FIRST DIVISION G.R. No.

120935 involves a petition for review on certiorari filed by petitioners

LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOS REYES
(private respondents), in their respective capacities as president, treasurer and
LUCAS G. ADAMSON, THERESE G.R. No. 120935 secretary of Adamson Management Corporation (AMC) against then Commissioner of
JUNE D. ADAMSON, and SARA Internal Revenue Liwayway Vinzons-Chato (COMMISSIONER), under Rule 45 of the
S. DE LOS REYES, in their capacities Revised Rules of Court. They seek to review and reverse the Decision promulgated
as President, Treasurer and Secretary on March 21, 1995 and Resolution issued on July 6, 1995 of the Court of Appeals in
of Adamson Management Corporation, CA-G.R. SP No. 35488 (Liwayway Vinzons-Chato, et al. v. Hon. Judge Erna Falloran-
Petitioners, Aliposa, et al.).
- versus - G.R. No. 124557 is a petition for review on certiorari filed by the
Commissioner, assailing the Decision dated March 29, 1996 of the Court of Appeals in
COURT OF APPEALS and CA-G.R. SP No. 35520, titled Commissioner of Internal Revenue v. Court of Tax
LIWAYWAY VINZONS-CHATO, Appeals, Adamson Management Corporation, Lucas G. Adamson, Therese June D.
in her capacity as Commissioner Adamson and Sara S. de los Reyes. In the said Decision, the Court of Appeals upheld
of the Bureau of Internal Revenue, the Resolution promulgated on September 19, 1994 by the Court of Tax Appeals (CTA)
Respondents. in C.T.A. Case No. 5075 (Adamson Management Corporation, Lucas G. Adamson,
Therese Adamson and Sara de los Reyes v. Commissioner of Internal Revenue).
x-- - - - - - - - - - - - - - - - - - - - - - - - x The facts, as culled from the findings of the appellate court, follow:

COMMISSIONER OF G.R. No. 124557 On June 20, 1990, Lucas Adamson and AMC sold 131,897 common shares
INTERNAL REVENUE, of stock in Adamson and Adamson, Inc. (AAI) to APAC Holding Limited (APAC). The
Petitioner, shares were valued at P7,789,995.00.[1] On June 22, 1990, P159,363.21 was paid as
Present: capital gains tax for the transaction.

-versus- PUNO, C.J., Chairperson, On October 12, 1990, AMC sold to APAC Philippines, Inc. another 229,870
CARPIO, common shares of stock in AAIfor P17,718,360.00. AMC paid the capital gains tax
CORONA, of P352,242.96.
COURT OF APPEALS, COURT LEONARDO-DE CASTRO, and
OF TAX APPEALS, ADAMSON BERSAMIN, JJ. On October 15, 1993, the Commissioner issued a Notice of Taxpayer to AMC,
MANAGEMENT CORPORATION, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes, informing
LUCAS G. ADAMSON, THERESE them of deficiencies on their payment of capital gains tax and Value Added Tax
JUNE D. ADAMSON, and SARA Promulgated: (VAT). The notice contained a schedule for preliminary conference.
S. DE LOS REYES, The events preceding G.R. No. 120935 are the following:
Respondents. May 21, 2009
On October 22, 1993, the Commissioner filed with the Department of Justice
x--------------------------------------------------x (DOJ) her Affidavit of Complaint[2] against AMC, Lucas G. Adamson, Therese June D.
Adamson and Sara S. de los Reyes for violation of Sections 45 (a) and (d)[3], and 110[4],
in relation to Section 100[5], as penalized under Section 255,[6] and for violation of
DECISION Section 253[7], in relation to Section 252 (b) and (d) of the National Internal Revenue
Code (NIRC).[8]

PUNO, C.J.: AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los
Reyes filed with the DOJ a motion to suspend proceedings on the ground of prejudicial
Before the Court are the consolidated cases of G.R. No. 120935 and G.R. No. 124557. question, pendency of a civil case with the Supreme Court, and pendency of their letter-
request for re-investigation with the Commissioner. After the preliminary investigation, 41919-24, May 30, 1980, 97 SCRA 877) TO THE CASE AT
State Prosecutor Alfredo P. Agcaoili found probable cause. The Motion for BAR.
Reconsideration against the findings of probable cause was denied by the prosecutor.
2. WHETHER OR NOT AN ASSESSMENT IS
On April 29, 1994, Lucas G. Adamson, Therese June D. Adamson and Sara REQUIRED UNDER THE SECOND CATEGORY OF THE
S. de los Reyes were charged before the Regional Trial Court (RTC) of Makati, Branch OFFENSE IN SECTION 253 OF THE NIRC.
150 in Criminal Case Nos. 94-1842 to 94-1846. They filed a Motion to Dismiss or
Suspend the Proceedings. They invoked the grounds that there was yet no final 3. WHETHER OR NOT THERE WAS A VALID
assessment of their tax liability, and there were still pending relevant Supreme Court ASSESSMENT MADE BY THE COMMISSIONER IN THE
and CTA cases. Initially, the trial court denied the motion. A Motion for Reconsideration CASE AT BAR.
was however filed, this time assailing the trial courts lack of jurisdiction over the nature
of the subject cases. On August 8, 1994, the trial court granted the Motion. It ruled that 4. WHETHER OR NOT THE FILING OF A CRIMINAL
the complaints for tax evasion filed by the Commissioner should be regarded as a COMPLAINT SERVES AS AN IMPLIED ASSESSMENT
decision of the Commissioner regarding the tax liabilities of Lucas G. Adamson, ON THE TAX LIABILITY OF THE TAXPAYER.
Therese June D. Adamson and Sara S. de los Reyes, and appealable to the CTA. It
further held that the said cases cannot proceed independently of the assessment case 5. WHETHER OR NOT THE FILING OF THE CRIMINAL
pending before the CTA, which has jurisdiction to determine the civil and criminal tax INFORMATION FOR TAX EVASION IN THE TRIAL
liability of the respondents therein. COURT IS PREMATURE BECAUSE THERE IS YET NO
BASIS FOR THE CRIMINAL CHARGE OF WILLFULL
On October 10, 1994, the Commissioner filed a Petition for Review with the INTENT TO EVADE THE PAYMENT OF A TAX.
Court of Appeals assailing the trial courts dismissal of the criminal cases. She averred
that it was not a condition prerequisite that a formal assessment should first be given 6. WHETHER OR NOT THE DOCTRINES LAID DOWN
to the private respondents before she may file the aforesaid criminal complaints against IN THE CASES OF YABES V. FLOJO (No. L-46954, July
them. She argued that the criminal complaints for tax evasion may proceed 20, 1982, 115 SCRA 286) AND CIR V. UNION SHIPPING
independently from the assessment cases pending before the CTA. CORP. (G.R. No. 66160, May 21, 1990, 185 SCRA
547) ARE APPLICABLE TO THE CASE AT BAR.
On March 21, 1995, the Court of Appeals reversed the trial courts decision
and reinstated the criminal complaints. The appellate court held that, in a criminal 7. WHETHER OR NOT THE COURT OF TAX
prosecution for tax evasion, assessment of tax deficiency is not required APPEALS HAS JURISDICTION OVER THE DISPUTE ON
because the offense of tax evasion is complete or consummated when the WHAT CONSTITUTES THE PROPER TAXES DUE FROM
offender has knowingly and willfully filed a fraudulent return with intent to evade THE TAXPAYER.
the tax.[9] It ruled that private respondents filed false and fraudulent returns with
intent to evade taxes, and acting thereupon, petitioner filed an Affidavit of
Complaint with the Department of Justice, without an accompanying assessment In parallel circumstances, the following events preceded G.R. No. 124557:
of the tax deficiency of private respondents, in order to commence criminal
action against the latter for tax evasion.[10] On December 1, 1993, AMC, Lucas G. Adamson, Therese June D. Adamson
and Sara S. de los Reyes filed a letter request for re-investigation with the
Private respondents filed a Motion for Reconsideration, but the trial court Commissioner of the Examiners Findings earlier issued by the Bureau of Internal
denied the motion on July 6, 1995.Thus, they filed the petition in G.R. No. 120935, Revenue (BIR), which pointed out the tax deficiencies.
raising the following issues:
On March 15, 1994 before the Commissioner could act on their letter-request,
1. WHETHER OR NOT THE RESPONDENT AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de los Reyes filed a
HONORABLE COURT OF APPEALS ERRED IN Petition for Review with the CTA. They assailed the Commissioners finding of tax
APPLYING THE DOCTRINE IN UNGAB V. CUSI (Nos. L- evasion against them. The Commissioner moved to dismiss the petition, on the ground
that it was premature, as she had not yet issued a formal assessment of the tax liability
of therein petitioners.On September 19, 1994, the CTA denied the Motion to Dismiss. It
considered the criminal complaint filed by the Commissioner with the DOJ as an implied 2. WHETHER THERE IS BASIS FOR THE CRIMINAL
formal assessment, and the filing of the criminal informations with the RTC as a denial CASES FOR TAX EVASION TO PROCEED AGAINST
of petitioners protest regarding the tax deficiency. AMC, LUCAS G. ADAMSON, THERESE JUNE D.
ADAMSON AND SARA S. DE LOS REYES; and
The Commissioner repaired to the Court of Appeals on the ground that
the CTA acted with grave abuse of discretion. She contended that, with regard to the 3. WHETHER THE COURT OF TAX
protest provided under Section 229 of the NIRC, there must first be a formal APPEALS HAS JURISDICTION TO TAKE COGNIZANCE
assessment issued by the Commissioner, and it must be in accord with Section 6 of OF BOTH THE CIVIL AND THE CRIMINAL ASPECTS OF
Revenue Regulation No. 12-85. She maintained that she had not yet issued a formal THE TAX LIABILITY OF AMC, LUCAS G. ADAMSON,
assessment of tax liability, and the tax deficiency amounts mentioned in her criminal THERESE JUNE D. ADAMSON AND SARA S. DE LOS
complaint with the DOJ were given only to show the difference between the tax returns REYES.
filed and the audit findings of the revenue examiner.

The Court of Appeals sustained the CTAs denial of the Commissioners Motion The case of CIR v. Pascor Realty, et al.[11] is relevant. In this case, then
to Dismiss. Thus, the Commissioner filed the petition for review under G.R. No. BIR Commissioner Jose U. Ong authorized revenue officers to examine the books of
124557, raising the following issues: accounts and other accounting records of Pascor Realty and Development
Corporation (PRDC) for 1986, 1987 and 1988. This resulted in a recommendation for
1. WHETHER OR NOT THE INSTANT PETITION the issuance of an assessment in the amounts of P7,498,434.65 and P3,015,236.35
SHOULD BE DISMISSED FOR FAILURE TO COMPLY for the years 1986 and 1987, respectively.
WITH THE MANDATORY REQUIREMENT OF A
CERTIFICATION UNDER OATH AGAINST FORUM On March 1, 1995, the Commissioner filed a criminal complaint before the
SHOPPING; DOJ against PRDC, its President Rogelio A. Dio, and its Treasurer Virginia S. Dio,
alleging evasion of taxes in the total amount of P10,513,671.00.Private respondents
2. WHETHER OR NOT THE CRIMINAL CASE FOR TAX filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax
EVASION IN THE CASE AT BAR CAN PROCEED assessment and tax liability.
WITHOUT AN ASSESSMENT;
The Commissioner denied the urgent request for
3. WHETHER OR NOT THE COMPLAINT FILED WITH reconsideration/reinvestigation because she had not yet issued a formal assessment.
THE DEPARTMENT OF JUSTICE CAN BE CONSTRUED
AS AN IMPLIED ASSESSMENT; and Private respondents then elevated the Decision of the Commissioner to the
CTA on a petition for review. The Commissioner filed a Motion to Dismiss the petition
4. WHETHER OR NOT THE COURT OF TAX on the ground that the CTA has no jurisdiction over the subject matter of the petition,
APPEALS HAS JURISDICTION TO ACT ON PRIVATE as there was yet no formal assessment issued against the petitioners. The CTA
RESPONDENTS PETITION FOR REVIEW FILED WITH denied the said motion to dismiss and ordered the Commissioner to file an answer
THE SAID COURT. within thirty (30) days. The Commissioner did not file an answer nor did she move to
reconsider the resolution. Instead, the Commissioner filed a petition for review of the
The issues in G.R. No. 124557 and G.R. No. 120935 can be compressed into CTA decision with the Court of Appeals. The Court of Appeals upheld the CTA order.
three: However, this Court reversed the Court of Appeals decision and the CTA order, and
ordered the dismissal of the petition. We held:
1. WHETHER THE COMMISSIONER HAS ALREADY
RENDERED AN ASSESSMENT (FORMAL OR An assessment contains not only a computation of tax liabilities,
OTHERWISE) OF THE TAX LIABILITY OF AMC, LUCAS but also a demand for payment within a prescribed period. It also
G. ADAMSON, THERESE JUNE D. ADAMSON AND signals the time when penalties and interests begin to accrue against
SARA S. DE LOS REYES; the taxpayer. To enable the taxpayer to determine his remedies
thereon, due process requires that it must be served on and received
by the taxpayer.Accordingly, an affidavit, which was executed by
revenue officers stating the tax liabilities of a taxpayer and attached
to a criminal complaint for tax evasion, cannot be deemed an
assessment that can be questioned before the Court of Tax Appeals.
Neither the NIRC nor the revenue regulations governing the
protest of assessments[12] provide a specific definition or form of an
assessment. However, the NIRC defines the specific functions and
effects of an assessment. To consider the affidavit attached to the
Complaint as a proper assessment is to subvert the nature of an
assessment and to set a bad precedent that will prejudice innocent
taxpayers.
True, as pointed out by the private respondents, an assessment
informs the taxpayer that he or she has tax liabilities.But not all
documents coming from the BIR containing a computation of the tax
liability can be deemed assessments.
To start with, an assessment must be sent to and received by
a taxpayer, and must demand payment of the taxes described
therein within a specific period. Thus, the NIRC imposes a 25 percent
penalty, in addition to the tax due, in case the taxpayer fails to pay
the deficiency tax within the time prescribed for its payment in the
notice of assessment.Likewise, an interest of 20 percent per annum,
or such higher rate as may be prescribed by rules and regulations, is
to be collected from the date prescribed for its payment until the full
payment.[13]
The issuance of an assessment is vital in determining the
period of limitation regarding its proper issuance and the period
within which to protest it. Section 203[14] of the NIRC provides that
internal revenue taxes must be assessed within three years from the
last day within which to file the return. Section 222,[15] on the other
hand, specifies a period of ten years in case a fraudulent return with
intent to evade was submitted or in case of failure to file a return.Also,
Section 228[16] of the same law states that said assessment may be
protested only within thirty days from receipt thereof. Necessarily, the
taxpayer must be certain that a specific document constitutes an
assessment. Otherwise, confusion would arise regarding the period
within which to make an assessment or to protest the same, or
whether interest and penalty may accrue thereon.
It should also be stressed that the said document is a notice
duly sent to the taxpayer. Indeed, an assessment is deemed made
only when the collector of internal revenue releases, mails or sends
such notice to the taxpayer.[17]
In the present case, the revenue officers Affidavit merely
contained a computation of respondents tax liability. It did not state
a demand or a period for payment. Worse, it was addressed to the
justice secretary, not to the taxpayers.
Respondents maintain that an assessment, in relation to
taxation, is simply understood to mean:
A notice to the effect that the amount
therein stated is due as tax and a demand for
payment thereof.[18]
Fixes the liability of the taxpayer and
ascertains the facts and furnishes the data for the
proper presentation of tax rolls.[19]
Even these definitions fail to advance private respondents
case. That the BIR examiners Joint Affidavit attached to the Criminal
Complaint contained some details of the tax liabilities of private
respondents does not ipso facto make it an assessment. The
purpose of the Joint Affidavit was merely to support and substantiate
the Criminal Complaint for tax evasion. Clearly, it was not meant to
be a notice of the tax due and a demand to the private respondents
for payment thereof.
The fact that the Complaint itself was specifically directed and
sent to the Department of Justice and not to private respondents
shows that the intent of the commissioner was to file a criminal
complaint for tax evasion, not to issue an assessment. Although the
revenue officers recommended the issuance of an assessment, the
commissioner opted instead to file a criminal case
for tax evasion. What private respondents received was a notice
from the DOJ that a criminal case for tax evasion had been filed
against them, not a notice that the Bureau of Internal Revenue had
made an assessment.
Private respondents maintain that the filing of a criminal
complaint must be preceded by an assessment. This is incorrect,
because Section 222 of the NIRC specifically states that in cases
where a false or fraudulent return is submitted or in cases of failure
to file a return such as this case, proceedings in court may be
commenced without an assessment. Furthermore, Section 205 of
the same Code clearly mandates that the civil and criminal aspects
 of the case may be pursued simultaneously. In Ungab v.
Cusi,[20] petitioner therein sought the dismissal of the criminal
Complaints for being premature, since his protest to the CTA had not
yet been resolved. The Court held that such protests could not stop
or suspend the criminal action which was independent of the
resolution of the protest in the CTA. This was because the
commissioner of internal revenue had, in such tax evasion cases,
discretion on whether to issue an assessment or to file a criminal
case against the taxpayer or to do both.
Private respondents insist that Section 222 should be read in
relation to Section 255 of the NIRC,[21] which penalizes failure to file
a return. They add that a tax assessment should precede a criminal
indictment. We disagree. To reiterate, said Section 222 states that
an assessment is not necessary before a criminal charge can be
filed. This is the general rule. Private respondents failed to show that
they are entitled to an exception. Moreover, the criminal charge need
only be supported by a prima facie showing of failure to file a required
return. This fact need not be proven by an assessment.
The issuance of an assessment must be distinguished from the
filing of a complaint. Before an assessment is issued, there is, by
practice, a pre-assessment notice sent to the taxpayer. The taxpayer
is then given a chance to submit position papers and documents to
prove that the assessment is unwarranted. If the commissioner is
unsatisfied, an assessment signed by him or her is then sent to the
taxpayer informing the latter specifically and clearly that an
assessment has been made against him or her. In contrast, the
criminal charge need not go through all these. The criminal charge is
filed directly with the DOJ. Thereafter, the taxpayer is notified that a
criminal case had been filed against him, not that the commissioner
has issued an assessment. It must be stressed that a criminal
complaint is instituted not to demand payment, but to penalize the
taxpayer for violation of the Tax Code.
In the cases at bar, the Commissioner denied that she issued a formal assessment of
the tax liability of AMC, Lucas G. Adamson, Therese June D. Adamson and Sara S. de
los Reyes. She admits though that she wrote the recommendation letter [22] addressed
to the Secretary of the DOJ recommending the filing of criminal complaints against AMC
and the aforecited persons for fraudulent returns and tax evasion.
The first issue is whether the Commissioners recommendation letter can be considered
as a formal assessment of private respondents tax liability.
In the context in which it is used in the NIRC, an assessment is a written notice
and demand made by the BIR on the taxpayer for the settlement of a due tax liability
that is there definitely set and fixed. A written communication containing a computation
by a revenue officer of the tax liability of a taxpayer and giving him an opportunity to
contest or disprove the BIR examiners findings is not an assessment since it is yet
indefinite.[23]
We rule that the recommendation letter of the Commissioner cannot be
considered a formal assessment. Even a cursory perusal of the said letter would reveal
three key points:
1. It was not addressed to the taxpayers.
2. There was no demand made on the taxpayers to pay the tax
liability, nor a period for payment set therein.
3. The letter was never mailed or sent to the taxpayers by the
Commissioner.
In fine, the said recommendation letter served merely as the prima facie basis
for filing criminal informations that the taxpayers had violated Section 45 (a) and (d),
and 110, in relation to Section 100, as penalized under Section 255, and for violation
of Section 253, in relation to Section 252 9(b) and (d) of the Tax Code.[24]
The next issue is whether the filing of the criminal complaints against the
private respondents by the DOJ is premature for lack of a formal assessment.
Section 269 of the NIRC (now Section 222 of the Tax Reform Act of 1997)
provides:
Sec. 269. Exceptions as to period of limitation of assessment and
collection of taxes.-(a) In the case of a false or fraudulent return with
intent to evade tax or of failure to file a return, the tax may be
assessed, or a proceeding in court after the collection of such tax
may be begun without assessment, at any time within ten years after
the discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which has become final and executory, the fact of
fraud shall be judicially taken cognizance of in the civil or criminal
action for collection thereof
The law is clear. When fraudulent tax returns are involved as in the cases at bar, a
proceeding in court after the collection of such tax may be begun without
assessment. Here, the private respondents had already filed the capital gains tax
return and the VAT returns, and paid the taxes they have declared due therefrom. Upon
investigation of the examiners of the BIR, there was a preliminary finding of gross
discrepancy in the computation of the capital gains taxes due from the sale of two lots
of AAI shares, first to APAC and then to APAC Philippines, Limited. The examiners also
found that the VAT had not been paid for VAT-liable sale of services for the third and
fourth quarters of 1990. Arguably, the gross disparity in the taxes due and the amounts
actually declared by the private respondents constitutes badges of fraud.
Thus, the applicability of Ungab v. Cusi[25] is evident to the cases at bar. In
this seminal case, this Court ruled that there was no need for precise computation and
formal assessment in order for criminal complaints to be filed against him. It quoted
Mertens Law of Federal Income Taxation, Vol. 10, Sec. 55A.05, p. 21, thus:
An assessment of a deficiency is not necessary to a criminal
prosecution for willful attempt to defeat and evade the income tax. A
crime is complete when the violator has knowingly and willfully filed
a fraudulent return, with intent to evade and defeat the tax. The
perpetration of the crime is grounded upon knowledge on the part of
the taxpayer that he has made an inaccurate return, and the
governments failure to discover the error and promptly to assess has
no connections with the commission of the crime.
This hoary principle still underlies Section 269 and related provisions of the present Tax
Code.
We now go to the issue of whether the CTA has no jurisdiction to take
cognizance of both the criminal and civil cases here at bar.
Under Republic Act No. 1125 (An Act Creating the Court of Tax Appeals) as
amended, the rulings of the Commissioner are appealable to the CTA, thus:
SEC. 7. Jurisdiction. The Court of Tax Appeals shall exercise
exclusive appellate jurisdiction to review by appeal, as herein
provided -
(1) Decisions of the Commissioner of Internal
Revenue in cases involving disputed
assessments, refunds of internal revenue taxes,
fees or other charges, penalties imposed in
relation thereto, or other matters arising under the
National Internal Revenue Code or other laws or
part of law administered by the Bureau of Internal
Revenue;
Republic Act No. 8424, titled An Act Amending the National Internal Revenue
Code, As Amended, And For Other Purposes, later expanded the jurisdiction of the
Commissioner and, correspondingly, that of the CTA, thus:
SEC. 4. Power of the Commissioner to Interpret Tax Laws and
to Decide Tax Cases. The power to interpret the provisions of this
Code and other tax laws shall be under the exclusive and original
jurisdiction of the Commissioner, subject to review by the Secretary
of Finance.
The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.
The latest statute dealing with the jurisdiction of the CTA is Republic Act No.
9282.[26] It provides:
SEC. 7. Section 7 of the same Act is hereby amended to read as follows:
Sec. 7. Jurisdiction. The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal, as
herein provided:
(1) Decisions of the Commissioner of Internal
Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other matters
arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;
(2) Inaction by the Commissioner of Internal
Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties in relation thereto, or other matters
arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal
Revenue, where the National Internal Revenue Code
provides a specific period of action, in which case the
inaction shall be deemed a denial;
(3) Decisions, orders or resolutions of the
Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their
original or appellate jurisdiction;
 xxx
(b) Jurisdiction over cases involving criminal offenses as
herein provided:
(1) Exclusive original jurisdiction over all criminal
offenses arising from violations of the National Internal
Revenue Code or Tariff and Customs Code and other
laws administered by the Bureau of Internal Revenue
or the Bureau of Customs: Provided, however, That
offenses or felonies mentioned in this paragraph
where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less
than One million pesos (P1,000,000.00) or where
there is no specified amount claimed shall be tried by
the regular courts and the jurisdiction of the CTA shall
be appellate. Any provision of law or the Rules of
Court to the contrary notwithstanding, the criminal
action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at
all times be simultaneously instituted with, and jointly
determined in the same proceeding by the CTA, the
filing of the criminal action being deemed to
necessarily carry with it the filing of the civil action, and
no right to reserve the filling of such civil action
separately from the criminal action will be recognized.
(2) Exclusive appellate jurisdiction in criminal
offenses:
(a) Over appeals from the judgments,
resolutions or orders of the Regional Trial
Courts in tax cases originally decided by
them, in their respected territorial
jurisdiction.
(b) Over petitions for review of the
judgments, resolutions or orders of the
Regional Trial Courts in the exercise of
their appellate jurisdiction over tax cases
originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in their
respective jurisdiction.
(c) Jurisdiction over tax collection
cases as herein provided:
(1) Exclusive original jurisdiction
in tax collection cases involving final
and executory assessments for taxes,
fees, charges and penalties: Provided,
however, That collection cases where
the principal amount of taxes and fees,
exclusive of charges and penalties,
claimed is less than One million pesos
(P1,000,000.00) shall be tried by the
proper Municipal Trial Court,
Metropolitan Trial Court and Regional
Trial Court.
(2) Exclusive appellate
jurisdiction in tax collection cases:
(a) Over appeals from the
judgments, resolutions or orders
of the Regional Trial Courts in tax
collection cases originally
decided by them, in their
respective territorial jurisdiction.
(b) Over petitions for review
of the judgments, resolutions or
orders of the Regional Trial
Courts in the exercise of their
appellate jurisdiction over tax
collection cases originally
decided by the Metropolitan Trial
Courts, Municipal Trial Courts
and Municipal Circuit Trial Courts,
in their respective jurisdiction.
These laws have expanded the jurisdiction of the CTA. However, they did not change
the jurisdiction of the CTA to entertain an appeal only from a final decision or
assessment of the Commissioner, or in cases where the Commissioner has not acted
within the period prescribed by the NIRC. In the cases at bar, the Commissioner has
not issued an assessment of the tax liability of private respondents.
Finally, we hold that contrary to private respondents stance, the doctrines laid
down in CIR v. Union Shipping Co. and Yabes v. Flojo are not applicable to the
cases at bar. In these earlier cases, the Commissioner already rendered an
assessment of the tax liabilities of the delinquent taxpayers, for which reason the Court
ruled that the filing of the civil suit for collection of the taxes due was a final denial of
the taxpayers request for reconsideration of the tax assessment.
IN VIEW WHEREOF, premises considered, judgment is rendered:

1. In G.R. No. 120935, AFFIRMING the CA decision dated

March 21, 1995, which set aside the Regional Trial Courts
Order dated August 8, 1994, and REINSTATING Criminal
Case Nos. 94-1842 to 94-1846 for further proceedings
before the trial court; and

2. In G.R. No. 124557, REVERSING and SETTING ASIDE

the Decision of the Court of Appeals dated March 29, 1996,
and ORDERING the dismissal of C.T.A. Case No. 5075.

No costs.

