the conduct of a full-
blown trial led to the finding duly supported by evidence
that the voluntary sale of the assets of the judgment debtor
was made in bad faith. Here, no trial was held, owing to the
motion to dismiss filed by NAMAWU, and the CA failed to
consider the factual findings made by this Court in Republic,
etc. v. "G" Holdings, Inc. Furthermore, in Tanongon, the
claimant did not exercise his option to file a separate action in
court, thus allowing the NLRC Sheriff to levy on execution and
to determine the rights of third-party claimants.45 In this
case, a separate action was filed in the regular courts by GHI,
the third-party claimant. Finally, the questioned transaction
in Tanongon was a plain, voluntary transfer in the form of a
sale executed by the judgment debtor in favor of a dubious
third-party, resulting in the inability of the judgment creditor
to satisfy the judgment. On the other hand, this case involves
an involuntary transfer (foreclosure of mortgage) arising from
a loan obligation that well-existed long before the
commencement of the labor claims of the private respondent.
Three other circumstances have been put forward by the CA
to support its conclusion that the mortgage contract is a
sham. First, the CA considered it highly suspect that the Deed
of Real Estate and Chattel Mortgage was registered only on
February 4, 2000, "three years after its execution, and almost
one month after the Supreme Court rendered its decision in
the labor dispute". 46 Equally suspicious, as far as the CA is
concerned, is the fact that the mortgages were foreclosed on
July 31, 2001, after the DOLE had already issued a Partial Writ
of Execution on May 9, 2001. 47 To the appellate court, the
timing of the registration of the mortgage deed was too
coincidental, while the date of the foreclosure signified that it
was "effected precisely to prevent the satisfaction of the
judgment awards". 48 Furthermore, the CA found that the
mortgage deed itself was executed without any consideration,
because at the time of its execution, all the assets of MMC
had already been transferred to GHI. 49
These circumstances provided the CA with sufficient
justification to apply Article 1387 of the Civil Code on
presumed fraudulent transactions, and to declare that the
mortgage deed was void for being simulated and fictitious. 50
We do not agree. We find this Court's ruling in MR Holdings,
Ltd. v. Sheriff Bajar 51 pertinent and instructive:
Article 1387 of the Civil Code of the Philippines provides:
"Art. 1387. All contracts by virtue of which the debtor
alienates property by gratuitous title are presumed to have
been entered into in fraud of creditors, when the donor did
not reserve sufficient property to pay all debts contracted
before the donation. cdrep

Alienations by onerous title are also presumed fraudulent

when made by persons against whom some judgment has
been rendered in any instance or some writ of attachment
has been issued. The decision or attachment need not
refer to the property alienated, and need not have been
obtained by the party seeking rescission.
In addition to these presumptions, the design to defraud
creditors may be proved in any other manner recognized
by law and of evidence."
This article presumes the existence of fraud made by a
debtor. Thus, in the absence of satisfactory evidence to the
contrary, an alienation of a property will be held fraudulent
if it is made after a judgment has been rendered against
the debtor making the alienation. This presumption of
fraud is not conclusive and may be rebutted by
satisfactory and convincing evidence. All that is
necessary is to establish affirmatively that the
conveyance is made in good faith and for a
sufficient and valuable consideration.
The "Assignment Agreement" and the "Deed of
Assignment" were executed for valuable considerations.
Patent from the "Assignment Agreement" is the fact that
petitioner assumed the payment of US$18,453,450.12 to
ADB in satisfaction of Marcopper's remaining debt as of
March 20, 1997. Solidbank cannot deny this fact
considering that a substantial portion of the said payment,
in the sum of US$13,886,791.06, was remitted in favor of
the Bank of Nova Scotia, its major stockholder.
The facts of the case so far show that the assignment
contracts were executed in good faith. The execution of the
"Assignment Agreement" on March 20, 1997 and the
"Deed of Assignment" on December 8, 1997 is not
the alpha of this case. While the execution of these
assignment contracts almost coincided with the
rendition on May 7, 1997 of the Partial Judgment in
Civil Case No. 96-80083 by the Manila RTC, however,
there was no intention on the part of petitioner to defeat
Solidbank's claim. It bears reiterating that as early as
November 4, 1992, Placer Dome had already bound itself
under a "Support and Standby Credit Agreement" to
provide Marcopper with cash flow support for the payment
to ADB of its obligations. When Marcopper ceased
operations on account of disastrous mine tailings spill into
the Boac River and ADB pressed for payment of the loan,
Placer Dome agreed to have its subsidiary, herein
petitioner, pay ADB the amount of US$18,453,450.12.
Thereupon, ADB and Marcopper executed, respectively, in
favor of petitioner an "Assignment Agreement" and a
"Deed of Assignment". Obviously, the assignment
contracts were connected with transactions that
happened long before the rendition in 1997 of the
Partial Judgment in Civil Case No. 96-80083 by the
Manila RTC. Those contracts cannot be viewed in
isolation. If we may add, it is highly inconceivable that
ADB, a reputable international financial organization, will
connive with Marcopper to feign or simulate a contract in
1992 just to defraud Solidbank for its claim four years
thereafter. And it is equally incredible for petitioner to be
paying the huge sum of US$18,453,450.12 to ADB only for
the purpose of defrauding Solidbank of the sum of
P52,970,756.89. ADECcI
It is said that the test as to whether or not a conveyance is
fraudulent is does it prejudice the rights of
creditors? We cannot see how Solidbank's right was
prejudiced by the assignment contracts considering
that substantially all of Marcopper's properties were
already covered by the registered "Deed of Real
Estate and Chattel Mortgage" executed by
Marcopper in favor of ADB as early as November 11,
1992. As such, Solidbank cannot assert a better
right than ADB, the latter being a preferred creditor.
It is basic that mortgaged properties answer
primarily for the mortgaged credit, not for the
judgment credit of the mortgagor's unsecured
creditor. Considering that petitioner assumed Marcopper's
debt to ADB, it follows that Solidbank's right as judgment
creditor over the subject properties must give way to that
of the former. 52
From this ruling in MR Holdings, we can draw parallel
conclusions. The execution of the subsequent Deed of Real
Estate and Chattel Mortgage on September 5, 1996 was
simply the formal documentation of what had already been
agreed in the seminal transaction (the Purchase and Sale
Agreement) between APT and GHI. It should not be viewed in
isolation, apart from the original agreement of October 2,
1992. And it cannot be denied that this original agreement
was supported by an adequate consideration. The APT was
even ordered by the court to deliver the shares and financial
notes of MMC in exchange for the payments that GHI had
made.
It was also about this time, in 1996, that NAMAWU filed a
notice of strike to protest non-payment of its rightful labor
claims. 53 But, as already mentioned, the outcome of that
labor dispute was yet unascertainable at that time, and
NAMAWU could only have hoped for, or speculated about, a
favorable ruling. To paraphraseMR Holdings, we cannot see
how NAMAWU's right was prejudiced by the Deed of Real
Estate and Chattel Mortgage, or by its delayed registration,
when substantially all of the properties of MMC were already
mortgaged to GHI as early as October 2, 1992. Given this
reality, the Court of Appeals had no basis to conclude that this
Deed of Real Estate and Chattel Mortgage, by reason of its
late registration, was a simulated or fictitious contract.
The importance of registration and its binding effect is stated
in Section 51 of the Property Registration
Decree or Presidential Decree (P.D.) No. 1529, 54 which reads:
SECTION 51. Conveyance and other dealings by registered
owner. An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the same
in accordance with existing laws. He may use such forms,
deeds, mortgages, leases or other voluntary instrument as
are sufficient in law. But no deed, mortgage, lease or other
voluntary instrument, except a will purporting to convey or
effect registered land, shall take effect as a conveyance or
bind the land, but shall operate only as a contract between
the parties and as evidence of authority to the Registry of
Deeds to make registration.
The act of registration shall be the operative act to convey
or affect the land insofar as third persons are concerned,
and in all cases under this Decree, the registration shall be
made in the Office of the Register of Deeds for the
province or the city where the land lies. 55
Under the Torrens system, registration is the operative act
which gives validity to the transfer or creates a lien upon the
land. Further, entrenched in our jurisdiction is the doctrine
that registration in a public registry creates constructive
notice to the whole world. 56 Thus, Section 51 of Act No. 496,
as amended by Section 52 ofP.D. No. 1529, provides:
SECTION 52. Constructive notice upon registration.
Every conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the Office of the
Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons
from the time of such registering, filing or
entering. EScHDA
But, there is nothing in Act No. 496, as amended by P.D. No.
1529, that imposes a period within which to register
annotations of "conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting
registered land". If liens were not so registered, then it "shall
operate only as a contract between the parties and as
evidence of authority to the Registry of Deeds to make
registration". If registered, it "shall be the operative act to
convey or affect the land insofar as third persons are
concerned". The mere lapse of time from the execution of the
mortgage document to the moment of its registration does
not affect the rights of a mortgagee.
Neither will the circumstance of GHI's foreclosure of MMC's
properties on July 31, 2001, or after the DOLE had already
issued a Partial Writ of Execution on May 9, 2001 against
MMC, support the conclusion of the CA that GHI's act of
foreclosing on MMC's properties was "effected to prevent
satisfaction of the judgment award". GHI's mortgage rights,
constituted in 1992, antedated the Partial Writ of Execution by
nearly ten (10) years. GHI's resort to foreclosure was a
legitimate enforcement of a right to liquidate a bona
fide debt. It was a reasonable option open to a mortgagee
which, not being a party to the labor dispute between
NAMAWU and MMC, stood to suffer a loss if it did not avail
itself of the remedy of foreclosure.
The well-settled rule is that a mortgage lien is inseparable
from the property mortgaged. 57 While it is true that GHI's
foreclosure of MMC's mortgaged properties may have had the
"effect to prevent satisfaction of the judgment award against
the specific mortgaged property that first answers for a
mortgage obligation ahead of any subsequent creditors", that
same foreclosure does not necessarily translate to having
been "effected to prevent satisfaction of the judgment
award" against MMC.
Likewise, we note the narration of subsequent facts contained
in the Comment of the Office of the Solicitor General. Therein,
it is alleged that after the Partial Writ of Execution was issued
on May 9, 2001, a motion for reconsideration was filed by
MMC; that the denial of the motion was appealed to the CA;
that when the appeal was dismissed by the CA on January 24,
2002, it eventually became the subject of a review petition
before this Court, docketed as G.R. No. 157696; and that G.R.
No. 157696 was decided by this Court only on February 9,
2006.
 This chronology of subsequent events shows that February 9,
2006 would have been the earliest date for the unimpeded
enforcement of the Partial Writ of Execution, as it was only
then that this Court resolved the issue. This happened four
and a half years after July 31, 2001, the date when GHI
foreclosed on the mortgaged properties. Thus, it is not
accurate to say that the foreclosure made on July 31, 2001
was "effected [only] to prevent satisfaction of the judgment
award".
We also observe the error in the CA's finding that the 1996
Deed of Real Estate and Chattel Mortgage was not supported
by any consideration since at the time the deed was
executed, "all the real and personal property of MMC had
already been transferred in the hands of G Holdings". 58 It
should be remembered that the Purchase and Sale Agreement
between GHI and APT involved large amounts (P550M) and
even spawned a subsequent court action (Civil Case No. 95-
76132, RTC of Manila). Yet, nowhere in the Agreement or in
the RTC decision is there any mention of real and personal
properties of MMC being included in the sale to GHI in 1992.
These properties simply served as mortgaged collateral for
the 1992 Promissory Notes. 59 The Purchase and Sale
Agreement and the Promissory Notes themselves are the best
evidence that there was ample consideration for the
mortgage. THDIaC
Thus, we must reject the conclusion of the CA that the Deed
of Real Estate and Chattel Mortgage executed in 1996 was a
simulated transaction.
On the issue of whether there
had been an effective levy upon
the properties of GHI.
The well-settled principle is that the rights of a mortgage
creditor over the mortgaged properties are superior to those
of a subsequent attaching creditor. InCabral v.
Evangelista, 60 this Court declared that:
 Defendants-appellants purchase of the mortgaged
chattels at the public sheriff's sale and the delivery of the
chattels to them with a certificate of sale did not give them
a superior right to the chattels as against plaintiffs-
mortgagees. Rule 39, Section 22 of the old Rules of Court
(now Rule 39, Section 25 of the Revised Rules), cited by
appellants precisely provides that "the sale conveys to the
purchaser all the right which the debtor had in such
property on the day the execution or attachment was
levied". It has long been settled by this Court that "The
right of those who so acquire said properties should not
and can not be superior to that of the creditor who has in
his favor an instrument of mortgage executed with the
formalities of the law, in good faith, and without the least
indication of fraud. This is all the more true in the present
case, because, when the plaintiff purchased the
automobile in question on August 22, 1933, he knew, or at
least, it is presumed that he knew, by the mere fact that
the instrument of mortgage, Exhibit 2, was registered in
the office of the register of deeds of Manila, that said
automobile was subject to a mortgage lien. In purchasing
it, with full knowledge that such circumstances existed, it
should be presumed that he did so, very much willing to
respect the lien existing thereon, since he should not have
expected that with the purchase, he would acquire a better
right than that which the vendor then had". In another
case between two mortgagees, we held that "As between
the first and second mortgagees, therefore, the second
mortgagee has at most only the right to redeem, and even
when the second mortgagee goes through the formality of
an extrajudicial foreclosure, the purchaser acquires no
more than the right of redemption from the first
mortgagee". The superiority of the mortgagee's lien over
that of a subsequent judgment creditor is now expressly
provided in Rule 39, Section 16 of the Revised Rules of
Court, which states with regard to the effect of levy on
execution as to third persons that "The levy on execution
shall create a lien in favor of the judgment creditor over
the right, title and interest of the judgment debtor in such
property at the time of the levy, subject to liens or
encumbrances then existing".
Even in the matter of possession, mortgagees over chattel
have superior, preferential and paramount rights thereto, and
the mortgagor has mere rights of redemption. 61
Similar rules apply to cases of mortgaged real properties that
are registered. Since the properties were already mortgaged
to GHI, the only interest remaining in the mortgagor was its
right to redeem said properties from the mortgage. The right
of redemption was the only leviable or attachable property
right of the mortgagor in the mortgaged real properties. We
have held that
The main issue in this case is the nature of the lien of a
judgment creditor, like the petitioner, who has levied an
attachment on the judgment debtor's (CMI) real properties
which had been mortgaged to a consortium of banks and
were subsequently sold to a third party, Top Rate.
xxx xxx xxx
The sheriff's levy on CMI's properties, under the writ of
attachment obtained by the petitioner, was actually a levy
on the interest only of the judgment debtor CMI on those
properties. Since the properties were already mortgaged to
the consortium of banks, the only interest remaining in the
mortgagor CMI was its right to redeem said properties from
the mortgage. The right of redemption was the only
leviable or attachable property right of CMI in the
mortgaged real properties. The sheriff could not have
attached the properties themselves, for they had already
been conveyed to the consortium of banks by mortgage
(defined as a "conditional sale"), so his levy must be
understood to have attached only the mortgagor's
remaining interest in the mortgaged property the right
to redeem it from the mortgage. 62 CHDTEA
xxx xxx xxx
There appears in the record a factual contradiction relating to
whether the foreclosure by GHI on July 13, 2001 63 over some
of the contested properties came ahead of the levy thereon,
or the reverse. NAMAWU claims that the levy on two trucks
was effected on June 22, 2001, 64 which GHI disputes as a
misstatement because the levy was attempted on July 18,
2002, and not 2001. 65 What is undisputed though is that the
mortgage of GHI was registered on February 4, 2000, 66 well
ahead of any levy by NAMAWU. Prior registration of a lien
creates a preference, as the act of registration is the operative
act that conveys and affects the land, 67even against
subsequent judgment creditors, such as respondent herein. Its
registration of the mortgage was not intended to defraud
NAMAWU of its judgment claims, since even the courts were
already judicially aware of its existence since 1992. Thus, at
that moment in time, with the registration of the mortgage,
either NAMAWU had no properties of MMC to attach because
the same had been previously foreclosed by GHI as
mortgagee thereof; or by virtue of the DOLE's levy to enforce
NAMAWU's claims, the latter's rights are subject to the notice
of the foreclosure on the subject properties by a prior
mortgagee's right. GHI's mortgage right had already been
registered by then, and "it is basic that mortgaged properties
answer primarily for the mortgaged credit, not for the
judgment credit of the mortgagor's unsecured creditor". 68
On the issue of piercing the
veil of corporate fiction.
The CA found that:
"Ordinarily, the interlocking of directors and officers in two
different corporations is not a conclusive indication that
the corporations are one and the same for purposes of
applying the doctrine of piercing the veil of corporate
fiction. However, when the legal fiction of the separate
corporate personality is abused, such as when the same is
used for fraudulent or wrongful ends, the courts have not
hesitated to pierce the corporate veil (Francisco vs.
Mejia, 362 SCRA 738). In the case at bar, the Deed of Real
Estate and Chattel Mortgage was entered into between
MMC and G Holdings for the purpose of evading the
satisfaction of the legitimate claims of the petitioner
against MMC. The notion of separate personality is clearly
being utilized by the two corporations to perpetuate the
violation of a positive legal duty arising from a final
judgment to the prejudice of the petitioner's right." 69
Settled jurisprudence 70 has it that
"(A) corporation, upon coming into existence, is invested
by law with a personality separate and distinct from those
persons composing it as well as from any other legal entity
to which it may be related. By this attribute, a stockholder
may not, generally, be made to answer for acts or
liabilities of the said corporation, and vice versa. This
separate and distinct personality is, however, merely a
fiction created by law for convenience and to promote the
ends of justice. For this reason, it may not be used or
invoked for ends subversive to the policy and purpose
behind its creation or which could not have been intended
by law to which it owes its being. This is particularly
true when the fiction is used to defeat public
convenience, justify wrong, protect fraud, defend
crime, confuse legitimate legal or judicial issues,
perpetrate deception or otherwise circumvent the
law. This is likewise true where the corporate entity is
being used as an alter ego, adjunct, or business
conduit for the sole benefit of the stockholders or of
another corporate entity. In all these cases, the notion
of corporate entity will be pierced or disregarded with
reference to the particular transaction involved. EHcaDT
Given this jurisprudential principle and the factual
circumstances obtaining in this case, we now ask: Was the CA
correct in piercing the veil of corporate identity of GHI and
MMC?
In our disquisition above, we have shown that the CA's
finding that there was a "simulated mortgage" between GHI
and MMC to justify a wrong or protect a fraud has struggled
vainly to find a foothold when confronted with the ruling of
this Court in Republic v. "G" Holdings, Inc.
The negotiations between the GHI and the Government
through APT, dating back to 1992 culminating in the
Purchase and Sale Agreement, cannot be depicted as a
contrived transaction. In fact, in the said Republic, etc. v. "G"
Holdings, Inc., this Court adjudged that GHI was entitled to its
rightful claims not just to the shares of MMC itself, or just to
the financial notes that already contained the mortgage
clauses over MMCs disputed assets, but also to the delivery of
those instruments. Certainly, we cannot impute to this Court's
findings on the case any badge of fraud. Thus, we reject the
CA's conclusion that it was right to pierce the veil of corporate
fiction, because the foregoing circumstances belie such an
inference. Furthermore, we cannot ascribe to the Government,
or the APT in particular, any undue motive to participate in a
transaction designed to perpetrate fraud. Accordingly, we
consider the CA interpretation unwarranted.
We also cannot agree that the presumption of fraud in Article
1387 of the Civil Code relative to property conveyances, when
there was already a judgment rendered or a writ of
attachment issued, authorizes piercing the veil of corporate
identity in this case. We find that Article 1387 finds less
application to an involuntary alienation such as the
foreclosure of mortgage made before any final judgment of a
court. We thus hold that when the alienation is involuntary,
and the foreclosure is not fraudulent because the mortgage
deed has been previously executed in accordance with
formalities of law, and the foreclosure is resorted to in order to
liquidate a bona fide debt, it is not the alienation by onerous
title contemplated in Article 1387 of the Civil Code wherein
fraud is presumed.
Since the factual antecedents of this case do not warrant a
finding that the mortgage and loan agreements between MMC
and GHI were simulated, then their separate personalities
must be recognized. To pierce the veil of corporate fiction
would require that their personalities as creditor and debtor
be conjoined, resulting in a merger of the personalities of the
creditor (GHI) and the debtor (MMC) in one person, such that
the debt of one to the other is thereby extinguished. But the
debt embodied in the 1992 Financial Notes has been
established, and even made subject of court litigation (Civil
Case No. 95-76132, RTC Manila). This can only mean that GHI
and MMC have separate corporate personalities.
Neither was MMC used merely as an alter ego, adjunct, or
business conduit for the sole benefit of GHI, to justify piercing
the former's veil of corporate fiction so that the latter could be
held liable to claims of third-party judgment creditors, like
NAMAWU. In this regard, we find American jurisprudence
persuasive. In a decision by the Supreme Court of New
York 71 bearing upon similar facts, the Court denied piercing
the veil of corporate fiction to favor a judgment creditor who
sued the parent corporation of the debtor, alleging fraudulent
corporate asset-shifting effected after a prior final judgment.
Under a factual background largely resembling this case at
bar, viz.:
In this action, plaintiffs seek to recover the balance due
under judgments they obtained against Lake George
Ventures Inc. (hereinafter LGV), a subsidiary of defendant
that was formed to develop the Top O' the World resort
community overlooking Lake George, by piercing the
corporate veil or upon the theory that LGV's transfer of
certain assets constituted fraudulent transfers under the
Debtor and Creditor Law. We previously upheld Supreme
Court's denial of defendant's motion for summary
judgment dismissing the complaint (252 A.D.2d 609, 675
N.Y.S.2d 234) and the matter proceeded to a nonjury trial.
Supreme Court thereafter rendered judgment in favor of
defendant upon its findings that, although defendant
dominated LGV, it did not use that domination to commit a
fraud or wrong on plaintiffs. Plaintiffs appealed. EcDSTI
The trial evidence showed that LGV was incorporated in
November 1985. Defendant's principal, Francesco Galesi,
initially held 90% of the stock and all of the stock was
ultimately transferred to defendant. Initial project funding
was provided through a $2.5 million loan from Chemical
Bank, secured by defendant's guarantee of repayment of
the loan and completion of the project. The loan proceeds
were utilized to purchase the real property upon which the
project was to be established. Chemical Bank thereafter
loaned an additional $3.5 million to LGV, again guaranteed
by defendant, and the two loans were consolidated into a
first mortgage loan of $6 million. In 1989, the loan was
modified by splitting the loan into a $1.9 term note on
which defendant was primary obligor and a $4.1 million
project note on which LGV was the obligor and defendant
was a guarantor.
Due to LGV's lack of success in marketing the project's
townhouses and in order to protect itself from the
exercise of Chemical Bank's enforcement remedies,
defendant was forced to make monthly installments of
principal and interest on LGV's behalf. Ultimately,
defendant purchased the project note from Chemical Bank
for $3.1 million, paid the $1.5 million balance on the term
note and took an assignment of the first mortgage on the
project's realty. After LGV failed to make payments on the
indebtedness over the course of the succeeding two years,
defendant brought an action to foreclose its mortgage.
Ultimately, defendant obtained a judgment of foreclosure
and sale in the amount of $6,070,246.50. Defendant bid in
the property at the foreclosure sale and thereafter
obtained a deficiency judgment in the amount of
$3,070,246.50.
Following the foreclosure sale, LGV transferred to
defendant all of the shares of Top of the World Water
Company, a separate entity that had been organized to
construct and operate the water supply and delivery
system for the project, in exchange for a $950,000
reduction in the deficiency judgment.
the U.S. Supreme Court of New York held
Based on the foregoing, and accepting that defendant
exercised complete domination and control over LGV, we
are at a loss as to how plaintiffs perceive themselves to
have been inequitably affected by defendant's foreclosure
action against LGV, by LGV's divestiture of the water
company stock or the sports complex property, or by
defendant's transfer to LGV of a third party's uncollectible
note, accomplished solely for tax purposes. It is
undisputed that LGV was, and for some period of
time had been, unable to meet its obligations and,
at the time of the foreclosure sale, liens against its
property exceeded the value of its assets by several
million dollars, even including the water company
and sports complex at the values plaintiffs would
assign to them. In fact, even if plaintiffs' analysis were
utilized to eliminate the entire $3 million deficiency
judgment, the fact remains that subordinate
mortgages totaling nearly an additional $2 million
have priority over plaintiffs' judgments.
 As properly concluded by Supreme Court, absent a
finding of any inequitable consequence to plaintiffs,
both causes of action pleaded in the amended
complaint must fail. Fundamentally, a party seeking
to pierce the corporate veil must show complete
domination and control of the subsidiary by the
parent and also that such domination was used to
commit a fraud or wrong against the plaintiff that
resulted in the plaintiff's injury (252 A.D.2d 609, 610,
675 N.Y.S.2d 234, supra; see, Matter of Morris v. New York
State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603
N.Y.S.2d 807, 623 N.E.2d 1157). Notably, "[e]vidence of
domination alone does not suffice without an
additional showing that it led to inequity, fraud or
malfeasance" (TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d
335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749). ASHEca
xxx xxx xxx
In reaching that conclusion, we specifically reject a
number of plaintiffs' assertions, including the entirely
erroneous claims that our determination on the prior
appeal (252 A.D.2d 609, 675 N.Y.S.2d 234, supra) set forth
a "roadmap" for the proof required at trial and mandated a
verdict in favor of plaintiffs upon their production of
evidence that supported the decision's "listed facts". To the
contrary, our decision was predicated upon the existence
of such evidence, absent which we would have granted
summary judgment in favor of defendant. We are equally
unpersuaded by plaintiffs' continued reliance upon
defendant's December 1991 unilateral conversion of its
intercompany loans with LGV from debt to equity, which
constituted nothing more than a "bookkeeping transaction"
and had no apparent effect on LGV's obligations to
defendant or defendant's right to foreclose on its
mortgage. 72
This doctrine is good law under Philippine jurisdiction.
 In Concept Builders, Inc. v. National Labor Relations
Commission, 73 we laid down the test in determining the
applicability of the doctrine of piercing the veil of corporate
fiction, to wit:
1. Control, not mere majority or complete control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so
that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own.
2. Such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or dishonest and,
unjust act in contravention of plaintiffs legal rights; and,
3. The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained of.
xxx xxx xxx
Time and again, we have reiterated that mere ownership by a
single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not, by itself, a
sufficient ground for disregarding a separate corporate
personality. 74 It is basic that a corporation has a personality
separate and distinct from that composing it as well as from
that of any other legal entity to which it may be related. Clear
and convincing evidence is needed to pierce the veil of
corporate fiction. 75
In this case, the mere interlocking of directors and officers
does not warrant piercing the separate corporate personalities
of MMC and GHI. Not only must there be a showing that there
was majority or complete control, but complete domination,
not only of finances but of policy and business practice in
respect to the transaction attacked, so that the corporate
entity as to this transaction had at the time no separate mind,
will or existence of its own. The mortgage deed transaction
attacked as a basis for piercing the corporate veil was a
transaction that was an offshoot, a derivative, of the
mortgages earlier constituted in the Promissory Notes dated
October 2, 1992. But these Promissory Notes with mortgage
were executed by GHI with APT in the name of MMC, in a full
privatization process. It appears that if there was any control
or domination exercised over MMC, it was APT, not GHI, that
wielded it. Neither can we conclude that the constitution of
the loan nearly four (4) years prior to NAMAWU's notice of
strike could have been the proximate cause of the injury of
NAMAWU for having been deprived of MMC's corporate
assets. IDcHCS