SO ORDERED.
 (A)(1), (3) and (20) of the Civil Service Law. Based on this complaint, a case for
Violations of R.A. No. 1379,[4] Art. 183 of the Revised Penal Code, and Sec. 8 in relation
EN BANC to Sec. 11 of R.A. No. 6713, docketed as Case

No. OMB-P-C-04-1132-I, was filed against petitioner.[5] Petitioners wife Clarita

MAJOR GENERAL G.R. No. 165835 Depakakibo Garcia, and their three sons, Ian Carl, Juan Paolo and Timothy Mark, all
CARLOS F. GARCIA, surnamed Garcia, were impleaded in the complaint for violation of R.A. No. 1379 insofar
Petitioner, Present: as they acted as conspirators, conduits, dummies and fronts of petitioner in receiving,
accumulating, using and disposing of his ill-gotten wealth.
DAVIDE, JR.,C.J.,
PUNO, On the same day, 27 October 2004, the Republic of the Philippines, acting through
PANGANIBAN, public respondent Office of the Ombudsman, filed before the Sandiganbayan, a Petition
QUISUMBING, with Verified Urgent Ex Parte Application for the Issuance of a Writ of Preliminary
- versus - YNARES-SANTIAGO, Attachment[6] against petitioner, his wife, and three sons, seeking the forfeiture of
SANDOVAL-GUTIERREZ, unlawfully acquired properties under Sec. 2 of R.A. No. 1379, as amended. The petition
CARPIO, was docketed as Civil Case No. 0193, entitled Republic of the Philippines vs. Maj. Gen.
AUSTRIA-MARTINEZ, Carlos F. Garcia, et al. It was alleged that the Office of the Ombudsman, after
CORONA, conducting an inquiry similar to a preliminary investigation in criminal cases, has
CARPIO-MORALES CALLEJO, SR., determined that a prima facie case exists against Maj. Gen. Garcia and the other
SANDIGANBAYAN and AZCUNA, respondents therein who hold such properties for, with, or on behalf of, Maj. Gen.
the OFFICE OF THE TINGA, Garcia, since during his incumbency as a soldier and public officer he acquired huge
OMBUDSMAN, CHICO-NAZARIO, and amounts of money and properties manifestly out of proportion to his salary as such
Respondents. GARCIA, JJ. public officer and his other lawful income, if any.[7]

Promulgated:
June 22, 2005
x ------------------------------------------------------------------ x
DECISION
TINGA, J.:
Petitioner Major General Carlos F. Garcia was the Deputy Chief of Staff for
Comptrollership, J6, of the Armed Forces of the Philippines. Petitioner filed
this Petition for certiorari and prohibition under Rule 65 to annul and set aside public
respondent Sandiganbayans Resolution[1] dated 29 October 2004 and Writ of
Preliminary Attachment[2] dated 2 November 2004, and to enjoin public respondents
Sandiganbayan and Office of the Ombudsman from further proceeding with any action
relating to the enforcement of the assailed issuances.
On 27 September 2004, Atty. Maria Olivia Elena A. Roxas, Graft Investigation and
Prosecution Officer II of the Field Investigation Office of the Office of the Ombudsman,
after due investigation, filed a complaint against petitioner with public respondent Office
of the Ombudsman, for violation of Sec. 8, in relation to Sec. 11 of Republic Act (R.A.)
No. 6713,[3] violation of Art. 183 of the Revised Penal Code, and violation of Section 52
Acting on the Republics prayer for issuance of a writ of preliminary attachment, the
Sandiganbayan issued the questioned Resolution granting the relief prayed for. The
corresponding writ of preliminary attachment was subsequently issued on 2 November
2004 upon the filing of a bond by the Republic. On 17 November 2004, petitioner (as
respondent a quo) filed a Motion to Dismiss[8] in Civil Case No. 0193 on the ground of
lack of jurisdiction of the Sandiganbayan over forfeiture proceedings under R.A. No.
1379. On even date, petitioner filed the present Petition, raising the same issue of lack
jurisdiction on the part of the Sandiganbayan.
Petitioner argues in this Petition that the Sandiganbayan is without jurisdiction over the
civil action for forfeiture of unlawfully acquired properties under R.A. No. 1379,
maintaining that such jurisdiction actually resides in the Regional Trial Courts as
provided under Sec. 2[9] of the law, and that the jurisdiction of the Sandiganbayan in
civil actions pertains only to separate actions for recovery of unlawfully acquired
property against President Marcos, his family, and cronies as can be gleaned from Sec.
4 of Presidential Decree (P.D.) No. 1606,[10] as amended, and Executive Orders (E.O.)
Nos. 14[11] and 14-A.[12]

Theorizing that the Sandiganbayan, under P.D. No. 1606 or the law creating it, was
intended principally as a criminal court, with no jurisdiction over separate civil actions,
petitioner points to President Corazon C. Aquinos issuances after the EDSA
Revolution, namely: (1) E.O. No. 1 creating the Presidential Commission on Good
Government (PCGG) for the recovery of ill-gotten wealth amassed by President
Ferdinand E. Marcos, his family and cronies, (2) E.O. No. 14 which amended P.D. No.
1606 and R.A. No. 1379 by transferring to the Sandiganbayan jurisdiction over civil
actions filed against President Marcos, his family and cronies based on R.A. No. 1379,
the Civil Code and other existing laws, and (3) E.O. No. 14-A whch further amended
E.O. No. 14, P.D. No. 1606 and R.A. No. 1379 by providing that the civil action under
R.A. No. 1379 which may be filed against President Marcos, his family and cronies,
may proceed independently of the criminal action.
Petitioner gathers from the presidential issuances that the Sandiganbayan has
been granted jurisdiction only over the separate civil actions filed against President
Marcos, his family and cronies, regardless of whether these civil actions were for
recovery of unlawfully acquired property under R.A. No. 1379 or for restitution,
reparation of damages or indemnification for consequential damages or other civil
actions under the Civil Code or other existing laws. According to petitioner, nowhere in
the amendments to P.D. No. 1606 and R.A. No. 1379 does it provide that the
Sandiganbayan has been vested jurisdiction over separate civil actions other than
those filed against President Marcos, his family and cronies. [13] Hence, the
Sandiganbayan has no jurisdiction over any separate civil action against him, even if
such separate civil action is for recovery of unlawfully acquired property under R.A. No.
1379.
Petitioner further contends that in any event, the petition for forfeiture filed against him
is fatally defective for failing to comply with the jurisdictional requirements under Sec.
2, R.A. No. 1379, [14] namely: (a) an inquiry similar to a preliminary investigation
conducted by the prosecution arm of the government; (b) a certification to the Solicitor
General that there is reasonable ground to believe that there has been violation of the
said law and that respondent is guilty thereof; and (c) an action filed by the Solicitor
General on behalf of the Republic of the Philippines.[15] He argues that only informations
for perjury were filed and there has been no information filed against him for violation
of R.A. No. 1379. Consequently, he maintains, it is impossible for the Office of the
Ombudsman to certify that there is reasonable ground to believe that a violation of the
said law had been committed and that he is guilty thereof. The petition is also
supposedly bereft of the required certification which should be made by the
investigating City or Provincial Fiscal (now Prosecutor) to the Solicitor General.
Furthermore, he opines that it should have been the Office of the Solicitor General
which filed the petition and not the Office of the Ombudsman as in this case. The
petition being fatally defective, the same should have been dismissed, petitioner
concludes.
In their Comment,[16] respondents submit the contrary, noting that the issues raised by
petitioner are not novel as these have been settled in Republic vs.
Sandiganbayan[17] which categorically ruled that there is no issue that jurisdiction over
violations of [R.A.] Nos. 3019 and 1379 now rests with the
Sandiganbayan.[18] Respondents argue that under the Constitution[19] and prevailing
statutes, the Sandiganbayan is vested with authority and jurisdiction over the petition
for forfeiture under R.A. No. 1379 filed against petitioner. Respondents point to Sec.
4.a (1) (d) of P.D. 1606, as amended, as the prevailing law on the jurisdiction of
the Sandiganbayan, thus:
Sec. 4. Jurisdiction.The Sandiganbayan shall exercise exclusive
original jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as
amended, otherwise known as the Anti-Graft and Corrupt Practices
Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book
II of the Revised Penal Code, where one or more of the accused are
officials occupying the following positions in the government, whether
in a permanent, acting or interim capacity, at the time of the
commission of the offense:
(1) Officials of the executive branch occupying the
positions of regional director and higher, otherwise classified
as Grade 27 and higher of the Compensation and Position
Classification Act of 1989 (Republic Act No. 6758), specifically
including:
.
(d) Philippine army and air force colonels, naval
captains, and all officers of higher ranks;
.
As petitioner falls squarely under the category of public positions covered by the
aforestated law, the petition for forfeiture should be within the jurisdiction of the
Sandiganbayan.
Respondents also brush off as inconsequential petitioners argument that the petition
for forfeiture is civil in nature and the Sandiganbayan, having allegedly no jurisdiction
over civil actions, therefore has no jurisdiction over the petition, since the same P.D.
No. 1606 encompasses all cases involving violations of R.A. No. 3019, irrespective of
whether these cases are civil or criminal in nature. The petition for forfeiture should not
be confused with the cases initiated and prosecuted by the PCGG pursuant to E.O.
Nos. 14 and 14-A, as these are dealt with under a separate subparagraph of P.D. No.
1606, as amended, in particular Sec. 4.c thereof. [20] Further, respondents stress that
E.O. Nos. 14 and 14-A exclusively apply to actions for recovery of unlawfully acquired
property against President Marcos, his family, and cronies. It would also not be
accurate to refer to a petition for forfeiture as a civil case, since it has been held that
petitions for forfeiture are deemed criminal or penal and that it is only the proceeding
for its prosecution which is civil in nature.[21]
The Office of the Ombudsman filed a separate Comment,[22] likewise relying
on Republic v. Sandiganbayan to argue that the Sandiganbayan has jurisdiction over
the petition for forfeiture filed against petitioner. The Ombudsman explains that the
grant to the Sandiganbayan of jurisdiction over violations of R.A. No. 1379 did not
change even under the amendments of
R.A. No. 7975[23] and R.A. No. 8294[24], although it came to be limited to cases involving
high-ranking public officials as enumerated therein, including Philippine army and air
force colonels, naval captains, and all other officers of higher rank, to which petitioner
belongs.[25]
In arguing that it has authority to investigate and initiate forfeiture proceedings
against petitioner, the Office of the Ombudsman refers to both the Constitution [26] and
R.A. No. 6770.[27] The constitutional power of investigation of the Office of the
Ombudsman is plenary and unqualified; its power to investigate any act of a public
official or employee which appears to be illegal, unjust, improper or inefficient covers
the unlawful acquisition of wealth by public officials as defined under R.A. No. 1379.
Furthermore, Sec. 15 (11)[28] of R.A. No. 6770 expressly empowers the Ombudsman
to investigate and prosecute such cases of unlawful acquisition of wealth. This authority
of the Ombudsman has been affirmed also in Republic vs. Sandiganbayan.[29]
The Office of the Ombudsman then refutes petitioners allegation that the petition for
forfeiture filed against him failed to comply with the procedural and formal requirements
under the law. It asserts that all the requirements of R.A. No. 1379 have been strictly
complied with. An inquiry similar to a preliminary investigation was conducted by a
Prosecution Officer of the Office of the Ombudsman. The participation of the Office of
the Solicitor General, claimed by petitioner to be necessary, is actually no longer
required since the Office of the Ombudsman is endowed with the authority to
investigate and prosecute the case as discussed above.[30]
In addition, the Office of the Ombudsman alleges that the present Petition should be
dismissed for blatant forum-shopping. Even as petitioner had filed a Motion to
Dismiss as regards the petition for forfeiture (docketed as Civil Case No. 0193) before
the Sandiganbayan on the ground of the Sandiganbayans alleged lack of jurisdiction,
he filed the instant Petition raising exactly the same issue, even though the Motion to
Dismiss in Civil Case No. 0193 is still pending resolution. Worse, it appears that
the Motion to Dismiss and the instant Petition were filed on the same day, 17
November 2004.
Petitioner refutes these arguments in his Reply[31] and enunciates that the
Sandiganbayans criminal jurisdiction is separate and distinct from its civil jurisdiction,
and that the Sandiganbayans jurisdiction over forfeiture cases had been removed
without subsequent amendments expressly restoring such civil jurisdiction. His thesis
is that R.A. No. 1379 is a special law which is primarily civil and remedial in nature, the
clear intent of which is to separate the prima facie determination in forfeiture
proceedings from the litigation of the civil action. This intent is further demonstrated by
Sec. 2 of R.A. No. 1379 which grants the authority to make an inquiry similar to a
preliminary investigation being done by the City or Provincial Fiscal, and the authority
to file a petition for forfeiture to the Solicitor General.
Petitioner also points out in his Reply[32] to the Comment of the Office of the
Ombudsman, that the use of the phrase violations of [R.A.] Nos. 3019 and 1379 in P.D.
No. 1606, as amended, implies jurisdiction over cases which are principally criminal or
penal in nature because the concept of violation of certain laws necessarily carries with
it the concept of imposition of penalties for such violation. Hence, when reference was
made to violations of [R.A.] Nos. 3019 and 1379, the only jurisdiction that can
supposedly be implied is criminal jurisdiction, not civil jurisdiction, thereby highlighting
respondent Sandiganbayans lack of jurisdiction over the civil case for forfeiture of ill-
gotten wealth. Of course, petitioner does not rule out cases where the crime carries
with it the corresponding civil liability such that when the criminal action is instituted,
the civil action for enforcement of the civil liability is impliedly instituted with it, and the
court having jurisdiction over the criminal action also acquires jurisdiction over the
ancillary civil action. However, petitioner argues that the action for forfeiture subject of
this case is not the ancillary civil action impliedly instituted with the criminal action.
Rather, the petition for forfeiture is an independent civil action over which the
Sandiganbayan has no jurisdiction. Petitioner points to P.D. No. 1606, as amended,
which treats of independent civil actions only in the last paragraph of Sec. 4 thereof:
Any provisions of law or Rules of Court to the contrary
notwithstanding, the criminal action and the corresponding civil
action for the recovery of civil liability shall at all times be
simultaneously instituted with, and jointly determined in, the same
proceeding by the Sandiganbayan or the appropriate courts, the filing
of the criminal action being deemed to necessarily carry with it the
filing of the civil action, and no right to reserve the filing of such civil
action separately from the criminal action shall be
recognized: Provided, however, That where the civil action had
heretofore been filed separately but judgment therein has not yet
been rendered, and the criminal case is hereafter filed with the
Sandiganbayan or the appropriate court, said civil action shall be
transferred to the Sandiganbayan or the appropriate court, as the
case may be, for consolidation and joint determination with the
criminal action, otherwise the separate civil action shall be deemed
abandoned.

Petitioner however did not raise any argument to refute the charge of forum-shopping.
The issues for resolution are: (a) whether the Sandiganbayan has jurisdiction over
petitions for forfeiture under R.A. No. 1379; (b) whether the Office of the Ombudsman
has the authority to investigate, initiate and prosecute such petitions for forfeiture; and
(c) whether petitioner is guilty of forum-shopping.
The petition is patently without merit. It should be dismissed.
The seminal decision of Republic v. Sandiganbayan[33] squarely rules on the issues
raised by petitioner concerning the jurisdiction of the Sandiganbayan and the authority
of the Office of the Ombudsman. After reviewing the legislative history of the
Sandiganbayan and the Office of the Ombudsman, the Court therein resolved the
question of jurisdiction by the Sandiganbayan over violations of R.A. No. 3019 and R.A.
No. 1379. Originally, it was the Solicitor General who was authorized to initiate forfeiture
proceedings before the then Court of First Instance of the city or province where the
public officer or employee resides or holds office, pursuant to Sec. 2 of R.A. No.
1379.Upon the creation of the Sandiganbayan pursuant to P.D. No. 1486, [34] original
and exclusive jurisdiction over such violations was vested in the said court. [35] P.D. No.
1606[36] was later issued expressly repealing P.D. No. 1486, as well as modifying the
jurisdiction of the Sandiganbayan by removing its jurisdiction over civil actions brought
in connection with crimes within the exclusive jurisdiction of said court. [37] Such civil
actions removed from the jurisdiction of the Sandigabayan include those for restitution
or reparation of damages, recovery of instruments and effects of the crime, civil actions
under Articles 32 and 34 of the Civil Code, and forfeiture proceedings provided for
under R.A. No. 1379.[38]
Subsequently, Batas Pambansa Blg. 129[39] abolished the concurrent
jurisdiction of the Sandiganbayan and the regular courts and expanded the exclusive
original jurisdiction of the Sandiganbayan over the offenses enumerated in Sec. 4 of
P.D. No. 1606 to embrace all such offenses irrespective of the imposable penalty. Since
this change resulted in the proliferation of the filing of cases before the Sandiganbayan
where the offense charged is punishable by a penalty not higher than prision
correccional or its equivalent, and such cases not being of a serious nature, P.D. No.
1606 was again amended by P.D. No. 1860[40] and eventually by P.D. No. 1861.[41]
On the foregoing premises alone, the Court in Republic v. Sandiganbayan, deduced
that jurisdiction over violations of R.A. No. 3019 and 1379 is lodged with the
Sandiganbayan.[42] It could not have taken into consideration R.A. No. 7975 [43] and R.A.
No. 8249[44] since both statutes which also amended the jurisdiction of the
Sandiganbayan were not yet enacted at the time. The subsequent enactments only
serve to buttress the conclusion that the Sandiganbayan indeed has jurisdiction over
violations of R.A. No. 1379.
Under R.A. No. 8249, the Sandiganbayan is vested with exclusive original
jurisdiction in all cases involving violations of R.A. No. 3019, R.A. No. 1379, and
Chapter II, Sec. 2, Title VII, Book II of the Revised Penal Code, where one or more of
the accused are officials occupying the following positions whether in a permanent,
acting or interim capacity, at the time of the commission of the offense: (1) Officials of
the executive branch occupying the positions of regional director and higher, otherwise
classified as Grade '27' and higher, of the Compensation and Position Classification
Act of 989 (R.A. No. 6758), specifically including: (a) Provincial governors, vice-
governors, members of the sangguniang panlalawigan, and provincial treasurers,
assessors, engineers, and other city department heads; (b) City mayor, vice-mayors,
members of the sangguniang panlungsod, city treasurers, assessors, engineers, and
other city department heads; (c) Officials of the diplomatic service occupying the
position of consul and higher; (d) Philippine army and air force colonels, naval captains,
and all officers of higher rank; (e) Officers of the Philippine National Police while
occupying the position of provincial director and those holding the rank of senior
superintended or higher; (f) City and provincial prosecutors and their assistants, and
officials and prosecutors in the Office of the Ombudsman and special prosecutor; (g)
Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations; (2) Members
of Congress and officials thereof classified as Grade '27' and up under the
Compensation and Position Classification Act of 1989; (3) Members of the judiciary
without prejudice to the provisions of the Constitution; (4) Chairmen and members of
Constitutional Commission, without prejudice to the provisions of the Constitution; and
(5) All other national and local officials classified as Grade '27' and higher under the
Compensation and Position Classification Act of 1989.[45]
In the face of the prevailing jurisprudence and the present state of statutory law on the
jurisdiction of the Sandiganbayan, petitioners argumentthat the Sandiganbayan has no
jurisdiction over the petition for forfeiture it being civil in nature and the Sandiganbayan
allegedly having no jurisdiction over civil actionscollapses completely.
The civil nature of an action for forfeiture was first recognized in Republic v.
Sandiganbayan, thus: [T]he rule is settled that forfeiture proceedings are actions in
rem and, therefore, civil in nature.[46] Then, Almeda, Sr.
v. Perez,[47] followed, holding that the proceedings under R.A. No. 1379 do not
terminate in the imposition of a penalty but merely in the forfeiture of the properties
illegally acquired in favor of the State. It noted that the
procedure outlined in the law leading to forfeiture is that provided for in a civil action.[48]
However, the Court has had occasion to rule that forfeiture of illegally acquired
property partakes the nature of a penalty. In Cabal v. Kapunan, Jr.,[49] the Court cited
voluminous authorities in support of its declaration of the criminal or penal nature of
forfeiture proceedings, viz:
 In a strict signification, a forfeiture is a divestiture of property
without compensation, in consequence of a default or an offense,
and the term is used in such a sense in this article. A forfeiture, as
thus defined, is imposed by way of punishment not by the mere
convention of the parties, but by the lawmaking power, to insure a
prescribed course of conduct. It is a method deemed necessary by
the legislature to restrain the commission of an offense and to aid in
the prevention of such an offense. The effect of such a forfeiture is
to transfer the title to the specific thing from the owner to the
sovereign power. (23 Am. Jur. 599)
"In Black's Law Dictionary a 'forfeiture' is defined to be 'the
incurring of a liability to pay a definite sum of money as the
consequence of violating the provisions of some statute or refusal to
comply with some requirement of law.' It may be said to be a penalty
imposed for misconduct or breach of duty.'" (Com. vs. French, 114
S.W. 255.)
. the Proceedings Therefor. What acts would constitute a violation of such a law? A
"Generally speaking, informations for the forfeiture of goods
that seek no judgment of fine or imprisonment against any person
are deemed to be civil proceedings in rem. Such proceedings are
criminal in nature to the extent that where the person using the res
illegally is the owner of rightful possessor of it the forfeiture
proceeding is in the nature of a punishment. They have been held to
be so far in the nature of
criminal proceedings that a general verdict on several counts in an
information is upheld if one count is good. According to the
authorities such proceedings, where the owner of the property
appears, are so far considered as quasicriminal proceedings as to
relieve the owner from being a witness against himself and to prevent
the compulsory production of his books and papers. . . ." (23 Am. Jur.
612)
. such forfeiture proceedings is a public officer or employee and the violation of R.A. No.
Proceedings for forfeitures are generally considered to be
civil and in the nature of proceedings in rem. The statute providing
that no judgment or other proceedings in civil causes shall be
arrested or reversed for any defect or want of form is applicable to
them. In some aspects, however, suits for penalties and forfeitures
are of quasi-criminal nature and within the reason of criminal
proceedings for all the purposes of . . . that portion of the Fifth
Amendment which declares that no person shall be compelled in any
criminal case to be a witness against himself. The proceeding is one
against the owner, as well as against the goods; for it is his breach
of the laws which has to be proved to establish the forfeiture and his
property is sought to be forfeited." (15 Am. Jur., Sec. 104, p. 368) [50]
Cabal v. Kapunan modified the earlier ruling in Almeda, Sr. v. Perez.[51] The Court
in Cabal held that the doctrine laid down in Almeda refers to the purely procedural
aspect of the forfeiture proceedings and has no bearing on the substantial rights of
respondents, particularly their constitutional right against self-incrimination.[52] This was
reaffirmed and reiterated in
Republic v. Agoncillo[53] and Katigbak v. Solicitor General.[54]
The Sandiganbayan is vested with jurisdiction over violations of R.A. No.
1379, entitled An Act Declaring Forfeiture In Favor of the State Any Property Found to
Have Been Unlawfully Acquired By Any Public Officer or Employee and Providing For
reading of R.A. No. 1379 establishes that it does not enumerate any prohibited acts the
commission of which would necessitate the imposition of a penalty. Instead, it provides
the procedure for forfeiture to be followed in case a public officer or employee has
acquired during his incumbency an amount of property manifestly out of proportion to
his salary as such public officer or employee and to his lawful income and income from
legitimately acquired property.[55] Section 12[56] of the law provides a penalty but it is
only imposed upon the public officer or employee who transfers or conveys the
unlawfully acquired property; it does not penalize the officer or employee for making
the unlawful acquisition. In effect, as observed in Almeda, Sr. v. Perez, it imposes the
penalty of forfeiture of the properties unlawfully acquired upon the respondent public
officer or employee.[57]
It is logically congruent, therefore, that violations of R.A. No. 1379 are placed under the
jurisdiction of the Sandiganbayan, even though the proceeding is civil in nature, since
the forfeiture of the illegally acquired property amounts to a penalty. The soundness of
this reasoning becomes even more obvious when we consider that the respondent in
1379 was committed during the respondent officer or employees incumbency and in
relation to his office. This is in line with the purpose behind the creation of the
Sandiganbayan as an anti-graft courtto address the urgent problem of dishonesty in
public service.[58]
Following the same analysis, petitioner should therefore abandon his erroneous belief
that the Sandiganbayan has jurisdiction only over petitions for forfeiture filed against
President Marcos, his family and cronies.
We come then to the question of authority of the Office of the Ombudsman to
investigate, file and
prosecute petitions for forfeiture under R.A. No. 1379. This was the main issue resolved
in Republic v. Sandiganbayan.[59]
Under Sec. 2 of R.A. No. 1379, it was the Solicitor General who was
authorized to initiate forfeiture proceedings before the then Courts of First Instance.
P.D. No. Decree No. 1486 was later issued on 11 June 1978 vesting the
Sandiganbayan with jurisdiction over R.A. No. 1379 forfeiture proceedings. Sec. 12 of
P.D. No. 1486 gave the Chief Special Prosecutor the authority to file and prosecute
forfeiture cases. This may be taken as an implied repeal by P.D. No. 1486 of the
jurisdiction of the former Courts of First Instance and the authority of the Solicitor
General to file a petition for forfeiture under Sec. 2 of R.A. No. 1379 by transferring said
jurisdiction and authority to the Sandiganbayan and the Chief Special Prosecutor,
respectively.[60] An implied repeal is one which takes place when a new law contains
some provisions which are contrary to, but do not expressly repeal those of a former
law.[61] As a rule, repeals by implication are not favored and will not be so declared
unless it be manifest that the legislature so intended. Before such repeal is deemed to
exist, it must be shown that the statutes or statutory provisions deal with the same
subject matter and that the latter be inconsistent with the former. The language used in
the latter statute must be such as to render it irreconcilable with what had been formerly
enacted. An inconsistency that falls short of that standard does not suffice. What is
needed is a manifest indication of the legislative purpose to repeal. [62]
P.D. No. 1486 contains a repealing clause which provides that [A]ny provision
of law, order, rule or regulation inconsistent with the provisions of this Decree is hereby
repealed or modified accordingly.[63] This is not an express repealing clause because it
fails to identify or designate the statutes that are intended to be repealed. Rather, it is
a clause which predicates the intended repeal upon the condition that a substantial
conflict must be found in existing and prior laws.[64]
The conflict between P.D. No. 1486 and R.A. No. 1379 refers to the jurisdiction
over the forfeiture proceeding and the authority to file the petition for forfeiture. As P.D.
No. 1486 grants exclusive jurisdiction and authority to the Sandiganbayan and the Chief
Special Prosecutor, the then Courts of First Instance and Solicitor General cannot
exercise concurrent jurisdiction or authority over such cases. Hence, P.D. No. 1486
and Sec. 2, R.A. No. 1379 are inconsistent with each other and the former should be
deemed to have repealed the latter.
On 11 June 1978, the same day that P.D. No. 1486 was enacted, P.D. No.
1487[65] creating the Office of the Ombudsman (then known as the Tanodbayan) was
passed. The Tanodbayan initially had no authority to prosecute cases falling within the
jurisdiction of the Sandiganbayan as provided in Sec. 4 of P.D. No. 1486, such
jurisdiction being vested in the Chief Special Prosecutor as earlier mentioned.
On 10 December 1978, P.D. No. 1606 was enacted expressly repealing P.D. No. 1486.
Issued on the same date was P.D. No. 1607 [66] which amended the powers of the
Tanodbayan to investigate administrative complaints [67] and created the Office of the
Chief Special Prosecutor.[68] P.D. No. 1607 provided said Office of the Chief Special
Prosecutor with exclusive authority to conduct preliminary investigation of all cases
cognizable by the Sandiganbayan, file informations therefor, and direct and control the
prosecution of said cases.[69] P.D. No. 1607 also removed from the Chief Special
Prosecutor the authority to file actions for forfeiture under R.A. No. 1379.[70]
The rule is that when a law which expressly repeals a prior law is itself
repealed, the law first repealed shall not be thereby revived unless expressly so
provided. From this it may fairly be inferred that the old rule continues in force where a
law which repeals a prior law, not expressly but by implication, is itself repealed; and
that in such cases the repeal of the repealing law revives the prior law, unless the
language of the repealing statute provides otherwise. [71] Hence, the repeal of P.D. No.
1486 by P.D. No. 1606 necessarily revived the authority of the Solicitor General to file
a petition for forfeiture under R.A. No. 1379, but not the jurisdiction of the Courts of First
Instance over the case nor the authority of the Provincial or City Fiscals (now
Prosecutors) to conduct the preliminary investigation therefore, since said powers at
that time remained in the Sandiganbayan and the Chief Special Prosecutor. [72]
The Tanodbayans authority was further expanded by P.D. No. 1630 [73] issued on 18
July 1990. Among other things, the Tanodbayan was given the exclusive authority to
conduct preliminary investigation of all cases cognizable by the Sandiganbayan, to file
informations therefore and to direct and control the prosecution of said cases. [74] The
power to conduct the necessary investigation and to file and prosecute the
corresponding criminal and administrative cases before the Sandiganbayan or the
proper court or administrative agency against any public personnel who has acted in a
manner warranting criminal and disciplinary action or proceedings was also transferred
from the Chief Special Prosecutor to the Tanodbayan.[75]
Thereafter, P.D. No. 1606 was amended by P.D. Nos. 1860 and 1861[76] which granted
the Tanodbayan the same authority. The present Constitution was subsequently ratified
and then the Tanodbayan became known as the Office of the Special Prosecutor which
continued to exercise its powers except those conferred on the Office of the
Ombudsman created under the Constitution.[77] The Office of the Ombudsman was
officially created under R.A. No. 6770.[78]
At present, the powers of the Ombudsman, as defined by R.A. No. 6770, corollary to
Sec. 13, Art. XI of the Constitution, include the authority, among others, to:
(1) Investigate and prosecute on its own or on complaint by
any person, any act or omission of any public officer or employee,
 office or agency, when such act or omission appears to be illegal,
unjust, improper or inefficient. It has primary jurisdiction over cases
cognizable by the Sandiganbayan and, in the exercise of this primary
jurisdiction, may take over, at any stage, from any investigatory
agency of Government, the investigation of such cases; [79]
(11) Investigate and initiate the proper action for the
recovery of ill-gotten and/or unexplained wealth amassed after 25
February 1986 and the prosecution of the parties involved therein. [80]
Ostensibly, it is the Ombudsman who should file the petition for forfeiture
under R.A. No. 1379. However, the Ombudsmans exercise of the correlative powers to
investigate and initiate the proper action for recovery of ill-gotten and/or unexplained
wealth is restricted only to cases for the recovery of ill-gotten and/or unexplained wealth
amassed after 25 February 1986.[81] As regards such wealth accumulated on or before
said date, the Ombudsman is without authority to commence before the
Sandiganbayan such forfeiture actionsince the authority to file forfeiture proceedings
on or before 25 February 1986 belongs to the Solicitor Generalalthough he has the
authority to investigate such cases for forfeiture even before 25 February 1986,
pursuant to the Ombudsmans general investigatory power under Sec. 15 (1) of R.A.
No. 6770.[82]
It is obvious then that respondent Office of the Ombudsman acted well within
its authority in conducting the investigation of petitioners illegally acquired assets and
in filing the petition for forfeiture against him. The contention that the procedural
requirements under Sec. 2 of R.A. No. 1379 were not complied with no longer deserve
consideration in view of the foregoing discussion.
Now to the charge that petitioner is guilty of forum-shopping. Forum-shopping
is manifest whenever a party repetitively avail[s] of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely by, some
other court.[83] It has also been defined as an act of a party against whom an adverse
judgment has been rendered in one forum of seeking and possibly getting a favorable
opinion in another forum, other than by appeal or the special civil action of certiorari, or
the institution of two or more actions or proceedings grounded on the same cause on
the supposition that one or the other court would make a favorable
disposition.[84] Considered a pernicious evil, it adversely affects the efficient
administration of justice since it clogs the court dockets, unduly burdens the financial
and human resources of the judiciary, and trifles with and mocks judicial
processes.[85] Willful and deliberate forum-shopping is a ground for summary dismissal
of the complaint or initiatory pleading with prejudice and constitutes direct contempt of
court, as well as a cause for administrative sanctions, which may both be resolved and
imposed in the same case where the forum-shopping is found.[86]
There is ample reason to hold that petitioner is guilty of forum-shopping. The present
petition was filed accompanied by the requisite Verification and Certification Against
Forum Shopping[87] in which petitioner made the following representation:
.
3.] As Petitioner, I have not heretofore commenced any other action
or proceeding in the Supreme Court, the Court of Appeals, or
any other tribunal or agency, involving the same issues as that
in the above-captioned case.
4.] To the best of my knowledge, no such action or proceeding is
pending in the Supreme Court, the Court of Appeals, or any
other tribunal or agency.
5.] If I should hereafter learn that such proceeding has been
commenced or is pending before the Supreme Court, the Court
of Appeals, or any other tribunal or agency, I undertake to report
that fact to this Honorable Court within five (5) days from
knowledge thereof.
However, petitioner failed to inform the Court that he had filed a Motion to
Dismiss[88] in relation to the petition for forfeiture before the Sandiganbayan. The
existence of this motion was only brought to the attention of this Court by respondent
Office of the Ombudsman in its Comment. A scrutiny of the Motion to Dismiss reveals
that petitioner raised substantially the same issues and prayed for the same reliefs
therein as it has in the instant petition. In fact, the Arguments and Discussion [89] in
the Petition of petitioners thesis that the Sandiganbayan has no jurisdiction over
separate civil actions for forfeiture of unlawfully acquired properties appears to be
wholly lifted from the Motion to Dismiss. The only difference between the two is that in
the Petition, petitioner raises the ground of failure of the petition for forfeiture to comply
with the procedural requirements of R.A. No. 1379, and petitioner prays for the
annulment of the Sandiganbayans Resolution dated 29 October 2004 and Writ of
Preliminary Attachment dated 2 November 2004. Nevertheless, these differences are
only superficial. Both Petition and Motion to Dismiss have the same intent of dismissing
the case for forfeiture filed against petitioner, his wife and their sons. It is undeniable
that petitioner had failed to fulfill his undertaking. This is incontestably forum-shopping
which is reason enough to dismiss the petition outright, without prejudice to the taking
of appropriate action against the counsel and party concerned. [90] The brazenness of
this attempt at forum-shopping is even demonstrated by the fact that both
the Petition and Motion to Dismiss were filed on the same day, 17 November 2004.
Petitioner should have waited for the resolution of his Motion to Dismiss before
resorting to the petition at hand.
 Petitioners counsel of record, Atty. Constantino B. De Jesus, needs to be
reminded that his primary duty is to assist the courts in the administration of justice. As
an officer of the court, his duties to the court are more significant and important than
his obligations to his clients. Any conduct which tends to delay, impede or obstruct the
administration thereof contravenes his oath of office.[91] Atty. De Jesus failed to accord
due regard, as he must, the tenets of the legal profession and the mission of our courts
of justice. For this, he should be penalized. Penalties imposed upon lawyers who
engaged in forum-shopping range from severe censure to suspension from the practice
of law.[92] In the instant case, we deem the imposition of a fine in the amount
of P20,000.00 to be sufficient to make Atty. De Jesus realize the seriousness of his
naked abuse of the judicial process.
WHEREFORE, in view of the foregoing, the Petition is DISMISSED. Atty. Constantino
B. De Jesus is DECLARED in CONTEMPT of this Court and meted a fine of Twenty
Thousand Pesos (P20,000.00) to be paid within ten (10) days from the finality of
this Decision. Costs against petitioner.

SO ORDERED.
FIRST DIVISION
FELIPE N. MADRIAN, G.R. No. 159374
Petitioner,
Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,*
- v e r s u s - CORONA,
AZCUNA and
GARCIA,** JJ.
FRANCISCA R. MADRIAN,
Respondent. Promulgated:
July 12, 2007
x------------------------------------------x
DECISION
CORONA, J.:
When a family breaks up, the children are always the victims. The ensuing
battle for custody of the minor children is not only a thorny issue but also a highly
sensitive and heart-rending affair. Such is the case here. Even the usually technical
subject of jurisdiction became emotionally charged.
Petitioner Felipe N. Madrian and respondent Francisca R. Madrian were married on
July 7, 1993 in Paraaque City. They resided in San Agustin Village, Brgy. Moonwalk,
Paraaque City.
Their union was blessed with three sons and a daughter: Ronnick, born on
January 30, 1994; Phillip, born on November 19, 1996; Francis Angelo, born on May
12, 1998 and Krizia Ann, born on December 12, 2000.
After a bitter quarrel on May 18, 2002, petitioner allegedly left their conjugal abode and
took their three sons with him to Ligao City, Albay and subsequently to Sta. Rosa,
Laguna. Respondent sought the help of her parents and parents-in-law to patch things
up between her and petitioner to no avail. She then brought the matter to the Lupong
Tagapamayapa in their barangay but this too proved futile.
Thus respondent filed a petition for habeas corpus of Ronnick, Phillip and
Francis Angelo in the Court of Appeals, alleging that petitioners act of leaving the
conjugal dwelling and going to Albay and then to Laguna disrupted the education of
their children and deprived them of their mothers care. She prayed that petitioner be
ordered to appear and produce their sons before the court and to explain why they
should not be returned to her custody.
Petitioner and respondent appeared at the hearing on September 17, 2002. They
initially agreed that petitioner would return the custody of their three sons to respondent.
Petitioner, however, had a change of heart[1] and decided to file a memorandum.
On September 3, 2002, petitioner filed his memorandum[2] alleging that respondent was
unfit to take custody of their three sons because she was habitually drunk, frequently
went home late at night or in the wee hours of the morning, spent much of her time at
a beer house and neglected her duties as a mother. He claimed that, after their
squabble on May 18, 2002, it was respondent who left, taking their daughter with her.
It was only then that he went to Sta. Rosa, Laguna where he worked as a tricycle driver.
He submitted a certification from the principal of the Dila Elementary School in Sta.
Rosa, Laguna that Ronnick and Phillip were enrolled there. He also questioned the
jurisdiction of the Court of Appeals claiming that under Section 5(b) of RA 8369
(otherwise known as the Family Courts Act of 1997) family courts have exclusive
original jurisdiction to hear and decide the petition for habeas corpus filed by
respondent.[3]
For her part, respondent averred that she did not leave their home on May 18,
2002 but was driven out by petitioner. She alleged that it was petitioner who was an
alcoholic, gambler and drug addict. Petitioners alcoholism and drug addiction impaired
his mental faculties, causing him to commit acts of violence against her and their
children. The situation was aggravated by the fact that their home was adjacent to that
of her in-laws who frequently meddled in their personal problems.[4]
On October 21, 2002, the Court of Appeals [5] rendered a decision[6] asserting
its authority to take cognizance of the petition and ruling that, under Article 213 of the
Family Code, respondent was entitled to the custody of Phillip and Francis Angelo who
were at that time aged six and four, respectively, subject to the visitation rights of
petitioner. With respect to Ronnick who was then eight years old, the court ruled that
his custody should be determined by the proper family court in a special proceeding on
custody of minors under Rule 99 of the Rules of Court.
Petitioner moved for reconsideration of the Court of Appeals decision but it
was denied. Hence, this recourse.
Petitioner challenges the jurisdiction of the Court of Appeals over the petition
for habeas corpus and insists that jurisdiction over the case is lodged in the family
courts under RA 8369. He invokes Section 5(b) of RA 8369:
 Section 5. Jurisdiction of Family Courts. The Family
Courts shall have exclusive original jurisdiction to hear and decide
the following cases:
xxxxxxxxx
b) Petitions for guardianship, custody of children, habeas
corpus in relation to the latter;
xxxxxxxxx
Petitioner is wrong.
In Thornton v. Thornton,[7] this Court resolved the issue of the Court of Appeals
jurisdiction to issue writs of habeas corpus in cases involving custody of minors in the
light of the provision in RA 8369 giving family courts exclusive original jurisdiction over
such petitions:
The Court of Appeals should take cognizance of the
case since there is nothing in RA 8369 that revoked its
jurisdiction to issue writs of habeas corpus involving the
custody of minors.
xxxxxxxxx
We rule therefore that RA 8369 did not divest the Court of
Appeals and the Supreme Court of their jurisdiction
over habeas corpus cases involving the custody of minors.
xxxxxxxxx
The provisions of RA 8369 reveal no manifest intent to
revoke the jurisdiction of the Court of Appeals and Supreme Court
to issue writs of habeas corpus relating to the custody of minors.
Further, it cannot be said that the provisions of RA 8369, RA 7092
[An Act Expanding the Jurisdiction of the Court of Appeals] and BP
129 [The Judiciary Reorganization Act of 1980] are absolutely
incompatible since RA 8369 does not prohibit the Court of Appeals
and the Supreme Court from issuing writs of habeas corpus in
cases involving the custody of minors. Thus, the provisions of RA
8369 must be read in harmony with RA 7029 and BP 129
that family courts have concurrent jurisdiction with the Court
of Appeals and the Supreme Court in petitions for habeas
corpus where the custody of minors is at issue.[8] (emphases
supplied)
The jurisdiction of the Court of Appeals over petitions for habeas corpus was further
affirmed by A.M. No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors
and Writ of Habeas Corpus in Relation to Custody of Minors:
In any case, whatever uncertainty there was has been
settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on
Custody of Minors and Writ of Habeas Corpus in Relation to
Custody of Minors. Section 20 of the rule provides that:
Section 20. Petition for writ of habeas
corpus. A verified petition for a writ of habeas
corpus involving custody of minors shall be filed
with the Family Court. The writ shall be
enforceable within its judicial region to which the
Family Court belongs.
xxxxxxxxx
The petition may likewise be filed
with the Supreme Court, Court of Appeals, or
with any of its members and, if so granted, the
writ shall be enforceable anywhere in the
Philippines. The writ may be made returnable
to a Family Court or to any regular court within
the region where the petitioner resides or where
the minor may be found for hearing and decision
on the merits.
From the foregoing, there is no doubt that the Court of
Appeals and Supreme Court have concurrent jurisdiction with
family courts in habeas corpus cases where the custody of
minors is involved.[9] (emphases supplied)
We note that after petitioner moved out of their Paraaque residence on May 18, 2002,
he twice transferred his sons to provinces covered by different judicial regions. This
situation is what the Thornton interpretation of RA 8369s provision on jurisdiction
precisely addressed:
[The reasoning that by giving family courts exclusive jurisdiction
over habeas corpus cases, the lawmakers intended them to be the
sole courts which can issue writs of habeas corpus] will result in an
iniquitous situation, leaving individuals like [respondent] without
legal recourse in obtaining custody of their children. Individuals who
 do not know the whereabouts of minors they are looking for would
be helpless since they cannot seek redress from family courts
whose writs are enforceable only in their respective territorial
jurisdictions. Thus, if a minor is being transferred from one
place to another, which seems to be the case here, the
petitioner in a habeas corpus case will be left without legal
remedy. This lack of recourse could not have been the
intention of the lawmakers when they passed [RA 8369].[10]

Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family

courts are vested with original exclusive jurisdiction in custody cases, not in habeas
corpus cases. Writs of habeas corpus which may be issued exclusively by family courts
under Section 5(b) of RA 8369 pertain to the ancillary remedy that may be availed of
in conjunction with a petition for custody of minors under Rule 99 of the Rules of Court.
In other words, the issuance of the writ is merely ancillary to the custody case pending
before the family court. The writ must be issued by the same court to avoid splitting of
jurisdiction, conflicting decisions, interference by a co-equal court and judicial
instability.

The rule therefore is: when by law jurisdiction is conferred on a court or judicial
officer, all auxiliary writs, processes and other means necessary to carry it into effect
may be employed by such court or officer.[11] Once a court acquires jurisdiction over
the subject matter of a case, it does so to the exclusion of all other courts, including
related incidents and ancillary matters.
Accordingly, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.
 x---------------------------------------------------------------------------------x
SECOND DIVISION

DECISION
GOVERNMENT SERVICE, G.R. No. 183905
INSURANCE SYSTEM, TINGA, J.:
Petitioner,
Present:
QUISUMBING, These are the undisputed facts.
- versus - Chairperson,
CARPIO MORALES, The annual stockholders meeting (annual meeting) of the Manila Electric
TINGA, Company (Meralco) was scheduled on 27 May 2008. [1] In connection with the annual
VELASCO, JR., and meeting, proxies[2] were required to be submitted on or before 17 May 2008, and the
THE HON. COURT OF APPEALS, BRION, JJ. proxy validation was slated for five days later, or 22 May. [3]
(8TH DIVISION), ANTHONY V.
ROSETE, MANUEL M. LOPEZ,
FELIPE B. ALFONSO, JESUS F. Promulgated:
FRANCISCO, CHRISTIAN S.
MONSOD, ELPIDIO L. IBAEZ,
and FRANCIS GILES PUNO, April 16, 2009
Respondents.
In view of the resignation of Camilo Quiason, [4] the position of corporate secretary of
x----------------------------------------------------------------------------------------------- x Meralco became vacant.[5]On 15 May 2008, the board of directors of Meralco
designated Jose Vitug[6] to act as corporate secretary for the annual
SECURITIES AND EXCHANGE G.R. No. 184275 meeting.[7] However, when the proxy validation began on 22 May, the proceedings were
COMMISSION, COMMISSIONER presided over by respondent Anthony Rosete (Rosete), assistant corporate secretary
JESUS ENRIQUE G. MARTINEZ and in-house chief legal counsel of Meralco.[8]Private respondents nonetheless argue
IN HIS CAPACITY AS OFFICER- that Rosete was the acting corporate secretary of Meralco. [9] Petitioner Government
IN-CHARGE OF THE SECURITIES Service Insurance System (GSIS), a major shareholder in Meralco, was distressed over
AND EXCHANGE COMMISSION the proxy validation proceedings, and the resulting certification of proxies in favor of the
and HUBERT G. GUEVARA IN HIS Meralco management.[10]
CAPACITY AS DIRECTOR OF THE
COMPLIANCE AND ENFORCEMENT On 23 May 2008, GSIS filed a complaint with the Regional Trial Court (RTC)
DEPT. OF SECURITIES of Pasay City, docketed as R-PSY-08-05777-C4
Petitioners, seeking the declaration of certain proxies as invalid.[11] Three days

- versus -

ANTHONY V. ROSETE, MANUEL M.

LOPEZ, FELIPE B. ALFONSO, JESUS F.
FRANCISCO, CHRISTIAN S. MONSOD,
ELPIDIO L. IBAEZ, and FRANCIS
later, on 26 May, GSIS filed a Notice with the RTC manifesting the dismissal of the
GILES PUNO,
complaint.[12] On the same day, GSIS filed an Urgent Petition[13] with the Securities and
Respondents.
Exchange Commission (SEC) seeking to restrain Rosete from recognizing, counting
and tabulating, directly or indirectly, notionally or actually or in whatever way, form,
manner or means, or otherwise honoring the shares covered by the proxies in favor of
respondents Manuel Lopez,[14] Felipe Alfonso,[15] Jesus Francisco,[16] Oscar Lopez,
Christian Monsod,[17] Elpidio Ibaez,[18]Francisco Giles-Puno[19] or any officer
representing MERALCO Management, and to annul and declare invalid said
proxies.[20] GSIS also prayed for the issuance of a Cease and Desist Order (CDO) to
restrain the use of said proxies during the annual meeting scheduled for the following
day.[21] A CDO[22] to that effect signed by SEC Commissioner Jesus Martinez was
issued on 26 May 2008, the same day the complaint was filed. During the annual
meeting held on the following day, Rosete announced that the meeting would push
through, expressing the opinion that the CDO is null and void.[23]
On 28 May 2008, the SEC issued a Show Cause Order (SCO)[24] against
private respondents, ordering them to appear before the Commission on 30 May 2008
and explain why they should not be cited in contempt. On 29 May 2008, respondents
filed a petition for certiorari with prohibition[25] with the Court of Appeals, praying that
the CDO and the SCO be annulled. The petition was docketed as CA-G.R. SP No.
103692.
Many developments involving the Court of Appeals handling of CA-G.R. SP
No. 103692 and the conduct of several of its individual justices are recounted in our
Resolution dated 9 September 2008 in A.M. No. 08-8-11-CA (Re: Letter Of Presiding
Justice Conrado M. Vasquez, Jr. On CA-G.R. SP No. 103692).[26] On 23 July 2008, the
Court of Appeals Eighth Division promulgated a decision in the case with the following
dispositive portion:
WHEREFORE, premises considered, the May 26, 2008
complaint filed by GSIS in the SEC is hereby DISMISSED due to SECs
lack of jurisdiction, due to forum shopping by respondent GSIS, and due
to splitting of causes of action by respondent GSIS. Consequently, the
SECs undated cease and desist order and the SECs May 28, 2008
show cause order are hereby DECLARED VOID AB INITIO and without
legal effect and their implementation are hereby permanently
restrained.
The May 26, 2008 complaint filed by GSIS in the SEC is hereby barred
from being considered, out of equitable considerations, as an election
contest in the RTC, because the prescriptive period of 15 days from the
May 27, 2008 Meralco election to file an election contest in the RTC had
already run its course, pursuant to Sec. 3, Rule 6 of the interim Rules
of Procedure Governing Intra-Corporate Controversies under R.A. No.
8799, due to deliberate act of GSIS in filing a complaint in the SEC
instead of the RTC.
Let seventeen (17) copies of this decision be officially TRANSMITTED
to the Office of the Chief Justice and three (3) copies to the Office of the
Court Administrator:
(1) for sanction by the Supreme Court against the GSIS LAW
OFFICE for unauthorized practice of law,
(2) for sanction and discipline by the Supreme Court of GSIS
lawyers led by Atty. Estrella Elamparo-Tayag, Atty. Marcial C.
Pimentel, Atty. Enrique L. Tandan III, and other GSIS lawyers
for violation of Sec. 27 of Rule 138 of the Revised Rules of
Court, pursuant to Santayana v. Alampay, A.C. No. 5878,
March 21, 2005 454 SCRA 1, and pursuant to Land Bank of
the Philippines v. Raymunda Martinez, G.R. No. 169008,
August 14, 2007:
(a) for violating express provisions of law and defying
public policy in deliberately displacing the Office of the
Government Corporate Counsel (OGCC) from its duty as
the exclusive lawyer of GSIS, a government owned and
controlled corporation (GOCC), by admittedly filing and
defending cases as well as appearing as counsel for
GSIS, without authority to do so, the authority belonging
exclusively to the OGCC;
(b) for violating the lawyers oath for failing in their duty to
act as faithful officers of the court by engaging in forum
shopping;
(c) for violating express provisions of law most especially
those on jurisdiction which are mandatory; and
(d) for violating Sec. 3, Rule 2 of the 1997 Rules of Civil
Procedure by deliberately splitting causes of action in
order to file multiple complaints: (i) in the RTC of Pasay
City and (ii) in the SEC, in order to ensure a favorable
order.[27]
The promulgation of the said decision provoked a searing controversy, as
detailed in our Resolution in A.M. No. 08-8-11-CA. Nonetheless, the appellate courts
decision spawned three different actions docketed with their own case numbers before
this Court. One of them, G.R. No. 183933, was initiated by a Motion for Extension of
Time to File Petition for Review filed by the Office of the Solicitor General (OSG) in
behalf of the SEC, Commissioner Martinez in his capacity as officer-in-charge of the
SEC, and Hubert Guevarra in his capacity as Director of the Compliance and
Enforcement Department of the SEC.[28] However, the OSG did not follow through with
the filing of the petition for review adverted to; thus, on 19 January 2009, the Court
resolved to declare G.R. No. 183933 closed and terminated. [29]
 The two remaining cases before us are docketed as G.R. No. 183905 and
184275. G.R. No. 183905 pertains to a petition for certiorari and prohibition filed by
GSIS, against the Court of Appeals, and respondents Rosete, Lopez, Alfonso,
Francisco, Monsod, Ibaez and Puno, all of whom serve in different corporate capacities
with Meralco or First Philippines Holdings Corporation, a major stockholder of Meralco
and an affiliate of the Lopez Group of Companies. This petition seeks of the Court to
declare the 23 July 2008 decision of the Court of Appeals null and void, affirm the SECs
jurisdiction over the petition filed before it by GSIS, and pronounce that the CDOand
the SCO orders are valid. This petition was filed in behalf of GSIS by the GSIS Law
Office; it was signed by the Chief Legal Counsel and Assistant Legal Counsel of GSIS,
and three self-identified Attorney[s], presumably holding lawyer positions in GSIS. [30]
The OSG also filed the other petition, docketed as G.R. No. 184275. It
identifies as its petitioners the SEC, Commissioner Martinez in his capacity as OIC of
the SEC, and Hubert Guevarra in his capacity as Director of the Compliance and
Enforcement Department of the SEC the same petitioners in the aborted petition for
review initially docketed as G.R. No. 183933. Unlike what was adverted to in the motion
for extension filed by the same petitioners in G.R. No. 183933, the petition in G.R. No.
184275 is one for certiorari under Rule 65 as indicated on page 3 thereof,[31] and not a
petition for review. Interestingly, save for the first page which leaves the docket number
blank, all 86 pages of this petition for certiorari carry a header wrongly identifying the
pleading as the non-existent petition for review under G.R. No. 183933. This petition
seeks the reversal of the assailed decision of the Court of Appeals, the recognition of
the jurisdiction of the SEC over the petition of GSIS, and the affirmation of
the CDO and SCO.
II.
Private respondents seek the expunction of the petition filed by the SEC in
G.R. No. 184275. We agree that the petitioners therein, namely: the SEC,
Commissioner Marquez and Guevarra, are not real parties-in-interest to the dispute
and thus bereft of capacity to file the petition. By way of simple illustration, to argue
otherwise is to say that the trial court judge, the National Labor Relations Commission,
or any quasi-judicial agency has the right to seek the review of an appellate court
decision reversing any of their rulings. That prospect, as any serious student of
remedial law knows, is zero.
The Court, through the Resolution of the Third Division dated 2 September
2008, had resolved to treat the petition in G.R. No. 184275 as a petition for review on
certiorari, but withheld giving due course to it. [32] Under Section 1 of Rule 45, which
governs appeals by certiorari, the right to file the appeal is restricted to a party, meaning
that only the real parties-in-interest who litigated the petition for certiorari before the
Court of Appeals are entitled to appeal the same under Rule 45. The SEC and its two
officers may have been designated as respondents in the petition for certiorari filed with
the Court of Appeals, but under Section 5 of Rule 65 they are not entitled to be classified
as real parties-in-interest. Under the provision, the judge, court, quasi-judicial agency,
tribunal, corporation, board, officer or person to whom grave abuse of discretion is
imputed (the SEC and its two officers in this case) are denominated only as public
respondents. The provision further states that public respondents shall not appear in or
file an answer or comment to the petition or any pleading therein. [33] Justice Regalado
explains:
[R]ule 65 involves an original special civil action specifically
directed against the person, court, agency or party a quo which had
committed not only a mistake of judgment but an error of jurisdiction,
hence should be made public respondents in that action brought to
nullify their invalid acts. It shall, however be the duty of the party litigant,
whether in an appeal under Rule 45 or in a special civil action in Rule
65, to defend in his behalf and the party whose adjudication is assailed,
as he is the one interested in sustaining the correctness of the
disposition or the validity of the proceedings.
xxx The party interested in sustaining the proceedings in the
lower court must be joined as a co-respondent and he has the duty to
defend in his own behalf and in behalf of the court which rendered the
questioned order. While there is nothing in the Rules that prohibit the
presiding judge of the court involved from filing his own answer and
defending his questioned order, the Supreme Court has reminded
judges of the lower courts to refrain from doing so unless ordered
by the Supreme Court.[[34]] The judicial norm or mode of conduct
to be observed in trial and appellate courts is now prescribed in
the second paragraph of this section.
xxx
A person not a party to the proceedings in the trial court
or in the Court of Appeals cannot maintain an action for certiorari
in the Supreme Court to have the judgment reviewed.[35]
Rule 65 does recognize that the SEC and its officers should have been
designated as public respondents in the petition for certiorari filed with the Court of
Appeals. Yet their involvement in the instant petition is not as original party-litigants,
but as the quasi-judicial agency and officers exercising the adjudicative functions over
the dispute between the two contending factions within Meralco. From the onset,
neither the SEC nor Martinez or Guevarra has been considered as a real party-in-
interest. Section 2, Rule 3 of the 1997 Rules of Civil Procedure provides that every
action must be prosecuted or defended in the name of the real party in interest, that is
the party who stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. It would be facetious to assume that the SEC had any
real interest or stake in the intra-corporate dispute within Meralco.
We find our ruling in Hon. Santiago v. Court of Appeals[36] quite apposite to
the question at hand. Petitioner therein, a trial court judge, had presided over an
expropriation case. The litigants had arrived at an amicable settlement, but the judge
refused to approve the same, even declaring it invalid. The matter was elevated to the
Court of Appeals, which promptly reversed the trial court and approved the amicable
settlement. The judge took the extraordinary step of filing in his own behalf a petition
for review on certiorari with this Court, assailing the decision of the Court of Appeals
which had reversed him. In disallowing the judges petition, the Court explained:
While the issue in the Court of Appeals and that raised by
petitioner now is whether the latter abused his discretion in nullifying the
deeds of sale and in proceeding with the expropriation proceeding, that
question is eclipsed by the concern of whether Judge Pedro T. Santiago
may file this petition at all.
And the answer must be in the negative, Section 1 of Rule
45 allows a party to appeal by certiorari from a judgment of the
Court of Appeals by filing with this Court a petition for review
on certiorari. But petitioner judge was not a party either in the
expropriation proceeding or in the certiorari proceeding in the
Court of Appeals. His being named as respondent in the Court of
Appeals was merely to comply with the rule that in original
petitions for certiorari, the court or the judge, in his capacity as
such, should be named as party respondent because the question
in such a proceeding is the jurisdiction of the court
itself (See Mayol v. Blanco, 61 Phil. 547 [19351, cited in Comments on
the Rules of Court, Moran, Vol. II, 1979 ed., p. 471). "In special
proceedings, the judge whose order is under attack is merely a
nominal party; wherefore, a judge in his official capacity, should
not be made to appear as a party seeking reversal of a decision
that is unfavorable to the action taken by him. A decent regard for
the judicial hierarchy bars a judge from suing against the adverse
opinion of a higher court,. . . ." (Alcasid v. Samson, 102 Phil. 785, 740
[1957])
ACCORDINGLY, this petition is DENIED for lack of legal
capacity to sue by the petitioner.[37]
Justice Isagani Cruz added, in a Concurring Opinion in Santiago: The judge
is not an active combatant in such proceeding and must leave it to the parties
themselves to argue their respective positions and for the appellate court to rule on the
matter without his participation.[38]
Note that in Santiago, the Court recognized the good faith of the judge, who
perceived the amicable settlement as a manifestly iniquitous and illegal contract.[39] The
SEC could have similarly felt in good faith that the assailed Court of Appeals decision
had unduly impaired its prerogatives or caused some degree of hurt to it. Yet assuming
that there are rights or prerogatives peculiar to the SEC itself that the appellate court
had countermanded, these can be vindicated in the petition for certiorari filed by GSIS,
whose legal capacity to challenge the Court of Appeals decision is without question.
There simply is no plausible reason for this Court to deviate from a time-honored rule
that preserves the purity of our judicial and quasi-judicial offices to accommodate the
SECs distrust and resentment of the appellate courts decision. The expunction of the
petition in G.R. No. 184275 is accordingly in order.
At this point, only one petition remainsthe petition for certiorari filed by GSIS in G.R.
No. 183905. Casting off the uncritical and unimportant aspects, the two main issues for
adjudication are as follows: (1) whether the SEC has jurisdiction over the petition filed
by GSIS against private respondents; and (2) whether the CDO and SCO issued by the
SEC are valid.
II.
It is our resolute inclination that this case, which raises interesting questions of law, be
decided solely on the merits, without regard to the personalities involved or the well-
reported drama preceding the petition. To that end, the Court has taken note of reports
in the media that GSIS and the Lopez group have taken positive steps to divest or
significantly reduce their respective interests in Meralco. [40] These are developments
that certainly ease the tension surrounding this case, not to mention reason enough for
the two groups to make an internal reassessment of their respective positions and
interests in relation to this case. Still, the key legal questions raised in the petition do
not depend at all on the identity of any of the parties, and would obtain the same
denouement even if this case was lodged by unknowns as petitioners against similarly
obscure respondents.
With the objective to resolve the key questions of law raised in the petition,
some of the issues raised diminish as peripheral. For example, petitioners raise
arguments tied to the behavior of individual justices of the Court of Appeals, particularly
former Justice Vicente Roxas, in relation to this case as it was pending before the
appellate court. The Court takes cognizance of our Resolution in A.M. No. 08-8-11-CA
dated 9 September 2008, which duly recited the various anomalous or unbecoming fact, condition, practice or matter which it may deem necessary or
acts in relation to this case performed by two of the justices who decided the case in proper to aid in the enforcement of the provisions of this Code, in
behalf of the Court of Appealsformer Justice Roxas (the ponente) and Justice the prescribing of rules and regulations thereunder, or in securing
Bienvenido L. Reyes (the Chairman of the 8th Division) as well as three other members information to serve as a basis for recommending further
of the Court of Appeals. At the same time, the consensus of the Court as it deliberated legislation concerning the matters to which this Code relates: xxx
on A.M. No. 08-8-11-CA was to reserve comment or conclusion on the assailed (emphasis supplied)
decision of the Court of Appeals, in recognition of the reality that however stigmatized
SEC. 20. Proxy Solicitations. 20.1. Proxies must be issued
the actions and motivations of Justice Roxas are, the decision is still the product of the
and proxy solicitation must be made in accordance with rules and
Court of Appeals as a collegial judicial body, and not of one or some rogue justices.
regulations to be issued by the Commission;
The penalties levied by the Court on these appellate court justices, in our estimation,
redress the unwholesome acts which they had committed. At the same time, given the
jurisprudential importance of the questions of law raised in the petition, any result
reached without squarely addressing such questions would be unsatisfactory, perhaps
derelict even.