On the propriety of injunction

to prevent execution by the
NLRC on the properties
of third-party claimants
It is settled that a Regional Trial Court can validly issue a
Temporary Restraining Order (TRO) and, later, a writ of
preliminary injunction to prevent enforcement of a writ of
execution issued by a labor tribunal on the basis of a third-
party's claim of ownership over the properties levied
upon. 76 While, as a rule, no temporary or permanent
injunction or restraining order in any case involving or growing
out of a labor dispute shall be issued by any court where
the writ of execution issued by a labor tribunal is sought to be
enforced upon the property of a stranger to the labor dispute,
even upon a mere prima facie showing of ownership of such
claimant a separate action for injunctive relief against such
levy may be maintained in court, since said action neither
involves nor grows out of a labor dispute insofar as the third
party is concerned. 77 Instructively, National Mines and Allied
Workers' Union v. Vera: 78
Petitioners' reliance on the provision of Art. 254 of the New
Labor Code (herein earlier quoted) which prohibits
injunctions or restraining orders in any case involving or
growing out of a 'labor dispute' is not well-taken. This has
no application to the case at bar. Civil Case No. 2749 is one
which neither "involves" nor "grows out" of a labor dispute.
What 'involves' or 'grows out' of a labor dispute is the NLRC
case between petitioners and the judgment debtor,
Philippine Iron Mines. The private respondents are not
parties to the said NLRC case. Civil Case No. 2749 does not
put in issue either the fact or validity of the proceeding in
the NLRC case nor the decision therein rendered, much
less the writ of execution issued thereunder. It does not
seek to enjoin the execution of the decision against the
properties of the judgment debtor. What is sought to be
tried in Civil Case No. 2749 is whether the NLRC's decision
and writ of execution, above mentioned, shall be permitted
to be satisfied against properties of private respondents,
and not of the judgment debtor named in the NLRC
decision and writ of execution. Such a recourse is allowed
under the provisions of Section 17, Rule 39 of the Rules of
Court.
To sustain petitioners' theory will inevitably lead to
disastrous consequences and lend judicial imprimatur to
deprivation of property without due process of law. Simply
because a writ of execution was issued by the NLRC does
not authorize the sheriff implementing the same to levy on
anybody's property. To deny the victim of the wrongful
levy, the recourse such as that availed of by the herein
private respondents, under the pretext that no court of
general jurisdiction can interfere with the writ of execution
issued in a labor dispute, will be sanctioning a greater evil
than that sought to be avoided by the Labor Code
provision in question. Certainly, that could not have been
the intendment of the law creating the NLRC. For well-
settled is the rule that the power of a court to execute its
judgment extends only over properties unquestionably
belonging to the judgment debtor."
 Likewise, since the third-party claimant is not one of the
parties to the action, he cannot, strictly speaking, appeal from
the order denying his claim, but he should file a separate
reivindicatory action against the execution creditor or the
purchaser of the property after the sale at public auction, or a
complaint for damages against the bond filed by the judgment
creditor in favor of the sheriff. 79
A separate civil action for recovery of ownership of the
property would not constitute interference with the powers or
processes of the labor tribunal which rendered the judgment
to execute upon the levied properties. The property levied
upon being that of a stranger is not subject to levy. Thus, a
separate action for recovery, upon a claim and prima
facie showing of ownership by the petitioner, cannot be
considered as interference. 80
Upon the findings and conclusions we have reached above,
petitioner is situated squarely as such third-party claimant.
The questioned restraining order of the lower court, as well as
the order granting preliminary injunction, does not constitute
interference with the powers or processes of the labor
department. The registration of the mortgage document
operated as notice to all on the matter of the mortgagee's
prior claims. Official proceedings relative to the foreclosure of
the subject properties constituted a prima facie showing of
ownership of such claimant to support the issuance of
injunctive reliefs. ESCTIA
As correctly held by the lower court:
The subject incidents for TRO and/or Writ of Injunction
were summarily heard and in resolving the same, the Court
believes, that the petitioner has a clear and unmistakable
right over the levied properties. The existence of the
subject Deed of Real Estate and Chattel Mortgage, the fact
that petitioner initiated a foreclosure of said properties
before the Clerk of Court and Ex-Officio Sheriff, RTC Branch
61, Kabankalan City on July 13, 2001, the fact that said Ex-
Officio Sheriff and the Clerk of Court issue a Notice of
Foreclosure, Possession and Control over said mortgaged
properties on July 19, 2001 and the fact that a Sheriff's
Certificate of Sale was issued on December 3, 2001 are the
basis of its conclusion. Unless said mortgage contract is
annulled or declared null and void, the presumption of
regularity of transaction must be considered and said
document must be looked [upon] as valid.
Notably, the Office of the Solicitor General also aptly
observed that when the respondent maintained that the Deed
of Real Estate and Chattel mortgage was entered into in fraud
of creditors, it thereby admitted that the mortgage was not
void, but merely rescissible under Article 1381 (3) of the Civil
Code; and, therefore, an independent action is needed to
rescind the contract of mortgage. 81 We, however, hold that
such an independent action cannot now be maintained,
because the mortgage has been previously recognized to
exist, with a valid consideration, in Republic, etc., v. "G"
Holdings, Inc.
A final word
The Court notes that the case filed with the lower court
involves a principal action for injunction to prohibit execution
over properties belonging to a third party not impleaded in
the legal dispute between NAMAWU and MMC. We have
observed, however, that the lower court and the CA failed to
take judicial notice of, or to consider, our Decisions
in Republic, etc., v. "G" Holdings, Inc., and Maricalum Mining
Corporation v. Brion and NAMAWU, in which we respectively
recognized the entitlement of GHI to the shares and the
company notes of MMC (under the Purchase and Sale
Agreement), and the rights of NAMAWU to its labor claims. At
this stage, therefore, neither the lower court nor the CA, nor
even this Court, can depart from our findings in those two
cases because of the doctrine of stare decisis.
 From our discussion above, we now rule that the trial court, in
issuing the questioned orders, did not commit grave abuse of
discretion, because its issuance was amply supported by
factual and legal bases.
We are not unmindful, however, of the fact that the labor
claims of NAMAWU, acknowledged by this Court
in Maricalum, still awaits final execution. As success fades
from NAMAWU's efforts to execute on the properties of MMC,
which were validly foreclosed by GHI, we see that NAMAWU
always had, and may still have, ample supplemental remedies
found in Rule 39 of the Rules of Court in order to protect its
rights against MMC. These include the examination of the
judgment obligor when judgment is unsatisfied, 82 the
examination of the obligors of judgment obligors, 83 or even
the resort to receivership. 84
While, theoretically, this case is not ended by this decision,
since the lower court is still to try the case filed with it and
decide it on the merits, the matter of whether the mortgage
and foreclosure of the assets that are the subject of said
foreclosure is ended herein, for the third and final time. So
also is the consequential issue of the separate and distinct
personalities of GHI and MMC. Having resolved these principal
issues with certainty, we find no more need to remand the
case to the lower court, only for the purpose of resolving
again the matter of whether GHI owns the properties that
were the subject of the latter's foreclosure.
WHEREFORE, the Petition is GRANTED. The Decision of the
Court of Appeals dated October 14, 2003 is SET ASIDE. The
Omnibus Order dated December 4, 2002 of the Regional Trial
Court, Branch 61 of Kabankalan City, Negros Occidental
is AFFIRMED. No costs. STEacI
SO ORDERED.
||| (G Holdings, Inc. v. National Mines and Allied Workers Union
Local 103, G.R. No. 160236, [October 16, 2009], 619 PHIL 69-
114)

THIRD DIVISION

[G.R. No. 177809. October 16, 2009.]

SPOUSES OMAR and MOSHIERA

LATIP, n petitioners, vs. ROSALIE PALAA
CHUA, respondent.

DECISION

NACHURA, J p:
Challenged in this petition for review on certiorari is the Court
of Appeals (CA) Decision in CA-G.R. SP No. 89300: 1 (1)
reversing the decision of the Regional Trial Court (RTC),
Branch 274, Paraaque City in Civil Case No. 04-0052; 2 and
(2) reinstating and affirming in toto the decision of the
Metropolitan Trial Court (MeTC), Branch 78, of the same city in
Civil Case No. 2001-315. 3
First, we sift through the varying facts found by the different
lower courts.
The facts parleyed by the MeTC show that respondent Rosalie
Chua (Rosalie) is the owner of Roferxane Building, a
commercial building, located at No. 158 Quirino Avenue
corner Redemptorist Road, Barangay Baclaran, Paraaque
City.
On July 6, 2001, Rosalie filed a complaint for unlawful
detainer plus damages against petitioners, Spouses Omar and
Moshiera Latip (Spouses Latip). Rosalie attached to the
complaint a contract of lease over two cubicles in Roferxane
Bldg., signed by Rosalie, as lessor, and by Spouses Latip, as
lessees thereof.
The contract of lease reads:
CONTRACT OF LEASE
KNOW ALL MEN BY THESE PRESENTS:
This Contract of Lease is entered into by and
between: CHEDAc
ROSALIE PALAA CHUA, Filipino, of legal age, married
with office at 2/F JOFERXAN Building, F.B. Harrison St., Brgy.
Baclaran, Paraaque City, and hereinafter referred to as
the LESSOR,
- and -
OMAR LATIEF marriage to MOSHIERA LATIEF, also both
Filipino, of legal age with address at 24 Anahan St. RGV
Homes Paraaque City, and hereinafter referred to as the
LESSEES.
WITNESSETH
1. That the LESSOR is the owner of the commercial
building erected at the lot of the Toribio G. Reyes Realty,
Inc. situated at 158 Quirino Ave. corner Redemptorist Road,
Barangay Baclaran in Paraaque Ctiy;
2. That LESSOR hereby leases two (2) cubicles located at
the 1st & 2nd Floor, of said building with an area of 56
square meters under the following terms and conditions, to
wit:
a. That the monthly rental of the two (2) cubicles in
PESOS, SIXTY THOUSAND (P60,000.00), Philippine
Currency. However, due to unstable power of the peso
LESSEES agrees to a yearly increase of ten (10%) percent
of the monthly rental;
b. That any rental in-arrears shall be paid before the
expiration of the contract to the LESSOR;
c. That LESSEES agree to pay their own water and electric
consumptions in the said premises;
d. That the LESSEES shall not sub-let or make any
alteration in the cubicles without a written permission from
the LESSOR. Provided, however, that at the termination of
the Contract, the lessee shall return the two cubicles in its
original conditions at their expenses;
e. That the LESSEES agree to keep the cubicles in a safe
and sanitary conditions, and shall not keep any kinds of
flammable or combustible materials.
f. That in case the LESSEES fail to pay the monthly rental
every time it falls due or violate any of the above
conditions shall be enough ground to terminate this
Contract of Lease. Provided, further, that, if the LESSEES
pre-terminate this Contract they shall pay the rentals for
the unused month or period by way of liquidated damages
in favor of the LESSOR. aSTHDc
3. That this Contract of Lease is for six (6) yrs. only
starting from December _____, 1999 or up to December
______, 2005.
IN WITNESS WHEREOF, the parties have hereunto affixed
their hands this ___th day of December, 1999 at City of
Manila, Philippines.
(sgd.) (sgd.)
ROSALIE PALAA-CHUA MOSHIERA LATIEF
LESSOR LESSEE

(sgd.)
OMAR LATIEF
LESSEE
 SIGNED IN THE PRESENCE OF:
(sgd.) (sgd.)
1. Daisy C. Ramos 2. Ferdinand C. Chua
Republic of the Philippines)
City of Manila__________)s.s.
ACKNOWLEDGMENT
BEFORE ME, a Notary Public for and in the City of Manila
personally appeared the following persons:
Rosalie P. Chua with CTC No. 05769706 at Paraaque City
on 2/1/99; Moshiera Latief with CTC No. 12885654 at
Paraaque City on 11/11/99; Omar Latief with CTC No.
12885653 Paraaque City on Nov. 11, 1999.
known to me and to me known to be the same persons
who executed this instrument consisting of two (2) pages
duly signed by them and the two (2) instrumental
witnesses and acknowledged to me that the same is their
free and voluntarily acts and deeds.
IN FAITH AND TESTIMONY WHEREOF, I have hereunto
affixed my hand and Notarial Seal this ____th day of
December, 1999 at the City of Manila, Philippines.
ATTY. CALIXTRO B.
Doc. No. _____
RAMOS
Page No. _____ NOTARY PUBLIC
Until December 31,
Book No. LXV
2000
PTR # 374145-
Series of 1999
1/11/99/-Mla.
IBP # 00262-Life
Member 4
A year after the commencement of the lease and with
Spouses Latip already occupying the leased cubicles, Rosalie,
through counsel, sent the spouses a letter demanding
payment of back rentals and should they fail to do so, to
vacate the leased cubicles. When Spouses Latip did not heed
Rosalie's demand, she instituted the aforesaid complaint.
In their Answer, Spouses Latip refuted Rosalie's claims. They
averred that the lease of the two (2) cubicles had already
been paid in full as evidenced by receipts showing payment to
Rosalie of the total amount of P2,570,000.00. The three (3)
receipts, in Rosalie's handwriting, read:
1. I received the amount of P2,000,000.00 (two million
pesos) from [O]mar Latip & Moshi[e]ra Latip for the
payment of 2 cubicles located at 158 Quirino Ave. corner
Redemptorist Rd.[,] Baclaran P[ara]aque City.
ROFERLAND 5 Bldg. with the terms 6 yrs. Contract. CITcSH
P2,000,000.00 (sgd.)
CHECK # 3767924
FAR EAST BANK Rosalie Chua
(sgd.)

Ferdinand Chua
2.
Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99 Rosalie Chua

Received by
3.
Received cash
P70,000.00 from
Moshiera Latip
12-11-99 (sgd.)

Received by: 6
 Spouses Latip asseverated that sometime in October 1999,
Rosalie offered for sale lease rights over two (2) cubicles in
Roferxane Bldg. Having in mind the brisk sale of goods during
the Christmas season, they readily accepted Rosalie's offer to
purchase lease rights in Roferxane Bldg., which was still under
construction at the time. According to Spouses Latip, the
immediate payment of P2,570,000.00 would be used to finish
construction of the building giving them first priority in the
occupation of the finished cubicles.
Thereafter, in December 1999, as soon as two (2) cubicles
were finished, Spouses Latip occupied them without waiting
for the completion of five (5) other stalls. Spouses Latip
averred that the contract of lease they signed had been
novated by their purchase of lease rights of the subject
cubicles. Thus, they were surprised to receive a demand letter
from Rosalie's counsel and the subsequent filing of a
complaint against them.
The MeTC ruled in favor of Rosalie, viz.:
WHEREFORE, premises considered, the [Spouses Latip]
and all persons claiming rights under them are hereby
ordered to VACATE the property subject of this case
located at the 1st and 2nd floors of a Roferxane Building
situated at No. 158 Quirino Avenue corner Redemptorist
Road, Barangay Baclaran, Paraaque City. The [Spouses
Latip] are also ordered to PAY [Rosalie] the amount of
SEVEN HUNDRED TWENTY THOUSAND PESOS
(P720,000.00) as rent arrearages for the period of
December 1999 to December 2000 and thereafter to PAY
[Rosalie] the amount of SEVENTY TWO THOUSAND PESOS
(P72,000.00) per month from January 2001 to December
2002, plus ten percent (10%) increase for each and every
succeeding years thereafter as stipulated in paragraph
2(a) of the Contract of Lease . . ., until the [Spouses Latip]
have completely vacated the leased premises subject of
this lease. Finally[,] the [Spouses Latip] are hereby ordered
to PAY [Rosalie] the amount of TWENTY THOUSAND PESOS
(P20,000.00) as attorney's fees and TWO THOUSAND
PESOS (P2,000.00) per [Rosalie's] appearance in Court as
appearance fee and to PAY the cost of this suit. CSDTac
[Spouses Latip's] counterclaim is hereby DISMISSED for
lack of merit.
SO ORDERED. 7
In stark contrast, the RTC reversed the MeTC and ruled in
favor of Spouses Latip. The RTC did not give credence to the
contract of lease, ruling that it was not notarized and, in all
other substantial aspects, incomplete. Further on this point,
the RTC noted that the contract of lease lacked: (1) the
signature of Ferdinand Chua, Rosalie's husband; (2) the
signatures of Spouses Latip on the first page thereof; (3) the
specific dates for the term of the contract which only stated
that the lease is for "six (6) y[ea]rs only starting from
December 1999 or up to December 2005"; (4) the exact date
of execution of the document, albeit the month of December
and year 1999 are indicated therein; and (5) the provision for
payment of deposit or advance rental which is supposedly
uncommon in big commercial lease contracts.
The RTC believed the claim of Spouses Latip that the contract
of lease was modified and supplemented; and the entire lease
rentals for the two (2) cubicles for six (6) years had already
been paid by Spouses Latip in the amount of P2,570,000.00.
As to Rosalie's claim that her receipt of P2,570,000.00 was
simply goodwill payment by prospective lessees to their
lessor, and not payment for the purchase of lease rights, the
RTC shot this down and pointed out that, apart from her bare
allegations, Rosalie did not adduce evidence to substantiate
this claim. On the whole, the RTC declared an existent lease
between the parties for a period of six (6) years, and already
fully paid for by Spouses Latip. Thus, Spouses Latip could not
be ejected from the leased premises until expiration of the
lease period.
The RTC disposed of the appeal, viz.:
WHEREFORE, all the foregoing considered, the appealed
decision of the [MeTC] dated January 13, 2004 is reversed
as judgment is hereby rendered for the [Spouses Latip]
and against [Rosalie], ordering the latter to pay the former

(1) the sum of PhP1,000,000.00 as moral damages;