III. The argument, stripped of extravagance, is that since proxy solicitations following
Section 20.1 have to be made in accordance with rules and regulations issued by the
SEC, it is the SEC under Section 53.1 that has the jurisdiction to investigate alleged
We now examine whether the SEC has jurisdiction over the petition filed by GSIS. To
violations of the rules on proxy solicitations. The GSIS petition invoked AIRR-AIRR-
recall, SEC has sought to enjoin the use and annul the validation, of the proxies issued
SRC Rule 20, otherwise known as The Proxy Rule, which enumerates the requirements
in favor of several of the private respondents, particularly in connection with the annual
as to form of proxy and delivery of information to security holders. According to GSIS,
meeting.
the information statement Meralco had filed with the SEC in connection with the annual
meeting did not contain any proxy form as required under AIRR-SRC Rule 20.
A.

On the other hand, private respondents argue before us that under Section
Jurisdiction is conferred by no other source but law. Both sides have relied upon
5.2 of the SRC, the SECs jurisdiction over all cases enumerated in Section 5 of
provisions of Rep. Act No. 8799, otherwise known as the Securities Regulation Code
Presidential Decree No. 902-A was transferred to the courts of general jurisdiction or
(SRC), its implementing rules (Amended Implementing Rules or AIRR-SRC), and other
the appropriate regional trial court. The two particular classes of cases in the
related rules to support their competing contentions that either the SEC or the trial
enumeration under Section 5 of Presidential Decree No. 902-A which private
courts has exclusive original jurisdiction over the dispute.
respondents especially refer to are as follows:

GSIS primarily anchors its argument on two correlated provisions of the SRC. These
xxx
are Section 53.1 and Section 20.1, which we cite:
(2) Controversies arising out of intra-corporate, partnership, or
SEC. 53. Investigations, Injunctions and Prosecution of association relations, between and among stockholders, members,
Offenses . - 53.1. The Commission may, in its discretion, make such or associates; or association of which they are stockholders,
investigations as it deems necessary to determine whether any members, or associates, respectively;
person has violated or is about to violate any provision of
this Code, any rule, regulation or order thereunder, or any rule of 3) Controversies in the election or appointment of directors, trustees,
an Exchange, registered securities association, clearing agency, officers or managers of corporations, partnerships, or associations;
other self-regulatory organization, and may require or permit any
person to file with it a statement in writing, under oath or otherwise, as
xxx
the Commission shall determine, as to all facts and circumstances
concerning the matter to be investigated. The Commission may publish
information concerning any such violations, and to investigate any
 In addition, private respondents cite the Interim Rules on Intra-Corporate
Controversies (Interim Rules) promulgated by this Court in 2001, most pertinently,
Section 2 of Rule 6 (on Election Contests), which defines election contests as follows:
SEC. 2. Definition. An election contest refers to any
controversy or dispute involving title or claim to any elective office in a
stock or nonstock corporation, the validation of proxies, the manner
and validity of elections and the qualifications of candidates, including
the proclamation of winners, to the office of director, trustee or other
officer directly elected by the stockholders in a close corporation or by
members of a nonstock corporation where the articles of incorporation
or bylaws so provide. (emphasis supplied)
The correct answer is not clear-cut, but there is one. In private respondents favor, the
provisions of law they cite pertain directly and exclusively to the statutory jurisdiction of
trial courts acquired by virtue of the transfer of jurisdiction following the passage of the
SRC. In contrast, the SRC provisions relied upon by GSIS do not immediately or directly
establish that bodys jurisdiction over the petition, since it necessitates the linkage of
Section 20 to Section 53.1 of the SRC before the point can bear on us.
On the other hand, the distinction between proxy solicitation and proxy
validation cannot be dismissed offhand. The right of
a stockholder to vote by proxy is generally established by the
Corporation Code,[41] but it is the SRC which specifically regulates the form and use of
proxies, more particularly the procedure of proxy solicitation, primarily through Section
20.[42] AIRR-SRC Rule 20 defines the terms solicit and solicitation:
The terms solicit and solicitation include:
A. any request for a proxy whether or not accompanied by or
included in a form of proxy
B. any request to execute or not to execute, or to revoke, a proxy;
or
C. the furnishing of a form of proxy or other communication to
security holders under circumstance reasonably calculated to
result in the procurement, withholding or revocation of a proxy.
It is plain that proxy solicitation is a procedure that antecedes proxy validation.
The former involves the securing and submission of proxies, while the latter concerns
the validation of such secured and submitted proxies. GSIS raises the sensible point
that there was no election yet at the time it filed its petition with the SEC, hence no
proper election contest or controversy yet over which the regular courts may have
jurisdiction. And the point ties its cause of action to alleged irregularities in the proxy
solicitation procedure, a process that precedes either the validation of proxies or the
annual meeting itself.
Under Section 20.1, the solicitation of proxies must be in accordance with
rules and regulations issued by the SEC, such as AIRR-SRC Rule 4. And by virtue of
Section 53.1, the SEC has the discretion to make such investigations as it deems
necessary to determine whether any person has violated any rule issued by it, such as
AIRR-SRC Rule 4. The investigatory power of the SEC established by Section 53.1 is
central to its regulatory authority, most crucial to the public interest especially as it may
pertain to corporations with publicly traded shares. For that reason, we are not keen on
pursuing private respondents insistence that the GSIS complaint be viewed as rooted
in an intra-corporate controversy solely within the jurisdiction of the trial courts to
decide. It is possible that an intra-corporate controversy may animate a disgruntled
shareholder to complain to the SEC a corporations violations of SEC rules and
regulations, but that motive alone should not be sufficient to deprive the SEC of its
investigatory and regulatory powers, especially so since such powers are exercisable
on a motu proprio basis.
At the same time, Meralco raises the substantial point that nothing in the SRC
empowers the SEC to annul or invalidate improper proxies issued in contravention of
Section 20. It cites that the penalties defined by the SEC itself for violation of Section
20 or AIRR-SRC Rule 20 are limited to a reprimand/warning for the first offense, and
pecuniary fines for succeeding offenses.[43] Indeed, if the SEC does not have the power
to invalidate proxies solicited in violation of its promulgated rules, serious questions
may be raised whether it has the power to adjudicate claims of violation in the first
place, since the relief it may extend does not directly redress the cause of action of the
complainant seeking the exclusion of the proxies.
There is an interesting point, which neither party raises, and it concerns
Section 6(g) of Presidential Decree No. 902-A, which states:
 SEC. 6. In order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
xxx
(g) To pass upon the validity of the issuance and use of proxies
and voting trust agreements for absent stockholders or members;
xxx
As promulgated then, the provision would confer on the SEC the power to adjudicate
controversies relating not only to proxy solicitation, but also to proxy validation. Should
the proposition hold true up to the present, the position of GSIS would have merit,
especially since Section 6 of Presidential Decree No. 902-A was not expressly repealed
or abrogated by the SRC.[44]
Yet a closer reading of the provision indicates that such power of the SEC
then was incidental or ancillary to the exercise of such jurisdiction. Note that Section 6
is immediately preceded by Section 5, which originally conferred on the SEC original
and exclusive jurisdiction to hear and decide cases involving controversies in the
election or appointments of directors, trustees, officers or managers of such
corporations, partnerships or associations. The cases referred to in Section 5 were
transferred from the jurisdiction of the SEC to the regular courts with the passage of
the SRC, specifically Section 5.2. Thus, the SECs power to pass upon the validity of
proxies in relation to election controversies has effectively been withdrawn, tied as it is
to its abrogated jurisdictional powers.
Based on the foregoing, it is evident that the linchpin in deciding the question
is whether or not the cause of action of GSIS before the SEC is intimately tied to an
election controversy, as defined under Section 5(c) of Presidential Decree No. 902-A.
To answer that, we need to properly ascertain the scope of the power of trial courts to
resolve controversies in corporate elections.
B.
Shares of stock in corporations may be divided into voting shares and non-voting
shares, which are generally issued as preferred or redeemable shares. [45] Voting rights
are exercised during regular or special meetings of stockholders; regular meetings to
be held annually on a fixed date, while special meetings may be held at any time
necessary or as provided in the by-laws, upon due notice.[46] The Corporation Code
provides for a whole range of matters which can be voted upon by stockholders,
including a limited set on which even non-voting stockholders are entitled to vote
on.[47] On any of these matters which may be voted upon by stockholders, the proxy
device is generally available.[48]
Under Section 5(c) of Presidential Decree No. 902-A, in relation to the SRC, the
jurisdiction of the regular trial courts with respect to election-related controversies is
specifically confined to controversies in the election or appointment of directors,
trustees, officers or managers of corporations, partnerships, or
associations. Evidently, the jurisdiction of the regular courts over so-called
election contests or controversies under Section 5(c) does not extend to every
potential subject that may be voted on by shareholders, but only to the election
of directors or trustees, in which stockholders are authorized to participate
under Section 24 of the Corporation Code.[49]
This qualification allows for a useful distinction that gives due effect to the
statutory right of the SEC to regulate proxy solicitation, and the statutory jurisdiction of
regular courts over election contests or controversies. The power of the SEC to
investigate violations of its rules on proxy solicitation is unquestioned when proxies are
obtained to vote on matters unrelated to the cases enumerated under Section 5 of
Presidential Decree No. 902-A. However, when proxies are solicited in relation to
the election of corporate directors, the resulting controversy, even if it ostensibly
raised the violation of the SEC rules on proxy solicitation, should be properly
seen as an election controversy within the original and exclusive jurisdiction of
the trial courts by virtue of Section 5.2 of the SRC in relation to Section 5(c) of
Presidential Decree No. 902-A.
The conferment of original and exclusive jurisdiction on the regular courts over such
controversies in the election of corporate directors must be seen as intended to confine
to one body the adjudication of all related claims and controversy arising from the
election of such directors. For that reason, the aforequoted Section 2, Rule 6 of the
Interim Rules broadly defines the term election contest as encompassing all plausible
incidents arising from the election of corporate directors, including: (1) any controversy
or dispute involving title or claim to any elective office in a stock or nonstock corporation,
(2) the validation of proxies, (3) the manner and validity of elections and (4) the
qualifications of candidates, including the proclamation of winners. If all matters
anteceding the holding of such election which affect its manner and conduct, such as
the proxy solicitation process, are deemed within the original and exclusive jurisdiction
of the SEC, then the prospect of overlapping and competing jurisdictions between that
body and the regular courts becomes frighteningly real. From the language of Section
5(c) of Presidential Decree No. 902-A, it is indubitable that controversies as to the
qualification of voting shares, or the validity of votes cast in favor of a candidate for
election to the board of directors are properly cognizable and adjudicable by the regular
courts exercising original and exclusive jurisdiction over election cases. Questions
relating to the proper solicitation of proxies used in such election are indisputably
related to such issues, yet if the position of GSIS were to be upheld, they would be
resolved by the SEC and not the regular courts, even if they fall within controversies in
the election of directors.
The Court recognizes that GSISs position flirts with the abhorrent evil of split of the Company. All of the nominees are current directors of the
jurisdiction,[50] allowing as it does both the SEC and the regular courts to assert Company.[52]
jurisdiction over the same controversies surrounding an election contest. Should the
argument of GSIS be sustained, we would be perpetually confronted with the spectacle
of election controversies being heard and adjudicated by both the SEC and the regular
Under the circumstances, we do not see it feasible for GSIS to posit that its challenge
courts, made possible through a mere allegation that the anteceding proxy solicitation
to the solicitation or validation of proxies bore no relation at all to the scheduled election
process was errant, but the competing cases filed with one objective in mind to affect
of the board of directors of Meralco during the annual meeting. GSIS very well knew
the outcome of the election of the board of directors. There is no definitive statutory
that the controversy falls within the contemplation of an election controversy properly
provision that expressly mandates so untidy a framework, and we are disinclined to
within the jurisdiction of the regular courts. Otherwise, it would have never filed its
construe the SRC in such a manner as to pave the way for the splitting of jurisdiction.
original petition with the RTC of Pasay. GSIS may have withdrawn its petition with the
RTC on a new assessment made in good faith that the controversy falls within the
Unlike either Section 20.1 or Section 53.1, which merely alludes to the rule-making or
jurisdiction of the SEC, yet the reality is that the reassessment is precisely wrong as a
investigatory power of the SEC, Section 5 of Pres. Decree No. 902-A sets forth a
matter of law.
definitive rule on jurisdiction, expressly granting as it does original and exclusive
jurisdiction first to the SEC, and now to the regular courts. The fact that the jurisdiction
IV.
of the regular courts under Section 5(c) is confined to the voting on election of officers,
and not on all matters which may be voted upon by stockholders, elucidates that the
power of the SEC to regulate proxies remains extant and could very well be exercised The lack of jurisdiction of the SEC over the subject matter of GSISs petition
when stockholders vote on matters other than the election of directors. necessarily invalidates the CDOand SDO issued by that body. However, especially
with respect to the CDO, there is need for this Court to squarely rule on the question
pertaining to its validity, if only for jurisprudential value and for the guidance of the SEC.

To recount the facts surrounding the issuance of the CDO, GSIS filed its
That the proxy challenge raised by GSIS relates to the election of the directors of
petition with the SEC on 26 May 2008. The CDO, six (6) pages in all with three (3)
Meralco is undisputed. The controversy was engendered by the looming annual
pages devoted to the tenability of granting the injunctive relief, was issued on the very
meeting, during which the stockholders of Meralco were to elect the directors of the
same day, 26 May 2008, without notice or hearing. The CDO bore the signature of
corporation. GSIS very well knew of that fact. On 17 March 2008, the Meralco board of
Commissioner Jesus Martinez, identified therein as Officer-in-Charge, and nobody
directors adopted a board resolution stating:
elses.

RESOLVED that the board of directors of the Manila Electric Company

The provisions of the SRC relevant to the issuance of a CDO are as follows:
(MERALCO) delegate, as it hereby delegates to the Nomination &
Governance Committee the authority to approve and adopt appropriate
rules on: (1) nomination of candidates for election to the board of
directors; (2) appreciation of ballots during the election of
members of the board of directors; and (3) validation of proxies for
regular or special meetings of the stockholders.[51]
SEC. 5. Powers and Functions of the Commission.- 5.1. The
In addition, the Information Statement/Proxy form filed by First Philippine Holdings Commission shall act with transparency and shall have the powers and
Corporation with the SEC pursuant to Section 20 of the SRC, states: functions provided by this Code, Presidential Decree No. 902-A,
the Corporation Code, the Investment Houses Law, the Financing
REASON FOR SOLICITATION OF VOTES Company Act and other existing laws. Pursuant thereto the
Commission shall have, among others, the following powers and
The Solicitor is soliciting proxies from stockholders of the Company for functions:
the purpose of electing the directors named under the subject
headed Directors in this Statement as well as to vote the matters in xxx
the agenda of the meeting as provided for in the Information Statement
(i) Issue cease and desist orders to prevent fraud or injury to the
investing public;
xxx
[SEC.] 53.3. Whenever it shall appear to the Commission that
any person has engaged or is about to engage in any act or practice
constituting a violation of any provision of this Code, any rule, regulation
or order thereunder, or any rule of an Exchange, registered securities
association, clearing agency or other self-regulatory organization, it
may issue an order to such person to desist from committing such act
or practice: Provided, however, That the Commission shall not charge
any person with violation of the rules of an Exchange or other self
regulatory organization unless it appears to the Commission that such
Exchange or other self-regulatory organization is unable or unwilling to
take action against such person. After finding that such person has
engaged in any such act or practice and that there is a reasonable
likelihood of continuing, further or future violations by such person, the
Commission may issue ex-parte a cease and desist order for a
maximum period of ten (10) days, enjoining the violation and compelling
compliance with such provision. The Commission may transmit such
evidence as may be available concerning any violation of any provision
of this Code, or any rule, regulation or order thereunder, to the
Department of Justice, which may institute the appropriate criminal
proceedings under this Code.
SEC. 64. Cease and Desist Order. 64.1. The Commission,
after proper investigation or verification, motu proprio, or upon verified
complaint by any aggrieved party, may issue a cease and desist order
without the necessity of a prior hearing if in its judgment the act or
practice, unless restrained, will operate as a fraud on investors or is
otherwise likely to cause grave or irreparable injury or prejudice to the
investing public.
64.2. Until the Commission issues a cease and desist order,
the fact that an investigation has been initiated or that a complaint has
been filed, including the contents of the complaint, shall be confidential.
Upon issuance of a cease and desist order, the Commission shall make
public such order and a copy thereof shall be immediately furnished to
each person subject to the order.
64.3. Any person against whom a cease and desist order was
issued may, within five (5) days from receipt of the order, file a formal
request for a lifting thereof. Said request shall be set for hearing by the
Commission not later than fifteen (15) days from its filing and the
resolution thereof shall be made not later than ten (10) days from the
termination of the hearing. If the Commission fails to resolve the request
within the time herein prescribed, the cease and desist order shall
automatically be lifted.
There are three distinct bases for the issuance by the SEC of the CDO. The first,
allocated by Section 5(i), is predicated on a necessity to prevent fraud or injury to the
investing public. No other requisite or detail is tied to this CDO authorized under Section
5(i).
The second basis, found in Section 53.3, involves a determination by the SEC that any
person has engaged or is about to engage in any act or practice constituting a violation
of any provision of this Code, any rule, regulation or order thereunder, or any rule of an
Exchange, registered securities association, clearing agency or other self-regulatory
organization. The provision additionally requires a finding that there is a reasonable
likelihood of continuing [or engaging in] further or future violations by such person. The
maximum duration of the CDO issued under Section 53.3 is ten (10) days.
The third basis for the issuance of a CDO is Section 64. This CDO is founded on a
determination of an act or practice, which unless restrained, will operate as a fraud on
investors or is otherwise likely to cause grave or irreparable injury or prejudice to the
investing public. Section 64.1 plainly provides three segregate instances upon which
the SEC may issue the CDO under this provision: (1) after proper investigation or
verification, (2) motu proprio, or (3) upon verified complaint by any aggrieved party.
While no lifetime is expressly specified for the CDO under Section 64, the respondent
to the CDO may file a formal request for the lifting thereof, which the SEC must hear
within fifteen (15) days from filing and decide within ten (10) days from the hearing.
It appears that the CDO under Section 5(i) is similar to the CDO under Section 64.1.
Both require a common finding of a need to prevent fraud or injury to the investing
public. At the same time, no mention is made whether the CDO defined under Section
5(i) may be issued ex-parte, while the CDO under Section 64.1 requires grave and
irreparable injury, language absent in Section 5(i). Notwithstanding the similarities
between Section 5(i) and Section 64.1, it remains clear that the CDO issued under
Section 53.3 is a distinct creation from that under Section 64.
The Court of Appeals cited the CDO as having been issued in violation of the
constitutional provision on due process, which requires both prior notice and prior
hearing.[53] Yet interestingly, the CDO as contemplated in Section 53.3 or in Section 64,
may be issued ex-parte (under Section 53.3) or without necessity of hearing (under
Section 64.1). Nothing in these provisions impose a requisite hearing before
the CDO may be issued thereunder. Nonetheless, there are identifiable requisite
actions on the part of the SEC that must be undertaken before the CDOmay be issued
either under Section 53.3 or Section 64. In the case of Section 53.3, the SEC must
make two findings: (1) that such person has engaged in any such act or practice, and
(2) that there is a reasonable likelihood of continuing, (or engaging in) further or future
violations by such person. In the case of Section 64, the SEC must adjudge that the
act, unless restrained, will operate as a fraud on investors or is otherwise likely to cause
grave or irreparable injury or prejudice to the investing public.
Noticeably, the CDO is not precisely clear whether it was issued on the basis
of Section 5.1, Section 53.3 or Section 64 of the SRC. The CDO actually refers and
cites all three provisions, yet it is apparent that a singular CDOcould not be founded on
Section 5.1, Section 53.3 and Section 64 collectively. At the very least, the CDO under
Section 53.3 and under Section 64 have their respective requisites and terms.
GSIS was similarly cagey in its petition before the SEC, it demurring to state
whether it was seeking the CDO under Section 5.1, Section 53.3, or Section 64.
Considering that injunctive relief generally avails upon the showing of a clear legal right
to such relief, the inability or unwillingness to lay bare the precise statutory basis for
the prayer for injunction is an obvious impediment to a successful
application. Nonetheless, the error of the SEC in granting the CDO without stating
which kind of CDO it was issuing is more unpardonable, as it is an act that contravenes
due process of law.
We have particularly required, in administrative proceedings, that the body or
tribunal in all controversial questions, render its decision in such a manner that the
parties to the proceeding can know the various issues involved, and the reason for the
decision rendered.[54] This requirement is vital, as its fulfillment would afford the adverse
party the opportunity to interpose a reasoned and intelligent appeal that is responsive
to the grounds cited against it. The CDO extended by the SEC fails to provide the
needed reasonable clarity of the rationale behind its issuance.
The subject CDO first refers to Section 64, citing its provisions, then stating:
[p]rescinding from the aforequoted, there can be no doubt whatsoever that the
Commission is in fact mandated to take up, if expeditiously, any verified complaint
praying for the provisional remedy of a cease and desist order.[55] The CDO then
discusses the nature of the right of GSIS to obtain the CDO, as well as the urgent and
paramount necessity to prevent serious damage because the stockholders meeting is
scheduled on May 28, 2008 x x x Had the CDO stopped there, the unequivocal
impression would have been that the order is based on Section 64.
But the CDO goes on to cite Section 5.1, quoting paragraphs (i) and (n) in full,
ratiocinating that under these provisions, the SEC had the power to issue cease and
desist orders to prevent fraud or injury to the public and such other measures necessary
to carry out the Commissions role as regulator.[56] Immediately thence, the CDO cites
Section 53.3 as providing that whenever it shall appear to the Commission that nay
person has engaged or is about to engage in any act or practice constituting a violation
of any provision, any rule, regulation or order thereunder, the Commission may issue
ex-parte a cease and desist order for a maximum period of ten (10) days, enjoining the
violation and compelling compliance therewith.[57]
The citation in the CDO of Section 5.1, Section 53.3 and Section 64 together
may leave the impression that it is grounded on all three provisions, and that may very
well have been the intention of the SEC. Assuming that is so, it is legally impermissible
for the SEC to have utilized both Section 53.3 and Section 64 as basis for the CDO at
the same time. The CDO under Section 53.3 is premised on distinctly different
requisites than the CDO under Section 64. Even more crucially, the lifetime of
the CDO under Section 53.3 is confined to a definite span of ten (10) days, which is not
the case with the CDO under Section 64. This CDO under Section 64 may be the object
of a formal request for lifting within five (5) days from its issuance, a remedy not
expressly afforded to the CDO under Section 53.3.
Any respondent to a CDO which cites both Section 53.3 and Section 64 would
not have an intelligent or adequate basis to respond to the same. Such respondent
would not know whether the CDO would have a determinate lifespan of ten (10) days,
as in Section 53.3, or would necessitate a formal request for lifting within five (5) days,
as required under Section 64.1. This lack of clarity is to the obvious prejudice of the
respondent, and is in clear defiance of the constitutional right to due process of law.
Indeed, the veritable mlange that the assailed CDO is, with its jumbled mixture of
premises and conclusions, the antithesis of due process.
Had the CDO issued by the SEC expressed the length of its term, perhaps
greater clarity would have been offered on what Section of the SRC it is based.
However, the CDO is precisely silent as to its lifetime, thereby precluding much needed
clarification. In view of the statutory differences among the three CDOs under the SRC,
it is essential that the SEC, in issuing such injunctive relief, identify the exact provision
of the SRC on which the CDO is founded. Only by doing so could the adversely affected
party be able to properly evaluate whatever his responses under the law.
 To make matters worse for the SEC, the fact that the CDO was signed, much
less apparently deliberated upon, by only by one commissioner likewise renders the
order fatally infirm.
The SEC is a collegial body composed of a Chairperson and four (4)
Commissioners.[58] In order to constitute a quorum to conduct business, the presence
of at least three (3) Commissioners is required.[59] In the leading case of GMCR v.
Bell,[60] we definitively explained the nature of a collegial body, and how the act of one
member of such body, even if the head, could not be considered as that of the entire
body itself. Thus:
We hereby declare that the NTC is a collegial body requiring a
majority vote out of the three members of the commission in order to
validly decide a case or any incident therein. Corollarily, the vote alone
of the chairman of the commission, as in this case, the vote of
Commissioner Kintanar, absent the required concurring vote coming
from the rest of the membership of the commission to at least arrive at
a majority decision, is not sufficient to legally render an NTC order,
resolution or decision.
Simply put, Commissioner Kintanar is not the National
Telecommunications Commission. He alone does not speak for and in
behalf of the NTC. The NTC acts through a three-man body, and the
three members of the commission each has one vote to cast in every
deliberation concerning a case or any incident therein that is subject to
the jurisdiction of the NTC. When we consider the historical milieu in
which the NTC evolved into the quasi-judicial agency it is now under
Executive Order No. 146 which organized the NTC as a three-man
commission and expose the illegality of all memorandum circulars
negating the collegial nature of the NTC under Executive Order No. 146,
we are left with only one logical conclusion: the NTC is a collegial body
and was a collegial body even during the time when it was acting as a
one-man regime.[61]
We can adopt a virtually word-for-word observation with respect to former
Commissioner Martinez and the SEC. Simply put, Commissioner Martinez is not the
SEC. He alone does not speak for and in behalf of the SEC. The SEC acts through a
five-person body, and the five members of the commission each has one vote to cast
in every deliberation concerning a case or any incident therein that is subject to the
jurisdiction of the SEC.
GSIS attempts to defend former Commissioner Martinezs action, but its argument is
without merit. It cites SEC Order No. 169, Series of 2008, whereby Martinez was
designated as Officer-in-Charge of the Commission for the duration of the official travel
of the Chairperson to Paris, France, to attend the 33rd Annual Conference of the
[IOSCO] from May 26-30, 2008.[62] As officer-in-charge (OIC), Martinez was authorized
to sign all documents and papers and perform all other acts and deeds as may be
necessary in the day-to-day operation of the Commission.
It is clear that Martinez was designated as OIC because of the official travel
of only one member, Chairperson Fe Barin. Martinez was not commissioned to act as
the SEC itself. At most, he was to act in place of Chairperson Barin in the exercise of
her duties as Chairperson of the SEC. Under Section 4.3 of the SRC, the Chairperson
is the chief executive officer of the SEC, and thus empowered to execute and
administer the policies, decisions, orders and resolutions approved by the Commission,
as well as to have the
general executive direction and supervision of the work and operation of the
Commission.[63] It is in relation to the exercise of these duties of the Chairperson, and
not to the functions of the Commission, that Martinez was authorized to sign all
documents and papers and perform all other acts and deeds as may be necessary in
the day-to-day operation of the Commission.
GSIS likewise cites, as authority for Martinezs unilateral issuance of the CDO,
Section 4.6 of the SRC, which states that the SEC may, for purposes of efficiency,
delegate any of its functions to any department or office of the Commission, an
individual Commissioner or staff member of the Commission except its review or
appellate authority and its power to adopt, alter and supplement any rule or regulation.
Reliance on this provision is inappropriate. First, there is no convincing demonstration
that the SEC had delegated to Martinez the authority to issue the CDO. The SEC Order
designating Martinez as OIC only authorized him to exercise the functions of the absent
Chairperson, and not of the Commission. If the Order is read as enabling Martinez to
issue the CDO in behalf of the Commission, it would be akin to conceding that the SEC
Chairperson, acting alone, can issue the CDO in behalf of the SEC itself. That again
contravenes our holding in GMCR v. Bell.
 In addition, it is clear under Section 4.6 that the ability to delegate functions to
a single commissioner does not extend to the exercise of the review or appellate
authority of the SEC. The issuance of the CDO is an act of the SEC itself done in the
exercise of its original jurisdiction to review actual cases or controversies. If it has not
been clear to the SEC before, it should be clear now that its power to issue a CDO can
not, under the SRC, be delegated to an individual commissioner.
V.
In the end, even assuming that the events narrated in our Resolution in A.M. No. 08-8-
11-CA constitute sufficient basis to nullify the assailed decision of the Court of Appeals,
still it remains clear that the reliefs GSIS seeks of this Court have no basis in law.
Notwithstanding the black mark that stains the appellate courts decision, the first
paragraph of its fallo, to the extent that it dismissed the complaint of GSIS with the SEC
for lack of jurisdiction and consequently nullified the CDO and SDO, defies unbiased
scrutiny and deserves affirmation.
A.
In its dispositive portion, the Court of Appeals likewise pronounced that the complaint
filed by GSIS with the SEC should be barred from being considered as an election
contest in the RTC, given that the fifteen (15) day prescriptive period to file an election
contest with the RTC, under Section 3, Rule 6 of the Interim Rules, had already run its
course.[64] Yet no such relief was requested by private respondents in their petition for
certiorari filed with the Court of Appeals[65]. Without disputing the legal predicates
surrounding this pronouncement, we note that its tenor, if not the text, unduly suggests
an unwholesome pre-emptive strike. Given our observations in A.M. No. 08-8-11-CA of
the undue interest exhibited by the author of the appellate court decision, such
declaration is best deleted. Nonetheless, we do trust that any court or tribunal that may
be confronted with that premise adverted to by the Court of Appeals would know how
to properly treat the same.
B.
Finally, we turn to the sanction on the lawyers of GSIS imposed by the Court
of Appeals.
Nonetheless, we find that as a matter of law the sanctions are unwarranted. The charter
of GSIS[66] is unique among government owned or controlled corporations with original
charter in that it allocates a role for its internal legal counsel that is in conjunction with
or complementary to the Office of the Government Corporate Counsel (OGCC), which
is the statutory legal counsel for GOCCs. Section 47 of GSIS charter reads:
SEC. 47. Legal Counsel.The Government Corporate Counsel shall be
the legal adviser and consultant of GSIS, but GSIS may assign to the
Office of the Government Corporate Counsel (OGCC) cases for legal
action or trial, issues for legal opinions, preparation and review of
contracts/agreements and others, as GSIS may decide or determine
from time to time: Provided, however, That the present legal services
group in GSIS shall serve as its in-house legal counsel.
The GSIS may, subject to approval by the proper court,
deputize any personnel of the legal service group to act as special
sheriff in the enforcement of writs and processes issued by the court,
quasi-judicial agencies or administrative bodies in cases involving
GSIS.[67]
The designation of the OGCC as the legal counsel for GOCCs is set forth by statute,
initially by Rep. Act No. 3838, then reiterated by the Administrative Code of
1987.[68] Given that the designation is statutory in nature, there is no impediment for
Congress to impose a different role for the OGCC with respect to particular GOCCs it
may charter. Congress appears to have done so with respect to GSIS, designating the
OGCC as a legal adviser and consultant, rather than as counsel to GSIS. Further, the
law clearly vests unto GSIS the discretion, rather than the duty, to assign cases to the
OGCC for legal action, while designating the present legal services group of GSIS as
in-house legal counsel. This situates GSIS differently from the Land Bank of
the Philippines, whose own in-house lawyers have persistently argued before this
Court to no avail on their alleged right
to file petitions before us instead of the OGCC.[69] Nothing in the Land
Bank charter[70] vested it with the discretion to choose when to assign
cases to the OGCC, notwithstanding the establishment of its own Legal Department. [71]
Congress is not bound to retain the OGCC as the primary or exclusive legal
counsel of GSIS even if it performs such a role for other GOCCs. To bind Congress to
perform in that manner would be akin to elevating the OGCCs statutory role to
irrepealable status, and it is basic that Congress is barred from passing irrepealable
laws.[72]
C.
We close by acknowledging that the surrounding circumstances behind these
petitions are unfortunate, given the events as narrated in A.M. No. 08-8-11-CA. While
due punishment has been meted on the errant magistrates, the corporate world may
very well be reminded that the members of the judiciary are not to be viewed or treated
as
mere pawns or puppets in the internecine fights businessmen and their associates
wage against other businessmen in the quest for corporate dominance. In the end, the
petitions did afford this Court to clarify consequential points of law, points rooted in
principles which will endure long after the names of the participants in these cases have
been forgotten.