(2) the sum of PhP500,000.00 as exemplary damages;
(3) the sum of PhP250,000.00 plus PhP3,000.00 per court
appearance as and for attorney's fees; and
(4) costs of suit.
SO ORDERED. 8
In yet another turn of events, the CA, as previously
mentioned, reversed the RTC and reinstated the decision of
the MeTC. The CA ruled that the contract of lease, albeit
lacking the signature of Ferdinand and not notarized,
remained a complete and valid contract. As the MeTC had, the
CA likewise found that the alleged defects in the contract of
lease did not render the contract ineffective. On the issue of
whether the amount of P2,570,000.00 merely constituted
payment of goodwill money, the CA took judicial notice of this
common practice in the area of Baclaran, especially around
the Redemptorist Church. According to the appellate court,
this judicial notice was bolstered by the Joint Sworn
Declaration of the stallholders at Roferxane Bldg. that they all
had paid goodwill money to Rosalie prior to occupying the
stalls thereat. Thus, ruling on Rosalie's appeal, the CA
disposed of the case: aTcIEH
WHEREFORE, in view of the foregoing, the Petition for
Review is hereby GRANTED. The assailed decision of RTC
Paraaque City Branch 274 dated September 24, 2004 is
hereby REVERSED and SET ASIDE, and the January 13,
2004 decision of the MeTC is REINSTATED and
AFFIRMED en toto.
SO ORDERED. 9
Not surprisingly, Spouses Latip filed the present appeal.
The singular issue for our resolution is whether Spouses Latip
should be ejected from the leased cubicles.
As previously adverted to, the CA, in ruling for Rosalie and
upholding the ejectment of Spouses Latip, took judicial notice
of the alleged practice of prospective lessees in the Baclaran
area to pay goodwill money to the lessor.
We disagree.
Sections 1 and 2 of Rule 129 of the Rules of Court declare
when the taking of judicial notice is mandatory or
discretionary on the courts, thus:
SECTION 1. Judicial notice, when mandatory. A court
shall take judicial notice, without the introduction of
evidence, of the existence and territorial extent of states,
their political history, forms of government and symbols of
nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution
and history of the Philippines, the official acts of the
legislative, executive and judicial departments of the
Philippines, the laws of nature, the measure of time, and
the geographical divisions.
SEC. 2. Judicial notice, when discretionary. A court may
take judicial notice of matters which are of public
knowledge, or are capable of unquestionable
demonstration or ought to be known to judges because of
their judicial functions.
On this point, State Prosecutors v. Muro 10 is instructive:
I. The doctrine of judicial notice rests on the wisdom and
discretion of the courts. The power to take judicial
notice is to be exercised by courts with caution;
care must be taken that the requisite notoriety
exists; and every reasonable doubt on the subject
should be promptly resolved in the negative.
Generally speaking, matters of judicial notice have three
material requisites: (1) the matter must be one of common
and general knowledge; (2) it must be well and
authoritatively settled and not doubtful or uncertain; and
(3) it must be known to be within the limits of the
jurisdiction of the court. The principal guide in
determining what facts may be assumed to be
judicially known is that of notoriety. Hence, it can be
said that judicial notice is limited to facts evidenced
by public records and facts of general notoriety.
To say that a court will take judicial notice of a fact is
merely another way of saying that the usual form of
evidence will be dispensed with if knowledge of the fact
can be otherwise acquired. This is because the court
assumes that the matter is so notorious that it will not be
disputed. But judicial notice is not judicial
knowledge. The mere personal knowledge of the
judge is not the judicial knowledge of the court, and
he is not authorized to make his individual
knowledge of a fact, not generally or professionally
known, the basis of his action. Judicial cognizance is
taken only of those matters which are "commonly"
known. SaHIEA
Things of "common knowledge", of which courts take
judicial notice, may be matters coming to the knowledge of
men generally in the course of the ordinary experiences of
life, or they may be matters which are generally accepted
by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are
universally known, and which may be found in
encyclopedias, dictionaries or other publications, are
judicially noticed, provided they are of such universal
notoriety and so generally understood that they may be
regarded as forming part of the common knowledge of
every person. 11
We reiterated the requisite of notoriety for the taking of
judicial notice in the recent case of Expertravel & Tours, Inc. v.
Court of Appeals, 12 which cited State Prosecutors:
Generally speaking, matters of judicial notice have three
material requisites: (1) the matter must be one of common
and general knowledge; (2) it must be well and
authoritatively settled and not doubtful or uncertain; and
(3) it must be known to be within the limits of the
jurisdiction of the court. The principal guide in determining
what facts may be assumed to be judicially known is that
of notoriety. Hence, it can be said that judicial notice is
limited to facts evidenced by public records and facts of
general notoriety. Moreover, a judicially noticed fact must
be one not subject to a reasonable dispute in that it is
either: (1) generally known within the territorial jurisdiction
of the trial court; or (2) capable of accurate and ready
determination by resorting to sources whose accuracy
cannot reasonably be questionable.
Things of "common knowledge", of which courts take
judicial notice, may be matters coming to the knowledge of
men generally in the course of the ordinary experiences of
life, or they may be matters which are generally accepted
by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are
universally known, and which may be found in
encyclopedias, dictionaries or other publications, are
judicially noticed, provided, they are such of universal
notoriety and so generally understood that they may be
regarded as forming part of the common knowledge of
every person. As the common knowledge of man ranges
far and wide, a wide variety of particular facts have been
judicially noticed as being matters of common
knowledge. But a court cannot take judicial notice of any
fact which, in part, is dependent on the existence or non-
existence of a fact of which the court has no constructive
knowledge.
From the foregoing provisions of law and our holdings
thereon, it is apparent that the matter which the appellate
court took judicial notice of does not meet the requisite of
notoriety. To begin with, only the CA took judicial notice of this
supposed practice to pay goodwill money to the lessor in the
Baclaran area. Neither the MeTC nor the RTC, with the former
even ruling in favor of Rosalie, found that the practice was of
"common knowledge" or notoriously known.
We note that the RTC specifically ruled that Rosalie, apart
from her bare allegation, adduced no evidence to prove her
claim that the amount of P2,570,000.00 simply constituted
the payment of goodwill money. Subsequently, Rosalie
attached an annex to her petition for review before the CA,
containing a joint declaration under oath by other stallholders
in Roferxane Bldg. that they had paid goodwill money to
Rosalie as their lessor. On this score, we emphasize that the
reason why our rules on evidence provide for matters that
need not be proved under Rule 129, specifically on judicial
notice, is to dispense with the taking of the usual form of
evidence on a certain matter so notoriously known, it will not
be disputed by the parties.
However, in this case, the requisite of notoriety is belied by
the necessity of attaching documentary evidence, i.e., the
Joint Affidavit of the stallholders, to Rosalie's appeal before
the CA. In short, the alleged practice still had to be proven by
Rosalie; contravening the title itself of Rule 129 of the Rules of
Court What need not be proved.
Apparently, only that particular division of the CA had
knowledge of the practice to pay goodwill money in the
Baclaran area. As was held in State Prosecutors,justices and
judges alike ought to be reminded that the power to take
judicial notice must be exercised with caution and every
reasonable doubt on the subject should be ample reason for
the claim of judicial notice to be promptly resolved in the
negative. AISHcD
Ultimately, on the issue of whether Spouses Latip ought to be
ejected from the leased cubicles, what remains in evidence is
the documentary evidence signed by both parties the
contract of lease and the receipts evidencing payment of
P2,570,000.00.
We need not be unduly detained by the issue of which
documents were executed first or if there was a novation of
the contract of lease. As had been found by the RTC, the lease
contract and the receipts for the amount of P2,570,000.00 can
be reconciled or harmonized. The RTC declared:
Definitely, the parties entered into a lease agreement over
two (2) cubicles of the 1st and 2nd floors of Roferxane
(Roferland) Building, a commercial building located at 158
Quirino Avenue, corner Redemptorist Road, Baclaran,
Paraaque City and belonging to [Rosalie]. The lease
agreement is for a term of six (6) years commencing in
December 1999 up to December 2005. This agreement
was embodied in a Contract of Lease . . . . The terms of this
lease contract, however, are modified or supplemented by
another agreement between the parties executed and or
entered into in or about the time of execution of the lease
contract, which exact date of execution of the latter is
unclear. 13
 We agree with the RTC's holding only up to that point. There
exists a lease agreement between the parties as set forth in
the contract of lease which is a complete document. It need
not be signed by Ferdinand Chua as he likewise did not sign
the other two receipts for P500,000.00 and P70,000.00,
respectively, which contained only the signature of Rosalie.
Besides, it is undisputed that Rosalie owns and leases the
stalls in Roferxane Bldg.; thus, doing away with the need for
her husband's consent. The findings of the three lower courts
concur on this fact.
The contract of lease has a period of six (6) years
commencing in December 1999. This fact is again buttressed
by Spouses Latip's admission that they occupied the property
forthwith in December 1999, bearing in mind the brisk sales
during the holiday season.
On the conflicting interpretations by the lower courts of the
receipts amounting to P2,570,000.00, we hold that the
practice of payment of goodwill money in the Baclaran area is
an inadequate subject of judicial notice. Neither was Rosalie
able to provide sufficient evidence that, apart from the
belatedly submitted Joint Affidavit of the stallholders of
Roferxane Bldg., the said amount was simply for the payment
of goodwill money, and not payment for advance rentals by
Spouses Latip.
In interpreting the evidence before us, we are guided by the
Civil Code provisions on interpretation of contracts, to wit:
Art. 1371. In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
Art. 1372. However general the terms of a contract may
be, they shall not be understood to comprehend things
that are distinct and cases that are different from those
which the parties intended to agree.
 Art. 1373. If some stipulation of any contract should admit
of several meanings, it shall be understood as bearing that
import which is most adequate to render it effectual.
The RTC was already on the right track when it declared that
the receipts for P2,570,000.00 modified or supplemented the
contract of lease. However, it made a quantum leap when it
ruled that the amount was payment for rentals of the two (2)
cubicles for the entire six-year period. We cannot subscribe to
this finding. To obviate confusion and for clarity, the contents
of the receipts, already set forth above, are again
reproduced: TcICEA
1. I received the amount of P2,000,000.00 (two million
pesos) from [O]mar Latip & Moshi[e]ra Latip for the
payment of 2 cubicles located at 158 Quirino Ave. corner
Redemptorist Rd.[,] Baclaran P[ara]que * City.
ROFERLAND 5 Bldg. with the terms 6 yrs. Contract.
P2,000,000.00 (sgd.)
CHECK # 3767924
FAR EAST BANK Rosalie Chua
(sgd.)

Ferdinand Chua
2.
Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99 Rosalie Chua

Received by
3.
Received cash
P70,000.00 from
Moshiera Latip
12-11-99
(sgd.)

Received by: 14
There is nothing on the receipts and on record that the
payment and receipt of P2,570,000.00 referred to full
payment of rentals for the whole period of the lease. All three
receipts state Rosalie's receipt of cash in varying amounts.
The first receipt for P2,000,000.00 did state payment for two
(2) cubicles, but this cannot mean full payment of rentals for
the entire lease period when there are no words to that effect.
Further, two receipts were subsequently executed pointing to
the obvious fact that the P2,000,000.00 is not for full payment
of rentals. Thus, since the contract of lease remained
operative, we find that Rosalie's receipt of the monies should
be considered as advanced rentals on the leased cubicles.
This conclusion is bolstered by the fact that Rosalie demanded
payment of the lease rentals only in 2000, a full year after the
commencement of the lease.
Finally, we note that the lease ended in 2005. Consequently,
Spouses Latip can be ejected from the leased premises. They
are liable to Rosalie for unpaid rentals on the lease of the two
(2) cubicles in accordance with the stipulations on rentals in
the Contract of Lease. However, the amount of P2,570,000.00,
covering advance rentals, must be deducted from this liability
of Spouses Latip to Rosalie.
WHEREFORE, premises considered, the petition is
hereby GRANTED. The decision of the Court of Appeals in CA-
G.R. SP No. 89300 is REVERSED. The petitioners, spouses
Omar and Moshiera Latip, are liable to respondent Rosalie
Chua for unpaid rentals minus the amount of P2,570,000.00
already received by her as advance rentals. No costs.
SO ORDERED.
||| (Spouses Latip v. Chua, G.R. No. 177809, [October 16,
2009], 619 PHIL 155-170)

THIRD DIVISION

[G.R. No. 160795. June 27, 2008.]

CORINTHIAN GARDENS ASSOCIATION,

INC., petitioner, vs. SPOUSES REYNALDO and MARIA
LUISA TANJANGCO, and SPOUSES FRANK and
TERESITA CUASO, respondents.

DECISION

NACHURA, J p:
Before this Court is a Petition for Review on Certiorari 1 under
Rule 45 of the Rules of Civil Procedure seeking the reversal of
the Court of Appeals (CA) Decision 2 dated January 31, 2003 in
CA-G.R. CV No. 43217, which reversed and set aside the
Decision 3 of the Regional Trial Court (RTC) of Quezon City,
dated March 30, 1993.
The Antecedents:
Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the
Tanjangcos) own Lots 68 and 69 covered by Transfer
Certificates of Title (TCT) No. 242245 4 and
2829615 respectively, located at Corinthian Gardens
Subdivision, Quezon City, which is managed by petitioner
Corinthian Gardens Association, Inc. (Corinthian). On the other
hand, respondents-spouses Frank and Teresita Cuaso (the
Cuasos) own Lot 65 which is adjacent to the Tanjangcos' lots.
 Before the Cuasos constructed their house on Lot 65, a
relocation survey was necessary. As Geodetic Engineer
Democrito De Dios (Engr. De Dios), operating under the
business name D.M. De Dios Realty and Surveying, conducted
all the previous surveys for the subdivision's developer,
Corinthian referred Engr. De Dios to the Cuasos. Before, during
and after the construction of the said house, Corinthian
conducted periodic ocular inspections in order to determine
compliance with the approved plans pursuant to the Manual of
Rules and Regulations of Corinthian. 6 Unfortunately, after the
Cuasos constructed their house employing the services of C.B.
Paraz & Construction Co., Inc. (C.B. Paraz) as builder, their
perimeter fence encroached on the Tanjangcos' Lot 69 by 87
square meters.
No amicable settlement was reached between the parties.
Thus, the Tanjangcos demanded that the Cuasos demolish the
perimeter fence but the latter failed and refused, prompting
the Tanjangcos to file with the RTC a suit against the Cuasos for
Recovery of Possession with Damages. 7
Eventually, the Cuasos filed a Third-Party Complaint 8 against
Corinthian, C.B. Paraz and Engr. De Dios. The Cuasos ascribed
negligence to C.B. Paraz for its failure to ascertain the proper
specifications of their house, and to Engr. De Dios for his failure
to undertake an accurate relocation survey, thereby, exposing
them to litigation. The Cuasos also faulted Corinthian for
approving their relocation survey and building plans without
verifying their accuracy and in making representations as to
Engr. De Dios' integrity and competence. The Cuasos alleged
that had Corinthian exercised diligence in performing its duty,
they would not have been involved in a boundary dispute with
the Tanjangcos. Thus, the Cuasos opined that Corinthian should
also be held answerable for any damages that they might incur
as a result of such construction.
On March 30, 1993, the RTC rendered a Decision in favor of the
Tanjangcos. It ruled that the Cuasos' perimeter wall encroached
on the land of the Tanjangcos by 87 square meters. It,
however, ruled that the Cuasos were builders in good faith, and
gave the Tanjangcos the option to sell and the Cuasos the
option to buy the encroaching portion of the land, at a price to
be agreed upon by the parties within sixty (60) days from
receipt of the said Decision. In the event that the Cuasos were
unable and unwilling to purchase the said portion, the
perimeter wall should be demolished at the latter's expense.
The RTC also ordered the Cuasos to pay monthly rentals of
P2,000.00 commencing from the time of the filing of the
complaint. The RTC likewise held that C.B. Paraz was grossly
negligent in not taking into account the correct boundaries of
Cuasos' lot when it constructed the house. It, thus, ordered
C.B. Paraz to pay moral and exemplary damages as well as
attorney's fees to the Tanjangcos and the Cuasos. The third-
party complaint against Corinthian and Engr. De Dios, on the
other hand, was dismissed for lack of cause of action.
The Tanjangcos filed a Motion for Reconsideration 9 of the said
RTC Decision which the RTC, however, denied in its
Order 10 dated June 28, 1993.
Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos,
and C.B. Paraz all appealed to the CA.
On appeal, the CA reversed and set aside the RTC Decision. It
held that the Cuasos acted in bad faith in land-grabbing the 87
square meter-portion of Lot 69 as of April 5, 1989.
Correlatively, the CA allowed the Tanjangcos to exercise the
rights granted under Articles 449, 450, 451 and 549 of the New
Civil Code, which include the right to demand the demolition of
the offending perimeter wall after reimbursing the Cuasos the
necessary expenses for the preservation of the encroached
area. The Cuasos were ordered to pay monthly rentals of
P10,000.00 for the use, enjoyment and occupancy of the lot
from 1989 up to the time they vacate the property considering
the location and category of the same. They were, likewise,
ordered to pay the Tanjangcos P100,000.00, as moral
damages, P50,000.00 as exemplary damages, and
P150,000.00 as attorney's fees. The CA also imposed six
percent (6%) interest per annum on all the awards. The
Cuasos' appeal against the Tanjangcos, on the other hand, was
dismissed for lack of merit. On the third-party complaints,
Corinthian, C.B. Paraz and Engr. De Dios were all found
negligent in performing their respective duties and so they
were ordered to contribute five percent (5%) each, or a total of
fifteen percent (15%) to all judgment sums and amounts that
the Cuasos shall eventually pay under the decision, also with
interest of six percent (6%) per annum.
Only Corinthian filed a Motion for Reconsideration 11 of the CA
Decision within the 15-day reglementary period. No motion for
reconsideration was filed by the Cuasos, C.B. Paraz and/or
Engr. De Dios.
About six (6) months later, or on August 12, 2003, the Cuasos
filed a Comment/Manifestation 12 praying that they be allowed
to adopt Corinthian's Motion for Reconsideration.
In its Resolution 13 dated November 14, 2003, the CA denied
Corinthian's Motion for Reconsideration.
Hence, Corinthian filed the instant Petition for Review
on Certiorari assailing the CA Decision and Resolution, and
impleading the Cuasos as one of the respondents being the
third-party plaintiffs in the RTC.
This Court gave due course to Corinthian's petition and
required the parties to submit their respective
memorandum. 14 In compliance, the Cuasos submitted their
Memorandum 15 and Supplement to Memorandum, 16 which
were both noted by this Court in its Resolutions dated January
10, 2005 17 and February 2, 2005, 18respectively.
In the meantime, the Tanjangcos moved for partial entry of
judgment of the CA Decision which was granted by the CA in its
Resolution 19 dated May 26, 2006, directing the issuance of an
Entry of Judgment and a Certification that its Decision dated
January 31 2003 has become final and executory with respect
to the Cuasos, C.B. Paraz and Engr. De Dios for their failure to
file an appeal assailing the said Decision before this Court.
The Tanjangcos then moved for the execution of the judgment
against the Cuasos, specifically the demolition of the perimeter
fence, 20 which was also granted by the RTC in its
Order 21 dated December 18, 2006.
Other than the filing of an Opposition 22 and a Motion for
Reconsideration 23 before the RTC, the Cuasos prayed for the
issuance of a temporary restraining order (TRO) and/or
preliminary injunction before this Court to enjoin the demolition
of the perimeter fence. They averred that the premature
demolition of the alleged encroaching perimeter wall and other
improvements will cause grave and irreparable damage to
them, because what is sought to be demolished is part of their
residence. They claimed that no amount of money will
compensate for the damage they stand to suffer should any
demolition subsequently prove to be wrongful. They argued
that before any execution can be carried out, it is necessary to
first determine whether or not Corinthian was negligent in
approving the building plan and whether or not it acted in good
faith in doing so. Such determination, according to the Cuasos,
will in turn determine whether or not they were in good faith in
constructing the house. 24
The Tanjangcos opposed the Cuasos' application for TRO. They
countered that the only pending matter with this Court is the
appeal by Corinthian; hence, the implementation of the January
31, 2003 Decision of the CA against the Cuasos will not
preempt the outcome of the said pending incidents. Also, any
action taken by this Court on Corinthian's petition would not
benefit the Cuasos for they did not appeal the adverse decision
against them. Accordingly, they cannot obtain affirmative relief
from this Court by reason or on account of the appeal taken by
Corinthian. The appeal, they added, is personal to Corinthian.
Finally, they argued that the Cuasos are now estopped from
questioning the enforcement of the CA Decision since they
issued a manager's check to pay the money judgment. 25
In this Court's Resolution dated July 18, 2007, we denied the
Cuasos' application for TRO and/or writ of preliminary
injunction for lack of merit.
The denial was based on sound legal principles. It is axiomatic
that to be entitled to the injunctive writ, one must show that
there exists a right to be protected which is directly threatened
by the act sought to be enjoined. Furthermore, there must be a
showing that the invasion of the right is material and
substantial, that the right of complainant is clear and
unmistakable, and that there is an urgent and paramount
necessity for the writ to issue in order to prevent serious
damage. 26

In the Cuasos' case, their right to injunctive relief had not been
clearly and unmistakably demonstrated. They failed to show
proof that there is material and substantial invasion of their
right to warrant the issuance of an injunctive writ. Indeed, the
enforcement of the writ of execution, which would demolish the
Cuasos' perimeter fence, is manifestly prejudicial to their
interest. However, they possess no clear and unmistakable
legal right that merits protection through the writ of
preliminary injunction. 27 Their right to maintain the said fence
had been declared inferior to the Tanjangcos' right to the
demolition of the fence, after the CA judgment had become
final and executory as to the Cuasos.
It bears stressing that the Cuasos failed to appeal the ruling of
the CA. This failure to contest the CA decision before this Court
was fatal to their cause. It had the effect of an admission that
they indeed acted in bad faith, as they accepted the CA ruling.
The decision of the CA, therefore, became binding and final as
to them. 28 As a matter of fact, the CA already issued a partial
entry of judgment against the Cuasos.
 An injunction to stay a final and executory decision is
unavailing except only after a showing that facts and
circumstances exist which would render execution unjust or
inequitable, or that a change in the situation of the parties
occurred. Here, no such exception exists as shown by the facts
earlier narrated. 29
While it is true that this Court noted the Memorandum and
Supplemental Memorandum filed by the Cuasos, such notation
was made only insofar as Corinthian made them respondents
in this petition. This Court cannot grant to the Cuasos any
affirmative relief as they did not file a petition questioning the
CA ruling. Consequently, the Decision of the CA holding that
the Cuasos acted in bad faith and that the perimeter fence
may now be demolished cannot be put in issue by the Cuasos.
It is a fundamental principle that a party who does not appeal,
or file a petition for certiorari, is not entitled to any affirmative
relief. 30 An appellee who is not an appellant may assign errors
in his brief where his purpose is to maintain the judgment, but
he cannot seek modification or reversal of the judgment or
claim affirmative relief unless he has also appealed. 31 This
applies to C.B. Paraz and Engr. De Dios who likewise failed to
assail the aforementioned CA Decision.
With this matter put to rest, we now go to the main issues
raised by Corinthian, the sole petitioner in this case, to wit:
a) Whether or not there is legal basis for the Court of
Appeals to hold petitioner Corinthian Gardens Association,
Inc. liable to pay 5% of the judgment money to Sps.
Tanjangco on account of the encroachment made by Sps.
Cuaso[; and]
b) Whether or not the Court of Appeals has legal basis to
increase unilaterally and without proof the amount prayed
for in the Complaint, i.e., P2,000.00, as reasonable
compensation for the use and enjoyment of the portion of
the lot encroached upon, to P10,000.00. 32
 Corinthian claims that the approval of the building plan of the
Cuasos was not tainted with negligence as it did not approve
the survey relocation plan but merely the architectural,
structural and sanitary plans for Cuasos' house; that the
purpose of the said approval is not to ensure that the house to
be erected on a particular lot is constructed within its
boundaries but only to ensure compliance with the Manual of
Rules and Regulations; that while Corinthian conducts actual
site inspections, the inspection and approval of the building
plans are limited to "table inspection" only; that the survey
relocation plan was never submitted for Corinthian's approval;
that the acceptance of the builder's bond did not make
Corinthian automatically liable for the encroachment and for
damages; and that Corinthian approved the building plan with
the good faith and due diligence required under the
circumstances. It, thus, concludes that it cannot be held liable
to pay five percent (5%) of the money judgment to the
Tanjangcos on account of the encroachment made by the
Cuasos. Likewise, it finds no legal basis for the CA to
unilaterally increase the amount of the adjudged rent from
P2,000.00 to P10,000.00 which was not prayed for by the
Tanjangcos in their complaint and in the absence of evidence
adduced by the parties. 33
On the other hand, the Tanjangcos stand by the ruling of the
CA and opine that Corinthian was negligent in approving the
building plan of the Cuasos. They submit that Corinthian's
claim that it merely conducts "table inspections" of buildings
further bolsters their argument that Corinthian was negligent in
conveniently and unilaterally restricting and limiting the
coverage of its approval, contrary to its own Manual of Rules
and Regulations; that the acceptance of a builder's bond does
not automatically make Corinthian liable but the same affirms
the fact that a homeowner can hold it liable for the
consequences of the approval of a building plan; and that
Corinthian, by regularly demanding and accepting membership
dues, must be wary of its responsibility to protect the rights
and interests of its members. Lastly, the Tanjangcos contend
that a court can take judicial notice of the general increase in
the rentals of real estate, as in this case, where the CA
considered the value of their lot in the "posh-and-swank"
Corinthian Gardens Subdivision and the fact that they were
deprived of it for almost two decades. The Tanjangcos pray that
this Court sustain the ruling of the CA. 34
The instant case is obviously one for tort, as governed by
Article 2176 of the Civil Code, which provides:
ART. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is
called a quasi-delict and is governed by the provisions of
this Chapter.
In every tort case filed under this provision, plaintiff has to
prove by a preponderance of evidence: (1) the damages
suffered by the plaintiff; (2) the fault or negligence of the
defendant or some other person for whose act he must
respond; and (3) the connection of cause and effect between
the fault or negligence and the damages incurred. 35
Undeniably, the perimeter fence of the Cuasos encroached on
Lot 69 owned by the Tanjangcos by 87 square meters as duly
found by both the RTC and the CA in accordance with the
evidence on record. As a result, the Tanjangcos suffered
damage in having been deprived of the use of that portion of
their lot encroached upon. Thus, the primordial issue to be
resolved in this case is whether Corinthian was negligent under
the circumstances and, if so, whether such negligence
contributed to the injury suffered by the Tanjangcos.
A negligent act is an inadvertent act; it may be merely
carelessly done from a lack of ordinary prudence and may be
one which creates a situation involving an unreasonable risk to
another because of the expectable action of the other, a third
person, an animal, or a force of nature. A negligent act is one
from which an ordinary prudent person in the actor's position,
in the same or similar circumstances, would foresee such an
appreciable risk of harm to others as to cause him not to do the
act or to do it in a more careful manner. 36
The test to determine the existence of negligence in a
particular case may be stated as follows: Did the defendant in
committing the alleged negligent act use that reasonable care
and caution which an ordinary person would have used in the
same situation? If not, then he is guilty of negligence. The law,
in effect, adopts the standard supplied by the imaginary
conduct of the discreet paterfamilias in Roman law. The
existence of negligence in a given case is not determined by
reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless,
blameworthy, or negligent in a man of ordinary intelligence
and prudence, and determines liability according to that
standard. 37
By this test, we find Corinthian negligent.
While the issue of Corinthian's alleged negligence is factual in
character, 38 a review by this Court is proper because the CA's
factual findings differ from those of the RTC's. 39 Thus, after a
meticulous review of the evidence on record, we hold that the
CA committed no reversible error when it deviated from the
findings of fact of the RTC. The CA's findings and conclusions
are substantiated by the evidence on record and are more in
accord with law and reason. Indeed, it is clear that Corinthian
failed to exercise the requisite diligence in insuring that the
Cuasos abide by its Manual of Rules and Regulations, thereby
resulting in the encroachment on the Tanjangcos' property.
We agree with the CA when it aptly held:
Corinthian cannot and should not be allowed to justify or
excuse its negligence by claiming that its approval of the
Cuasos' building plans was only limited to a so-called
"table inspection"; and not actual site measurement. To
accept some such postulate is to put a premium on
negligence. Corinthian was not organized solely for the
defendants Cuasos. It is also the subdivision of the
plaintiffs-spouses Tanjangcos and of all others who have
their dwelling units or abodes therein. Pertinently, its
Manual of Rules and Regulations stipulates in Section 3
thereof (under the heading Construction), thus:
A. Rules and Regulations
No new construction can be started unless the building
plans are approved by the Association and the
appropriate Builder's cash bond and pre-construction fees
are paid. The Association will not allow the entry of
construction materials and process identification cards for
workers if the above conditions are not complied with.
Likewise, all renovations, repairs, additions and
improvements to a finished house except electrical wiring,
will have to be approved by the Association. Water service
connection of a homeowner who undertakes construction
work without prior approval of the Association will be cut-
off in addition to the sanctions previously mentioned.

It goes without saying that this Manual of Rules and

Regulations applies to all or it does not apply at all. To
borrow a popular expression, what is sauce for the gander
is sauce for the goose or ought to be. To put it matter-of-
factly and bluntly, thus, its so-called "table inspection"
approval of the Cuasos' building plans is no less of an
approval, as approvals come and go. And since it is an
approval tainted with negligence, the necessary and
inevitable consequences which law and justice attach to
such negligence must, as a matter of law and justice, also
necessarily attach to Corinthian.
 And then again third party defendant-appellee Corinthian
Garden required the posting of a builder's cash bond (Exh.
5-Corinthian) from the defendants-appellants Cuasos and
the third-party defendant C.B. Paraz Construction to secure
the performance of their undertaking. Surely, Corinthian
does not imply that while it may take the benefits from the
Builder's cash bond, it may, Pilate-like, wash its hands of
any responsibility or liability that would or might arise from
the construction or building of the structure for which the
cash bond was in the first place posted. That is not only
unjust and immoral, but downright unchristian and
iniquitous.
Under the same parity of reasoning, the payment by the
appellants-Cuasos to the appellee Corinthian of pre-
construction and membership fees in the Association must
necessarily entail the creation of certain obligations on the
part of Corinthian. For duties and responsibilities always go
hand in hand with rights and privileges. That is the law of
life and that is the law of every civilized society. It is an
axiom of equity that he who receives the benefits must
share the burdens. 40
By its Manual of Rules and Regulations, it is reasonable to
assume that Corinthian, through its representative, in the
approval of building plans, and in the conduct of periodic
inspections of on-going construction projects within the
subdivision, is responsible in insuring compliance with the
approved plans, inclusive of the construction of perimeter
walls, which in this case is the subject of dispute between the
Tanjangcos and the Cuasos. 41 It is not just or equitable to
relieve Corinthian of any liability when, by its very own rules, it
imposes its authority over all its members to the end that "no
new construction can be started unless the plans are approved
by the Association and the appropriate cash bond and pre-
construction fees are paid". Moreover, Corinthian can impose
sanctions for violating these rules. Thus, the proposition that
the inspection is merely a "table inspection" and, therefore,
should exempt Corinthian from liability, is unacceptable. After
all, if the supposed inspection is merely a "table inspection"
and the approval granted to every member is a mere formality,
then the purpose of the rules would be defeated. Compliance
therewith would not be mandatory, and sanctions imposed for
violations could be disregarded. Corinthian's imprimatur on the
construction of the Cuasos' perimeter wall over the property of
the Tanjangcos assured the Cuasos that everything was in
order.
In sum, Corinthian's failure to prevent the encroachment of the
Cuasos' perimeter wall into Tanjangcos' property despite the
inspection conducted constitutes negligence and, at the
very least, contributed to the injury suffered by the Tanjangcos.
On the second issue, our ruling in Spouses Badillo v.
Tayag 42 is instructive:
Citing Sia v. Court of Appeals [272 SCRA 141, May 5,
1997], petitioners argue that the MTC may take judicial
notice of the reasonable rental or the general price
increase of land in order to determine the amount of rent
that may be awarded to them. In that case, however, this
Court relied on the CA's factual findings, which were based
on the evidence presented before the trial court. In
determining reasonable rent,
the RTC therein took account of the following factors: 1)
the realty assessment of the land, 2) the increase in realty
taxes, and 3) the prevailing rate of rentals in the vicinity.
Clearly, the trial court relied, not on mere judicial notice,
but on the evidence presented before it.
Indeed, courts may fix the reasonable amount of rent for
the use and occupation of a disputed property. However,
petitioners herein erred in assuming that courts, in
determining the amount of rent, could simply rely on their
own appreciation of land values without considering any
evidence. As we have said earlier, a court may fix the
reasonable amount of rent, but it must still base its action
on the evidence adduced by the parties.
In Herrera v. Bollos [G.R. No. 138258, January 18, 2002],
the trial court awarded rent to the defendants in a forcible
entry case. Reversing the RTC, this Court declared that the
reasonable amount of rent could be determined not by
mere judicial notice, but by supporting evidence:
. . . A court cannot take judicial notice of a factual matter
in controversy. The court may take judicial notice of
matters of public knowledge, or which are capable of
unquestionable demonstration, or ought to be known to
judges because of their judicial functions. Before taking
such judicial notice, the court must "allow the parties to be
heard thereon". Hence, there can be no judicial notice on
the rental value of the premises in question without
supporting evidence.
Truly, mere judicial notice is inadequate, because evidence is
required for a court to determine the proper rental value. But
contrary to Corinthian's arguments, both the RTC and the CA
found that indeed rent was due the Tanjangcos because they
were deprived of possession and use of their property. This
uniform factual finding of the RTC and the CA was based on the
evidence presented below. Moreover, in Spouses Catungal v.
Hao, 43 we considered the increase in the award of rentals as
reasonable given the particular circumstances of each case.
We noted therein that the respondent denied the petitioners
the benefits, including rightful possession, of their property for
almost a decade.
Similarly, in the instant case, the Tanjangcos were deprived of
possession and use of their property for more than two
decades through no fault of their own. Thus, we find no cogent
reason to disturb the monthly rental fixed by the CA.
All told, the CA committed no reversible error.
WHEREFORE, the petition is DENIED. The Decision of the Court
of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
||| (Corinthian Gardens Association, Inc. v. Spouses Tanjangco,
G.R. No. 160795, [June 27, 2008], 578 PHIL 712-730)

FIRST DIVISION

[G.R. No. 156052. March 7, 2007.]

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE

T. CABIGAO, and BONIFACIO S.
TUMBOKON, petitioners, vs. HON. JOSE L. ATIENZA,
JR., in his capacity as Mayor of the City of
Manila, respondent.

DECISION

CORONA, J p:
In this original petition for mandamus, 1 petitioners Social
Justice Society (SJS), Vladimir Alarique T. Cabigao and Bonifacio
S. Tumbokon seek to compel respondent Hon. Jose L. Atienza,
Jr., mayor of the City of Manila, to enforce Ordinance No. 8027.
The antecedents are as follows. EDISTc
On November 20, 2001, the Sangguniang Panlungsod of
Manila enacted Ordinance No. 8027. 2 Respondent mayor
approved the ordinance on November 28, 2001. 3 It became
effective on December 28, 2001, after its publication. 4
Ordinance No. 8027 was enacted pursuant to the police power
delegated to local government units, a principle described as
the power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health,
morals and general welfare of the society. 5 This is evident
from Sections 1 and 3 thereof which state:
SECTION 1. For the purpose of promoting sound urban
planning and ensuring health, public safety, and general
welfare of the residents of Pandacan and Sta. Ana as well as its
adjoining areas, the land use of [those] portions of land
bounded by the Pasig River in the north, PNR Railroad Track in
the east, Beata St. in the south, Palumpong St. in the
southwest, and Estero de Pancacan in the west[,] PNR Railroad
in the northwest area, Estero de Pandacan in the [n]ortheast,
Pasig River in the southeast and Dr. M.L. Carreon in the
southwest. The area of Punta, Sta. Ana bounded by the Pasig
River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street,
are hereby reclassified from Industrial II to Commercial I.
SEC. 3. Owners or operators of industries and other
businesses, the operation of which are no longer permitted
under Section 1 hereof, are hereby given a period of six (6)
months from the date of effectivity of this Ordinance within
which to cease and desist from the operation of businesses
which are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein
from industrial to commercial and directed the owners and
operators of businesses disallowed under Section 1 to cease
and desist from operating their businesses within six months
from the date of effectivity of the ordinance. Among the
businesses situated in the area are the so-called " Pandacan
Terminals" of the oil companies Caltex (Philippines), Inc., Petron
Corporation and Pilipinas Shell Petroleum Corporation. ESTDIA
However, on June 26, 2002, the City of Manila and the
Department of Energy (DOE) entered into a memorandum of
understanding (MOU) 6 with the oil companies in which they
agreed that " the scaling down of the Pandacan Terminals [was]
the most viable and practicable option." Under the MOU, the oil
companies agreed to perform the following:
Section 1. Consistent with the objectives stated above, the
OIL COMPANIES shall, upon signing of this MOU, undertake a
program to scale down the Pandacan Terminals which shall
include, among others, the immediate
removal/decommissioning process of TWENTY EIGHT (28) tanks
starting with the LPG spheres and the commencing of works for
the creation of safety buffer and green zones surrounding the
Pandacan Terminals. . . .
Section 2. Consistent with the scale-down program
mentioned above, the OIL COMPANIES shall establish joint
operations and management, including the operation of
common, integrated and/or shared facilities, consistent with
international and domestic technical, safety, environmental
and economic considerations and standards. Consequently, the
joint operations of the OIL COMPANIES in the Pandacan
Terminals shall be limited to the common and integrated
areas/facilities. A separate agreement covering the commercial
and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.
Section 3. The development and maintenance of the safety
and green buffer zones mentioned therein, which shall be
taken from the properties of the OIL COMPANIES and not from
the surrounding communities, shall be the sole responsibility of
the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed
to do the following:
Section 1. The City Mayor shall endorse to the City Council
this MOU for its appropriate action with the view of
implementing the spirit and intent thereof. DEcSaI
Section 2. The City Mayor and the DOE shall, consistent with
the spirit and intent of this MOU, enable the OIL COMPANIES to
continuously operate in compliance with legal requirements,
within the limited area resulting from the joint operations and
the scale down program.
Section 3. The DOE and the City Mayor shall monitor the OIL
COMPANIES' compliance with the provisions of this MOU.
Section 4. The CITY OF MANILA and the national government
shall protect the safety buffer and green zones and shall exert
all efforts at preventing future occupation or encroachment
into these areas by illegal settlers and other unauthorized
parties.
The Sangguniang Panlungsod ratified the MOU in Resolution
No. 97. 7 In the same resolution, the Sanggunian declared that
the MOU was effective only for a period of six months starting
July 25, 2002. 8 Thereafter, on January 30, 2003,
the Sanggunian adopted Resolution No. 13 9 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing
Mayor Atienza to issue special business permits to the oil
companies. Resolution No. 13, s. 2003 also called for a
reassessment of the ordinance. 10
Meanwhile, petitioners filed this original action
for mandamus on December 4, 2002 praying that Mayor
Atienza be compelled to enforce Ordinance No. 8027 and order
the immediate removal of the terminals of the oil
companies. 11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to
enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions
ratifying it can amend or repeal Ordinance No. 8027. 12
Petitioners contend that respondent has the mandatory legal
duty, under Section 455 (b) (2) of the Local Government Code
(RA 7160), 13 to enforce Ordinance No. 8027 and order the
removal of the Pandacan Terminals of the oil companies.
Instead, he has allowed them to stay. cADEHI
Respondent's defense is that Ordinance No. 8027 has been
superseded by the MOU and the resolutions. 14 However, he
also confusingly argues that the ordinance and MOU are not
inconsistent with each other and that the latter has not
amended the former. He insists that the ordinance remains
valid and in full force and effect and that the MOU did not in
any way prevent him from enforcing and implementing it. He
maintains that the MOU should be considered as a mere
guideline for its full implementation. 15
Under Rule 65, Section 3 16 of the Rules of Court, a petition
for mandamus may be filed when any tribunal, corporation,
board, officer or person unlawfully neglects the performance of
an act which the law specifically enjoins as a duty resulting
from an office, trust or station. Mandamus is an extraordinary
writ that is employed to compel the performance, when
refused, of a ministerial duty that is already imposed on the
respondent and there is no other plain, speedy and adequate
remedy in the ordinary course of law. The petitioner should
have a well-defined, clear and certain legal right to the
performance of the act and it must be the clear and imperative
duty of respondent to do the act required to be done. 17
Mandamus will not issue to enforce a right, or to compel
compliance with a duty, which is questionable or over which a
substantial doubt exists. The principal function of the writ
ofmandamus is to command and to expedite, not to inquire
and to adjudicate; thus, it is neither the office nor the aim of
the writ to secure a legal right but to implement that which is
already established. Unless the right to the relief sought is
unclouded, mandamus will not issue. 18
To support the assertion that petitioners have a clear legal
right to the enforcement of the ordinance, petitioner SJS states
that it is a political party registered with the Commission on
Elections and has its offices in Manila. It claims to have many
members who are residents of Manila. The other petitioners,
Cabigao and Tumbokon, are allegedly residents of
Manila. TcHCIS
We need not belabor this point. We have ruled in previous
cases that when a mandamus proceeding concerns a public
right and its object is to compel a public duty, the people who
are interested in the execution of the laws are regarded as the
real parties in interest and they need not show any specific
interest. 19 Besides, as residents of Manila, petitioners have a
direct interest in the enforcement of the city's ordinances.
Respondent never questioned the right of petitioners to
institute this proceeding.
On the other hand, the Local Government Code imposes upon
respondent the duty, as city mayor, to " enforce all laws and
ordinances relative to the governance of the city." 20 One of
these is Ordinance No. 8027. As the chief executive of the city,
he has the duty to enforce Ordinance No. 8027 as long as it has
not been repealed by theSanggunian or annulled by the
courts. 21 He has no other choice. It is his ministerial duty to
do so. In Dimaporo v. Mitra, Jr., 22 we stated the reason for
this:
These officers cannot refuse to perform their duty on the
ground of an alleged invalidity of the statute imposing the
duty. The reason for this is obvious. It might seriously
hinder the transaction of public business if these officers
were to be permitted in all cases to question the
constitutionality of statutes and ordinances imposing
duties upon them and which have not judicially been
declared unconstitutional. Officers of the government from
the highest to the lowest are creatures of the law and are
bound to obey it. 23
 The question now is whether the MOU entered into by
respondent with the oil companies and the subsequent
resolutions passed by the Sanggunian have made the
respondent's duty to enforce Ordinance No. 8027 doubtful,
unclear or uncertain. This is also connected to the second issue
raised by petitioners, that is, whether the MOU and Resolution
Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend
or repeal Ordinance No. 8027. TEcHCA
We need not resolve this issue. Assuming that the terms of the
MOU were inconsistent with Ordinance No. 8027, the
resolutions which ratified it and made it binding on the City of
Manila expressly gave it full force and effect only until April
30, 2003. Thus, at present, there is nothing that legally
hinders respondent from enforcing Ordinance No. 8027. 24
Ordinance No. 8027 was enacted right after the Philippines,
along with the rest of the world, witnessed the horror of the
September 11, 2001 attack on the Twin Towers of the World
Trade Center in New York City. The objective of the ordinance is
to protect the residents of Manila from the catastrophic
devastation that will surely occur in case of a terrorist
attack 25 on the Pandacan Terminals. No reason exists why
such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent
Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is
directed to immediately enforce Ordinance No. 8027.
SO ORDERED.
Puno, C.J., Sandoval-Gutierrez and Garcia, JJ., concur.
Azcuna, J., is on official leave.
||| (Social Justice Society v. Atienza, Jr., G.R. No. 156052,
[March 7, 2007], 546 PHIL 485-494)
 FIRST DIVISION

[G.R. No. 157594. March 9, 2010.]

TOSHIBA INFORMATION EQUIPMENT (PHILS.),

INC., petitioner, vs. COMMISSIONER OF INTERNAL
REVENUE, respondent.

DECISION

LEONARDO-DE CASTRO, J p:
In this Petition for Review on Certiorari 1 under Rule 45 of the
Rules of Court, petitioner Toshiba Information Equipment
(Philippines), Inc. (Toshiba) seeks the reversal and setting
aside of (1) the Decision 2 dated August 29, 2002 of the Court
of Appeals in CA-G.R. SP No. 63047, which found that Toshiba
was not entitled to the credit/refund of its unutilized input
Value-Added Tax (VAT) payments attributable to its export
sales, because it was a tax-exempt entity and its export sales
were VAT-exempt transactions; and (2) the Resolution 3 dated
February 19, 2003 of the appellate court in the same case,
which denied the Motion for Reconsideration of Toshiba. The
herein assailed judgment of the Court of Appeals reversed and
set aside the Decision 4 dated October 16, 2000 of the Court
of Tax Appeals (CTA) in CTA Case No. 5762 granting the claim
for credit/refund of Toshiba in the amount of P1,385,282.08.
Toshiba is a domestic corporation principally engaged in the
business of manufacturing and exporting of electric
machinery, equipment systems, accessories, parts,
components, materials and goods of all kinds, including those
relating to office automation and information technology and
all types of computer hardware and software, such as but not
limited to HDD-CD-ROM and personal computer printed circuit
board. 5 It is registered with the Philippine Economic Zone
Authority (PEZA) as an Economic Zone (ECOZONE) export
enterprise in the Laguna Technopark, Inc., as evidenced by
Certificate of Registration No. 95-99 dated September 27,
1995. 6 It is also registered with Regional District Office No.
57 of the Bureau of Internal Revenue (BIR) in San Pedro,
Laguna, as a VAT-taxpayer with Taxpayer Identification No.
(TIN) 004-739-137. 7
In its VAT returns for the first and second quarters of
1997, 8 filed on April 14, 1997 and July 21, 1997, respectively,
Toshiba declared input VAT payments on its domestic
purchases of taxable goods and services in the aggregate sum
of P3,875,139.65, 9 with no zero-rated sales. Toshiba
subsequently submitted to the BIR on July 23, 1997 its
amended VAT returns for the first and second quarters of
1997, 10 reporting the same amount of input VAT payments
but, this time, with zero-rated sales totaling
P7,494,677,000.00. 11
On March 30, 1999, Toshiba filed with the One-Stop Shop
Inter-Agency Tax Credit and Duty Drawback Center of the
Department of Finance (DOF One-Stop Shop) two separate
applications for tax credit/refund 12 of its unutilized input VAT
payments for the first half of 1997 in the total amount of
P3,685,446.73. 13
The next day, on March 31, 1999, Toshiba likewise filed with
the CTA a Petition for Review 14 to toll the running of the two-
year prescriptive period under Section 230 of the Tax Code of
1977, 15 as amended. 16 In said Petition, docketed as CTA
Case No. 5762, Toshiba prayed that
[A]fter due hearing, judgment be rendered ordering
[herein respondent Commissioner of Internal Revenue
(CIR)] to refund or issue to [Toshiba] a tax refund/tax credit
certificate in the amount of P3,875,139.65 representing
unutilized input taxes paid on its purchase of taxable
goods and services for the period January 1 to June 30,
1997. 17
 The Commissioner of Internal Revenue (CIR) opposed the
claim for tax refund/credit of Toshiba, setting up the following
special and affirmative defenses in his Answer 18
5. [Toshiba's] alleged claim for refund/tax credit is subject
to administrative routinary investigation/examination by
[CIR's] Bureau;
6. [Toshiba] failed miserably to show that the total amount
of P3,875,139.65 claimed as VAT input taxes, were
erroneously or illegally collected, or that the same are
properly documented;
7. Taxes paid and collected are presumed to have been
made in accordance with law; hence, not
refundable; CEcaTH
8. In an action for tax refund, the burden is on the
taxpayer to establish its right to refund, and failure to
sustain the burden is fatal to the claim for refund;
9. It is incumbent upon [Toshiba] to show that it has
complied with the provisions of Section 204 in relation to
Section 229 of the Tax Code;
10. Well-established is the rule that claims for refund/tax
credit are construed in strictissimi juris against the
taxpayer as it partakes the nature of exemption from
tax. 19
Upon being advised by the CTA, 20 Toshiba and the CIR filed
a Joint Stipulation of Facts and Issues, 21 wherein the
opposing parties "agreed and admitted" that
1. [Toshiba] is a duly registered value-added tax entity in
accordance with Section 107 of the Tax Code,as amended.
2. [Toshiba] is subject to zero percent (0%) value-added
tax on its export sales in accordance with then Section
100(a)(2)(A) of the Tax Code,as amended.
3. [Toshiba] filed its quarterly VAT returns for the first two
quarters of 1997 within the legally prescribed period.
xxx xxx xxx
7. [Toshiba] is subject to zero percent (0%) value-added
tax on its export sales.
8. [Toshiba] has duly filed the instant Petition for Review
within the two-year prescriptive period prescribed by then
Section 230 of the Tax Code. 22
In the same pleading, Toshiba and the CIR jointly submitted
the following issues for determination by the CTA
Whether or not [Toshiba] has incurred input taxes in the
amount of P3,875,139.65 for the period January 1 to June
30, 1997 which are directly attributable to its export
sales[.]
Whether or not the input taxes incurred by [Toshiba] for
the period January 1 to June 30, 1997 have not been
carried over to the succeeding quarters[.]
Whether or not input taxes incurred by [Toshiba] for the
first two quarters of 1997 have not been offset against any
output tax[.]
Whether or not input taxes incurred by [Toshiba] for the
first two quarters of 1997 are properly substantiated by
official receipts and invoices. 23
During the trial before the CTA, Toshiba presented
documentary evidence in support of its claim for tax
credit/refund, while the CIR did not present any evidence at
all.
With both parties waiving the right to submit their respective
memoranda, the CTA rendered its Decision in CTA Case No.
5762 on October 16, 2000 favoring Toshiba. According to the
CTA, the CIR himself admitted that the export sales of Toshiba
were subject to zero percent (0%) VAT based on Section 100
(a) (2) (A) (i) of the Tax Code of 1977, as amended. Toshiba
could then claim tax credit or refund of input VAT paid on its
purchases of goods, properties, or services, directly
attributable to such zero-rated sales, in accordance with
Section 4.102-2 of Revenue Regulations No. 7-95. The CTA,
though, reduced the amount to be credited or refunded to
Toshiba to P1,385,292.02.
The dispositive portion of the October 16, 2000 Decision of
the CTA fully reads
WHEREFORE, [Toshiba's] claim for refund of unutilized
input VAT payments is hereby GRANTED but in a reduced
amount of P1,385,282.08 computed as follows:

1st Quarter 2nd Quarter Total

Amount of claimed input
taxes filed with the DOF
P3,268,682 P3,685,446.
One Stop Shop Center P416,764.39
.34 73

Less
1) Input taxes not
:
properly
supported
by VAT invoices
and official
receipts

a. Per SGV's
verification
P242,491.4
(Exh. I) P154,391.13 P396,882.58
5

Per this
b.
court's
further
 verification
P1,852,437 P1,887,545.
(Annex A) P35,108.00
.65 65

1998 4th qtr.