WHEREFORE, the petition in G.R. No. 184275 is EXPUNGED for lack of capacity of
the petitioner to bring forth the suit.

The petition in G.R. No. 183905 is DISMISSED for lack of merit except that the second
and third paragraphs of the fallo of the assailed decision dated 23 July 2008 of the
Court of Appeals, including subparagraphs (1), (2), 2(a), 2(b), 2(c) and 2(d) under the
second paragraph, are hereby DELETED.

No pronouncements as to costs.

SO ORDERED.

THIRD DIVISION
[G.R. NO. 176405 : August 20, 2008]
LEO WEE, Petitioner, v. GEORGE DE CASTRO (on his behalf and as attorney-in-
fact of ANNIE DE CASTRO and FELOMINA UBAN) and MARTINIANA DE
CASTRO, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Revised
Rules of Court filed by petitioner Leo Wee, seeking the reversal and setting aside of
the Decision2 dated 19 September 2006 and the Resolution3 dated 25 January 2007
of the Court of Appeals in CA-G.R. SP No. 90906. The appellate court, in its assailed
Decision, reversed the dismissal of Civil Case. No. 1990, an action for ejectment
instituted by respondent George de Castro, on his own behalf and on behalf of Annie
de Castro, Felomina de Castro Uban and Jesus de Castro 4 against petitioner, by the
Municipal Trial Court (MTC) of Alaminos City, which was affirmed by the Regional
Trial Court (RTC), Branch 54, Alaminos City, Pangasinan; and, ruling in favor of the
respondents, ordered the petitioner to vacate the subject property. In its assailed
Resolution dated 25 January 2007, the Court of Appeals refused to reconsider its
earlier Decision of 19 September 2006.
In their Complaint5 filed on 1 July 2002 with the MTC of Alaminos City, docketed as
Civil Case No. 1990, respondentsalleged that they are the registered owners of the
subject property, a two-storey building erected on a parcel of land registered under
Transfer Certificate of Title (TCT) No. 16193 in the Registry of Deeds of Pangasinan,
described and bounded as follows:
A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot 13033-D,
Psd-018529, LRC Rec. No. ____) situated in Pob., Alaminos City; bounded on the
NW. along line 1-2 by Lot 13035-D-1 of the subdivision plan; on the NE. along line 2-3
by Vericiano St.; on the SE. along line 3-4 by Lot 13033-D-2 of the subdivision plan;
on the SW. along line 4-1 by Lot 575, Numeriano Rabago. It is coverd by TCT No.
16193 of the Register of Deeds of Pangasinan (Alaminos City) and declared for
taxation purposes per T.D. No. 2075, and assessed in the sum of P93,400.00.6
Respondents rented out the subject property to petitioner on a month to month basis
for P9,000.00 per month.7 Both parties agreed that effective 1 October 2001, the
rental payment shall be increased from P9,000.00 to P15,000.00. Petitioner, however,
failed or refused to pay the corresponding increase on rent when his rental obligation
for the month of 1 October 2001 became due. The rental dispute was brought to
the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, in an attempt to
amicably settle the matter but the parties failed to reach an agreement, resulting in
the issuance by the BarangayLupon of a Certification to file action in court on 18
January 2002. On 10 June 2002, respondent George de Castro sent a letter to
petitioner terminating their lease agreement and demanding that the latter vacate and
turn over the subject property to respondents. Since petitioner stubbornly refused to
comply with said demand letter, respondent George de Castro, together with his
siblings and co-respondents, Annie de Castro, Felomina de Castro Uban and Jesus
de Castro, filed the Complaint for ejectment before the MTC.
It must be noted, at this point, that although the Complaint stated that it was being
filed by all of the respondents, the Verification and the Certificate of Non-Forum
Shopping were signed by respondent George de Castro alone. He would
subsequently attach to his position paper filed before the MTC on 28 October 2002
the Special Powers of Attorney (SPAs) executed by his sisters Annie de Castro and
Felomina de Castro Uban dated 7 February 2002 and 14 March 2002 respectively,
authorizing him to institute the ejectment case against petitioner.
Petitioner, on the other hand, countered that there was no agreement between the
parties to increase the monthly rentals and respondents' demand for an increase was
exorbitant. The agreed monthly rental was only for the amount of P9,000.00 and he
was religiously paying the same every month. Petitioner then argued that respondents
failed to comply with the jurisdictional requirement of conciliation before
the Barangay Lupon prior to the filing of Civil Case. No. 1990, meriting the dismissal
of their Complaint therein. The Certification to file action issued by
the Barangay Lupon appended to the respondents' Complaint merely referred to the
issue of rental increase and not the matter of ejectment. Petitioner asserted further
that the MTC lacked jurisdiction over the ejectment suit, since respondents' Complaint
was devoid of any allegation that there was an "unlawful withholding" of the subject
property by the petitioner.8
During the Pre-Trial Conference9 held before the MTC, the parties stipulated that in
May 2002, petitioner tendered to respondents the sum of P9,000.00 as rental
payment for the month of January 2002; petitioner paid rentals for the months of
October 2001 to January 2002 but only in the amount of P9,000.00 per month;
respondents, thru counsel, sent a letter to petitioner on 10 June 2002 terminating their
lease agreement which petitioner ignored; and the Barangay Lupon did issue a
Certification to file action after the parties failed to reach an agreement before it.
After the submission of the parties of their respective Position Papers, the MTC, on 21
November 2002, rendered a Decision10 dismissing respondents' Complaint in Civil
Case No. 1990 for failure to comply with the prior conciliation requirement before
the Barangay Lupon. The decretal portion of the MTC Decision reads:
WHEREFORE, premised considered, judgment is hereby rendered ordering the
dismissal of this case. Costs against the [herein respondents].
On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan,
Branch 54, promulgated its Decision11 dated 27 June 2005 affirming the dismissal of
respondents' Complaint for ejectment after finding that the appealed MTC Decision
was based on facts and law on the matter. The RTC declared that since the original
agreement entered into by the parties was for petitioner to pay only the sum
of P9.000.00 per month for the rent of the subject property, and no concession was
reached by the parties to increase such amount to P15.000.00, petitioner cannot be
faulted for paying only the originally agreed upon monthly rentals. Adopting
petitioner's position, the RTC declared that respondents' failure to refer the matter to
the Barangay court for conciliation process barred the ejectment case, conciliation
before the Lupon being a condition sine qua non in the filing of ejectment suits. The
RTC likewise agreed with petitioner in ruling that the allegation in the Complaint was
flawed, since respondents failed to allege that there was an "unlawful withholding" of
possession of the subject property, taking out Civil Case No. 1990 from the purview of
an action for unlawful detainer. Finally, the RTC decreed that respondents' Complaint
failed to comply with the rule that a co-owner could not maintain an action without
joining all the other co-owners. Thus, according to the dispositive portion of the RTC
Decision:
WHEREFORE the appellate Court finds no cogent reason to disturb the findings of
the court a quo. The Decision dated November 21, 2002 appealed from is hereby
AFFIRMED IN TOTO.12
Undaunted, respondents filed a Petition for Review on Certiorari13 with the Court of
Appeals where it was docketed as CA-G.R. SP No. 90906. Respondents argued in
their Petition that the RTC gravely erred in ruling that their failure to comply with the
conciliation process was fatal to their Complaint, since it is only respondent George
de Castro who resides in Alaminos City, Pangasinan, while respondent Annie de
Castro resides in Pennsylvania, United States of America (USA); respondent
Felomina de Castro Uban, in California, USA; and respondent Jesus de Castro, now
substituted by his wife, Martiniana, resides in Manila. Respondents further claimed
that the MTC was not divested of jurisdiction over their Complaint for ejectment
because of the mere absence therein of the term "unlawful withholding" of their
subject property, considering that they had sufficiently alleged the same in their
Complaint, albeit worded differently. Finally, respondents posited that the fact that
only respondent George de Castro signed the Verification and the Certificate of Non-
Forum Shopping attached to the Complaint was irrelevant since the other
respondents already executed Special Powers of Attorney (SPAs) authorizing him to
act as their attorney-in-fact in the institution of the ejectment suit against the
petitioner.
On 19 September 2006, the Court of Appeals rendered a Decision granting the
respondents' Petition and ordering petitioner to vacate the subject property and turn
over the same to respondents. The Court of Appeals decreed:
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed
Decision dated June 27, 2005 issued by the RTC of Alaminos City, Pangasinan,
Branch 54, is REVERSED and SET ASIDE. A new one is hereby rendered ordering
[herein petitioner] Leo Wee to SURRENDER and VACATE the leased premises in
question as well as to pay the sum of P15,000.00 per month reckoned from March,
2002 until he shall have actually turned over the possession thereof to petitioners plus
the rental arrearages of P30,000.00 representing unpaid increase in rent for the
period from October, 2001 to February, 2002, with legal interest at 6% per annum to
be computed from June 7, 2002 until finality of this decision and 12% thereafter until
full payment thereof. Respondent is likewise hereby ordered to pay petitioners the
amount of P20,000.00 as and for attorney's fees and the costs of suit. 14
In a Resolution dated 25 January 2007, the appellate court denied the Motion for
Reconsideration interposed by petitioner for lack of merit.
Petitioner is now before this Court via the Petition at bar, making the following
assignment of errors:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT
CONCILIATION PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT
NON-COMPLIANCE THEREWITH DOES NOT AFFECT THE JURISDICTION IN
EJECTMENT CASE;
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE
SUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT
DESPITE THE WANT OF ALLEGATION OF "UNLAWFUL WITHOLDING
PREMISES" (sic) QUESTIONED BY PETITIONER;
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
THE FILING OF THE COMPLAINT OF RESPONDENT GEORGE DE CASTRO
WITHOUT JOINING ALL HIS OTHER CO-OWNERS OVER THE SUBJECT
PROPERTY IS PROPER;
IV.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING
SUPREME COURT CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO
INDICATE IN HIS PLEADINGS HIS OFFICIAL RECEIPT OF HIS PAYMENT OF HIS
IBP DUES.15
Petitioner avers that respondents failed to go through the conciliation process before
the Barangay Lupon, a jurisdictional defect that bars the legal action for ejectment.
The Certification to file action dated 18 January 2002 issued by the Barangay Lupon,
appended by the respondents to their Complaint in Civil Case No. 1990, is of no
moment, for it attested only that there was confrontation between the parties on the
matter of rental increase but not on unlawful detainer of the subject property by the
petitioner. If it was the intention of the respondents from the very beginning to eject
petitioner from the subject property, they should have brought up the alleged unlawful
stay of the petitioner on the subject property for conciliation before the Barangay
Lupon.
The barangay justice system was established primarily as a means of easing up the
congestion of cases in the judicial courts. This could be accomplished through a
proceeding before the barangay courts which, according to the one who conceived of
the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in
character; and to make it truly effective, it should also be compulsory. With this
primary objective of the barangay justice system in mind, it would be wholly in
keeping with the underlying philosophy of Presidential Decree No. 1508 (Katarungang
Pambarangay Law), which would be better served if an out-of-court settlement of the
case is reached voluntarily by the parties.16 To ensure this objective, Section 6 of
Presidential Decree No. 1508 requires the parties to undergo a conciliation process
before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to
filing a complaint in court subject to certain exceptions. The said section has been
declared compulsory in nature.17
Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The
Local Government Code), which took effect on 1 January 1992.
The pertinent provisions of the Local Government Code making conciliation a
precondition to the filing of complaints in court are reproduced below:
SEC. 412. Conciliation. - (a) Pre-condition to filing of complaint in court. - No
complaint, petition, action, or proceeding involving any matter within the authority of
the lupon shall be filed or instituted directly in court or any other government office for
adjudication, unless there has been a confrontation between the parties before the
lupon chairman or the pangkat, and that no conciliation or settlement has been
reached as certified by the lupon secretary or pangkat secretary as attested to by the
lupon or pangkat chairman or unless the settlement has been repudiated by the
parties thereto.
(b) Where parties may go directly to court. - The parties may go directly to court in the
following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of personal liberty calling for habeas
corpus proceedings;
(3) Where actions are coupled with provisional remedies such as preliminary
injunction, attachment, delivery of personal property, and support pendente lite;
andcralawlibrary
(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. - The customs
and traditions of indigenous cultural communities shall be applied in settling disputes
between members of the cultural communities.
SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. - The lupon of
each barangay shall have authority to bring together the parties actually residing in
the same city or municipality for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding
Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or
municipalities unless the parties thereto agree to submit their differences to amicable
settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties
thereto agree to submit their differences to amicable settlement by an appropriate
lupon;
(g) Such other classes of disputes which the President may determine in the interest
of justice or upon the recommendation of the Secretary of Justice.
There is no question that the parties to this case appeared before the Barangay
Lupon for conciliation proceedings. There is also no dispute that the only matter
referred to the Barangay Lupon for conciliation was the rental increase, and not the
ejectment of petitioner from the subject property. This is apparent from a perusal of
the Certification to file action in court issued by the Barangay Lupon on 18 January
2002, to wit:
CERTIFICATION TO FILE COMPLAINTS
This is to certify that:
1. There was personal confrontation between parties before the barangay
Lupon regarding rental increase of a commercial building but conciliation failed;
2. Therefore, the corresponding dispute of the above-entitled case may now be filed
in Court/Government Office.18 (Emphasis ours.)
The question now to be resolved by this Court is whether the Certification dated 18
January 2002 issued by the Barangay Lupon stating that no settlement was reached
by the parties on the matter of rental increase sufficient to comply with the prior
conciliation requirement under the Katarungang PambarangayLaw to authorize the
respondents to institute the ejectment suit against petitioner.
The Court rules affirmatively.
While it is true that the Certification to file action dated 18 January 2002 of
the Barangay Lupon refers only to rental increase and not to the ejectment of
petitioner from the subject property, the submission of the same for conciliation before
the Barangay Lupon constitutes sufficient compliance with the provisions of
the Katarungang Pambarangay Law. Given the particular circumstances of the case
at bar, the conciliation proceedings for the amount of monthly rental should logically
and reasonably include also the matter of the possession of the property subject of
the rental, the lease agreement, and the violation of the terms thereof.
We now proceed to discuss the meat of the controversy.
The contract of lease between the parties did not stipulate a fixed period. Hence, the
parties agreed to the payment of rentals on a monthly basis. On this score, Article
1687 of the Civil Code provides:
Art. 1687. If the period for the lease has not been fixed, it is understood to be from
year to year, if the rent agreed upon is annual; from month to month, if it is
monthly; from week to week, if the rent is weekly; and from day to day, if the rent is
to be paid daily. However, even though a monthly rent is paid, and no period for the
lease has been set, the courts may fix a longer term for the lease after the lessee has
occupied the premises for over one year. If the rent is weekly, the courts may likewise
determine a longer period after the lessee has been in possession for over six
months. In case of daily rent, the courts may also fix a longer period after the lessee
has stayed in the place for over one month. (Emphasis supplied.)
The rentals being paid monthly, the period of such lease is deemed terminated at the
end of each month. Thus, respondents have every right to demand the ejectment of
petitioners at the end of each month, the contract having expired by operation of law.
Without a lease contract, petitioner has no right of possession to the subject property
and must vacate the same. Respondents, thus, should be allowed to resort to an
action for ejectment before the MTC to recover possession of the subject property
from petitioner.
Corollarily, petitioner's ejectment, in this case, is only the reasonable consequence of
his unrelenting refusal to comply with the respondents' demand for the payment of
rental increase agreed upon by both parties. Verily, the lessor's right to rescind the
contract of lease for non-payment of the demanded increased rental was recognized
by this Court in Chua v. Victorio19:
The right of rescission is statutorily recognized in reciprocal obligations, such as
contracts of lease. In addition to the general remedy of rescission granted under
Article 1191 of the Civil Code, there is an independent provision granting the remedy
of rescission for breach of any of the lessor or lessee's statutory obligations. Under
Article 1659 of the Civil Code, the aggrieved party may, at his option, ask for (1) the
rescission of the contract; (2) rescission and indemnification for damages; or (3) only
indemnification for damages, allowing the contract to remain in force.
Payment of the rent is one of a lessee's statutory obligations, and, upon non-
payment by petitioners of the increased rental in September 1994, the lessor
acquired the right to avail of any of the three remedies outlined
above. (Emphasis supplied.)
Petitioner next argues that respondent George de Castro cannot maintain an action
for ejectment against petitioner, without joining all his co-owners.
Article 487 of the New Civil Code is explicit on this point:
ART. 487. Any one of the co-owners may bring an action in ejectment.
This article covers all kinds of action for the recovery of possession, i.e., forcible entry
and unlawful detainer (accion interdictal), recovery of possession (accion publiciana),
and recovery of ownership (accion de reivindicacion). As explained by the renowned
civilist, Professor Arturo M. Tolentino20:
A co-owner may bring such an action, without the necessity of joining all the
other co-owners as co-plaintiffs, because the suit is deemed to be instituted for
the benefit of all. If the action is for the benefit of the plaintiff alone, such that he
claims possession for himself and not for the co-ownership, the action will not
prosper. (Emphasis added.)
In the more recent case of Carandang v. Heirs of De Guzman,21 this Court declared
that a co-owner is not even a necessary party to an action for ejectment, for complete
relief can be afforded even in his absence, thus:
In sum, in suits to recover properties, all co-owners are real parties in interest.
However, pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any
one of them may bring an action, any kind of action for the recovery of co-owned
properties. Therefore, only one of the co-owners, namely the co-owner who filed the
suit for the recovery of the co-owned property, is an indispensable party thereto. The
other co-owners are not indispensable parties. They are not even necessary parties,
for a complete relief can be afforded in the suit even without their participation, since
the suit is presumed to have been filed for the benefit of all co-owners.
Moreover, respondents Annie de Castro and Felomina de Castro Uban each
executed a Special Power of Attorney, giving respondent George de Castro the
authority to initiate Civil Case No. 1990.
A power of attorney is an instrument in writing by which one person, as principal,
appoints another as his agent and confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the principal. The written authorization
itself is the power of attorney, and this is clearly indicated by the fact that it has also
been called a "letter of attorney."22
Even then, the Court views the SPAs as mere surplusage, such that the lack thereof
does not in any way affect the validity of the action for ejectment instituted by
respondent George de Castro. This also disposes of petitioner's contention that
respondent George de Castro lacked the authority to sign the Verification and the
Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v. Coronel23 :
We likewise hold that the execution of the certification against forum shopping
by the attorney-in-fact in the case at bar is not a violation of the requirement
that the parties must personally sign the same. The attorney-in-fact, who has
authority to file, and who actually filed the complaint as the representative of the
plaintiff co-owner, pursuant to a Special Power of Attorney, is a party to the ejectment
suit. In fact, Section 1, Rule 70 of the Rules of Court includes the representative of the
owner in an ejectment suit as one of the parties authorized to institute the
proceedings. (Emphasis supplied.)
Failure by respondent George de Castro to attach the said SPAs to the Complaint is
innocuous, since it is undisputed that he was granted by his sisters the authority to file
the action for ejectment against petitioner prior to the institution of Civil Case No.
1990. The SPAs in his favor were respectively executed by respondents Annie de
Castro and Felomina de Castro Uban on 7 February 2002 and 14 March 2002; while
Civil Case No. 1990 was filed by respondent George de Castro on his own behalf and
on behalf of his siblings only on 1 July 2002, or way after he was given by his siblings
the authority to file said action. The Court quotes with approval the following
disquisition of the Court of Appeals:
Moreover, records show that [herein respondent] George de Castro was indeed
authorized by his sisters Annie de Castro and Felomina de Castro Uban, to prosecute
the case in their behalf as shown by the Special Power of Attorney dated February 7,
2002 and March 14, 2002. That these documents were appended only to [respondent
George de Castro's] position paper is of no moment considering that the authority
conferred therein was given prior to the institution of the complaint in July, 2002. x x
x.24
Respondent deceased Jesus de Castro's failure to sign the Verification and
Certificate of Non-Forum Shopping may be excused since he already executed an
Affidavit25 with respondent George de Castro that he had personal knowledge of the
filing of Civil Case No. 1990. In Torres v. Specialized Packaging Development
Corporation,26 the Court ruled that the personal signing of the verification requirement
was deemed substantially complied with when, as in the instant case, two out of 25
real parties-in-interest, who undoubtedly have sufficient knowledge and belief to
swear to the truth of the allegations in the petition, signed the verification attached to
it.
In the same vein, this Court is not persuaded by petitioner's assertion that
respondents' failure to allege the jurisdictional fact that there was "unlawful
withholding" of the subject property was fatal to their cause of action.
It is apodictic that what determines the nature of an action as well as which court has
jurisdiction over it are the allegations in the complaint and the character of the relief
sought. In an unlawful detainer case, the defendant's possession was originally lawful
but ceased to be so upon the expiration of his right to possess. Hence, the phrase
"unlawful withholding" has been held to imply possession on the part of defendant,
which was legal in the beginning, having no other source than a contract, express or
implied, and which later expired as a right and is being withheld by defendant. 27

In Barba v. Court of Appeals,28 the Court held that although the phrase "unlawfully
withholding" was not actually used by therein petitioner in her complaint, the Court
held that her allegations, nonetheless, amounted to an unlawful withholding of the
subject property by therein private respondents, because they continuously refused to
vacate the premises even after notice and demand.