2)
Output
VAT liability
applied
against the
claimed
input taxes 15,736.42 15,736.42



P2,110,665 P2,300,164.
Subtotal P189,499.13
.52 65



P1,158,016 P1,385,282.
Amount Refundable P227,265.26
.82 08



Respondent Commissioner of Internal Revenue
is ORDERED to REFUND to [Toshiba] or in the alternative,
ISSUE a TAX CREDIT CERTIFICATE in the amount of
P1,385,282.08 representing unutilized input taxes paid by
[Toshiba] on its purchases of taxable goods and services
for the period January 1 to June 30, 1997. 24
Both Toshiba and the CIR sought reconsideration of the
foregoing CTA Decision.
Toshiba asserted in its Motion for Reconsideration 25 that it
had presented proper substantiation for the P1,887,545.65
input VAT disallowed by the CTA.
The CIR, on the other hand, argued in his Motion for
Reconsideration 26 that Toshiba was not entitled to the
credit/refund of its input VAT payments because as a PEZA-
registered ECOZONE export enterprise, Toshiba was not
subject to VAT. The CIR invoked the following statutory and
regulatory provisions
Section 24 of Republic Act No. 7916 27
Sec. 24. Exemption from Taxes Under the National Internal
Revenue Code. Any provision of existing laws, rules and
regulations to the contrary notwithstanding, no taxes, local
and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu of paying taxes, five
percent (5%) of the gross income earned by all businesses
and enterprises within the ECOZONE shall be remitted to
the national government. . . . . AECDHS
Section 103 (q) of the Tax Code of 1977, as amended
Sec. 103. Exempt transactions. The following shall be
exempt from the value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws,
except those granted under Presidential Decree Nos. 66,
529, 972, 1491, and 1950, and non-electric cooperatives
under Republic Act No. 6938, or international agreements
to which the Philippines is a signatory.
Section 4.103-1 of Revenue Regulations No. 7-95
Sec. 4.103-1.Exemptions. (A) In general. An
exemption means that the sale of goods or properties
and/or services and the use or lease of properties is not
subject to VAT (output tax) and the seller is not allowed
any tax credit on VAT (input tax) previously paid.
The person making the exempt sale of goods, properties
or services shall not bill any output tax to his customers
because the said transaction is not subject to VAT. On the
other hand, a VAT-registered purchaser of VAT-exempt
goods, properties or services which are exempt from VAT is
not entitled to any input tax on such purchase despite the
issuance of a VAT invoice or receipt.
The CIR contended that under Section 24 of Republic Act No.
7916, a special law, all businesses and establishments within
the ECOZONE were to remit to the government five percent
(5%) of their gross income earned within the zone, in lieu of
all taxes, including VAT. This placed Toshiba within the ambit
of Section 103 (q) of the Tax Code of 1977, as amended,
which exempted from VAT the transactions that were
exempted under special laws. Following Section 4.103-1 (A) of
Revenue Regulations No. 7-95, the VAT-exemption of Toshiba
meant that its sale of goods was not subject to output VAT
and Toshiba as seller was not allowed any tax credit on the
input VAT it had previously paid.
On January 17, 2001, the CTA issued a Resolution 28 denying
both Motions for Reconsideration of Toshiba and the CIR.
The CTA took note that the pieces of evidence referred to by
Toshiba in its Motion for Reconsideration were insufficient
substantiation, being mere schedules of input VAT payments it
had purportedly paid for the first and second quarters of
1997. While the CTA gives credence to the report of its
commissioned certified public accountant (CPA), it does not
render its decision based on the findings of the said CPA
alone. The CTA has its own CPA and the tax court itself
conducts an investigation/examination of the documents
presented. The CTA stood by its earlier disallowance of the
amount of P1,887,545.65 as tax credit/refund because it was
not supported by VAT invoices and/or official receipts.
The CTA refused to consider the argument that Toshiba was
not entitled to a tax credit/refund under Section 24 of Republic
Act No. 7916 because it was only raised by the CIR for the first
time in his Motion for Reconsideration. Also, contrary to the
assertions of the CIR, the CTA held that Section 23, and not
Section 24, ofRepublic Act No. 7916, applied to Toshiba.
According to Section 23 of Republic Act No. 7916
 Sec. 23. Fiscal Incentives. Business establishments
operating within the ECOZONES shall be entitled to the
fiscal incentives as provided for under Presidential Decree
No. 66, the law creating the Export Processing Zone
Authority, or those provided under Book VI of Executive
Order No. 226, otherwise known as the Omnibus
Investment Code of 1987.
Furthermore, tax credits for exporters using local materials
as inputs shall enjoy the benefits provided for in the Export
Development Act of 1994.
Among the fiscal incentives granted to PEZA-registered
enterprises by the Omnibus Investments Code of 1987 was
the income tax holiday, to wit
Art. 39. Incentives to Registered Enterprises. All
registered enterprises shall be granted the following
incentives to the extent engaged in a preferred area of
investment:
(a) Income Tax Holiday.
(1) For six (6) years from commercial operation for pioneer
firms and four (4) years for non-pioneer firms, new
registered firms shall be fully exempt from income taxes
levied by the national government. Subject to such
guidelines as may be prescribed by the Board, the income
tax exemption will be extended for another year in each of
the following cases:
(i) The project meets the prescribed ratio of capital
equipment to number of workers set by the Board;
(ii) Utilization of indigenous raw materials at rates set by
the Board;
(iii) The net foreign exchange savings or earnings amount
to at least US$500,000.00 annually during the first three
(3) years of operation.
The preceding paragraph notwithstanding, no registered
pioneer firm may avail of this incentive for a period
exceeding eight (8) years.
(2) For a period of three (3) years from commercial
operation, registered expanding firms shall be entitled to
an exemption from income taxes levied by the National
Government proportionate to their expansion under such
terms and conditions as the Board may
determine: Provided, however, That during the period
within which this incentive is availed of by the expanding
firm it shall not be entitled to additional deduction for
incremental labor expense.
(3) The provision of Article 7(14) notwithstanding,
registered firms shall not be entitled to any extension of
this incentive. TIDcEH
The CTA pointed out that Toshiba availed itself of the income
tax holiday under the Omnibus Investments Code of 1987, so
Toshiba was exempt only from income tax but not from other
taxes such as VAT. As a result, Toshiba was liable for output
VAT on its export sales, but at zero percent (0%) rate, and
entitled to the credit/refund of the input VAT paid on its
purchases of goods and services relative to such zero-rated
export sales.
Unsatisfied, the CIR filed a Petition for Review 29 with the
Court of Appeals, docketed as CA-G.R. SP No. 63047.
In its Decision dated August 29, 2002, the Court of Appeals
granted the appeal of the CIR, and reversed and set aside the
Decision dated October 16, 2000 and the Resolution dated
January 17, 2001 of the CTA. The appellate court ruled that
Toshiba was not entitled to the refund of its alleged unused
input VAT payments because it was a tax-exempt entity under
Section 24 of Republic Act No. 7916. As a PEA-registered
corporation, Toshiba was liable for remitting to the national
government the five percent (5%) preferential rate on its
gross income earned within the ECOZONE, in lieu of all other
national and local taxes, including VAT.
The Court of Appeals further adjudged that the export sales
of Toshiba were VAT-exempt, not zero-rated, transactions. The
appellate court found that the Answer filed by the CIR in CTA
Case No. 5762 did not contain any admission that the export
sales of Toshiba were zero-rated transactions under Section
100 (a) (2) (A) of the Tax Code of 1977, as amended. At the
least, what was admitted by the CIR in said Answer was that
the Tax Code provisions cited in the Petition for Review of
Toshiba in CTA Case No. 5762 were correct. As to the Joint
Stipulation of Facts and Issues filed by the parties in CTA Case
No. 5762, which stated that Toshiba was subject to zero
percent (0%) VAT on its export sales, the appellate court
declared that the CIR signed the said pleading through
palpable mistake. This palpable mistake in the stipulation of
facts should not be taken against the CIR, for to do otherwise
would result in suppressing the truth through falsehood. In
addition, the State could not be put in estoppel by the
mistakes or errors of its officials or agents.
Given that Toshiba was a tax-exempt entity under Republic
Act No. 7916, a special law, the Court of Appeals concluded
that the export sales of Toshiba were VAT-exempt transactions
under Section 109 (q) of the Tax Code of 1997, formerly
Section 103 (q) of the Tax Code of 1977. Therefore, Toshiba
could not claim refund of its input VAT payments on its
domestic purchases of goods and services.
The Court of Appeals decreed at the end of its August 29,
2002 Decision
WHEREFORE, premises considered, the appealed decision
of the Court of Tax Appeals in CTA Case No. 5762, is hereby
REVERSED and SET ASIDE, and a new one is hereby
rendered finding [Toshiba], being a tax exempt entity
under R.A. No. 7916, not entitled to refund the VAT
payments made in its domestic purchases of goods and
services. 30
Toshiba filed a Motion for Reconsideration 31 of the
aforementioned Decision, anchored on the following
arguments: (a) the CIR never raised as an issue before the
CTA that Toshiba was tax-exempt under Section 24 of Republic
Act No. 7916; (b) Section 24 of Republic Act No. 7916,
subjecting the gross income earned by a PEZA-registered
enterprise within the ECOZONE to a preferential rate of five
percent (5%), in lieu of all taxes, did not apply to Toshiba,
which availed itself of the income tax holiday under Section
23 of the same statute; (c) the conclusion of the CTA that the
export sales of Toshiba were zero-rated was supported by
substantial evidence, other than the admission of the CIR in
the Joint Stipulation of Facts and Issues; and (d) the judgment
of the CTA granting the refund of the input VAT payments was
supported by substantial evidence and should not have been
set aside by the Court of Appeals.
In a Resolution dated February 19, 2003, the Court of Appeals
denied the Motion for Reconsideration of Toshiba since the
arguments presented therein were mere reiterations of those
already passed upon and found to be without merit by the
appellate court in its earlier Decision. The Court of Appeals,
however, mentioned that it was incorrect for Toshiba to say
that the issue of the applicability of Section 24 of Republic Act
No. 7916 was only raised for the first time on appeal before
the appellate court. The said issue was adequately raised by
the CIR in his Motion for Reconsideration before the CTA, and
was even ruled upon by the tax court.
Hence, Toshiba filed the instant Petition for Review with the
following assignment of errors
5.1 THE HONORABLE COURT OF APPEALS ERRED WHEN IT
RULED THAT [TOSHIBA], BEING A PEZA-REGISTERED
ENTERPRISE, IS EXEMPT FROM VAT UNDER SECTION 24
OF R.A. 7916, AND FURTHER HOLDING THAT [TOSHIBA'S]
EXPORT SALES ARE EXEMPT TRANSACTIONS UNDER
SECTION 109 OF THE TAX CODE.
5.2 THE HONORABLE COURT OF APPEALS ERRED WHEN IT
FAILED TO DISMISS OUTRIGHT AND GAVE DUE COURSE TO
[CIR'S] PETITION NOTWITHSTANDING [CIR'S] FAILURE TO
ADEQUATELY RAISE IN ISSUE DURING THE TRIAL IN THE
COURT OF TAX APPEALS THE APPLICABILITY OF SECTION 24
OF R.A. 7916 TO [TOSHIBA'S] CLAIM FOR REFUND.
5.3 THE HONORABLE COURT OF APPEALS ERRED WHEN
[IT] RULED THAT THE COURT OF TAX APPEALS' FINDINGS,
WITH REGARD [TOSHIBA'S] EXPORT SALES BEING ZERO
RATED SALES FOR VAT PURPOSES, WERE BASED MERELY
ON THE ADMISSIONS MADE BY [CIR'S] COUNSEL AND NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE.
5.4 THE HONORABLE COURT OF APPEALS ERRED WHEN IT
REVERSED THE DECISION OF THE COURT OF TAX APPEALS
GRANTING [TOSHIBA'S] CLAIM FOR REFUND[;]32
and the following prayer
WHEREFORE, premises considered, Petitioner TOSHIBA
INFORMATION EQUIPMENT (PHILS.), INC. most respectfully
prays that the decision and resolution of the Honorable
Court of Appeals, reversing the decision of the CTA in CTA
Case No. 5762, be set aside and further prays that a new
one be rendered AFFIRMING AND UPHOLDING the Decision
of the CTA promulgated on October 16, 2000 in CTA Case
No. 5762. EICDSA
Other reliefs, which the Honorable Court may deem just
and equitable under the circumstances, are likewise
prayed for. 33
The Petition is impressed with merit.
The CIR did not timely raise before
the CTA the issues on the VAT-
exemptions of Toshiba and its export
sales.
Upon the failure of the CIR to timely plead and prove before
the CTA the defenses or objections that Toshiba was VAT-
exempt under Section 24 of Republic Act No. 7916, and that
its export sales were VAT-exempt transactions under Section
103 (q) of the Tax Code of 1977, as amended, the CIR is
deemed to have waived the same.
During the pendency of CTA Case No. 5762, the proceedings
before the CTA were governed by the Rules of the Court of Tax
Appeals, 34 while the Rules of Court were applied
suppletorily. 35
Rule 9, Section 1 of the Rules of Court provides:
Sec. 1. Defenses and objections not pleaded. Defenses
and objections not pleaded either in a motion to dismiss or
in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that
the court has no jurisdiction over the subject matter, that
there is another action pending between the same parties
for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall
dismiss the claim. CaEATI
The CIR did not argue straight away in his Answer in CTA
Case No. 5762 that Toshiba had no right to the credit/refund of
its input VAT payments because the latter was VAT-exempt
and its export sales were VAT-exempt transactions. The Pre-
Trial Brief 36 of the CIR was equally bereft of such allegations
or arguments. The CIR passed up the opportunity to prove the
supposed VAT-exemptions of Toshiba and its export sales
when the CIR chose not to present any evidence at all during
the trial before the CTA. 37 He missed another opportunity to
present the said issues before the CTA when he waived the
submission of a Memorandum. 38 The CIR had waited until
the CTA already rendered its Decision dated October 16, 2000
in CTA Case No. 5762, which granted the claim for
credit/refund of Toshiba, before asserting in his Motion for
Reconsideration that Toshiba was VAT-exempt and its export
sales were VAT-exempt transactions.
The CIR did not offer any explanation as to why he did not
argue the VAT-exemptions of Toshiba and its export sales
before and during the trial held by the CTA, only doing so in
his Motion for Reconsideration of the adverse CTA judgment.
Surely, said defenses or objections were already available to
the CIR when the CIR filed his Answer to the Petition for
Review of Toshiba in CTA Case No. 5762.
It is axiomatic in pleadings and practice that no new issue in
a case can be raised in a pleading which by due diligence
could have been raised in previous pleadings. 39 The Court
cannot simply grant the plea of the CIR that the procedural
rules be relaxed based on the general averment of the
interest of substantive justice. It should not be forgotten that
the first and fundamental concern of the rules of procedure is
to secure a just determination of every action. 40 Procedural
rules are designed to facilitate the adjudication of cases.
Courts and litigants alike are enjoined to abide strictly by the
rules. While in certain instances, the Court allows a relaxation
in the application of the rules, it never intends to forge a
weapon for erring litigants to violate the rules with impunity.
The liberal interpretation and application of rules apply only in
proper cases of demonstrable merit and under justifiable
causes and circumstances. While it is true that litigation is not
a game of technicalities, it is equally true that every case
must be prosecuted in accordance with the prescribed
procedure to ensure an orderly and speedy administration of
justice. Party litigants and their counsel are well advised to
abide by, rather than flaunt, procedural rules for these rules
illumine the path of the law and rationalize the pursuit of
justice. 41
 The CIR judicially admitted that
Toshiba was VAT-registered and
its export sales were subject to VAT at
zero percent (0%) rate.
More importantly, the arguments of the CIR that Toshiba was
VAT-exempt and the latter's export sales were VAT-exempt
transactions are inconsistent with the explicit admissions of
the CIR in the Joint Stipulation of Facts and Issues (Joint
Stipulation) that Toshiba was a registered VAT entity and that
it was subject to zero percent (0%) VAT on its export sales.
The Joint Stipulation was executed and submitted by Toshiba
and the CIR upon being advised to do so by the CTA at the
end of the pre-trial conference held on June 23, 1999. 42 The
approval of the Joint Stipulation by the CTA, in its
Resolution 43 dated July 12, 1999, marked the culmination of
the pre-trial process in CTA Case No. 5762.
Pre-trial is an answer to the clarion call for the speedy
disposition of cases. Although it was discretionary under the
1940 Rules of Court, it was made mandatory under the 1964
Rules and the subsequent amendments in 1997. It has been
hailed as "the most important procedural innovation in Anglo-
Saxon justice in the nineteenth century." 44
The nature and purpose of a pre-trial have been laid down in
Rule 18, Section 2 of the Rules of Court:
Sec. 2. Nature and purpose. The pre-trial is mandatory.
The court shall consider:
(a) The possibility of an amicable settlement or of a
submission to alternative modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the
pleadings;
(d) The possibility of obtaining stipulations or
admissions of facts and of documents to avoid
unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a
commissioner;
(g) The propriety of rendering judgment on the pleadings,
or summary judgment, or of dismissing the action should a
valid ground therefor be found to exist;
(h) The advisability or necessity of suspending the
proceedings; and
(i) Such other matters as may aid in the prompt
disposition of the action. (Emphasis ours.) HDCTAc
The admission having been made in a stipulation of facts at
pre-trial by the parties, it must be treated as a Judicial
admission. 45 Under Section 4, Rule 129 of the Rules of Court,
a judicial admission requires no proof. The admission may be
contradicted only by a showing that it was made through
palpable mistake or that no such admission was made. The
Court cannot lightly set aside a judicial admission especially
when the opposing party relied upon the same and
accordingly dispensed with further proof of the fact already
admitted. An admission made by a party in the course of the
proceedings does not require proof. 46
In the instant case, among the facts expressly admitted by
the CIR and Toshiba in their CTA-approved Joint Stipulation are
that Toshiba "is a duly registered value-added tax entity in
accordance with Section 107 of the Tax Code,as amended
[,]" 47 that "is subject to zero percent (0%) value-added tax
on its export sales in accordance with then Section 100 (a) (2)
(A) of the Tax Code,as amended." 48 The CIR was bound by
these admissions, which he could not eventually contradict in
his Motion for Reconsideration of the CTA Decision dated
October 16, 2000, by arguing that Toshiba was actually a VAT-
exempt entity and its export sales were VAT-exempt
transactions. Obviously, Toshiba could not have been subject
to VAT and exempt from VAT at the same time. Similarly,
the export sales of Toshiba could not have been subject to
zero percent (0%) VAT and exempt from VAT as well.
The CIR cannot escape the binding
effect of his judicial admissions.
The Court disagrees with the Court of Appeals when it ruled in
its Decision dated August 29, 2002 that the CIR could not be
bound by his admissions in the Joint Stipulation because (1)
the said admissions were "made through palpable
mistake" 49 which, if countenanced, "would result in
falsehood, unfairness and injustice"; 50and (2) the State could
not be put in estoppel by the mistakes of its officials or
agents. This ruling of the Court of Appeals is rooted in its
conclusion that a "palpable mistake" had been committed by
the CIR in the signing of the Joint Stipulation. However, this
Court finds no evidence of the commission of a mistake, much
more, of a palpable one.
The CIR does not deny that his counsel, Atty. Joselito F.
Biazon, Revenue Attorney II of the BIR, signed the Joint
Stipulation, together with the counsel of Toshiba, Atty. Patricia
B. Bisda. Considering the presumption of regularity in the
performance of official duty, 51 Atty. Biazon is presumed to
have read, studied, and understood the contents of the Joint
Stipulation before he signed the same. It rests on the CIR to
present evidence to the contrary.
Yet, the Court observes that the CIR himself never alleged in
his Motion for Reconsideration of the CTA Decision dated
October 16, 2000, nor in his Petition for Review before the
Court of Appeals, that Atty. Biazon committed a mistake in
signing the Joint Stipulation. Since the CIR did not make such
an allegation, neither did he present any proof in support
thereof. The CIR began to aver the existence of a palpable
mistake only after the Court of Appeals made such a
declaration in its Decision dated August 29, 2002.
Despite the absence of allegation and evidence by the CIR,
the Court of Appeals, on its own, concluded that the
admissions of the CIR in the Joint Stipulation were due to a
palpable mistake based on the following deduction
Scrutinizing the Answer filed by [the CIR], we rule that the
Joint Stipulation of Facts and Issues signed by [the CIR] was
made through palpable mistake. Quoting paragraph 4 of its
Answer, [the CIR] states:
"4. He ADMITS the allegations contained in paragraph 5 of
the petition only insofar as the cited provisions of Tax
Code is concerned, but SPECIFICALLY DENIES the rest of
the allegations therein for being mere opinions, arguments
or gratuitous assertions on the part of [Toshiba] and/or
because they are mere erroneous conclusions or
interpretations of the quoted law involved, the truth of the
matter being those stated hereunder.
xxx xxx xxx"
And paragraph 5 of the petition for review filed by
[Toshiba] before the CTA states:
"5. Petitioner is subject to zero percent (0%) value-added
tax on its export sales in accordance with then Section
100(a)(2)(A) of the Tax Code . . . . cEHSTC
xxx xxx xxx"
As we see it, nothing in said Answer did [the CIR] admit
that the export sales of [Toshiba] were indeed zero-rated
transactions. At the least, what was admitted only by [the
CIR] concerning paragraph 4 of his Answer, is the fact that
the provisions of the Tax Code,as cited by [Toshiba] in its
petition for review filed before the CTA were correct. 52
The Court of Appeals provided no explanation as to why the
admissions of the CIR in his Answer in CTA Case No. 5762
deserved more weight and credence than those he made in
the Joint Stipulation. The appellate court failed to appreciate
that the CIR, through counsel, Atty. Biazon, also signed the
Joint Stipulation; and that absent evidence to the contrary,
Atty. Biazon is presumed to have signed the Joint Stipulation
willingly and knowingly, in the regular performance of his
official duties. Additionally, the Joint Stipulation 53 of Toshiba
and the CIR was a more recent pleading than the
Answer 54 of the CIR. It was submitted by the parties after
the pre-trial conference held by the CTA, and subsequently
approved by the tax court. If there was any discrepancy
between the admissions of the CIR in his Answer and in the
Joint Stipulation, the more logical and reasonable explanation
would be that the CIR changed his mind or conceded some
points to Toshiba during the pre-trial conference which
immediately preceded the execution of the Joint Stipulation.
To automatically construe that the discrepancy was the result
of a palpable mistake is a wide leap which this Court is not
prepared to take without substantial basis.
The judicial admissions of the CIR
in the Joint Stipulation are not
intrinsically false, wrong, or illegal,
and are consistent with the ruling on
the VAT treatment of PEZA-
registered enterprises in the previous
Toshiba case.
There is no basis for believing that to bind the CIR to his
judicial admissions in the Joint Stipulation that Toshiba was
a VAT-registered entity and its export sales were zero-rated
VAT transactions would result in "falsehood, unfairness and
injustice." The judicial admissions of the CIR are not
intrinsically false, wrong, or illegal. On the contrary, they are
consistent with the ruling of this Court in a previous case
involving the same parties, Commissioner of Internal Revenue
v. Toshiba Information Equipment (Phils.) Inc. 55 (Toshiba
case), explaining the VAT treatment of PEZA-registered
enterprises.
In the Toshiba case,Toshiba sought the refund of its unutilized
input VAT on its purchase of capital goods and
services for the first and second quarters of 1996, based on
Section 106 (b) of the Tax Code of 1977, as amended. 56 In
the Petition at bar, Toshiba is claiming refund of its unutilized
input VAT on its local purchase of goods and services
which are attributable to its export sales for the first and
second quarters of 1997, pursuant to Section 106 (a), in
relation to Section 100 (a) (1) (A) (i) of the Tax Code of 1977,
as amended, which read
Sec. 106.Refunds or tax credits of creditable input tax.
(a) Any VAT-registered person, whose sales are zero-rated
or effectively zero-rated, may, within two (2) years after
the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or
refund of creditable input tax due or paid attributable to
such sales, except transitional input tax, to the extent that
such input tax has not been applied against output
tax: Provided, however, That in the case of zero-rated sales
under Section 100(a)(2)(A)(i), (ii) and (b) and Section
102(b)(1) and (2), the acceptable foreign currency
exchange proceeds thereof has been duly accounted for in
accordance with the regulations of the Bangko Sentral ng
Pilipinas (BSP): Provided, further, That where the taxpayer
is engaged in zero-rated or effectively zero-rated sale and
also in taxable or exempt sale of goods or properties of
services, and the amount of creditable input tax due or
paid cannot be directly and entirely attributed to any one
of the transactions, it shall be allocated proportionately on
the basis of the volume sales. DaAETS
Sec. 100. Value-added tax on sale of goods or
properties. (a) Rate and base of tax. . . .
xxx xxx xxx
 (2) The following sales by VAT-registered persons shall be
subject to 0%:
(A) Export sales. The term "export sales" means:
(i) The sale and actual shipment of goods from the
Philippines to a foreign country, irrespective of any
shipping arrangement that may be agreed upon which may
influence or determine the transfer of ownership of the
goods so exported and paid for in acceptable foreign
currency or its equivalent in goods or services, and
accounted for in accordance with the rules and regulations
of the Bangko Sentral ng Pilipinas (BSP).
Despite the difference in the legal bases for the claims for
credit/refund in the Toshiba case and the case at bar, the CIR
raised the very same defense or objection in both that
Toshiba and its transactions were VAT-exempt. Hence, the
ruling of the Court in the former case is relevant to the
present case.
At the outset, the Court establishes that there is a basic
distinction in the VAT-exemption of a person and the VAT-
exemption of a transaction
It would seem that petitioner CIR failed to differentiate
between VAT-exempt transactions from VAT-exempt
entities. In the case of Commissioner of Internal Revenue
v. Seagate Technology (Philippines), this Court already
made such distinction
An exempt transaction, on the one hand, involves goods
or services which, by their nature, are specifically listed in
and expressly exempted from the VAT under the Tax
Code,without regard to the tax status VAT-exempt or not
of the party to the transaction. . .
An exempt party, on the other hand, is a person or entity
granted VAT exemption under the Tax Code,a special law or
an international agreement to which the Philippines is a
signatory, and by virtue of which its taxable transactions
become exempt from VAT . . . . 57
In effect, the CIR is opposing the claim for credit/refund of
input VAT of Toshiba on two grounds: (1) that Toshiba was a
VAT-exempt entity; and (2) that its export sales were VAT-
exempt transactions.
It is now a settled rule that based on the Cross Border
Doctrine, PEZA-registered enterprises, such as Toshiba, are
VAT-exempt and no VAT can be passed on to them. The Court
explained in the Toshiba case that
PEZA-registered enterprise, which would necessarily be
located within ECOZONES, are VAT-exempt entities, not
because of Section 24 of Rep. Act No. 7916, as amended,
which imposes the five percent (5%) preferential tax rate
on gross income of PEZA-registered enterprises, in lieu of
all taxes; but, rather, because of Section 8 of the same
statute which establishes the fiction that ECOZONES are
foreign territory.
xxx xxx xxx
The Philippine VAT system adheres to the Cross Border
Doctrine, according to which, no VAT shall be imposed to
form part of the cost of goods destined for consumption
outside of the territorial border of the taxing authority.
Hence, actual export of goods and services from the
Philippines to a foreign country must be free of VAT; while,
those destined for use or consumption within the
Philippines shall be imposed with ten percent (10%) VAT.
Applying said doctrine to the sale of goods, properties,
and services to and from the ECOZONES, the BIR issued
Revenue Memorandum Circular (RMC) No. 74-99, on 15
October 1999. Of particular interest to the present Petition
is Section 3 thereof, which reads
Sec. 3. Tax Treatment of Sales Made by a VAT
Registered Supplier from the Customs Territory, to a
PEZA Registered Enterprise.
(1) If the Buyer is a PEZA registered enterprise which is
subject to the 5% special tax regime, in lieu of all taxes,
except real property tax, pursuant to R.A. No. 7916, as
amended:
(a) Sale of goods (i.e., merchandise). This shall be
treated as indirect export hence, considered subject to
zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)
(5), NIRC and Sec. 23 of R.A. No. 7916, in relation to ART.
77(2) of the Omnibus Investments Code.
(b) Sale of service. This shall be treated subject to
zero percent (0%) VAT under the "cross border doctrine" of
the VAT System, pursuant to VAT Ruling No. 032-98 dated
Nov. 5, 1998.
(2) If Buyer is a PEZA registered enterprise which is not
embraced by the 5% special tax regime, hence, subject to
taxes under the NIRC,e.g., Service Establishments which
are subject to taxes under the NIRC rather than the 5%
special tax regime:
(a) Sale of goods (i.e., merchandise). This shall be
treated as indirect export hence, considered subject to
zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)
(5), NIRC and Sec. 23 of R.A. No. 7916 in relation to ART.
77(2) of the Omnibus Investments Code.
(b) Sale of Service. This shall be treated subject to
zero percent (0%) VAT under the "cross border doctrine" of
the VAT System, pursuant to VAT Ruling No. 032-98 dated
Nov. 5, 1998. cASTED
(3) In the final analysis, any sale of goods, property or
services made by a VAT registered supplier from the
Customs Territory to any registered enterprise operating in
the ecozone, regardless of the class or type of the latter's
PEZA registration, is actually qualified and thus legally
entitled to the zero percent (0%) VAT. Accordingly, all sales
of goods or property to such enterprise made by a VAT
registered supplier from the Customs Territory shall be
treated subject to 0% VAT, pursuant to Sec. 106(A)(2)(a)
(5), NIRC,in relation to ART. 77(2) of the Omnibus
Investments Code, while all sales of services to the said
enterprises, made by VAT registered suppliers from the
Customs Territory, shall be treated effectively subject to
the 0% VAT, pursuant to Section 108(B)(3), NIRC,in relation
to the provisions of R.A. No. 7916 and the "Cross Border
Doctrine" of the VAT system.
This Circular shall serve as a sufficient basis to entitle such
supplier of goods, property or services to the benefit of the
zero percent (0%) VAT for sales made to the
aforementioned ECOZONE enterprises and shall serve as
sufficient compliance to the requirement for prior approval
of zero-rating imposed by Revenue Regulations No. 7-95
effective as of the date of the issuance of this Circular.
Indubitably, no output VAT may be passed on to an
ECOZONE enterprise since it is a VAT-exempt entity. . . . 58
The Court, nevertheless, noted in the Toshiba case that the
rule which considers any sale by a supplier from the Customs
Territory to a PEZA-registered enterprise as export sale, which
should not be burdened by output VAT, was only clearly
established on October 15, 1999, upon the issuance by the
BIR of RMC No. 74-99. Prior to October 15, 1999, whether a
PEZA-registered enterprise was exempt or subject to VAT
depended on the type of fiscal incentives availed of by the
said enterprise. 59 The old rule, then followed by the BIR, and
recognized and affirmed by the CTA, the Court of Appeals, and
this Court, was described as follows
 According to the old rule, Section 23 of Rep. Act No. 7916,
as amended, gives the PEZA-registered enterprise the
option to choose between two sets of fiscal incentives: (a)
The five percent (5%) preferential tax rate on its gross
income under Rep. Act No. 7916, as amended; and (b) the
income tax holiday provided under Executive Order No.
226, otherwise known as the Omnibus Investment Code of
1987, as amended.
The five percent (5%) preferential tax rate on gross
income under Rep. Act No. 7916, as amended, is in lieu of
all taxes. Except for real property taxes, no other national
or local tax may be imposed on a PEZA-registered
enterprise availing of this particular fiscal incentive, not
even an indirect tax like VAT.
Alternatively, Book VI of Exec. Order No. 226, as amended,
grants income tax holiday to registered pioneer and non-
pioneer enterprises for six-year and four-year periods,
respectively. Those availing of this incentive are exempt
only from income tax, but shall be subject to all other
taxes, including the ten percent (10%) VAT.
This old rule clearly did not take into consideration the
Cross Border Doctrine essential to the VAT system or the
fiction of the ECOZONE as a foreign territory. It relied
totally on the choice of fiscal incentives of the PEZA-
registered enterprise. Again, for emphasis, the old VAT rule
for PEZA-registered enterprises was based on their choice
of fiscal incentives: (1) If the PEZA-registered enterprise
chose the five percent (5%) preferential tax on its gross
income, in lieu of all taxes, as provided by Rep. Act No.
7916, as amended, then it would be VAT-exempt; (2) If the
PEZA-registered enterprise availed of the income tax
holiday under Exec. Order No. 226, as amended, it shall be
subject to VAT at ten percent (10%). Such distinction was
abolished by RMC No. 74-99, which categorically declared
that all sales of goods, properties, and services made by a
VAT-registered supplier from the Customs Territory to an
ECOZONE enterprise shall be subject to VAT, at zero
percent (0%) rate, regardless of the latter's type or class of
PEZA registration; and, thus, affirming the nature of a
PEZA-registered or an ECOZONE enterprise as a VAT-
exempt entity. 60
To recall, Toshiba is herein claiming the refund of unutilized
input VAT payments on its local purchases of goods and
services attributable to its export sales for the first and
second quarters of 1997. Such export sales took
place before October 15, 1999, when the old rule on the
VAT treatment of PEZA-registered enterprises still applied.
Under this old rule, it was not only possible, but even
acceptable, for Toshiba, availing itself of the income tax
holiday option under Section 23 of Republic Act No. 7916, in
relation to Section 39 of the Omnibus Investments Code of
1987, to be subject to VAT, both indirectly (as purchaser to
whom the seller shifts the VAT burden) and directly (as seller
whose sales were subject to VAT, either at ten percent [10%]
or zero percent [0%]).
A VAT-registered seller of goods and/or services who made
zero-rated sales can claim tax credit or refund of the input VAT
paid on its purchases of goods, properties, or services relative
to such zero-rated sales, in accordance with Section 4.102-2
of Revenue Regulations No. 7-95, which provides
Sec. 4.102-2. Zero-rating. (a) In general. A zero-rated
sale by a VAT-registered person, which is a taxable
transaction for VAT purposes, shall not result in any output
tax. However, the input tax on his purchases of goods,
properties or services related to such zero-rated sale shall
be available as tax credit or refund in accordance with
these regulations.
The BIR, as late as July 15, 2003, when it issued RMC No. 42-
2003, accepted applications for credit/refund of input VAT on
purchases prior to RMC No. 74-99, filed by PEZA-registered
enterprises which availed themselves of the income tax
holiday. The BIR answered Question Q-5(1) of RMC No. 42-
2003 in this wise
Q-5: Under Revenue Memorandum Circular (RMC) No. 74-
99, purchases by PEZA-registered firms automatically
qualify as zero-rated without seeking prior approval from
the BIR effective October 1999.
1) Will the OSS-DOF Center still accept applications
from PEZA-registered claimants who were allegedly
billed VAT by their suppliers before and during the
effectivity of the RMC by issuing VAT
invoices/receipts? ACIDSc
xxx xxx xxx
A-5(1):If the PEZA-registered enterprise is paying the 5%
preferential tax in lieu of all other taxes, the said PEZA-
registered taxpayer cannot claim TCC or refund for the VAT
paid on purchases. However, if the taxpayer is availing
of the income tax holiday, it can claim VAT
credit provided:
a. The taxpayer-claimant is VAT-registered;
b. Purchases are evidenced by VAT invoices or
receipts, whichever is applicable, with shifted VAT to the
purchaser prior to the implementation of RMC No. 74-
99; and
c. The supplier issues a sworn statement under
penalties of perjury that it shifted the VAT and declared the
sales to the PEZA-registered purchaser as taxable sales in
its VAT returns.
For invoices/receipts issued upon the effectivity of RMC
No. 74-99, the claims for input VAT by PEZA-registered
companies, regardless of the type or class of PEZA-
registration, should be denied. (Emphases ours.)
 Consequently, the CIR cannot herein insist that all PEZA-
registered enterprises are VAT-exempt in every instance. RMC
No. 42-2003 contains an express acknowledgement by the BIR
that prior to RMC No. 74-99, there were PEZA-registered
enterprises liable for VAT and entitled to credit/refund of input
VAT paid under certain conditions.
This Court already rejected in the Toshiba case the argument
that sale transactions of a PEZA-registered enterprise were
VAT-exempt under Section 103 (q) of the Tax Code of 1977, as
amended, ratiocinating that
Section 103(q) of the Tax Code of 1977, as amended,
relied upon by petitioner CIR, relates to VAT-exempt
transactions. These are transactions exempted from VAT by
special laws or international agreements to which the
Philippines is a signatory. Since such transactions are not
subject to VAT, the sellers cannot pass on any output VAT
to the purchasers of goods, properties, or services, and
they may not claim tax credit/refund of the input VAT they
had paid thereon.
Section 103(q) of the Tax Code of 1977, as amended,
cannot apply to transactions of respondent Toshiba
because although the said section recognizes that
transactions covered by special laws may be exempt from
VAT, the very same section provides that those falling
under Presidential Decree No. 66 are not. Presidential
Decree No. 66, creating the Export Processing Zone
Authority (EPZA), is the precursor of Rep. Act No.
7916, as amended, under which the EPZA evolved
into the PEZA. Consequently, the exception
of Presidential Decree No. 66 from Section 103(q) of
the Tax Code of 1977, as amended, extends likewise
to Rep. Act No. 7916, as amended. 61 (Emphasis
ours.)
In light of the judicial admissions of
Toshiba, the CTA correctly confined
itself to the other factual issues
submitted for resolution by the
parties.
In accord with the admitted facts that Toshiba was a VAT-
registered entity and that its export sales were zero-rated
transactions the stated issues in the Joint Stipulation were
limited to other factual matters, particularly, on the
compliance by Toshiba with the rest of the requirements for
credit/refund of input VAT on zero-rated transactions. Thus,
during trial, Toshiba concentrated on presenting evidence to
establish that it incurred P3,875,139.65 of input VAT for the
first and second quarters of 1997 which were directly
attributable to its export sales; that said amount of input VAT
were not carried over to the succeeding quarters; that said
amount of input VAT has not been applied or offset against
any output VAT liability; and that said amount of input VAT
was properly substantiated by official receipts and invoices.
After what truly appears to be an exhaustive review of the
evidence presented by Toshiba, the CTA made the following
findings
(1) The amended quarterly VAT returns of Toshiba for 1997
showed that it made no other sales, except zero-rated export
sales, for the entire year, in the sum of P2,083,305,000.00 for
the first quarter and P5,411,372,000.00 for the second
quarter. That being the case, all input VAT allegedly incurred
by Toshiba for the first two quarters of 1997, in the amount of
P3,875,139.65, was directly attributable to its zero-rated sales
for the same period.
(2) Toshiba did carry-over the P3,875,139.65 input VAT it
reportedly incurred during the first two quarters of 1997 to
succeeding quarters, until the first quarter of 1999. Despite
the carry-over of the subject input VAT of P3,875,139.65, the
claim of Toshiba was not affected because it later on deducted
the said amount as "VAT Refund/TCC Claimed" from its total
available input VAT of P6,841,468.17 for the first quarter of
1999.
(3) Still, the CTA could not allow the credit/refund of the total
input VAT of P3,875,139.65 being claimed by Toshiba because
not all of said amount was actually incurred by the company
and duly substantiated by invoices and official receipts. From
the P3,875,139.65 claim, the CTA deducted the amounts of
(a)P189,692.92, which was in excess of the P3,685,446.23
input VAT Toshiba originally claimed in its application for
credit/refund filed with the DOF One-Stop Shop;
(b)P396,882.58, which SGV & Co., the commissioned CPA,
disallowed for being improperly substantiated, i.e., supported
only by provisional acknowledgement receipts, or by
documents other than official receipts, or not supported by
TIN or TIN VAT or by any document at all; (c) P1,887,545.65,
which the CTA itself verified as not being substantiated in
accordance with Section 4.104-5 62 of Revenue Regulations
No. 7-95, in relation to Sections 108 63 and 238 64 of the Tax
Code of 1977, as amended; and (d) P15,736.42, which
Toshiba already applied to its output VAT liability for the fourth
quarter of 1998. AcHSEa
(4) Ultimately, Toshiba was entitled to the credit/refund of
unutilized input VAT payments attributable to its zero-rated
sales in the amounts of P1,158,016.82 and P227,265.26, for
the first and second quarters of 1997, respectively, or in the
total amount of P1,385,282.08.
Since the aforementioned findings of fact of the CTA are
borne by substantial evidence on record, unrefuted by the
CIR, and untouched by the Court of Appeals, they are given
utmost respect by this Court.
The Court will not lightly set aside the conclusions reached by
the CTA which, by the very nature of its functions, is dedicated
exclusively to the resolution of tax problems and has
accordingly developed an expertise on the subject unless
there has been an abuse or improvident exercise of
authority. 65 In Barcelon, Roxas Securities, Inc. (now known
as UBP Securities, Inc.) v. Commissioner of Internal
Revenue, 66 this Court more explicitly pronounced
Jurisprudence has consistently shown that this Court
accords the findings of fact by the CTA with the highest
respect. In Sea-Land Service Inc. v. Court of Appeals [G.R.
No. 122605, 30 April 2001, 357 SCRA 441, 445-446], this
Court recognizes that the Court of Tax Appeals, which by
the very nature of its function is dedicated exclusively to
the consideration of tax problems, has necessarily
developed an expertise on the subject, and its conclusions
will not be overturned unless there has been an abuse or
improvident exercise of authority. Such findings can only
be disturbed on appeal if they are not supported by
substantial evidence or there is a showing of gross error or
abuse on the part of the Tax Court. In the absence of any
clear and convincing proof to the contrary, this Court must
presume that the CTA rendered a decision which is valid in
every respect.
WHEREFORE, the assailed Decision dated August 29, 2002
and the Resolution dated February 19, 2003 of the Court of
Appeals in CA-G.R. SP No. 63047 areREVERSED and SET
ASIDE, and the Decision dated October 16, 2000 of the Court
of Tax Appeals in CTA Case No. 5762
is REINSTATED. Respondent Commissioner of Internal
Revenue is ORDERED to REFUND or, in the alternative,
to ISSUE a TAX CREDIT CERTIFICATE in favor of petitioner
Toshiba Information Equipment (Phils.), Inc. in the amount of
P1,385,282.08, representing the latter's unutilized input VAT
payments for the first and second quarters of 1997. No
pronouncement as to costs.
SO ORDERED.
Puno, C.J., Carpio Morales, Bersamin and Villarama, Jr.,
JJ., concur.
||| (Toshiba Information Equipment (Phils.), Inc. v.
Commissioner of Internal Revenue, G.R. No. 157594, [March 9,
2010], 628 PHIL 430-468)

THIRD DIVISION

[G.R. No. 174154. October 17, 2008.]

JESUS CUENCO, petitioner, vs. TALISAY TOURIST

SPORTS COMPLEX, INCORPORATED AND MATIAS B.
AZNAR III, respondents.