In the Petition at bar, respondents alleged in their Complaint that they are the
registered owners of the subject property; the subject property was being occupied by
the petitioner pursuant to a monthly lease contract; petitioner refused to accede to
respondents' demand for rental increase; the respondents sent petitioner a letter
terminating the lease agreement and demanding that petitioner vacate and turn over
the possession of the subject property to respondents; and despite such demand,
petitioner failed to surrender the subject property to respondents. 29 The Complaint
sufficiently alleges the unlawful withholding of the subject property by petitioner,
constitutive of unlawful detainer, although the exact words "unlawful withholding" were
not used. In an action for unlawful detainer, an allegation that the defendant is
unlawfully withholding possession from the plaintiff is deemed sufficient, without
necessarily employing the terminology of the law.30

Petitioner's averment that the Court of Appeals should have dismissed respondents'
Petition in light of the failure of their counsel to attach the Official Receipt of his
updated payment of Integrated Bar of the Philippines (IBP) dues is now moot and
academic, since respondents' counsel has already duly complied therewith. It must be
stressed that judicial cases do not come and go through the portals of a court of law
by the mere mandate of technicalities.31 Where a rigid application of the rules will
result in a manifest failure or miscarriage of justice, technicalities should be
disregarded in order to resolve the case.32

Finally, we agree in the ruling of the Court of Appeals that petitioner is liable for the
payment of back rentals, attorney's fees and cost of the suit. Respondents must be
duly indemnified for the loss of income from the subject property on account of
petitioner's refusal to vacate the leased premises.

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision

dated 19 September 2006 and Resolution dated 25 January 2007 of the Court of
Appeals in CA-G.R. SP No. 90906 are hereby AFFIRMED in toto. Costs against
petitioner.

SO ORDERED.
 THIRD DIVISION Complaint, Aure and Aure Lending alleged that they acquired the subject property from
Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed of
Sale[8]executed on 4 June 1996. Aure claimed that after the spouses Aquino received
LIBRADA M. AQUINO, G.R. No. 153567 substantial consideration for the sale of the subject property, they refused to vacate the
Petitioner, Present: same.[9]

YNARES-SANTIAGO, J., In her Answer,[10] Aquino countered that the Complaint in Civil Case No. 17450
Chairperson, lacks cause of action for Aure and Aure Lending do not have any legal right over the
AUSTRIA-MARTINEZ, subject property. Aquino admitted that there was a sale but such was governed by the
CHICO-NAZARIO, Memorandum of Agreement[11] (MOA) signed by Aure. As stated in the MOA, Aure shall
- versus - NACHURA, and secure a loan from a bank or financial institution in his own name using the subject
REYES, JJ. property as collateral and turn over the proceeds thereof to the spouses
Aquino. However, even after Aure successfully secured a loan, the spouses Aquino did
not receive the proceeds thereon or benefited therefrom.
Promulgated:
On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in
ERNEST S. AURE[1], February 18, 2008 favor of Aquino and dismissed the Complaint for ejectment of Aure and Aure Lending
Respondent. for non-compliance with the barangay conciliation process, among other grounds. The
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x MeTC observed that Aure and Aquino are residents of the same barangay but there is
no showing that any attempt has been made to settle the case amicably at
the barangay level. The MeTC further observed that Aure Lending was improperly
included as plaintiff in Civil Case No. 17450 for it did not stand to be injured or benefited
DECISION by the suit. Finally, the MeTC ruled that since the question of ownership was put in
issue, the action was converted from a mere detainer suit to one incapable of pecuniary
estimation which properly rests within the original exclusive jurisdiction of the RTC. The
CHICO-NAZARIO, J.: dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, let this case be, as it

Before this Court is a Petition for Review on Certiorari[2]
under Rule 45 of the Revised
Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the reversal and
the setting aside of the Decision[3] dated 17 October 2001 and the Resolution [4] dated
8 May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The appellate court, in
its assailed Decision and Resolution, reversed the Decision [5] of the Regional Trial
Court (RTC) of Quezon City, Branch 88, affirming the Decision[6] of the Metropolitan
Trial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto
Aures (Aure) complaint for ejectment on the ground, inter alia, of failure to comply with
barangay conciliation proceedings.
The subject of the present controversy is a parcel of land situated in Roxas District,
Quezon City, with an area of 449 square meters and covered by Transfer Certificate of
Title (TCT) No. 205447 registered with the Registry of Deeds of Quezon City (subject
property).[7]
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for
ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In their
is, hereby ordered DISMISSED. [Aquinos] counterclaim is likewise
dismissed.[12]
On appeal, the RTC affirmed the dismissal of the Complaint on the same
ground that the dispute was not brought before the Barangay Council for conciliation
before it was filed in court. In a Decision dated 14 December 2000, the RTC stressed
that the barangay conciliation process is a conditio sine qua non for the filing of an
ejectment complaint involving residents of the same barangay, and failure to comply
therewith constitutes sufficient cause for the dismissal of the action. The RTC likewise
validated the ruling of the MeTC that the main issue involved in Civil Case No. 17450
is incapable of pecuniary estimation and cognizable by the RTC. Hence, the RTC ruled:
WHEREFORE, finding no reversible error in the appealed
judgment, it is hereby affirmed in its entirety.[13]
Aures Motion for Reconsideration was denied by the RTC in an Order [14] dated 27
February 2001.
Undaunted, Aure appealed the adverse RTC Decision with the Court of
Appeals arguing that the lower court erred in dismissing his Complaint for lack of cause
of action. Aure asserted that misjoinder of parties was not a proper ground for dismissal
of his Complaint and that the MeTC should have only ordered the exclusion of Aure
Lending as plaintiff without prejudice to the continuation of the proceedings in Civil Case
No. 17450 until the final determination thereof. Aure further asseverated that mere
allegation of ownership should not divest the MeTC of jurisdiction over the ejectment
suit since jurisdiction over the subject matter is conferred by law and should not depend
on the defenses and objections raised by the parties. Finally, Aure contended that the
MeTC erred in dismissing his Complaint with prejudice on the ground of non-
compliance with barangay conciliation process. He was not given the opportunity to
rectify the procedural defect by going through the barangay mediation proceedings
and, thereafter, refile the Complaint.[15]
On 17 October 2001, the Court of Appeals rendered a Decision, reversing the
MeTC and RTC Decisions and remanding the case to the MeTC for further proceedings
and final determination of the substantive rights of the parties. The appellate court
declared that the failure of Aure to subject the matter to barangay conciliation is not a
jurisdictional flaw and it will not affect the sufficiency of Aures Complaint since Aquino
failed to seasonably raise such issue in her Answer. The Court of Appeals further ruled
that mere allegation of ownership does not deprive the MeTC of jurisdiction over the
ejectment case for jurisdiction over the subject matter is conferred by law and is
determined by the allegations advanced by the plaintiff in his complaint. Hence, mere
assertion of ownership by the defendant in an ejectment case will not oust the MeTC
of its summary jurisdiction over the same. The decretal part of the Court of Appeals
Decision reads:
WHEREFORE, premises considered, the petition is hereby
GRANTED - and the decisions of the trial courts below REVERSED
and SET ASIDE. Let the records be remanded back to the court
a quo for further proceedings for an eventual decision of the
substantive rights of the disputants.[16]
In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for
Reconsideration interposed by Aquino for it was merely a rehash of the arguments set
forth in her previous pleadings which were already considered and passed upon by the
appellate court in its assailed Decision.
Aquino is now before this Court via the Petition at bar raising the following issues:
I.
WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY
CONCILIATION PROCEEDINGS IS A JURISDICTIONAL DEFECT
THAT WARRANTS THE DISMISSAL OF THE COMPLAINT.
II.
WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF
ITS JURISDICTION OVER AN EJECTMENT CASE.
The barangay justice system was established primarily as a means of easing
up the congestion of cases in the judicial courts. This could be accomplished through
a proceeding before the barangay courts which, according to the conceptor of the
system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character,
and to make it truly effective, it should also be compulsory. With this primary objective
of the barangay justice system in mind, it would be wholly in keeping with the underlying
philosophy of Presidential Decree No. 1508, otherwise known as the Katarungang
Pambarangay Law, and the policy behind it would be better served if an out-of-court
settlement of the case is reached voluntarily by the parties. [17]
The primordial objective of Presidential Decree No. 1508 is to reduce the number of
court litigations and prevent the deterioration of the quality of justice which has been
brought by the indiscriminate filing of cases in the courts. [18] To ensure this objective,
Section 6 of Presidential Decree No. 1508[19] requires the parties to undergo a
conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain
exceptions[20] which are inapplicable to this case. The said section has been declared
compulsory in nature.[21]
Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160,
otherwise known as The Local Government Code, which took effect on 1 January
1992.
The pertinent provisions of the Local Government Code making conciliation a
precondition to filing of complaints in court, read:
SEC. 412. Conciliation.- (a) Pre-condition to filing of
complaint in court. No complaint, petition, action, or proceeding
involving any matter within the authority of the lupon shall be filed or
instituted directly in court or any other government office for
adjudication, unless there has been a confrontation between the
parties before the lupon chairman or the pangkat, and that no
conciliation or settlement has been reached as certified by the lupon
secretary or pangkat secretary as attested to by the lupon chairman
or pangkat chairman or unless the settlement has been repudiated
by the parties thereto.
(b) Where parties may go directly to court. The parties may go
directly to court in the following instances:
(1) Where the accused is under detention;
(2) Where a person has otherwise been deprived of
personal liberty calling for habeas corpus proceedings;
(3) Where actions are coupled with provisional remedies
such as preliminary injunction, attachment, delivery of personal
property, and support pendente lite; and
(4) Where the action may otherwise be barred by the statute
of limitations.
(c) Conciliation among members of indigenous cultural communities.
The customs and traditions of indigenous cultural communities shall
be applied in settling disputes between members of the cultural
communities.
SEC. 408. Subject Matter for Amicable Settlement;
Exception Therein. The lupon of each barangay shall have authority
to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision
or instrumentality thereof;
(b) Where one party is a public officer or employee, and the
dispute relates to the performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one
(1) year or a fine exceeding Five thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in
different cities or municipalities unless the parties thereto agree to
submit their differences to amicable settlement by an appropriate
lupon;
(f) Disputes involving parties who actually reside in
barangays of different cities or municipalities, except where such
barangay units adjoin each other and the parties thereto agree to
submit their differences to amicable settlement by an appropriate
lupon;
(g) Such other classes of disputes which the President
may determine in the interest of justice or upon the recommendation
of the Secretary of Justice.
There is no dispute herein that the present case was never referred to the
Barangay Lupon for conciliation before Aure and Aure Lending instituted Civil Case No.
17450. In fact, no allegation of such barangay conciliation proceedings was made in
Aure and Aure Lendings Complaint before the MeTC. The only issue to be resolved is
whether non-recourse to the barangay conciliation process is a jurisdictional flaw that
warrants the dismissal of the ejectment suit filed with the MeTC.
Aquino posits that failure to resort to barangay conciliation makes the action
for ejectment premature and, hence, dismissible. She likewise avers that this objection
was timely raised during the pre-trial and even subsequently in her Position Paper
submitted to the MeTC.
We do not agree.
It is true that the precise technical effect of failure to comply with the
requirement of Section 412 of the Local Government Code on barangay conciliation
(previously contained in Section 5 of Presidential Decree No. 1508) is much the same
effect produced by non-exhaustion of administrative remedies -- the complaint
becomes afflicted with the vice of pre-maturity; and the controversy there alleged is not
ripe for judicial determination. The complaint becomes vulnerable to a motion to
dismiss.[22] Nevertheless, the conciliation process is not a jurisdictional
requirement, so that non-compliance therewith cannot affect the jurisdiction
which the court has otherwise acquired over the subject matter or over the
person of the defendant.[23]
As enunciated in the landmark case of Royales v. Intermediate Appellate
Court[24]:
Ordinarily, non-compliance with the condition precedent
prescribed by P.D. 1508 could affect the sufficiency of the plaintiff's
cause of action and make his complaint vulnerable to dismissal on
ground of lack of cause of action or prematurity; but the same would
not prevent a court of competent jurisdiction from exercising its
power of adjudication over the case before it, where the
defendants, as in this case, failed to object to such exercise of
jurisdiction in their answer and even during the entire
proceedings a quo.
While petitioners could have prevented the trial court from
exercising jurisdiction over the case by seasonably taking exception
 thereto, they instead invoked the very same jurisdiction by filing an
answer and seeking affirmative relief from it. What is more, they
participated in the trial of the case by cross-examining respondent
Planas. Upon this premise, petitioners cannot now be allowed
belatedly to adopt an inconsistent posture by attacking the
jurisdiction of the court to which they had submitted
themselves voluntarily. x x x (Emphasis supplied.)
In the case at bar, we similarly find that Aquino cannot be allowed to attack the
jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself
voluntarily thereto. We have scrupulously examined Aquinos Answer before the MeTC
in Civil Case No. 17450 and there is utter lack of any objection on her part to any
deficiency in the complaint which could oust the MeTC of its jurisdcition.
We thus quote with approval the disquisition of the Court of Appeals:
Moreover, the Court takes note that the defendant [Aquino]
herself did not raise in defense the aforesaid lack of conciliation
proceedings in her answer, which raises the exclusive affirmative
defense of simulation. By this acquiescence, defendant [Aquino] is
deemed to have waived such objection. As held in a case of similar
circumstances, the failure of a defendant [Aquino] in an ejectment
suit to specifically allege the fact that there was no compliance with
the barangay conciliation procedure constitutes a waiver of that
defense. x x x.[25]
By Aquinos failure to seasonably object to the deficiency in the Complaint, she
is deemed to have already acquiesced or waived any defect attendant
thereto. Consequently, Aquino cannot thereafter move for the dismissal of the
ejectment suit for Aure and Aure Lendings failure to resort to the barangay conciliation
process, since she is already precluded from doing so. The fact that Aquino raised such
objection during the pre-trial and in her Position Paper is of no moment, for the issue of
non-recourse to barangay mediation proceedings should be impleaded in her Answer.
As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:
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. (Emphasis supplied.)
While the aforequoted provision applies to a pleading (specifically, an Answer) or a
motion to dismiss, a similar or identical rule is provided for all other motions in Section
8 of Rule 15 of the same Rule which states:
Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of
Rule 9, a motion attacking a pleading, order, judgment, or proceeding
shall include all objections then available, and all objections not so
included shall be deemed waived.
The spirit that surrounds the foregoing statutory norm is to require the party filing a
pleading or motion to raise all available exceptions for relief during the single
opportunity so that single or multiple objections may be avoided. [26] It is clear and
categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise
defenses and objections in a motion to dismiss or in an answer is deemed a waiver
thereof; and basic is the rule in statutory construction that when the law is clear and
free from any doubt or ambiguity, there is no room for construction or
interpretation.[27] As has been our consistent ruling, where the law speaks in clear and
categorical language, there is no occasion for interpretation; there is only room for
application.[28] Thus, although Aquinos defense of non-compliance with Presidential
Decree No. 1508 is meritorious, procedurally, such defense is no longer available for
failure to plead the same in the Answer as required by the omnibus motion rule.
Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules
of Civil Procedure provide only three instances when the court may motu
proprio dismiss the claim, and that is when the pleadings or evidence on the record
show that (1) the court has no jurisdiction over the subject matter; (2) there is another
cause of action pending between the same parties for the same cause; or (3) where
the action is barred by a prior judgment or by a statute of limitations. Thus, it is clear
that a court may not motu proprio dismiss a case on the ground of failure to comply with
the requirement for barangay conciliation, this ground not being among those
mentioned for the dismissal by the trial court of a case on its own initiative.
Aquino further argues that the issue of possession in the instant case cannot be
resolved by the MeTC without first adjudicating the question of ownership, since the
Deed of Sale vesting Aure with the legal right over the subject property is simulated.
Again, we do not agree. Jurisdiction in ejectment cases is determined by the
allegations pleaded in the complaint. As long as these allegations demonstrate a cause
of action either for forcible entry or for unlawful detainer, the court acquires jurisdiction
over the subject matter. This principle holds, even if the facts proved during the trial do
not support the cause of action thus alleged, in which instance the court -- after
acquiring jurisdiction -- may resolve to dismiss the action for insufficiency of evidence.

The necessary allegations in a Complaint for ejectment are set forth in Section
1, Rule 70 of the Rules of Court, which reads:
SECTION 1. Who may institute proceedings, and when. Subject to
the provisions of the next succeeding section, a person deprived of
the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person
against whom the possession of any land or building is unlawfully
withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or
other person may at any time within one (1) year after such unlawful
deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons
claiming under them, for the restitution of such possession, together
with damages and costs.
In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997,
alleged as follows:
2. [Aure and Aure Lending] became the owners of a house
and lot located at No. 37 Salazar Street corner Encarnacion Street,
B.F. Homes, Quezon City by virtue of a deed of absolute sale
executed by [the spouses Aquino] in favor of [Aure and Aure
Lending] although registered in the name of x x x Ernesto S. Aure;
title to the said property had already been issued in the name of
[Aure] as shown by a transfer Certificate of Title , a copy of which is
hereto attached and made an integral part hereof as Annex A;
3. However, despite the sale thus transferring ownership of the
subject premises to [Aure and Aure Lending] as above-stated and
consequently terminating [Aquinos] right of possession over the
subject property, [Aquino] together with her family, is continuously
occupying the subject premises notwithstanding several demands
made by [Aure and Aure Lending] against [Aquino] and all persons
claiming right under her to vacate the subject premises and
surrender possession thereof to [Aure and Aure Lending] causing
damage and prejudice to [Aure and Aure Lending] and making
[Aquinos] occupancy together with those actually occupying the
subject premises claiming right under her, illegal. [29]
It can be inferred from the foregoing that Aure, together with Aure Lending,
sought the possession of the subject property which was never surrendered by Aquino
after the perfection of the Deed of Sale, which gives rise to a cause of action for an
ejectment suit cognizable by the MeTC. Aures assertion of possession over the subject
property is based on his ownership thereof as evidenced by TCT No. 156802 bearing
his name. That Aquino impugned the validity of Aures title over the subject property
and claimed that the Deed of Sale was simulated should not divest the MeTC of
jurisdiction over the ejectment case.[30]
As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v. Court
of Appeals[31]:
As the law on forcible entry and unlawful detainer cases now stands,
even where the defendant raises the question of ownership in his
pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts
nevertheless have the undoubted competence to resolve the issue
of ownership albeit only to determine the issue of possession.
x x x. The law, as revised, now provides instead that when the
question of possession cannot be resolved without deciding the
issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession.On its face, the new
Rule on Summary Procedure was extended to include within the
jurisdiction of the inferior courts ejectment cases which likewise
involve the issue of ownership. This does not mean, however, that
blanket authority to adjudicate the issue of ownership in ejectment
suits has been thus conferred on the inferior courts.
At the outset, it must here be stressed that the resolution of
this particular issue concerns and applies only to forcible entry and
unlawful detainer cases where the issue of possession is intimately
intertwined with the issue of ownership. It finds no proper application
where it is otherwise, that is, where ownership is not in issue, or
where the principal and main issue raised in the allegations of the
complaint as well as the relief prayed for make out not a case for
ejectment but one for recovery of ownership.
Apropos thereto, this Court ruled in Hilario v. Court of Appeals[32]:
Thus, an adjudication made therein regarding the issue of
ownership should be regarded as merely provisional and, therefore,
would not bar or prejudice an action between the same parties
involving title to the land. The foregoing doctrine is a necessary
consequence of the nature of forcible entry and unlawful detainer
cases where the only issue to be settled is the physical or material
 possession over the real property, that is, possession de facto and
not possession de jure. CARPIO, J.:

In other words, inferior courts are now conditionally vested with adjudicatory power over
the issue of title or ownership raised by the parties in an ejectment suit. These courts
shall resolve the question of ownership raised as an incident in an ejectment case
where a determination thereof is necessary for a proper and complete adjudication of
the issue of possession.[33]
The Case
Before the Court is a petition for review assailing the 26 July 2002 Decision [1] and the
10 December 2002 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 62002.

WHEREFORE, premises considered, the instant Petition is DENIED. The The Antecedent Facts
Court of Appeals Decision dated 17 October 2001 and its Resolution dated 8 May 2002
in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner. On 18 January 2000, Atty. Oswaldo Macadangdang (Atty. Macadangdang), acting as
administrator of the Estate of Felomina G. Macadangdang (petitioner), filed an action
SO ORDERED. for Unlawful Detainer with Damages against Lucia Gaviola, Agapito Romero, Cristina
Quiones, Boy Laurente, Agustina Tuna, Sotero Tapon, Buenaventura Muring, Sr.,
FIRST DIVISION Rogelio Pasaje, Fe Tuboro, Estanislao Pen, Pablo Navales, and Jose Dagatan
(respondents). Respondents were occupying, by mere tolerance, portions of four
ESTATE OF FELOMINA G.R. No. 156809 parcels of land in the name of the late Felomina G. Macadangdang, covered by
G. MACADANGDANG, Transfer Certificate of Title Nos. T-6084, T-6085, T-6086, and T-6087, all in the Registry
represented by Court Appointed Present: of Deeds of Davao City.
Administrator ATTY. OSWALDO
MACADANGDANG, PUNO, C.J., Chairperson, In a Decision[3] dated 27 June 2000, the Municipal Trial Court in Cities (MTCC), Branch
Petitioner, CARPIO, 4, Davao City, ruled in favor of petitioner, as follows:
CORONA,
LEONARDO-DE CASTRO, and WHEREFORE, judgment is hereby rendered ordering the
- versus - BRION,* JJ. defendants and all the persons claiming rights under them to:

a) vacate their respective possession over the subject premises, and

LUCIA GAVIOLA, remove their structures built therein at their expense;
AGAPITO ROMERO,
CRISTINA QUIONES, b) pay plaintiff the sum of P500.00 a month, for each defendant, for
BOY LAURENTE, the use and occupation of the said premises commencing the date
AGUSTINA TUNA, of this decision until they vacate the same;
SOTERO TAPON,
BUENAVENTURA MURING, SR., c) pay plaintiff the sum of P5,000.00, each defendant, as attorneys
ROGELIO PASAJE, fee; and
FE TUBORO, ESTANISLAO PEN,
PABLO NAVALES, and Promulgated: d) cost of suit.
JOSE DAGATAN,
Respondents. March 4, 2009 Defendants counterclaims being compulsory are dismissed.
x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x SO ORDERED.[4]
Respondents appealed from the MTCCs Decision.

DECISION The Ruling of the Trial Court


In an Order[5] dated 14 September 2000, the Regional Trial Court (RTC) of Davao City
dismissed the appeal for respondents failure to file an appeal memorandum.
On petitioners motion, the RTC remanded the case to the MTCC for execution of
judgment in its Order[6] dated 22 September 2000.
On 3 October 2000, respondents filed a Motion for Reconsideration/New Trial.
In an Order[7] dated 16 October 2000, the MTCC ordered the issuance of a writ of
execution after payment of the execution fee.
In an Order[8] dated 30 October 2000, the RTC denied respondents motion for
reconsideration. The RTC ruled that it no longer had jurisdiction over the motion after
the dismissal of respondents appeal.
Respondents filed a petition for review before the Court of Appeals assailing the RTCs
14 September 2000 Order.
The Ruling of the Court of Appeals
In its Decision promulgated on 26 July 2002, the Court of Appeals set aside the 14
September 2000 Order and remanded the case to the RTC.
The Court of Appeals ruled that as a matter of policy, the dismissal of an appeal on
purely technical grounds is frowned upon. The Court of Appeals ruled that rules of
procedure are intended to promote and not defeat substantial justice and should not be
applied in a very rigid and technical sense. The Court of Appeals further ruled that
litigants should be afforded every opportunity to establish the merits of their cases
without the constraints of technicalities.
The Court of Appeals ruled that a distinction should be made between failure to file a
notice of appeal within the reglementary period and failure to file the appeal
memorandum within the period granted by the appellate court.The Court of Appeals
ruled that failure to file a notice of appeal within the reglementary period would result to
failure of the appellate court to obtain jurisdiction over the appealed decision. Thus, the
assailed decision would become final and executory upon failure to move for
reconsideration. On the other hand, failure to file the appeal memorandum within the
period granted by the appellate court would only result to abandonment of appeal,
which could lead to its dismissal upon failure to move for its reconsideration. Thus, the
RTC erred in denying respondents motion for reconsideration on the ground of lack of
jurisdiction.
Finally, the Court of Appeals ruled that while the negligence of counsel binds the client,
the rule is not without exceptions such as when its application would result to outright
deprivation of the clients liberty or property, or when a client would suffer due to the
counsels gross or palpable mistake or negligence.
Petitioner moved for the reconsideration of the Decision of the Court of Appeals.
In its 10 December 2002 Resolution, the Court of Appeals denied the motion for lack of
merit.
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals erred in reversing the RTCs
dismissal of respondents appeal for failure to file an appeal memorandum.
The Ruling of this Court
The petition has merit.
Petitioners allege that the Court of Appeals erred when it allowed the filing of a motion
for reconsideration before the RTC. Petitioners allege that the case stemmed from an
unlawful detainer case where the Rules on Summary Procedure apply. Petitioners
allege that under the Rules on Summary Procedure, a motion for reconsideration is a
prohibited pleading. Petitioners also allege that due to the mandatory character of
Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure, the RTC correctly dismissed
the appeal. Petitioners also pointed out that respondents Motion for
Reconsideration/New Trial was neither verified nor accompanied by affidavits of merit
as required under Section 2, Rule 37 of the 1997 Rules of Civil Procedure.
Applicability of the Rules on Summary Procedure
Jurisdiction over forcible entry and unlawful detainer cases falls on the Metropolitan
Trial Courts, the Municipal Trial Courts in Cities, the Municipal Trial Courts, and the
Municipal Circuit Trial Courts.[9] Since the case before the the MTCC was an unlawful
detainer case, it was governed by the Rules on Summary Procedure. The purpose of
the Rules on Summary Procedure is to prevent undue delays in the disposition of cases
and to achieve this, the filing of certain pleadings is prohibited, [10] including the filing of
a motion for reconsideration.[11]
However, the motion for reconsideration that petitioners allege to be a prohibited
pleading was filed before the RTC acting as an appellate court. The appeal before the
RTC is no longer covered by the Rules on Summary Procedure.The Rules on Summary
Procedure apply before the appeal to the RTC. Hence, respondents motion for
reconsideration filed with the RTC is not a prohibited pleading.