DECISION

NACHURA, J p:
Before the Court is a petition for review on certiorari under
Rule 45 of the Rules of Court assailing the Decision dated April
18, 2005 and the Resolution dated August 15, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 65773. TCaSAH
The Facts
The antecedent facts of the case are as follows:
On May 25, 1992, petitioner leased from respondents for a
period of two (2) years, from May 8, 1992 to May 8, 1994, the
Talisay Tourist Sports Complex, to be operated as a cockpit. The
lease was extended for another four (4) years, or until May 8,
1998.
Under the Contract of Lease, 1 it was stipulated that petitioner
shall, like a good father of the family, maintain in good
condition the furniture, chattels and all other equipment and
shall, at all times, keep the leased premises clean and sanitary.
For this purpose, petitioner would allow the respondent's
building supervisor or his authorized representative to make a
regular spot inspection of the leased premises to see to it that
these stipulations are strictly implemented. 2 Any damage
caused to the furniture, chattels, equipment and parts of the
leased premises shall be the responsibility of petitioner to
repair and compensate. 3 Furthermore, petitioner would give a
deposit equivalent to six (6) months rental to answer for
whatever damages may be caused to the premises during the
period of the lease. 4
Upon expiration of the contract, respondent company
conducted a public bidding for the lease of the property.
Petitioner participated in the bidding. The lease was eventually
awarded to another bidder, Mr. Rex Cuaqui Salud. 5 Thereafter,
petitioner wrote four (4) demand letters to
respondents. AIDTSE
The first letter, dated June 8, 1998, reads:
Dear Mr. Aznar:
I was so disheartened that after going through with the
supposed public bidding, haggling with the terms and
conditions of a new lease agreement and after full
compliance of ALL your requirements and the handshakes
signifying the clinching of the deal, the contract was
awarded to another party. Though I believe I deserve a
renewal, I had to accept your decision with a heavy heart.
It is now my desire to be released quickly from whatever
liability or responsibility under our previous contract.
Repair works on some damaged portions were already
done. Based on our contract, par. 5 thereof, it is my
understanding that I am answerable to all damages
caused to furnitures (sic), chattels and other
equipments and minor parts of the leased premises.
Once cleared, I want the return of my deposit of
P500,000.00.
Kindly send your inspector to determine by actual
ocular inspection if the restoration work is to your
satisfaction.
Very truly yours,
JESUS C. CUENCO [signed] 6
Obviously, the letter was not answered, because on June 17,
1998 petitioner found it necessary to write respondents a
second letter reiterating his request for the return of the
deposit. The second demand letter reads:
Dear Mr. Aznar:
It has been more than a week since my letter dated 8 June
1998 requesting the return of my deposit of P500,000.00. I
would assume your representative had already conducted
an ocular inspection and you were satisfied on the
restoration works made on the premises. As I've stated in
my said letter, I want to be released as soon as
possible. HIaSDc
I need to know immediately if I still have other
things to comply with as pre-condition for the
release of the deposit. As far as I know, I have
already done my part.
Very truly yours,
JESUS C. CUENCO [signed] 7
With still no response from respondents, petitioner, on August
14, 1998, sent a third demand letter which read:
Dear Mr. Aznar:
I am surprised by the unreasonable delay in the release of
my deposit of P500,000.00 in spite of my full compliance
as to repair works on minor damage to the premises during
my term as lessee. Twice I requested in writing for the
immediate release of my deposit but until now it
remains unheeded. And the so-called "inventory"
which your lawyer Atty. Algoso 8 promised to give
has not been given. Frankly, I am doubtful of the
accuracy of said inventory, if any, considering the
full blast major renovation now being conducted on
the complex by the new concessionaire. I think it's
about time we close the last chapter of the book, in a
manner of speaking, so we can proceed in our separate
distinct ways. ECcDAH
I reiterate my request to please release right now my
deposit of P500,000.00.
Very truly yours,
JESUS C. CUENCO [signed] 9
Finally, on August 18, 1998, petitioner, thru his counsel, wrote
respondents a final demand letter as follows:
Dear Mr. Aznar:
For ignoring the two letters of my client Mr. Jesus C.
Cuenco, dated June 8 and 17, 1998 regarding his request
for the return of his deposit in the sum of P500,000.00, he
has decided to endorse the matter to this office for
appropriate action. IcHTED
It appears that when Mr. Cuenco leased the cockpit
complex he was required to put up a deposit to answer for
damages that may be caused to furnitures (sic), chattels
and other equipments and minor repairs on the leased
premises. When the lease expired and he failed to
get a renewal, Mr. Cuenco in fulfillment of his
obligation under the contract caused the repair of
minor damage to the premises after which your
attention was invited to get your reaction to the
restoration work. And since he did not receive any
objection, it can be safely premised that the
restoration was to the lessor's satisfaction.
 Mr. Cuenco informed me that the new concessionaire has
undertaken a full blast major renovation of the complex.
Under this condition and in the absence of an accurate
inventory conducted in the presence of both parties, it
would be doubly difficult, if not impossible, to charge Mr.
Cuenco of any violation of his undertaking especially as to
deficiency in the furnitures (sic), chattels and other
equipments in the premises. ITaESD
In view of all the foregoing, it is consequently demanded
that you return to Mr. Cuenco the aforesaid sum of
P500,000.00 within THREE (3) DAYS from notice hereof;
otherwise, he may be constrained to seek judicial relief for
the return of the deposit plus interest, damages and
attorney's fees.
Your compliance is enjoined.
Very truly yours, At my instance:
FEDERICO C. CABILAO (signed) JESUS C. CUENCO (signed)
Counsel for Mr. Jesus C. Cuenco 10
As all of his demand letters remained unheeded, on October
21, 1998, petitioner filed a Complaint 11 for sum of money,
damages and attorney's fees. He maintained that respondents
acted in bad faith in withholding the amount of the deposit
without any justifiable reason. 12
In their Answer, 13 respondents countered that petitioner
caused physical damage to some portions of the leased
premises and the cost of repair and replacement of materials
amounted to more than P500,000.00. 14 They also averred
that respondent Matias B. Aznar III (Aznar) cannot be sued
personally under the contract of lease since a corporation has
a separate and distinct personality from its officers and
stockholders, and there was no allegation that Aznar, who is
the President of the corporation, signed the contract in his
personal capacity. 15
On March 8, 1999, the RTC issued a Pre-trial Order, 16 the
pertinent portions of which reads:
The following facts were admitted by the [respondents]:
1. There is no inventory of damages up to this time;
2. [Petitioner] deposited the amount of P500,000.00;
3. [Petitioner] sends (sic) several letters of demand to
[respondents] but said letters were not answered. HcDATC
4. There was a renovation of the Talisay Tourist Sports
Complex with a qualification that the renovation is only
10% of the whole amount.
The main issues in this case are as follows:
1. Whether or not [petitioner] is entitled to the return of
the deposit of P500,000.00, with interest;
2. Whether or not some portions of the complex sustained
physical damage during the operation of the same by the
[petitioner]. 17
On May 24, 1999, the RTC issued an Order 18 admitting the
exhibits of petitioner, consisting of the contract of lease dated
May 4, 1994 and the four (4) demand letters.HaTSDA
On July 29, 1999, an Order 19 was issued by the same court
formally admitting the respondents' following exhibits: the
lease contract, inventory of the leased property as of June 4,
1998, inventory of the sports complex dated June 24, 1995,
ocular inspection report dated January 15, 1998 and various
receipts mostly in the name of Southwestern University
incurred in different months of 1998.
On August 11, 1999, the RTC rendered a Decision 20 in favor
of petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of
[petitioner] and against the [respondents], directing the
latter jointly and severally to return to [petitioner] the sum
of P500,000.00, representing the deposit mentioned in the
Complaint, plus 3% interest per month from August 18,
1998 until full payment thereof. ISTHED
The latter are, likewise, directed to pay [petitioner] the
sum of P15,000.00 as and for litigation expenses.
With costs against the [respondents].
SO ORDERED. 21
The RTC ratiocinated that respondents' failure to reply to the
letters of petitioner raises a presumption that petitioner has
complied with his end of the contract. The lower court gave
credence to the testimony of respondents' witness, Ateniso
Coronado (Coronado), the property custodian of the
respondents, that the sports complex was repaired and
renovated by the new lessee. The court also considered the
admission of respondents' counsel during the pre-trial that no
inventory of the property was conducted on the leased
premises. The RTC debunked the inventory presented by the
respondents during trial as a mere afterthought to bolster their
claim against petitioner. 22

Respondents appealed. On April 18, 2005, the CA rendered a

Decision 23 reversing and setting aside the decision of the
RTC. The fallo of the CA decision reads:
WHEREFORE, with the foregoing, the Decision of the
Regional Trial Court, Branch 13, Cebu City, dated August
11, 1999, is REVERSED and SET ASIDE, and a new one
entered finding this case in favor of defendants-appellants
Talisay Tourists Sports Complex and Matias Aznar III.
Consequently, Civil Case No. CEB-22847 for sum of money,
damages, and attorney's fees involving herein parties, as
well as all other claims and counterclaims are
hereby DISMISSED for lack of factual and legal
basis. TEcAHI
No pronouncement as to costs.
SO ORDERED. 24
The CA ruled in favor of respondents on the basis of: (1)
Coronado's testimony that petitioner continued to hold
cockfights two months after the expiration of the lease contract
which was not refuted by petitioner; (2) the summary of repairs
made on the property showing that respondents spent the
amount of P573,710.17 immediately prior to the expiration of
the lease contract and shortly thereafter; and (3) the new
lessor incurred expenses amounting to over P3 million when he
shouldered the rest of the repair and renovation of the subject
property. 25
Hence, the instant petition.
The Issues
Petitioner raised the following issues for resolution of the
Court: (1) whether a judicial admission is conclusive and
binding upon a party making the admission; and (2) whether
such judicial admission was properly rejected by the CA. 26
On the other hand, respondents posed the following: (1)
whether the findings of the CA that the cockpit sustained
damage during the period of the lease was rendered not in
accord with law or with the applicable decisions of the Court;
(2) whether the CA committed an error of law in ruling that
petitioner is not entitled for the return of the deposit. 27
The ultimate question we must resolve is whether petitioner is
entitled to the return of the amount deposited. TSADaI
The Ruling of the Court
We rule in the affirmative. Respondents failed to present
sufficient proof to warrant the retention of the full amount of
the deposit given by petitioner.
The Supreme Court is not a trier of facts, and as a rule, does
not weigh anew the evidence presented by the parties.
However, the instant case is one of the exceptions to the rule
because of the conflicting decisions of the RTC and the CA
based on contradictory factual findings. Thus, we have
reviewed the records in order to arrive at a judicious resolution
of the case at bench.
Petitioner questions the CA's finding that there was damage
caused the premises while the lease was still in force. Such
finding could only have been based on alleged inventory of the
property conducted by the respondents. Petitioner takes
exception to this evidence because of the earlier judicial
admission made by respondents' counsel that no inventory was
conducted and, accordingly, any evidence adduced by the
respondents contrary to or inconsistent with the judicial
admission should be rejected. AaCEDS
Indeed, at the pre-trial conference, respondents' counsel made
an admission that no inventory was made on the leased
premises, at least up to that time. This admission was
confirmed in the Pre-Trial Order issued by the trial court on
March 8, 1999 after the lease expired on May 8, 1998.
Yet, on July 1, 1999, respondents' witness Coronado testified,
as follows:
ATTY. VASQUEZ:
Q Why do you know the defendants?
A Because Talisay Sports Complex is owned by Aznar
Brothers Realty Corporation of which I am employed
as (sic) in charge of the realty department. ESHAcI
Q How about Matias Aznar III, the defendant here?
A He is the Chairman of the Board.
Q Board of what?
A Of the Aznar Brothers Realty Corporation.
Q Is he the Chairman of Talisay Tourist Sports Complex?
A Yes, sir.
Q You said that you are in charge of the realty
department, what is your function with respect to
the properties of Talisay Tourist and Sports
Complex?
A I am the in-charge of the administration and
overseeing of the complex owned by Talisay Sports
Complex.
Q When you said that you are in charge of the
administration and overseeing of the complex, what does it
includes (sic)? DSAEIT
A It includes collection of rentals of complex and
routine inspection to determine that there are
missing or damage of (sic) the properties.
Q How long have you been employed with the Aznar
Brothers Realty Company?
A 25 years.
xxx xxx xxx
Q In your earlier testimony, you said that part of
your function is to conduct routine inspection of the
complex. Now, was there a routine inspection
conducted during the period of the lease contract
between plaintiff and the defendant?
A Yes, we conducted inspection sometime in January
1998.
Q For what purpose was that inspection?
A The purpose is to determine if there are damage
sustained by the complex. ITEcAD
Q And what was the result of the inspection.
A There were missing and destroyed fixtures and physical
damage sustained by the complex.
 xxx xxx xxx
COURT
xxx xxx xxx
Q W[h]y did you not take photographs of the
damage sustained by the complex?
A We did not take pictures, Your Honor, because in
fact their personnel were in our
presence (sic) during the inspection, they were
accompanied by us, because we can not conduct
inspection without the presence of the personnel of
Jesus Cuenco, Your Honor, the lessee.
Q Did the personnel of Jesus Cuenco sign any paper
acknowledging receipt of any report?
A There was no refusal, but we did not initiate to let
them sign and confirm.
COURT
Q So, we have to rely on your testimony?
A Yes, sir. 28
Obviously, it was on Coronado's testimony, as well as on the
documentary evidence 29 of an alleged property inventory
conducted on June 4, 1998, that the CA based its conclusion
that the amount of damage sustained by the leased premises
while in the possession of petitioner exceeded the amount of
petitioner's deposit. This contradicts the judicial admission
made by respondents' counsel which should have been binding
on the respondents. ESCTIA
Section 4, Rule 129 of the Rules of Court provides:
SEC. 4. Judicial admissions. An admission, verbal or
written, made by a party in the course of the proceedings
in the same case, does not require proof. The admission
may be contradicted only by a showing that it was made
through palpable mistake or that no such admission was
made.
A party may make judicial admissions in (1) the pleadings, (2)
during the trial, by verbal or written manifestations or
stipulations, or (3) in other stages of the judicial
proceeding. 30 The stipulation of facts at the pre-trial of a
case constitutes judicial admissions. The veracity of judicial
admissions require no further proof and may be controverted
only upon a clear showing that the admissions were made
through palpable mistake or that no admissions were made.
Thus, the admissions of parties during the pre-trial, as
embodied in the pre-trial order, are binding and conclusive
upon them. AHCaED
Respondents did not deny the admission made by their
counsel, neither did they claim that the same was made
through palpable mistake. As such, the stipulation of facts is
incontrovertible and may be relied upon by the courts. The pre-
trial forms part of the proceedings and matters dealt therein
may not be brushed aside in the process of decision-making.
Otherwise, the real essence of compulsory pre-trial would be
rendered inconsequential and worthless. 31 Furthermore, an
act performed by counsel within the scope of a "general or
implied authority" is regarded as an act of the client which
renders respondents in estoppel. By estoppel is meant that an
admission or representation is conclusive upon the person
making it and cannot be denied or disproved as against the
person relying thereon. 32
Thus, respondents are bound by the admissions made by their
counsel at the pre-trial. Accordingly, the CA committed an error
when it gave ample evidentiary weight to respondents'
evidence contradictory to the judicial admission. DEHcTI
The appellate court's findings that the damage in the premises
exceeded the amount of the deposit is further sought to be
justified, thus:
 Verily, a perusal of the summary of repairs amounting to
P573,710.17 claimed to have been made by appellants
over the property at about that time immediately prior to
the expiration of the lease contract and shortly thereafter,
would show that the repairs pertained to repairs on the
drainage, sewage, immediate premises and structure of
the complex. We find the same highly credible and
meritorious considering that as earlier admitted by
appellee, the repairs he made were minor and were
confined only to certain portions of the complex, although
substantial repairs were done on the cockhouses only, and
that said repairs were done because of a coming big time
derby and not to satisfy the provisions of the lease
contract. Also, by implication, appellee is stating that the
new lessor incurred expenses amounting to over P3 million
when he shouldered the rest of the repair and renovation
of the complex after the term of lease of appellee. 33
Yet, upon perusal of the receipts presented by respondents, we
found that majority of the receipts are under the name of
Southwestern University. In their
Memorandum, 34 respondents aver that Southwestern
University and respondent corporation are sister
companies. 35 Even if true, this matter is of no consequence
because respondent company and Southwestern University
have distinct and separate legal personalities, and
Southwestern University is not a party to this case. Thus, we
cannot just accept respondents' argument that the receipts
paid in the name of Southwestern University should be credited
to respondent company. In any event, they were not able to
prove that those receipts were in fact used for the repair or
maintenance of the respondents' complex. cECTaD

Furthermore, respondents are not entitled the full amount of

the deposit because the repair and renovation of the sports
complex after the expiration of petitioner's lease were
undertaken not by respondents but by the new lessee. This can
be gleaned from Coronado's testimony on cross-
examination, viz.:
Q You do not know. Mr. Witness, is it not a fact that the
new lessee was Wacky Salud?
A Yes, sir.
Q And that was sometime of July or August of 1998?
A They were about to conduct three months repair of the
complex?
Q So, Mr. Wacky Salud conducted, did you say repair or
renovation? Is it renovation or repair? DAcaIE
A There was a renovation and repair.
Q Renovation including repair?
A Yes, sir.
COURT
Q In other words, after the expiration of the contract of Mr.
Cuenco, Wacky Salud took over?
A Yes, he took over that repair and renovation were no
longer included in this presentation, that is at his own
expense. DTIaCS
Q Precisely. In other words, some repairs were made by Mr.
Salud and not by Aznar Brothers Realty?
A Yes, sir. 36
Finally, the Court observes that the inventories presented by
respondents were not countersigned by petitioner or were they
presented to the latter prior to the filing of the case in the RTC.
Thus, we are more inclined to agree with the trial court that the
"inventory was made as an afterthought", 37 in a vain attempt
of the respondents to establish their case.
However, Coronado's testimony that petitioner extended the
operation of the sports complex for a period of two months
after the expiration of the lease without the respondents'
authority and without the payment of rentals, remains
unrebutted. Enlightening is the following testimony: SHADEC
Q I observed here in No. 16 of your summary, two months
arrears rentals, June to July, how come? The contract was
supposed to expire May 1998?
A Yes, because it had happened on this extension of the
lease because they are still occupying until July after the
expiration of the contract.
COURT
Q You mean to say that they still use the complex for the
purpose for which it was intended, which is for
cockfighting?
WITNESS
A Yes, they are still doing their usual operation.
ATTY. VASQUEZ
Q You mean to say that there were still cockfighting held in
the complex even after May 1998? EHScCA
A Yes, sir. 38
This two (2) months over-stay of petitioner in the leased
premises should be charged against the deposit. Because
there was no renewal of the lease contract, it is understood
that the continued use of the premises is on a monthly basis
with the rental in the amount previously agreed upon by the
parties, in accordance with Articles 1670 39 and 1687 40 of
the Civil Code.
In the Contract of Lease of petitioner and respondent
company, it was agreed that the rental to be paid shall be the
following:
 WHEREAS, the FIRST PARTY is the owner of the Talisay
Tourist Sports Complex, Inc. located at Tabunok, Talisay,
Cebu; cSHATC
WHEREAS, the SECOND PARTY has expressed his desire to
lease said complex (cockpit) and the FIRST PARTY have
agreed to lease/let the same to the SECOND PARTY subject
to the following term and condition, to wit:
1. In consideration of this lease, the SECOND PARTY agrees
to pay the FIRST PARTY a lump sum of ONE MILLION PESOS
(P1,000,000.00) representing advance rental for the first
year, the same to be paid on May 8, 1994. Thereafter, the
rental shall be as follows:
Second year P1,050,000.00 or P87,500.00/month
Third year 1,100,000.00 or P91,666.67/month
Fourth year 1,175,000.00 or P97,916.67/month 41
Thus, by way of rental for the two-month overstay, the
amount of P195,833.34 should be deducted from the amount
of deposit paid by petitioner to respondent company. DEHcTI
As to petitioner's claim of interest of three percent (3%) per
month on the amount due him, the same is without legal basis.
We note that no amount of interest was previously agreed upon
by the parties in the contract of lease.
Under Article 2213 of the Civil Code, "interest cannot be
recovered upon unliquidated claims or damages, except when
the demand can be established with reasonable certainty". In
the instant case, the claim of petitioner is unliquidated or
cannot be established with reasonable certainty upon his filing
of the case in the RTC. This is because of the contending claims
of the parties, specifically, the claim of petitioner for the return
of the P500,000.00 deposit vis-a-vis the claim of respondents
on the arrears in rentals and on the damage to the premises. It
is only now that the amount that should be returned is
ascertained, i.e., P500,000.00 less the two-months arrears in
rentals amounting to P195,833.34, the sum of which will earn
interest at the legal rate of six percent (6%) per
annum 42 from the time the case was filed in the RTC on
October 21, 1998. 43 Upon finality of this decision, the rate of
interest shall be twelve percent (12%) per annum from such
finality until full satisfaction. The foregoing interest rate is
based on the guidelines set by the Court in Eastern Shipping
Lines v. CA, viz.:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages. AaITCH
II. With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of
money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can
be established with reasonable certainty. Accordingly,
where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest
shall begin to run only from the date of the judgment of
the court is made (at which time the quantification of
damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount of finally
adjudged. DaAIHC
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
credit. 44
Concerning the solidary liability of respondents, we hold that
respondent Matias Aznar III is not solidarily liable with
respondent company. His function as the President of the
company does not make him personally liable for the
obligations of the latter. A corporation, being a juridical entity,
may act only through its directors, officers and employees.
Obligations incurred by them while acting as corporate agents,
are not their personal liability but the direct accountability of
the corporation they represent. 45
WHEREFORE, the petition is PARTLY GRANTED. The Decision of
the Court of Appeals is hereby REVERSED AND SET ASIDE. The
Decision of the RTC in Civil Case No. CEB-22847 is hereby
REINSTATED with the following modifications:
(1) Talisay Sports Complex, Inc. is solely liable to return the
amount of the deposit after deducting the amount of the two-
months arrears in rentals; and AIHTEa
(2) The rate of legal interest to be paid is SIX PERCENT (6%) on
the amount due computed from October 21, 1998, and TWELVE
PERCENT (12%) interest, thereon upon finality of this decision
until full payment thereof.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Azcuna * and Chico-
Nazario, JJ., concur.
||| (Cuenco v. Talisay Tourist Sports Complex, Inc., G.R. No.
174154, [October 17, 2008], 590 PHIL 634-653)

FIRST DIVISION

[G.R. No. 156052. March 7, 2007.]

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE

T. CABIGAO, and BONIFACIO S.
TUMBOKON, petitioners, vs. HON. JOSE L. ATIENZA,
JR., in his capacity as Mayor of the City of
Manila, respondent.

DECISION

CORONA, J p:
In this original petition for mandamus, 1 petitioners Social
Justice Society (SJS), Vladimir Alarique T. Cabigao and Bonifacio
S. Tumbokon seek to compel respondent Hon. Jose L. Atienza,
Jr., mayor of the City of Manila, to enforce Ordinance No. 8027.
The antecedents are as follows. EDISTc
On November 20, 2001, the Sangguniang Panlungsod of
Manila enacted Ordinance No. 8027. 2 Respondent mayor
approved the ordinance on November 28, 2001. 3 It became
effective on December 28, 2001, after its publication. 4
Ordinance No. 8027 was enacted pursuant to the police power
delegated to local government units, a principle described as
the power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health,
morals and general welfare of the society. 5 This is evident
from Sections 1 and 3 thereof which state:
SECTION 1. For the purpose of promoting sound urban
planning and ensuring health, public safety, and general
welfare of the residents of Pandacan and Sta. Ana as well as its
adjoining areas, the land use of [those] portions of land
bounded by the Pasig River in the north, PNR Railroad Track in
the east, Beata St. in the south, Palumpong St. in the
southwest, and Estero de Pancacan in the west[,] PNR Railroad
in the northwest area, Estero de Pandacan in the [n]ortheast,
Pasig River in the southeast and Dr. M.L. Carreon in the
southwest. The area of Punta, Sta. Ana bounded by the Pasig
River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street,
are hereby reclassified from Industrial II to Commercial I.
SEC. 3. Owners or operators of industries and other
businesses, the operation of which are no longer permitted
under Section 1 hereof, are hereby given a period of six (6)
months from the date of effectivity of this Ordinance within
which to cease and desist from the operation of businesses
which are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein
from industrial to commercial and directed the owners and
operators of businesses disallowed under Section 1 to cease
and desist from operating their businesses within six months
from the date of effectivity of the ordinance. Among the
businesses situated in the area are the so-called " Pandacan
Terminals" of the oil companies Caltex (Philippines), Inc., Petron
Corporation and Pilipinas Shell Petroleum Corporation. ESTDIA
However, on June 26, 2002, the City of Manila and the
Department of Energy (DOE) entered into a memorandum of
understanding (MOU) 6 with the oil companies in which they
agreed that " the scaling down of the Pandacan Terminals [was]
the most viable and practicable option." Under the MOU, the oil
companies agreed to perform the following:
Section 1. Consistent with the objectives stated above, the
OIL COMPANIES shall, upon signing of this MOU, undertake a
program to scale down the Pandacan Terminals which shall
include, among others, the immediate
removal/decommissioning process of TWENTY EIGHT (28) tanks
starting with the LPG spheres and the commencing of works for
the creation of safety buffer and green zones surrounding the
Pandacan Terminals. . . .
Section 2. Consistent with the scale-down program
mentioned above, the OIL COMPANIES shall establish joint
operations and management, including the operation of
common, integrated and/or shared facilities, consistent with
international and domestic technical, safety, environmental
and economic considerations and standards. Consequently, the
joint operations of the OIL COMPANIES in the Pandacan
Terminals shall be limited to the common and integrated
areas/facilities. A separate agreement covering the commercial
and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.
Section 3. The development and maintenance of the safety
and green buffer zones mentioned therein, which shall be
taken from the properties of the OIL COMPANIES and not from
the surrounding communities, shall be the sole responsibility of
the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed
to do the following:
 Section 1. The City Mayor shall endorse to the City Council
this MOU for its appropriate action with the view of
implementing the spirit and intent thereof. DEcSaI
Section 2. The City Mayor and the DOE shall, consistent with
the spirit and intent of this MOU, enable the OIL COMPANIES to
continuously operate in compliance with legal requirements,
within the limited area resulting from the joint operations and
the scale down program.
Section 3. The DOE and the City Mayor shall monitor the OIL
COMPANIES' compliance with the provisions of this MOU.
Section 4. The CITY OF MANILA and the national government
shall protect the safety buffer and green zones and shall exert
all efforts at preventing future occupation or encroachment
into these areas by illegal settlers and other unauthorized
parties.
The Sangguniang Panlungsod ratified the MOU in Resolution
No. 97. 7 In the same resolution, the Sanggunian declared that
the MOU was effective only for a period of six months starting
July 25, 2002. 8 Thereafter, on January 30, 2003,
the Sanggunian adopted Resolution No. 13 9 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing
Mayor Atienza to issue special business permits to the oil
companies. Resolution No. 13, s. 2003 also called for a
reassessment of the ordinance. 10
Meanwhile, petitioners filed this original action
for mandamus on December 4, 2002 praying that Mayor
Atienza be compelled to enforce Ordinance No. 8027 and order
the immediate removal of the terminals of the oil
companies. 11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to
enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals, and
 2. whether the June 26, 2002 MOU and the resolutions
ratifying it can amend or repeal Ordinance No. 8027. 12
Petitioners contend that respondent has the mandatory legal
duty, under Section 455 (b) (2) of the Local Government Code
(RA 7160), 13 to enforce Ordinance No. 8027 and order the
removal of the Pandacan Terminals of the oil companies.
Instead, he has allowed them to stay. cADEHI
Respondent's defense is that Ordinance No. 8027 has been
superseded by the MOU and the resolutions. 14 However, he
also confusingly argues that the ordinance and MOU are not
inconsistent with each other and that the latter has not
amended the former. He insists that the ordinance remains
valid and in full force and effect and that the MOU did not in
any way prevent him from enforcing and implementing it. He
maintains that the MOU should be considered as a mere
guideline for its full implementation. 15
Under Rule 65, Section 3 16 of the Rules of Court, a petition
for mandamus may be filed when any tribunal, corporation,
board, officer or person unlawfully neglects the performance of
an act which the law specifically enjoins as a duty resulting
from an office, trust or station. Mandamus is an extraordinary
writ that is employed to compel the performance, when
refused, of a ministerial duty that is already imposed on the
respondent and there is no other plain, speedy and adequate
remedy in the ordinary course of law. The petitioner should
have a well-defined, clear and certain legal right to the
performance of the act and it must be the clear and imperative
duty of respondent to do the act required to be done. 17
Mandamus will not issue to enforce a right, or to compel
compliance with a duty, which is questionable or over which a
substantial doubt exists. The principal function of the writ
ofmandamus is to command and to expedite, not to inquire
and to adjudicate; thus, it is neither the office nor the aim of
the writ to secure a legal right but to implement that which is
already established. Unless the right to the relief sought is
unclouded, mandamus will not issue. 18
To support the assertion that petitioners have a clear legal
right to the enforcement of the ordinance, petitioner SJS states
that it is a political party registered with the Commission on
Elections and has its offices in Manila. It claims to have many
members who are residents of Manila. The other petitioners,
Cabigao and Tumbokon, are allegedly residents of
Manila. TcHCIS
We need not belabor this point. We have ruled in previous
cases that when a mandamus proceeding concerns a public
right and its object is to compel a public duty, the people who
are interested in the execution of the laws are regarded as the
real parties in interest and they need not show any specific
interest. 19 Besides, as residents of Manila, petitioners have a
direct interest in the enforcement of the city's ordinances.
Respondent never questioned the right of petitioners to
institute this proceeding.
On the other hand, the Local Government Code imposes upon
respondent the duty, as city mayor, to " enforce all laws and
ordinances relative to the governance of the city." 20 One of
these is Ordinance No. 8027. As the chief executive of the city,
he has the duty to enforce Ordinance No. 8027 as long as it has
not been repealed by theSanggunian or annulled by the
courts. 21 He has no other choice. It is his ministerial duty to
do so. In Dimaporo v. Mitra, Jr., 22 we stated the reason for
this:
These officers cannot refuse to perform their duty on the
ground of an alleged invalidity of the statute imposing the
duty. The reason for this is obvious. It might seriously
hinder the transaction of public business if these officers
were to be permitted in all cases to question the
constitutionality of statutes and ordinances imposing
duties upon them and which have not judicially been
declared unconstitutional. Officers of the government from
the highest to the lowest are creatures of the law and are
bound to obey it. 23

The question now is whether the MOU entered into by

respondent with the oil companies and the subsequent
resolutions passed by the Sanggunian have made the
respondent's duty to enforce Ordinance No. 8027 doubtful,
unclear or uncertain. This is also connected to the second issue
raised by petitioners, that is, whether the MOU and Resolution
Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend
or repeal Ordinance No. 8027. TEcHCA
We need not resolve this issue. Assuming that the terms of the
MOU were inconsistent with Ordinance No. 8027, the
resolutions which ratified it and made it binding on the City of
Manila expressly gave it full force and effect only until April
30, 2003. Thus, at present, there is nothing that legally
hinders respondent from enforcing Ordinance No. 8027. 24
Ordinance No. 8027 was enacted right after the Philippines,
along with the rest of the world, witnessed the horror of the
September 11, 2001 attack on the Twin Towers of the World
Trade Center in New York City. The objective of the ordinance is
to protect the residents of Manila from the catastrophic
devastation that will surely occur in case of a terrorist
attack 25 on the Pandacan Terminals. No reason exists why
such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent
Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is
directed to immediately enforce Ordinance No. 8027.
SO ORDERED.
Puno, C.J., Sandoval-Gutierrez and Garcia, JJ., concur.
Azcuna, J., is on official leave.
 ||| (Social Justice Society v. Atienza, Jr., G.R. No. 156052,
[March 7, 2007], 546 PHIL 485-494)

FIRST DIVISION

[G.R. No. 165987. March 31, 2006.]

JOSHUA S. ALFELOR and MARIA KATRINA

S. ALFELOR, petitioners, vs. JOSEFINA M. HALASAN,
and THE COURT OF APPEALS, respondents.

DECISION

CALLEJO, SR., J p:
This is a Petition for Review on Certiorari seeking to nullify the
Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
74757, as well as the Resolution 2 dated June 28, 2004
denying the motion for reconsideration thereof.
On January 30, 1998, the children and heirs of the late spouses
Telesforo and Cecilia Alfelor filed a Complaint for
Partition 3 before the Regional Trial Court (RTC) of Davao City.
Among the plaintiffs were Teresita Sorongon and her two
children, Joshua and Maria Katrina, who claimed to be the
surviving spouse of Jose Alfelor, one of the children of the
deceased Alfelor Spouses. The case, docketed as Civil Case No.
26,047-98, was raffled to Branch 17 of said court.
On October 20, 1998, respondent Josefina H. Halasan filed a
Motion for Intervention, 4 alleging as follows:
1. That she has legal interest in the matter of litigation in
the above-entitled case for partition between plaintiffs and
defendants;
2. That she is the surviving spouse and primary
compulsory heir of Jose K. Alfelor, one of the children and
compulsory heirs of Telesforo I. Alfelor whose intestate
estate is subject to herein special proceedings for partition;
3. That herein intervenor had not received even a single
centavo from the share of her late husband Jose
K. Alfelor to the intestate estate of Telesforo K. Alfelor.
WHEREFORE, movant prays that she be allowed to
intervene in this case and to submit attached Answer in
Intervention. 5
Josefina attached to said motion her Answer in
Intervention, 6 claiming that she was the surviving spouse of
Jose. Thus, the alleged second marriage to Teresita was voidab
initio for having been contracted during the subsistence of a
previous marriage. Josefina further alleged that Joshua and
Maria Katrina were not her husband's children. Josefina prayed,
among others, for the appointment of a special administrator
to take charge of the estate. Josefina attached to her pleading
a copy of the marriage contract 7 which indicated that she and
Jose were married on February 1, 1956.
Since petitioners opposed the motion, the judge set the
motion for hearing. Josefina presented the marriage contract as
well as the Reply-in-Intervention 8 filed by the heirs of the
deceased, where Teresita declared that she knew "of the
previous marriage of the late Jose K. Alfelor with that of the
herein intervenor" on February 1, 1956.9 However, Josefina did
not appear in court.
Teresita testified before the RTC on February 13, 2002. 10 She
narrated that she and the deceased were married in civil rites
at Tagum City, Davao Province on February 12, 1966, and that
they were subsequently married in religious rites at the
Assumption Church on April 30, 1966. Among those listed as
secondary sponsors were Josefina's own relatives-Atty.
Margarito Halasan, her brother, and Valentino Halasan, her
father. 11 While she did not know Josefina personally, she
knew that her husband had been previously married to Josefina
and that the two did not live together as husband and wife. She
knew that Josefina left Jose in 1959. Jose's relatives consented
to her (Teresita's) marriage with Jose because there had been
no news of Josefina for almost ten years. In fact, a few months
after the marriage, Josefina disappeared, and Jose even looked
for her in Cebu, Bohol, and Manila. Despite his efforts, Jose
failed to locate Josefina and her whereabouts remained
unknown. HIaSDc
Teresita further revealed that Jose told her that he did not have
his marriage to Josefina annulled because he believed in good
faith that he had the right to remarry, not having seen her for
more than seven years. This opinion was shared by Jose's sister
who was a judge. Teresita also declared that she met Josefina
in 2001, and that the latter narrated that she had been married
three times, was now happily married to an Englishman and
residing in the United States.
On September 13, 2002, Judge Renato A. Fuentes issued an
Order 12 denying the motion and dismissed her complaint,
ruling that respondent was not able to prove her claim. The
trial court pointed out that the intervenor failed to appear to
testify in court to substantiate her claim. Moreover, no witness
was presented to identify the marriage contract as to the
existence of an original copy of the document or any public
officer who had custody thereof. According to the court, the
determinative factor in this case was the good faith of Teresita
in contracting the second marriage with the late Jose Alfelor, as
she had no knowledge that Jose had been previously married.
Thus, the evidence of the intervenor did not satisfy the
quantum of proof required to allow the intervention.
Citing Sarmiento v. Court of Appeals, 13 the RTC ruled that
while Josefina submitted a machine copy of the marriage
contract, the lack of its identification and the accompanying
testimony on its execution and ceremonial manifestation or
formalities required by law could not be equated to proof of its
validity and legality.
The trial court likewise declared that Teresita and her children,
Joshua and Maria Katrina, were the legal and legitimate heirs of
the late Jose K. Alfelor, considering that the latter referred to
them as his children in his Statement of Assets and Liabilities,
among others. Moreover, the oppositor did not present
evidence to dispute the same. The dispositive portion of the
Order reads:
WHEREFORE, finding the evidence of intervenor,
Josephina (sic) Halasan through counsel, not sufficient to
prove a preponderance of evidence and compliance with
the basic rules of evidence to proved (sic) the competent
and relevant issues of the complaint-in-intervention, as
legal heir of the deceased Jose K. Alfelor, the complaint
(sic) of intervention is ordered dismiss (sic) with cost[s] de
oficio.
On the other hand, finding the evidence by Teresita
Sorongon Aleflor, oppositor through counsel sufficient to
proved (sic) the requirement of the Rules of Evidence, in
accordance with duly supporting and prevailing
jurisprudence, oppositor, Teresita Sorongon Alfelor and her
children, Joshua S. Alfelor and Maria Katrina S. Alfelor, are
declared legal and legitimate Heirs of the late Jose
K. Alfelor, for all purposes, to entitled (sic) them, in the
intestate estate of the latter in accordance to (sic) law, of
all properties in his name and/or maybe entitled to any
testate or intestate proceedings of his predecessor-[in]-
interest, and to receive such inheritance, they are legally
entitled, along with the other heirs, as the case maybe
(sic). 14
Josefina filed a Motion for Reconsideration, 15 insisting that
under Section 4, Rule 129 of the Revised Rules of Court, an
admission need not be proved. She pointed out that Teresita
admitted in her Reply in Intervention dated February 22, 1999
that she (Teresita) knew of Jose's previous marriage to her.
Teresita also admitted in her testimony that she knew of the
previous marriage. 16 Since the existence of the first marriage
was proven in accordance with the basic rules of evidence,
pursuant to paragraph 4, Article 80 of the New Civil Code, the
second marriage was void from the beginning. Moreover,
contrary to the ruling of the trial court, Article 83 of the Civil
Code provides that the person entitled to claim good faith is
the "spouse present" (thus, the deceased Jose and not
Teresita). Josefina concluded that if the validity of the second
marriage were to be upheld, and at the same time admit the
existence of the second marriage, an absurd situation would
arise: the late Jose Alfelor would then be survived by two
legitimate spouses.
The trial court denied the motion in its Order 17 dated October
30, 2002.
Aggrieved, Josefina filed a Petition for Certiorari under Rule 65
before the CA, alleging that the RTC acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction in
declaring that she failed to prove the fact of her marriage to
Jose, in considering the bigamous marriage valid and declaring
the second wife as legal heir of the deceased. Josefina also
stressed that Articles 80 and 83 of the New Civil Code provide
for a presumption of law that any subsequent marriage is null
and void. She insisted that no evidence was presented to prove
that she had been absent for seven consecutive years before
the second marriage.
In their comment, Teresita and her children countered that
anyone who claims to be the legal wife must show proof
thereof. They pointed out that Josefina failed to present any of
the following to prove the fact of the previous marriage: the
testimony of a witness to the matrimony, the couple's public
and open cohabitation as husband and wife after the alleged
wedding; the birth and the baptismal certificates of children
during such union, and other subsequent documents
mentioning such union. Regarding Teresita's alleged admission
of the first marriage in her Reply in Intervention dated February
22, 1999, petitioners claim that it was mere hearsay, without
probative value, as she heard of the alleged prior marriage of
decedent Jose Alfelor to Josefina only from other persons, not
based on her own personal knowledge. They also pointed out
that Josefina did not dispute the fact of having left and
abandoned Jose after their alleged marriage in 1956, and only
appeared for the first time in 1988 during the filing of the case
for partition of the latter's share in his parents' estate. They
further pointed out that Josefina does not even use the
surname of the deceased Alfelor. Contrary to the allegations of
Josefina, paragraph 2, Article 83 of the Civil Code, now Article
41 of the Family Code, is applicable. Moreover, her inaction all
this time brought to question her claim that she had not been
heard of for more than seven years.

In its Decision dated November 5, 2003, the CA reversed the

ruling of the trial court. It held that Teresita had already
admitted (both verbally and in writing) that Josefina had been
married to the deceased, and under Section 4, Rule 129 of the
Revised Rules of Evidence, a judicial admission no longer
requires proof. Consequently, there was no need to prove and
establish the fact that Josefa was married to the decedent.
Citing Santiago v. De los Santos, 18 the appellate court ruled
that an admission made in a pleading cannot be controverted
by the party making such admission, and is conclusive as to
such party; and all contrary or inconsistent proofs submitted by
the party who made the admission should be ignored whether
objection is interposed by the other party or not. The CA
concluded that the trial court thus gravely abused its discretion
in ordering the dismissal of Josefina's Complaint-in-
Intervention. The dispositive portion of the decision reads:
 WHEREFORE, foregoing premises considered, the assailed
orders, having been issued with grave abuse of discretion
are hereby ANNULLED and SET ASIDE. Resultantly, the
Regional Trial Court, Branch 17, Davao City, is ordered to
admit petitioner's complaint in intervention and to
forthwith conduct the proper proceeding with dispatch. No
costs.
SO ORDERED. 19
Thus, Joshua and Maria Katrina Alfelor filed the instant
petition, assailing the ruling of the appellate court.
Petitioners limit the issue to the determination of whether or
not the CA erred in ordering the admission of private
respondent's intervention in S.P. Civil Case No. 26,047-98. They
insist that in setting aside the Orders of the trial court, dated
September 13, 2002 and October 30, 2002, the CA completely
disregarded the hearsay rule. They aver that while Section 4 of
Rule 129 of the Revised Rules of Evidence provides that an
admission does not require proof, such admission may be
contradicted by showing that it was made through palpable
mistake. Moreover, Teresita's statement in the Reply-in-
Intervention dated February 22, 1999, admitting knowledge of
the alleged first marriage, is without probative value for being
hearsay.
Private respondent, for her part, reiterates that the matters
involved in this case fall under Section 4, Rule 129 of the
Revised Rules of Evidence, and thus qualify as a judicial
admission which does not require proof. Consequently, the CA
did not commit any palpable error when it ruled in her favor.
Petitioners counter that while Teresita initially admitted
knowledge of Jose's previous marriage to private respondent in
the said Reply-in-Intervention, Teresita also testified during the
hearing, for the purpose, that the matter was merely "told" to
her by the latter, and thus should be considered hearsay. They
also point out that private respondent failed to appear and
substantiate her Complaint-in-Intervention before the RTC, and
only submitted a machine copy of a purported marriage
contract with the deceased Jose Alfelor.
The issue in this case is whether or not the first wife of a
decedent, a fact admitted by the other party who claims to be
the second wife, should be allowed to intervene in an action for
partition involving the share of the deceased "husband" in the
estate of his parents.
The petition is dismissed.
The fact of the matter is that Teresita Alfelor and her co-heirs,
petitioners herein, admitted the existence of the first marriage
in their Reply-in-Intervention filed in the RTC, to wit:
1.1. Plaintiff Teresita S. Alfelor admits knowledge of the
previous marriage of the late Jose K. Alfelor, with that of
the herein intervenor were married on February 1,
1956; 20
Likewise, when called to testify, Teresita admitted several
times that she knew that her late husband had been previously
married to another. To the Court's mind, this admission
constitutes a "deliberate, clear and unequivocal" statement;
made as it was in the course of judicial proceedings, such
statement qualifies as a judicial admission. 21 A party who
judicially admits a fact cannot later challenge that fact as
judicial admissions are a waiver of proof; 22 production of
evidence is dispensed with. 23 A judicial admission also
removes an admitted fact from the field of
controversy. 24 Consequently, an admission made in the
pleadings cannot be controverted by the party making such
admission and are conclusive as to such party, and all proofs to
the contrary or inconsistent therewith should be ignored,
whether objection is interposed by the party or not. 25 The
allegations, statements or admissions contained in a pleading
are conclusive as against the pleader. A party cannot
subsequently take a position contrary of or inconsistent with
what was pleaded. 26
On the matter of the propriety of allowing her motion for
intervention, the pertinent provision of the Revised Rules of
Court is Section 1, Rule 19, which provides:
SEC. 1. Who may intervene. A person who has a legal
interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or
of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or
not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and
whether or not the intervenor's rights may be fully
protected in a separate proceeding.
Under this Rule, intervention shall be allowed when a person
has (1) a legal interest in the matter in litigation; (2) or in the
success of any of the parties; (3) or an interest against the
parties; (4) or when he is so situated as to be adversely
affected by a distribution or disposition of property in the
custody of the court or an officer thereof.27 Intervention is "a
proceeding in a suit or action by which a third person is
permitted by the court to make himself a party, either joining
plaintiff in claiming what is sought by the complaint, or uniting
with defendant in resisting the claims of plaintiff, or demanding
something adversely to both of them; the act or proceeding by
which a third person becomes a party in a suit pending
between others; the admission, by leave of court, of a person
not an original party to pending legal proceedings, by which
such person becomes a party thereto for the protection of
some right of interest alleged by him to be affected by such
proceedings." 28
 Considering this admission of Teresita, petitioners' mother, the
Court rules that respondent Josefina Halasan sufficiently
established her right to intervene in the partition case. She has
shown that she has legal interest in the matter in litigation. As
the Court ruled in Nordic Asia Ltd. v. Court of Appeals: 29
. . . [T]he interest which entitles a person to intervene in a
suit between other parties must be in the matter in
litigation and of such direct and immediate character that
the intervenor will either gain or lose by direct legal
operation and effect of the judgment. Otherwise, if persons
not parties to the action were allowed to intervene,
proceedings would become unnecessarily complicated,
expensive and interminable. And this would be against the
policy of the law. The words "an interest in the subject"
means a direct interest in the cause of action as pleaded,
one that would put the intervenor in a legal position to
litigate a fact alleged in the complaint without the
establishment of which plaintiff could not recover. 30
In Uy v. Court of Appeals, 31 the Court allowed petitioners
(who claimed to be the surviving legal spouse and the
legitimate child of the decedent) to intervene in the intestate
proceedings even after the parties had already submitted a
compromise agreement involving the properties of the
decedent, upon which the intestate court had issued a writ of
execution. In setting aside the compromise agreement, the
Court held that petitioners were indispensable parties and that
"in the interest of adjudicating the whole controversy,
petitioners' inclusion in the action for partition, given the
circumstances, not only is preferable but rightly essential in the
proper disposition of the case." 32
Contrary to petitioners' argument, the case of Sarmiento v.
Court of Appeals 33 is not in point, as the Court therein did not
discuss the propriety of allowing a motion for intervention, but
resolved the validity of a marriage. In relying on the merits of
the complaint for partition, the Court ultimately determined the
legitimacy of one of the petitioners therein and her entitlement
to a share in the subject properties.
CONSIDERING THE FOREGOING, the Decision of the Court of
Appeals in CA-G.R. SP No. 74757 is AFFIRMED. The Regional
Trial Court, Branch 17, Davao City, is ORDERED to admit
respondent Josefina Halasan's Complaint-in-Intervention and
forthwith conduct the proper proceedings with
dispatch. DScTaC
SO ORDERED.
Panganiban, Ynares-Santiago, Austria-Martinez and Chico-
Nazario, JJ., concur.
||| (Alfelor v. Halasan, G.R. No. 165987, [March 31, 2006], 520
PHIL 982-993)