Procedure on Appeal
Section 7, Rule 40 of the 1997 Rules of Civil Procedure provides:
Sec. 7. Procedure in the Regional Trial Court. -
(a) Upon receipt of the complete records or the record on appeal, the
clerk of court of the Regional Trial Court shall notify the parties of
such fact.
(b) Within fifteen (15) days from such notice, it shall be the duty of the
appellant to submit a memorandum which shall briefly discuss the
errors imputed to the lower court, a copy of which shall be furnished
by him to the adverse party.Within fifteen (15) days from receipt of
the appellants memorandum, the appellee may file his
memorandum. Failure of the appellant to file a memorandum
shall be a ground for dismissal of the appeal.
(c) Upon the filing of the memorandum of the appellee, or the
expiration of the period to do so, the case shall be considered
submitted for decision. The Regional Trial Court shall decide the case
on the basis of the entire record of the proceedings had in the court
of origin and such memoranda as are filed. (Emphasis supplied)
In this case, the RTC dismissed respondents appeal for their failure to file an appeal
memorandum in accordance with Section 7(b), Rule 40 of the 1997 Rules of Civil
Procedure. The Court of Appeals reversed the RTCs dismissal of the appeal.
The Court of Appeals ruled that while the negligence of counsel binds the client, the
circumstances in this case warrant a departure from this general rule. The Court of
Appeals ruled that respondents counsel only realized his failure to submit the appeal
memorandum when he received a copy of the dismissal of the appeal. The Court of
Appeals ruled that exceptions to the general rule are recognized to accord relief to a
client who suffered by reason of the counsels gross or palpable mistake or negligence.
We do not agree with the Court of Appeals.
The general rule is that a client is bound by the acts, even mistakes, of his counsel in
the realm of procedural technique.[12] There are exceptions to this rule, such as when
the reckless or gross negligence of counsel deprives the client of due process of law,
or when the application of the general rule results in the outright deprivation of ones
property through a technicality. [13]
In this case, respondents counsel advanced this reason for his failure to submit the
appeal memorandum:
c. That there was a delay in the filing of defendants-appellants[]
appeal memorandum due to the heavy backlog of legal paperwork
piled on the table of the undersigned counsel, and he realized his
failure to submit defendants[] appeal memorandum when he
received a copy of the dismissal of the case. This is to consider that
he is the only lawyer in his law office doing a herculean task.[14]
We find no reason to exempt respondents from the general rule. The cause of the delay
in the filing of the appeal memorandum, as explained by respondents counsel, was not
due to gross negligence. It could have been prevented by respondents counsel if he
only acted with ordinary diligence and prudence in handling the case. For a claim of
gross negligence of counsel to prosper, nothing short of clear abandonment of the
clients cause must be shown.[15]In one case, the Court ruled that failure to file appellants
brief can qualify as simple negligence but it does not amount to gross neglience to
justify the annulment of the proceedings below.[16]
Finally, respondents were not deprived of due process of law. The right to appeal is not
a natural right or a part of due process.[17] It is merely a statutory privilege and may be
exercised only in the manner and in accordance with the provisions of the law. [18] The
Court notes that in their memoranda,[19] respondents admitted that they signed an
agreement that they would vacate the land they occupy not later than 28 February
1998. They refused to vacate the land only because they were not relocated as
promised by the owner. Respondents claimed that the land was later declared alienable
and disposable, and the decision was affirmed by this Court. Hence, respondents
alleged that petitioner no longer had the right to drive them out of the land. However,
respondents did not even indicate the case number and title, as well as the date of
promulgation of the alleged Supreme Court decision, in their memoranda.
WHEREFORE, we GRANT the petition. We SET ASIDE the 26 July 2002 Decision
and the 10 December 2002 Resolution of the Court of Appeals in CA-G.R. SP No.
62002.
SO ORDERED.
 3. That the lessee obligated herself with the Lessor
by virtue of this Lease, to do the following, to wit:
SECOND DIVISION
a) xxx
G.R. No. 152131
FLORAIDA TERAA, b) To keep the leased property in such
Petitioner, Present: repair and condition as it was in the
commencement of the Lease with the
*QUISUMBING, J. Chairperson, exception of portions or parts which may
*CARPIO MORALES, be impaired due to reasonable wear and
**TINGA, tear;
- versus - VELASCO, JR., and
BRION, JJ. c) xxx

d) Not to make any alterations in the Leased

Promulgated: property without the knowledge and
HON. ANTONIO DE SAGUN, consent of the Lessor; x x x
PRESIDING JUDGE, REGIONAL April 29, 2009
TRIAL COURT, BRANCH XIV,
NASUGBU, BATANGAS AND The petitioner allegedly also gave the materials from the demolished house to her
ANTONIO B. SIMUANGCO, sister, who built a house adjacent to the respondents property. [8] When the respondent
Respondents. discovered what the petitioner did, he immediately confronted her and advised her to
x ---------------------------------------------------------------------------------------x vacate the premises.[9] She refused. On February 3, 1997, the respondent sent a letter
demanding the petitioner to vacate the leased property. [10] Despite this letter of
demand, which the petitioner received on February 10, [11] she still refused to vacate the
DECISION said property.

BRION, J.:
The petitioner Floraida Terana (petitioner) asks us to reverse and set aside,
through this Petition for Review on Certiorari,[1] the September 7, 2001 Decision[2] of
the Court of Appeals (CA), and its subsequent Resolution[3] denying the petitioners
motion for reconsideration.
THE FACTS
The respondent thus filed a complaint for unlawful detainer[12] against the petitioner
on April 16, 1997 on the ground of the petitioners violation of the terms of the Contract
of Lease.[13] The respondent prayed for the petitioners ejectment of the leased property,
and for the award of P70,000.00, representing the cost of the materials from the
demolished house, attorneys fees, and costs.[14]
The presiding judge of the Municipal Trial Court (MTC) of Nasugbu,
Batangas, Hon. Herminia Lucas, inhibited from the case on the ground that she is
related to the respondent.[15]

The respondent Antonio Simuangco (respondent) owned a house and lot
at 138 J.P. Laurel St., Nasugbu, Batangas, which he leased to the
petitioner.[4] Sometime in 1996, the petitioner demolished the leased house and erected
a new one in its place.[5] The respondent alleged that this was done without his
consent.[6] The Contract of Lease[7] defining the respective rights and obligations of the
parties contained the following provisions, which the petitioner allegedly violated:
The petitioner denied allegations of the complaint in her Sagot.[16] She claimed that she
demolished the old building and built a new one with the knowledge and consent of the
respondent; that the original house was old and was on the verge of collapsing;[17] that
without the timely repairs made by the petitioner, the houses collapse would have
caused the death of the petitioner and her family. The petitioner prayed for the court
to: 1) dismiss the ejectment case against her; and 2) award in her favor: a) P100,000.00
as moral damages, b) P200,000.00 as reimbursement for the expenses incurred in
building the new house, c) P50,000.00 as attorneys fees, and d) P10,000.00 as costs
incurred in relation to the suit.[18]
The trial court called for a preliminary conference under Section 7 of the Revised Rules
of Summary Procedure (RSP) and Section 8 of Rule 70 of the Rules of Court, and
required the parties to file their position papers and affidavits of their witnesses after
they failed to reach an amicable settlement. [19] Instead of filing their position papers,
both parties moved for an extension of time to file the necessary pleadings. The trial
court denied both motions on the ground that the RSP and the Rules of Court,
particularly Rule 70, Section 13(5), prohibit the filing of a motion for extension of time. [20]
The MTC framed the issues in the case as follows:
1. Whether or not there was a violation of the contract of lease
when the old house was demolished and a new house was
constructed by the defendant; and
2. Whether or not defendant is entitled to be reimbursed for her
expenses in the construction of the new house.[21]
THE MTCS DECISION[22]
The MTC rendered its decision on November 5, 1997[23] despite the parties failure to
timely file their respective position papers.[24] The decision stated that: according to the
parties Contract of Lease, the consent of the respondent must be obtained before any
alteration or repair could be done on the leased property; that the petitioner failed to
produce any evidence that the respondent had given her prior permission to demolish
the leased house and construct a new one; that even in her answer, she failed to give
specific details about the consent given to her; that in demolishing the old structure and
constructing the new one, the petitioner violated the Contract of Lease; that this
violation of the terms of the lease was a ground for judicial ejectment under Article
1673(3) of the Civil Code; and that since the demolition and construction of the new
house was without the consent of the respondent, there was no basis to order the
respondent to reimburse the petitioner.
The MTC thus ruled:
IN VIEW OF THE FOREGOING, judgment is hereby rendered
in favor of the plaintiff Antonio B. Simuangco and against the
defendant Aida Terana as follows:
1. Ordering the defendant Aida Terana and all persons
claiming right under her to vacate and surrender
possession of the subject house to the plaintiff;
2. Ordering the said defendant to pay the amount of
Five Thousand Pesos (P5,000.00) as Attorneys fees;
and
3. To pay the costs of suit.
SO ORDERED.[25]
Unaware that a decision had already been rendered, the petitioner filed a
letter entitled Kahilingan,[26] to which she attached her position paper and the affidavits
of her witnesses.[27] The submission was essentially a motion for reconsideration of the
denial of motion for extension of time. On November 6, 1977, the MTC denied the
petitioners Kahilingan as follows:
Defendant Aida
Teranias KAHILINGAN dated November 5,
1997 is DENIED for being moot and academic on account of
the decision on the merits rendered by this court
dated November 4, 1997 relative to the instant case.
SO ORDERED.[28]
Petitioner then filed a Notice of Appeal on November 12, 1997. [29] The
records of the case were ordered elevated to the Regional Trial Court (RTC) where the
case was docketed as Civil Case No. 439.
THE RTCS DECISION[30]
The RTC rendered judgment affirming the decision of the MTC on February
26, 1998. The RTC ruled that: 1) the ruling of the MTC was supported by the facts on
record; 2) although the respondent failed to submit his position paper and the affidavits
of his witnesses, the MTC correctly rendered its decision on the basis of the pleadings
submitted by the parties, as well as the evidence on record; 3) the petitioner failed to
show enough reason to reverse the MTCs decision. The court further declared that its
decision was immediately executory, without prejudice to any appeal the parties may
take.
 The petitioner filed a Motion for Reconsideration and/or for New Trial
on March 3, 1998.[31] The petitioner argued that the appealed MTC decision was not
supported by any evidence, and that the respondent failed to substantiate the
allegations of his complaint and to discharge the burden of proving these allegations
after the petitioner denied them in her Sagot. In effect, the petitioner argued that the
allegations of the complaint should not have been the sole basis for the judgment since
she filed an answer and denied the allegations in the complaint; the RTC should have
also appreciated her position paper and the affidavit of her witnesses that, although
filed late, were nevertheless not expunged from the records.
In her motion for a new trial, the petitioner argued that her failure to submit
her position paper and the affidavits of her witnesses within the 10-day period was due
to excusable negligence. She explained that she incurred delay because of the
distance of some of her witnesses residence. The petitioner alleged that she had a
good and meritorious claim against the respondent, and that aside from her position
paper and the affidavits of her witnesses, she would adduce receipts and other pieces
of documentary evidence to establish the costs incurred in the demolition of the old
house and the construction of the new one.
On April 28, 1998, the RTC granted the motion for reconsideration, and thus
reversed its February 26, 1998judgment, as well as the November 5, 1997 decision of
the MTC. It noted that: 1) the MTC rendered its decision before the petitioner was able
to file her position paper and the affidavit of her witnesses; 2) the rule on the timeliness
of filing pleadings may be relaxed on equitable considerations; and 3) the denial of the
petitioners motion for reconsideration and/or new trial will result to a miscarriage of
justice. Thus, believing that it was equitable to relax the rules on the timeliness of the
filing of pleadings, the RTC remanded the case to the MTC for further proceedings,
after giving the respondent the opportunity to submit his position paper and the
affidavits of his witnesses. The fallo reads:
WHEREFORE, on considerations of equity and substantial
justice, and in the light of Section 6, Rule 135 of the Rules of Court,
the judgment of this Court dated February 26, 1998, as well as the
Decision dated November 4, 1997 of the Lower Court in Civil Case
No. 1305, are hereby both set aside. The lower court to which the
records were heretofore remanded is hereby ordered to conduct
further proceedings in this case, after giving the plaintiff-appellee
an opportunity to file his position paper and affidavits of witnesses
as required by Section 10, Rule 70, of the 1997 Rules of Civil
Procedure. [Underscoring supplied.]
SO ORDERED.
On May 9, 1998, the petitioner challenged the order of remand through
another motion for reconsideration.[32] The petitioner argued that since the original
action for unlawful detainer had already been elevated from the MTC to the RTC, the
RSP no longer governed the disposal of the case. Before the RTC, the applicable rule
is the Rules of Court, particularly Section 6 of Rule 37, which reads:
Sec. 6. Effect of granting of motion for new trial. If a new trial is
granted in accordance with the provisions of this Rule, the
original judgment or final order shall be vacated, and the action
shall stand for trial de novo; but the recorded evidence taken
upon the former trial, in so far as the same is material and
competent to establish the issues, shall be used at the new trial
without retaking the same.
Thus, the RTC should have conducted a trial de novo instead of remanding
the case to the MTC. The petitioner further argued that a remand to the court a quo may
only be ordered under Section 8, Rule 40[33] of the Rules of Court.
The RTC denied the motion noting that the petitioner missed the whole point
of the reversal of the decision. First, the reversal was made in the interest of substantial
justice and the RTC hewed more to the spirit that vivifieth than to the letter that
killeth,[34] and that a lawsuit is best resolved on its full merits, unfettered by the stringent
technicalities of procedure. The RTC further emphasized that a remand is not
prohibited under the Rules of Court and that Section 6 of Rule 135 allows it:
Sec. 6. Means to carry jurisdiction into effect When by law
jurisdiction is conferred on a court or judicial officer, all auxiliary
writs, processes and other means necessary to carry it into
effect may be employed by such court or officer, and if the
procedure to be followed in the exercise of such jurisdiction is
not specifically pointed out by law or by these rules, any suitable
process or mode of proceeding may be adopted which appears
conformable to the spirit of said law or rules.
Second, Rule 40 governs appeals from the MTC to the RTC. Nowhere in Rule 40 is
there a provision similar to Section 6 of Rule 37.
Third, Section 6 of Rule 37 contemplates a motion for new trial and for reconsideration
filed before a trial court a quo. The RTC in this case was acting as an appellate court;
the petitioners motion for new trial and reconsideration was directed against
the appellate judgment of the RTC, not the original judgment of the trial court.
Fourth, after Republic Act No. 6031 mandated municipal trial courts to record their
proceedings, a trial de novo at the appellate level may no longer be conducted. The
appellate courts may instead review the evidence and records transmitted to it by the
trial court. Since the petitioner is asking the court to review the records of the MTC,
inclusive of her position paper and the affidavits of her witnesses, it is also important to
give the respondent an opportunity to file his position paper and the affidavits of his
witnesses before the MTC renders a judgment. It is the MTC or the trial court that has
the jurisdiction to do that.
THE CAS DECISION
The CA affirmed the RTC in a decision promulgated on September 7,
2001.[35] The CA noted that the RTCs order of remand was not just based on equity
and substantial justice, but was also based on law, specifically Section 6 of Rule 135.
Thus, the CA ruled that the RTC did not err in remanding the case to the MTC and
ordering the conduct of further proceedings after giving the respondent an opportunity
to present his position paper and the affidavits of his witnesses. This ruling did not
satisfy petitioner, giving way to the present petition.
THE PETITION
Before this Court, the petitioner alleges: 1) that the respondent made a
request for the petitioner to vacate the subject property because his nearest of kin
needed it; 2) that she was only going to vacate the premises if she were reimbursed
the actual cost incurred in building the said house; [36] 3) that the case be decided on
the basis of the entire record of the proceedings in the court of origin, including
memoranda and briefs submitted by the parties, instead of being remanded to the
MTC.
In his Comment[37] and Memorandum,[38] the respondent joins the
petitioners prayer for a ruling based on the records instead of remanding the case to
the MTC. He prays that, as the MTC ruled, the petitioner be ordered to vacate the
leased property, and that the petitioners claim for reimbursement be denied. The
respondent argues that the MTC correctly ruled on the basis of the parties pleadings,
the stipulation of facts during the preliminary conference, and the records of the
proceedings.
ISSUES
The petitioner submits the following as the issue to be decided:
[W]hether under the Rules of Summary Procedure, the Regional
Trial Court, as well as the Court of Appeals, may order the case
remanded to the MTC after the plaintiff, herein respondent, failed to
submit evidence in support of his complaint because his Position
Paper, affidavit of witnesses and evidence, were not submitted on
time and the extension of time to file the same was denied because
it is prohibited under the Rules on Summary Procedure.[39]
which we break down into the following sub-issues: 1) whether a remand is proper; 2)
whether the Court should appreciate the petitioners position paper and the affidavits of
her witnesses; and 3) whether the complaint for unlawful detainer should be dismissed.
THE COURTS RULING
The petition is partly meritorious.
Remand Not Necessary
We find that a remand of the case to the lower courts is no longer necessary,
given the pleadings and submissions filed, and the records of the proceedings below.
A remand would delay the overdue resolution of this case (originally filed with the MTC
on April 16, 1997), and would run counter to the spirit and intent of the RSP. [40]
Petitioners Position Paper
and the Affidavits of Her
Witnesses Cannot Be
Admitted
Should the Court admit the petitioners position paper and the affidavits of
her witnesses attached to her Kahilingan?
The intent and terms of the RSP both speak against the liberality that the
petitioner sees. By its express terms, the purpose of the RSP is to achieve an
expeditious and inexpensive determination of the cases they cover, among them,
forcible entry and unlawful detainer cases.[41] To achieve this objective, the RSP
expressly prohibit certain motions and pleadings that could cause delay, among them,
a motion for extension of time to file pleadings, affidavits or any other paper. If the
extension for the filing of these submissions cannot be allowed, we believe it illogical
and incongruous to admit a pleading that is already filed late. Effectively, we would
then allow indirectly what we prohibit to be done directly. It is for this reason that in Don
Tino Realty Development Corporation v. Florentino,[42] albeit on the issue of late filing
of an answer in a summary proceeding, we stated that [t]o admit a late answer is to put
a premium on dilatory measures, the very mischief that the rules seek to redress.
The strict adherence to the reglementary period prescribed by the RSP is
due to the essence and purpose of these rules. The law looks with compassion upon
a party who has been illegally dispossessed of his property. Due to the urgency
presented by this situation, the RSP provides for an expeditious and inexpensive
means of reinstating the rightful possessor to the enjoyment of the subject
property.[43] This fulfills the need to resolve the ejectment case quickly. Thus, we
cannot reward the petitioners late filing of her position paper and the affidavits of her
witnesses by admitting them now.
The failure of one party to submit his position paper does not bar at all the
MTC from issuing a judgment on the ejectment complaint. Section 10 of the RSP
states:
Section 10. Rendition of judgment. Within thirty (30) days
after receipt of the last affidavits and position papers, or the expiration
of the period for filing the same, the court shall render judgment.
[Underscoring supplied.]
However, should the court find it necessary to clarify certain
material facts, it may, during the said period, issue an order
specifying the matters to be clarified, and require the parties to
submit affidavits or other evidence on the said matters within ten
(10) days from receipt of said order. Judgment shall be rendered
within fifteen (15) days after the receipt of the last affidavit or the
expiration of the period for filing the same.
The court shall not resort to the foregoing procedure just to gain
time for the rendition of the judgment.
Thus, the situation obtaining in the present case has been duly provided for by the
Rules; it was correct to render a judgment, as the MTC did, after one party failed to file
their position paper and supporting affidavits.
That a position paper is not indispensable to the courts authority to render
judgment is further evident from what the RSP provides regarding a preliminary
conference: on the basis of the pleadings and the stipulations and admissions made
by the parties, judgment may be rendered without the need for further proceedings, in
which event the judgment shall be rendered within 30 days from the issuance of the
order.[44] Thus, the proceedings may stop at that point, without need for the submission
of position papers. In such a case, what would be extant in the record and the bases
for the judgment would be the complaint, answer, and the record of the preliminary
conference.
Unlawful detainer
The special civil action for unlawful detainer has the following essential requisites:
1) the fact of lease by virtue of a contract, express or implied;
2) the expiration or termination of the possessor's right to hold possession;
3) withholding by the lessee of possession of the land or building after the
expiration or termination of the right to possess;
4) letter of demand upon lessee to pay the rental or comply with the terms of the
lease and vacate the premises; and
5) the filing of the action within one year from the date of the last demand
received by the defendant.[45]
Requisites 1, 4, and 5 have been duly established. The presence of the
Contract of Lease is undisputed; the letter of demand was sent on February 3, 1997,
and received by the petitioner on February 10, 1997; and the action was filed on April
16, 1997, well within the one-year period from the letter of demand. For our
determination is whether the petitioners right to possess the subject property may be
terminated by virtue of her violation of the terms of the contract. If we answer in the
affirmative, her continued detention of the property is illegal.
Section 1673(3) of the Civil Code answers this question by providing that the
lessor may terminate the lease contract for violation of any of the conditions or terms
agreed upon,[46] and may judicially eject the lessee.[47]One of the stipulated terms of
the parties Contract of Lease, as narrated above, is that no alterations may be made
on the leased property without the knowledge and consent of the lessor. The issue in
this case is beyond the fact of alteration since it is not disputed that the petitioner
demolished the house under lease and built a new one. The crucial issue is whether
the demolition was with or without the knowledge and consent of the respondent.
The petitioner contends that the Court should not give credence to the respondents
claim that he neither had knowledge of nor gave his consent to her acts. She argued
that the respondent had the burden of proving this allegation with positive evidence
after she frontally denied it in her answer. Since the respondent failed to discharge this
burden, she argues that she no longer needed to prove her defense that the demolition
and construction were done with the respondents knowledge and consent.[48]
The petitioners contention is misplaced.
First, the material allegations in a complaint must be specifically denied by the
defendant in his answer. Section 10, Rule 8 of the 1997 Rules of Court, provides:
A defendant must specify each material allegation of fact
the truth of which he does not admit and, whenever practicable,
shall set forth the substance of the matters upon which he relies
to support his denial. Where a defendant desires to deny only a
part of an averment, he shall specify so much of it as is true
and material and shall deny the remainder. Where a defendant
is without knowledge or information sufficient to form a belief as
to the truth of a material averment made in the complaint, he
shall so state, and this shall have the effect of a denial.
Section 11, Rule 8 of the Rules of Court likewise provides that material
allegations in the complaint which are not specifically denied, other than the amount of
unliquidated damages, are deemed admitted. A denial made without setting forth the
substance of the matters relied upon in support of the denial, even when to do so is
practicable, does not amount to a specific denial.[49]
The petitioners denial in her answer consists of the following:
1. Maliban sa personal na katangian at tirahan ng
nasasakdal, ay walang katotuhanan ang mga
isinasakdal ng nagsasakdal;
2. Na hindi lumabag sa kasunduan ng upahan ang
nasasakdal;
3. Na, ang pagpapagawa ng bahay na inuupahan ng
nasasakdal ay sa kaalaman at kapahintulutan ng
nagsasakdal at higit na gumanda at tumibay ang
bahay ng nagsasakdal sa pamamagitan ng
pagpapagawa ng nasasakdal; xxx[50]
We do not find this denial to be specific as the petitioner failed to set forth the substance
of the matters in which she relied upon to support her denial. The petitioner merely
alleged that consent was given; how and why, she did not say. If indeed consent were
given, it would have been easy to fill in the details. She could have stated in her
pleadings that she verbally informed the respondent of the need for the repairs, or wrote
him a letter. She could have stated his response, and how it was conveyed, whether
verbally or in writing. She could have stated when the consent was solicited and
procured. These, she failed to do. Ergo, the petitioner is deemed to have admitted the
material allegations in the complaint.
Second, both parties failed to present evidence other than the allegations in their
pleadings. Thus, the court may weigh the parties allegations against each other. The
petitioner presented a general denial, while the respondent set forth an affirmative
assertion. This Court has time and again said that a general denial cannot be given
more weight than an affirmative assertion.[51]
Damages recoverable in an
unlawful detainer action are
limited to rentals or
reasonable compensation for
the use of the property
This Court has no jurisdiction to award the reimbursement prayed for by both
parties. Both parties seek damages other than rentals or reasonable compensation for
the use of the property, which are the only forms of damages that may be recovered in
an unlawful detainer case.[52] Rule 70, Section 17 of the Rules of Court authorizes the
trial court to order the award of an amount representing arrears of rent or reasonable
compensation for the use and occupation of the premises if it finds that the allegations
of the complaint are true.[53]
The rationale for limiting the kind of damages recoverable in an unlawful
detainer case was explained in Araos v. Court of Appeals,[54] wherein the Court held
that:
The rule is settled that in forcible entry or unlawful
detainer cases, the only damage that can be recovered is the fair
rental value or the reasonable compensation for the use and
occupation of the leased property. The reason for this is that in
such cases, the only issue raised in ejectment cases is that of
rightful possession; hence, the damages which could be
recovered are those which the plaintiff could have sustained as a
mere possessor, or those caused by the loss of the use and
occupation of the property, and not the damages which he may
have suffered but which have no direct relation to his loss of
material possession.
An action for reimbursement or for recovery of damages may not be properly
joined with the action for ejectment. The former is an ordinary civil action requiring a
full-blown trial, while an action for unlawful detainer is a special civil action which
requires a summary procedure. The joinder of the two actions is specifically enjoined
by Section 5 of Rule 2 of the Rules of Court, which provides:

Section 5. Joinder of causes of action. A party may in one pleading

assert, in the alternative or otherwise, as many causes of action as
he may have against an opposing party, subject to the following
conditions:

(a) The party joining the causes of action shall

comply with the rules on joinder of parties;

(b) The joinder shall not include special civil

actions or actions governed by special rules;

(c) Where the causes of action are between the

same parties but pertain to different venues or jurisdictions, the
joinder may be allowed in the Regional Trial Court provided one of
the causes of action falls within the jurisdiction of said court and the
venue lies therein; and

(d) Where the claims in all the causes of action

are principally for recovery of money, the aggregate amount
claimed shall be the test of jurisdiction. [Underscoring supplied.]

WHEREFORE, the petition is PARTIALLY GRANTED. The decision of the

Court of Appeals in CA-G.R. No. SP-48534 is REVERSED AND SET ASIDE. The
petitioner FLORAIDA TERANA and all persons claiming right under her are ordered to
vacate and surrender possession of the subject property to the respondent ANTONIO
SIMUANGCO. No costs.

SO ORDERED.

THIRD DIVISION
[G.R. NO. 167403 : August 6, 2008]
MAKATI INSURANCE CO., INC., Petitioner, v. HON. WILFREDO D. REYES, as
Presiding Judge of the Regional Trial Court of Manila, Branch 36, RUBILLS
INTERNATIONAL, INC., TONG WOON SHIPPING PTE LTD, and ASIAN
TERMINALS, INC., Respondents.
DECISION
CHICO-NAZARIO, J.:
Assailed in this Petition for Review under Rule 451 of the Revised Rules of Court are
(1) the Decision2dated 12 August 2004 of the Court of Appeals dismissing the petition
filed in CA-G.R. SP No. 74220 by herein petitioner Makati Insurance Co., Inc., and
affirming the Order3 dated 2 October 2002 of the Regional Trial Court (RTC) of
Manila, Branch 36, in Civil Case No. 97-84952, which dismissed petitioner's Notice of
Appeal for having been filed three days beyond the reglementary period; and (2) the
Resolution4 dated 17 February 2005 of the Court of Appeals in the same case
denying petitioner's Motion for Reconsideration of its earlier Decision.
The generative facts of the present Petition are as follows.
Petitioner filed before the RTC a Complaint5 against private respondents Rubills
International, Inc., Tong Woon Shipping PTE., LTD., and Asian Terminals, Inc. for
damages arising from breach of contract of carriage. In its Complaint, petitioner
alleged that:
3.1 [Herein private respondents] Rubills International, Inc. and Tong Woon Shipping
Pte. Ltd. [Rubills for brevity], were and are the owners, operators, charterers, bailees,
representatives, or agents of several ocean going vessels, engaged in ocean carriage
to and from Philippine ports in foreign trade, one of which is the vessel M/V "Cherry" a
common carrier, bound to observe extraordinary diligence in the care and custody of
goods while in its protective custody.
3.2 [Herein private respondent] Asian Terminals, Inc. [ATI] was and is the arrastre
operator at the port of Manila and as such was charged and obligated with the duty of
receiving cargoes discharged from the vessels docking at the port of Manila, of
safekeeping and taking good care of the same while in its protective custody, and
thereafter delivering the same to the respective consignees and/or consignee's
representatives.
4.0 On or about August 11, 1996, the [private respondents] Rubills and Tong Woon
vessel M/V "CHERRY" arrived in Manila and docked at Pier 15 South Harbor, Manila,
and therein completely unloaded on September 9, 1996 a shipment of 120MT Red
Beans and 153.00MT Cattle Meat Colloid covered by Bill of Lading dated August 01,
1996, a photocopy of which is herewith attached as Annex "A" and made an integral
part hereof;
5.0 It was found out after the inspection of the subject shipment that eighty four (84)
ton bags of the shipment were in apparent damaged condition, partly to badly wet and
loose/torn on sides and/or ends with spillages/wettages to contents apparent. x x x.
xxx
6.0 The aforesaid losses and damages sustained by the subject shipment were
directly caused and brought about by the wanton fault, gross negligence, malevolent
mishandling and culpable disregard, recreance and/or breach of contractual
obligations of all or either of the [private respondents] as common carrier and arrastre
operator respectively, and as a result of which the owner/assured/consignee Silver
Allies Trading International sustained damages and losses in the total sum of Four
Hundred Twelve Thousand Two Hundred Fifty Three & 91/100 Pesos (P412,253.91)
for which [herein petitioner]-insurer paid the consignee-assured. Thus, [petitioner] was
subrogated into the rights and interests of the consignee-assured relative to the said
losses and damages sustained by the subject shipment;
7.0 Demands were lodged against the [private respondents] for compensation of the
amount paid by the [petitioner] to the consignee-assured, but the [private
respondents] failed, ignored and refused to heed the same to the damage and
prejudice of the [petitioner];
8.0 [Private respondents] are guilty of wanton fault, gross negligence, malevolent
mishandling and culpable disregard of their contractual obligations in bringing about
and contumaciously causing the losses and damages to the said shipment x x x.6
Petitioner prayed in its Complaint that:
J]udgment be rendered ordering the [herein private respondents], jointly and severally or whichever may be found liable, to pay
[herein petitioner]:
A. Actual damages in the amount of P412,253.91 with legal interest from the date of
the filing of the complaint until fully paid;
b. Exemplary damages in the sum of at least P20,000.00 or as may be found proper
by this Honorable Court;
c. Attorney's fees in the sum equivalent to twenty five percent (25%) of the principal
claim of P103,063.47; andcralawlibrary
d. Litigation expenses in the sum of at least P10,000.00 or as may be proven, plus
costs of suit.7
After the issues were joined, the case was set for pre-trial conference. For the failure
of petitioner's counsel to appear at the scheduled pre-trial conference on 19
November 2001, RTC Presiding Judge Wilfredo D. Reyes (Judge Reyes) dismissed
the case without prejudice. His Order of even date reads:
On third call of this case at 10:40 o'clock this morning, only counsels for [herein
private respondents] Rubills International, Inc. and Asian Terminals, Inc. appeared.
There was no appearance for [herein petitioner] despite due notice.
Respective counsels of [private respondents] moved for the dismissal of the case on
the following grounds:
1. For failure of [petitioner] to properly appear for pre-trial conference on September
5, 2001 considering that its counsel and/or representative did not have the requisite
authority.
2. For failure of [petitioner] to appear at the pre-trial conference at the proper time set
on October 16, 2001 although [petitioner]'s counsel came in after [private
respondents]' counsel had left the court room and the case re-set for continuation of
pre-trial on November 19, 2001, and
3. For failure of [petitioner]'s counsel to appear at today's pre-trial.
It appearing that [petitioner]'s counsel has been given ample opportunity to appear in
the pre-trial conference of this case with the requisite authority for its counsel and/or
representative and that [petitioner]'s counsel has failed to so appear for pre-trial
conference, and upon motion of [private respondents]' counsel, this case is dismissed
without prejudice.
WHEREFORE, the case at bar is dismissed without prejudice. No costs. 8
On 29 November 2001, petitioner received the Order dated 19 November 2001
dismissing its case. On 4 December 2001, petitioner filed its Verified Motion for
Reconsideration9 alleging that sickness prevented its counsel from attending the pre-
trial conference. On 3 July 2002, petitioner received Judge Reyes's Order dated 17
June 2002 denying its Verified Motion for Reconsideration. 10
According to the 17 June 2002 RTC Order:
After a careful review of the grounds relied upon by [herein petitioner]'s counsel in his
verified motion for reconsideration dated December 1, 2001, the Court has no other
recourse but to deny the same as the grounds of said motion for reconsideration are
not impressive so as to convince the Court to reverse its Order of November 19,
2001,
WHEREFORE, [petitioner]'s motion for reconsideration is DENIED.11
Petitioner received notice of the afore-mentioned Order on 3 July 2002.
On 17 July 2002, petitioner filed a Notice of Appeal,12 which was promptly opposed by
private respondents for having been filed out of time.13 Petitioner countered that its
failure to file the Notice of Appeal on time was due to its counsel's inadvertence in
computing the appeal period. The inadvertence was allegedly due to the fact that its
Verified Motion for Reconsideration was filed by registered mail, and the messenger
who mailed it failed to attach to the records of the case the postal receipt showing the
date the said motion was mailed.14 Petitioner's counsel, therefore, was unable to
determine correctly when petitioner's period to appeal was interrupted by the filing of
its Verified Motion for Reconsideration and how many more days were left in said
period when its Motion was denied.
On 23 September 2002, petitioner filed a Motion to Admit Notice of Appeal,15 alleging
it had no intention to delay the resolution of the case; it had a meritorious case; and
its Notice of Appeal should be granted pursuant to the dictum that "courts should not
place undue importance on technicalities, when by so doing, substantial justice is
sacrificed."
On 2 October 2002, Judge Reyes issued his Order16 dismissing petitioner's Notice of
Appeal for being filed three days beyond the 15-day reglementary period. In so ruling,
Judge Reyes held that pursuant to Section 3, Rule 41 vis - à-vis Section 2, Rule 22 of
the Revised Rules of Court, the period to appeal is interrupted by a timely motion for
reconsideration. Petitioner filed its Verified Motion for Reconsideration five days after
receiving the Order dismissing the case without prejudice. Excluding the day the said
motion was filed, petitioner had only 11 days left to file a notice of appeal. Petitioner
received the Order of 17 June 2002 denying its Verified Motion for Reconsideration
on 3 July 2002. Accordingly, it had only until 14 July 2002 to file a Notice of Appeal.
Petitioner, however, filed its Notice of Appeal on 17 July 2002. 17 Judge Reyes,
therefore, held:
WHEREFORE, plaintiff's notice of appeal is ordered dismissed as it was filed three
(3) days beyond the reglementary period.18
Petitioner then filed with the Court of Appeals a Petition for Certiorari under Rule 65 of
the Revised Rules of Court questioning the 2 October 2002 RTC Order dismissing its
Notice of Appeal. The Petition, however, was denied by the Court of Appeals based
on the following reasons:
F]rom an order dismissing an action without prejudice, the remedy of the aggrieved party is to file a petition for certiorari under
Rule 65, or to re-file the case. On this score, therefore, petitioner's Notice of Appeal is clearly dismissible.
Even assuming arguendo that appeal is petitioner's proper remedy, it should still be
denied for having been filed out of time. x x x.19
The Court of Appeals held:
WHEREFORE, the instant petition is hereby DISMISSED, and the assailed Order
dated October 2, 2002 AFFIRMED.20
The Motion for Reconsideration filed by the petitioner was denied by the Court of
Appeals in a Resolution dated 17 February 2005.
In the Petition at bar, petitioner insists that:
EXTRAORDINARY CIRCUMSTANCES ATTENDANT TO THE CASE AT BAR
WARRANT THE LIBERAL APPLICATION OF THE RULES.21
We first hew our attention to the main issue for our resolution: whether the Notice of
Appeal filed by petitioner was filed out of time.
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days
from notice of the judgment or final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a record on appeal within thirty
(30) days from notice of the judgment or final order.
The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed.
Based on the foregoing, an appeal should be taken within 15 days from the notice of
judgment or final order appealed from.22 A final judgment or order is one that finally
disposes of a case, leaving nothing more for the court to do with respect to it. It is an
adjudication on the merits which, considering the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are; or it may be
an order or judgment that dismisses an action.23
Propitious to petitioner is Neypes v. Court of Appeals,24 promulgated on 14
September 2005 while the present Petition was already pending before us. In
Neypes, we pronounced that:
To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period
of 15 days within which to file the notice of appeal in the Regional Trial Court,
counted from receipt of the order dismissing a motion for a new trial or motion for
reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals
from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for
review from the Regional Trial Courts to the Court of Appeals; Rule 43 on
appeals from quasi-judicial agencies to the Court of Appeals and Rule 45 governing
appeals by certiorarito the Supreme Court. The new rule aims to regiment or make
the appeal period uniform, to be counted from receipt of the order denying the motion
for new trial, motion for reconsideration (whether full or partial) or any final order or
resolution. (Emphasis ours.)
Rules of Procedure are mere tools designed to facilitate the attainment of justice; their
strict and rigid application which would result in technicalities that tend to frustrate
rather than promote substantial justice must always be eschewed.25
We justified in Neypes that:
In setting aside technical infirmities and thereby giving due course to tardy appeals,
we have not been oblivious to or unmindful of the extraordinary situations that merit
liberal application of the Rules. In those situations where technicalities were
dispensed with, our decisions were not meant to undermine the force and effectivity of
the periods set by law. But we hasten to add that in those rare cases where
procedural rules were not stringently applied, there always existed a clear need to
prevent the commission of a grave injustice. Our judicial system and the courts have
always tried to maintain a healthy balance between the strict enforcement of
procedural laws and the guarantee that every litigant be given the full opportunity for
the just and proper disposition of his cause.
The Supreme Court may promulgate procedural rules in all courts. It has the sole
prerogative to amend, repeal or even establish new rules for a more simplified and
inexpensive process, and the speedy disposition of cases. In the rules governing
appeals to it and to the Court of Appeals, particularly Rules 42, 43 and 45, the Court
allows extensions of time, based on justifiable and compelling reasons, for parties to
file their appeals. These extensions may consist of 15 days or more.26
Hence, in the interest of substantial justice, procedural rules of the most mandatory
character in terms of compliance may be relaxed.27
With the advent of the "fresh period rule," parties who availed themselves of the
remedy of motion for reconsideration are now allowed to file a notice of appeal within
fifteen days from the denial of that motion.28
The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised
Rules of Court which states that the appeal shall be taken "within fifteen (15) days
from notice of judgment or final order appealed from." The use of the disjunctive word
"or" signifies disassociation and independence of one thing from another. It should, as
a rule, be construed in the sense which it ordinarily implies. 29 Hence, the use of "or" in
the above provision supposes that the notice of appeal may be filed within 15 days
from the notice of judgment or within 15 days from notice of the "final order," which, in
this case is the 17 July 2002 RTC Order denying petitioner's Verified Motion for
Reconsideration, received by petitioner on 3 July 2002.
Neither does the new rule run counter to the spirit of Section 39 of Batas Pambansa
Blg. 129 which shortened the appeal period from 30 days to 15 days to hasten the
disposition of cases. The original period of appeal remains and the requirement for
strict compliance still applies. The fresh period of 15 days becomes significant only
when a party opts to file a motion for new trial or motion for reconsideration. In this
manner, the trial court which rendered the assailed decision is given another
opportunity to review the case and, in the process, minimize and/or rectify any error of
judgment. While we aim to resolve cases with dispatch and to have judgments of
courts become final at some definite time, we likewise aspire to deliver justice fairly. 30
The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal
period should be counted - from receipt of notice of judgment or from receipt of notice
of "final order" appealed from.31
Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc.,32 we set aside
the denial of a notice of appeal which was purportedly filed five days late. With the
fresh period rule, the 15-day period within which to file the notice of appeal was
counted from notice of the denial of the therein petitioner's motion for reconsideration.
We followed suit in Elbiña v. Ceniza,33 wherein we applied the principle granting a
fresh period of 15 days within which to file the notice of appeal, counted from receipt
of the order dismissing a motion for new trial or motion for reconsideration or any final
order or resolution.
Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands,34 we
held that a party litigant may now file his notice of appeal either within fifteen days
from receipt of the original decision or within fifteen days from the receipt of the order
denying the motion for reconsideration.
In De los Santos v. Vda de Mangubat,35 we applied the same principle of "fresh
period rule," expostulating that procedural law refers to the adjective law which
prescribes rules and forms of procedure in order that courts may be able to administer
justice. Procedural laws do not come within the legal conception of a retroactive law,
or the general rule against the retroactive operation of statutes. The "fresh period
rule" is irrefragably procedural, prescribing the manner in which the appropriate
period for appeal is to be computed or determined and, therefore, can be made
applicable to actions pending upon its effectivity, such as the present case, without
danger of violating anyone else's rights.
We thus hold that when herein petitioner filed its notice of appeal on 17 July 2002, the
same was seasonably filed within the fresh period of 15 days, counted from 3 July
2002, the date it received the denial of its Verified Motion for Reconsideration.
This fresh 15-day period within which to file notice of appeal counted from notice of
the denial of the motion for reconsideration may be applied to petitioner's case
inasmuch as rules of procedure may be given retroactive effect on actions pending
and undetermined at the time of their passage. In Republic v. Court of
Appeals,36 involving A.M. No. 00-2-03-SC, which provided for the rule that the 60-day
period within which to file a Petition for Certiorari shall be reckoned from receipt of the
order denying the motion for reconsideration, we stated that rules of procedure "may
be given retroactive effect to actions pending and undetermined at the time of their
passage and this will not violate any right of a person who may feel that he is
adversely affected, inasmuch as there is no vested rights in rules of procedure."
We also take note of an important declaration made by the Court of Appeals in its
assailed Decision that even if petitioner's Notice of Appeal was considered filed on
time, it was dismissible for being the wrong remedy.
It bears repeating that the RTC dismissed Civil Case No. 97-84952 without prejudice.
The rules37provide:
Rule 41
APPEAL FROM THE REGIONAL
TRIAL COURTS
Section 1. x x x
No appeal may be taken from:
 xxx All these postponements truly manifest a lack of interest to prosecute on the part of
the petitioner as found by the RTC. Section 3, Rule 17 of the Rules of Court states:
(h) An order dismissing an action without prejudice.
SEC. 3. Dismissal due to fault of plaintiff. - If, for no justifiable cause, the plaintiff fails
Indeed, under the 1997 Rules of Civil Procedure, Rule 41, Section 1(h), thereof to appear on the date of the presentation of his evidence in chief on the complaint, or
expressly provides that no appeal may be taken from an order dismissing an action to prosecute his action for an unreasonable length of time, or to comply with these
without prejudice. It may be subject of a special civil action for certiorari under Rule 65 Rules or any order of the court, the complaint may be dismissed upon motion of the
of the Rules of Court, as amended by the said 1997 Rules of Civil Procedure. The defendant or upon the court's own motion, without prejudice to the right of the
Court of Appeals, therefore, acted correctly in stating that the Notice of Appeal filed by defendant to prosecute his counterclaim in the same or in a separate action. This
the petitioner was dismissible. dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.
Even if in the interest of substantial justice, we consider the Notice of Appeal as a
Petition for Certiorariunder Rule 65 of the Rules of Court, still no grave abuse of We have always been steadfast in ruling that in every action, the plaintiff is duty-
discretion may be attributed to the RTC in dismissing Civil Case No. 97-84952. bound to prosecute the same with utmost diligence and with reasonable dispatch to
enable him to obtain the relief prayed for and, at the same time, minimize the clogging
The Writ of Certiorari is an extraordinary remedy to correct errors of jurisdiction. An of the court dockets. The expeditious disposition of cases is as much the duty of the
act of a court or tribunal may only be considered as committed in grave abuse of plaintiff as the court. It must be remembered that a defendant in a case likewise has
discretion when the same was performed in a capricious or whimsical exercise of the right to the speedy disposition of the action filed against him, considering that any
judgment which is equivalent to lack of jurisdiction. The abuse of discretion must be delay in the proceedings entails prolonged anxiety and valuable time wasted. 54
so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform a duty enjoined by law or to act at all in contemplation of law, as where the In all, we find that while it is true that the petitioner's Notice of Appeal was timely filed
power is exercised in an arbitrary and despotic manner by reason of passion or based on our ruling in Neypes, said Notice of Appeal was the wrong remedy. Even if
personal hostility. Be that as it may, it must be emphasized that this practice is considered as a Petition for Certiorari under Rule 65 of the Rules of Court, the same
applied only under certain exceptional circumstances to prevent unnecessary delay in has no merit as discussed above.
the administration of justice and so as not to unduly burden the courts. 38
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals
In the present case, Civil Case No. 97-84952 was initially scheduled for pre-trial dated 12 August 2004 and Resolution dated 17 February 2005 are AFFIRMED. Costs
conference on 17 April 2000.39 By agreement of the parties, the pre-trial conference against petitioner.
was re-set to 8 June 2000.40 Again, by agreement of the parties, the pre-trial
conference was re-set to 6 July 2000,41 only to be re-set once more to 3 August SO ORDERED.
2000.42 On 3 August 2000, petitioner filed a motion to re-set pre-trial conference to 11
September 2000.43 On 11 September 2000, petitioner's counsel was not present;
thus, the pre-trial conference was cancelled and re-set to 17 October 2000.44 On 17
October 2000, the parties manifested that they might settle the case amicably so the
pre-trial conference on said date was cancelled.45 The pre-trial conference was re-set
to 28 November 200046 and again to 17 January 2001 upon motion of private
respondent Asian Terminals, Inc.47 Cancellation and re-setting of the pre-trial
conference also occurred to 28 March 2001,48 19 April 2001,49 20 June 2001,50 31
July 2001.51 Then again on 5 September 2001,52 on the ground that petitioner's
counsel/representative did not have the requisite authority, and on 15 October 2001
because petitioner's counsel failed to arrive at the proper time. 53When petitioner's
counsel again failed to attend the pre-trial conference on 19 November 2001, the RTC
finally ordered the dismissal of the case without prejudice.

THIRD DIVISION
RURAL BANK OF THE SEVENLAKES (S.P.C.), Inc.,
Petitioner,
- versus -
BELEN A. DAN,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court, filed by petitioner Rural Bank of the Seven Lakes (RBSL), seeking to
reverse and set aside the Decision[1] dated 21 October 2002 and its
Resolution[2] dated 7 August 2006 of the Court of Appeals in CA-G.R. SP No. 59193. In
[3]
its assailed Decision, the appellate court reversed the Decision dated 9 May 2000 of
the Securities and Exchange Commission (SEC) en banc, which upheld the dismissal
by the SEC Hearing Officer of SEC Case No. 03-99-6229, instituted by respondent
Belen A. Dan (Dan), for failure to prosecute.
The factual and procedural antecedents of this instant Petition are as follows:
RBSL is a domestic corporation duly authorized by the Central Bank of
the Philippines to engage in the banking business.
In 1975, Dan was employed by RBSL as an assistant bookkeeper. She rose
from the ranks and, in 1982, she was appointed bank manager by the RBSL Board of
Directors.[4]
Sometime in 1998, RBSL discovered that Dan committed unsound banking
practices, which included the granting of loans to herself, her relatives, and close
friends. Accordingly, Dan was charged with the following offenses: (a) violation of
Section 5 of Republic Act No. 7353;[5] (b) loss of confidence; (c) serious misconduct;
G.R. No. 174109 (d) willful disobedience to the lawful order of the employer; (e) willful breach of trust;
Present: and (f) incompetence. On 30 September 1998, Dan was preventively suspended from
employment by the RBSL pending the investigation of the charges against her. After
YNARES-SANTIAGO, J., the hearing held before the RBSL, Dan was determined to have committed the offenses
Chairperson, charged. Consequently, Dans appointment as bank manager was revoked by the
AUSTRIA-MARTINEZ, RBSL Board of Directors through Board Resolution No. 1998-127 dated 10 November
CHICO-NAZARIO, 1998.[6]
NACHURA, and
REYES, JJ. On 4 March 1999, Dan filed a Petition[7] before the SEC, docketed as SEC
Case No. 03-99-6229, praying, inter alia, for the nullification of (a) her preventive
Promulgated: suspension and (b) the revocation of her appointment as bank manager; as well as the
payment of her backwages and moral and exemplary damages.
December 24, 2008
During the pendency of SEC Case No. 03-99-6229, Dan instituted an action
for damages against RBSL before the Regional Trial Court (RTC) of San Pablo City,
Branch 32, docketed as Civil Case SP No. 5734-2000. In her Complaint in said civil
case, Dan alleged that she suffered serious anxiety as a result of her wrongful
separation from employment by RBSL. RBSL filed a motion to dismiss Civil Case SP
No. 5734-2000 on the ground of forum shopping, averring that the said case was based
exactly on the same cause of action as that in SEC Case No. 03-99-6229 pending
before the SEC, namely, the wrongful termination of Dans employment. The RTC, in
its Order dated 4 September 2000, granted the motion of RBSL and dismissed Civil
Case SP No. 5734-2000. The RTC denied Dans Motion for Reconsideration in an Order
dated 3 December 2000. Dan challenged the RTC Orders dated 4 September
2000 and 3 December 2000, dismissing Civil Case SP No. 5734-2000, in her appeal
before the Court of Appeals.[8]
In the meantime, the SEC Hearing Officer called SEC Case No. 03-99-
6229 for hearing on 3 November 1999, but Dan failed to appear on the said
date.[9] Thus, the SEC Hearing Officer was prompted to reset the hearing to 29
November 1999, with a warning that should Dan again fail to appear on the date set,
the SEC Hearing Officer would already be constrained to dismiss the case. [10] On 24
November 1999, Dans counsel filed an Urgent Motion for Cancellation of the 29
November 1999 hearing, since he had another hearing scheduled on the same date. In
an Order[11] dated 24 November 1999, the SEC Hearing Officer granted the motion and
reset the hearing to 6 December 1999, with a stern warning that he would no longer
entertain further postponement. Notwithstanding the explicit warning of the SEC
Hearing Officer, Dans counsel still failed to attend the hearing set on 6 December 1999,
finally causing the Hearing Officer to dismiss SEC Case No. 03-99-6229 for failure to
prosecute.[12]
 On appeal, the SEC en banc rendered its Decision[13] dated 9 May
2000, affirming the Order dated 6 December 1999 of the SEC Hearing Officer, which
dismissed SEC Case No. 03-99-6229 for non-suit.
Unyielding, Dan filed before the Court of Appeals a Petition for
Review[14] under Rule 43 of the Revised Rules of Court assailing the Decision dated 9
May 2000 of the SEC en banc. Dan invoked in her Petition equitable justice to justify
her counsels several postponements of the hearing before the SEC Hearing
Officer. Dan urged the appellate court to afford her ample opportunity to fully ventilate
her side of the controversy, in consonance with the Constitutional dicta on due process;
and not dispose of her case on technicality. Dan also argued that the issue involving
the postponements of the hearing was rendered moot and academic, considering the
issuance by the SEC Hearing Officer, with the conformity of RBSL, of the orders
granting her counsels motions for postponement.Lastly, Dan asserted that the failure
of her counsel to appear on the hearing scheduled on 6 December 1999constituted
gross and inexcusable neglect which should not bind her. [15]
In response, the RBSL underscored the procedural lapses flagrantly
committed by Dan. RBSL alleged that Dan violated the rule against forum shopping by
stating in her Complaint in Civil Case SP No. 5734-2000 before the RTC, that she had
no knowledge of the pendency of any action involving the same party and the same
subject matter, despite her prior institution of SEC Case No. 03-99-6229 before the
SEC. RBSL also pointed out that Dans appeal before the SEC En Banc lacked
verification as required by Section 2, Rule II of the 1999 SEC Rules of Procedure. Aside
from these procedural flaws, RBSL further contended that, in repeatedly disregarding
the hearings set in SEC Case No. 03-99-6229, Dan only showed that she was not
interested in prosecuting the case.[16]
On 21 October 2002, the Court of Appeals promulgated its Decision[17] in favor
of Dan, thus, reversing the Decision dated 9 May 2000 of the SEC en banc. According
to the appellate court, the rules of procedure should be viewed as mere tools designed
to facilitate the attainment of justice. Their strict and rigid application, which would result
in technicalities that tend to frustrate rather than promote substantial justice, must
always be avoided. In the highest interest of justice and equity, the Court of Appeals
directed the SEC Hearing Officer to allow Dan to complete the presentation of her
evidence.
The Motion for Reconsideration of RBSL was denied by the Court of Appeals
in its Resolution[18] dated 7 August 2006.
Hence, this instant Petition for Review on Certiorari[19] filed by RBSL assigning
the following errors:
I.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
RULING THAT [DAN] HAD NOT VIOLATED THE RULE AGAINST
FORUM-SHOPPING.
II.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
HOLDING THAT THE REQUIREMENT OF A VERIFICATION IN
APPEALS BEFORE THE SEC CAN BE RELAXED.
III.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
DISREGARDING [DANS] FAILURE TO PROSECUTE HER CASE.
RBSL accuses Dan of forum shopping in instituting SEC Case No. 03-99-6229
before the SEC and Civil Case SP No. 5734-2000 before the RTC. RBSL alleged that
Dan had trifled with the courts and abused their processes by improperly instituting
several cases from the same cause of action.
Forum shopping is a deplorable practice of litigants of resorting to two
different fora for the purpose of obtaining the same relief, to increase his or her chances
of obtaining a favorable judgment. What is pivotal to consider in determining whether
forum shopping exists or not is the vexation caused to the courts and the parties-
litigants by a person who asks appellate courts and/or administrative entities to rule on
the same related causes and/or to grant the same or substantially the same relief, in
the process creating the possibility of conflicting decisions by the different courts
or fora upon the same issues.[20]
The grave evil sought to be avoided by the rule against forum shopping is the
rendition by two competent tribunals of two separate, and contradictory
decisions. Unscrupulous party litigants, taking advantage of a variety of competent
tribunals, may repeatedly try their luck in several different fora until a favorable result is
reached. To avoid the resultant confusion, this Court adheres strictly to the rules against
forum shopping, and any violation of these rules results in the dismissal of a case.[21]
To stamp out this abominable practice which seriously impairs the efficient
administration of justice, this Court promulgated Administrative Circulars No. 28-91 and
No. 04-94, which are now embodied as Section 5, Rule 7 of the Rules of Court, which
reads:
SEC. 5. Certification against forum shopping. The plaintiff
or principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a)
 that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact within five (5) days
therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not
be curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance
with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly
constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute
direct contempt, as well as a cause for administrative sanctions.
The test for determining the existence of forum shopping is whether the
elements of litis pendentia are present, or whether a final judgment in one case
amounts to res judicata in another. Thus, there is forum shopping when the following
elements are present: (a) identity of parties, or at least such parties as represent the
same interests in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity of the two preceding
particulars, such that any judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the action under consideration; said
requisites are also constitutive of the requisites for auter action pendant or lis
pendens.[22]
The Court holds that the afore-mentioned requisites are all present in the
instant case. First, the parties in SEC Case No. 03-99-6229 and Civil Case No. SP No.
5734-2000 are the same, no other than Dan and RBSL. Second, there is also the
identity of rights asserted and reliefs prayed for in these two cases. Dans Complaint
in Civil Case No. SP No. 5734-2000 before the RTC was for the payment of moral
damages and litigation expenses premised on the alleged wrongful revocation of her
appointment as bank manager of RBSL. While the primary relief sought by Dan in
filing SEC Case No. 03-99-6229 was for the nullification of the revocation of her
appointment as bank manage of RBSL, she also prayed in the same Petition for the
payment of the moral damages she suffered by reason thereof. Undeniably, the
damages Dan seeks to recover in these two cases arose from the same set of facts
and a singular cause of action: the purportedly unjust revocation of her appointment as
bank manager of RBSL. And thirdly, a judgment rendered in either SEC Case No. 03-
99-6229 and Civil Case No. SP No. 5734-2000 shall constitute res judicata on the
other. Before they could award the moral damages Dan prayed for, both the SEC and
the RTC must first resolve the issue of whether the revocation of Dans appointment
was valid.Should the SEC determine that the revocation of Dans appointment was
proper and, consequently, refuse to award moral damages, then the RTC would be
bound thereby and could not render a contrary ruling on the very same issue.
Dismissal of the case and contempt is the inevitable consequence of Dans
violation of the prohibition against forum shopping. As discussed in Sps. Ong v. Court
of Appeals[23]:
The distinction between the prohibition against forum shopping and
the certification requirement should by now be too elementary to be
misunderstood. To reiterate, compliance with the certification against
forum shopping is separate from and independent of the avoidance
of the act of forum shopping itself. There is a difference in the
treatment between failure to comply with the certification requirement
and violation of the prohibition against forum shopping not only in
terms of imposable sanctions but also in the manner of enforcing
them. The former constitutes sufficient cause for the dismissal
without prejudice of the complaint or initiatory pleading upon
motion and after hearing, while the latter is a ground for
summary dismissal thereof and for direct contempt. x x
x. (Emphasis supplied.)
Dan committed another procedural faux pas in filing an appeal before the
SEC en banc without the required verification.
The SEC Rules of Procedure on verification under Section 2, Rule III thereof
states:
SECTION 2. Verification. All pleadings filed with the
Commission shall be verified by an affidavit that the affiant has read
the pleading and the allegations therein are true and correct of his
own knowledge and belief. A pleading which contains a verification
based on information and belief, or upon "knowledges, information
and belief," or which lacks a proper verification, shall be treated as
an unsigned pleading and shall not be considered as filed.
It is not controverted that Dans appeal was not verified at all. The Court of
Appeals, however, held that the absence of verification in Dans appeal before the
SEC en banc is excusable and does not warrant the dismissal of the same. Echoing
the ruling of the appellate court, Dan pleads for the liberal interpretation of the
procedural rules in the interest of substantial justice.
The Court is not persuaded.
The Court cannot sanction Dans utter disregard of procedural rules. It must
be emphasized that 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.[24] It is this symbiosis between form and substance
that guarantees that discernible result.[25]
The use of the words substantial justice is not a magic wand that will
automatically compel this Court to suspend procedural rules. Procedural rules are not
to be belittled or dismissed, simply because their non-observance may have resulted
in prejudice to a partys substantive rights. Like all rules, they are required to be followed
except only for the most persuasive of reasons, when they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.[26] Thus, as called upon by the respondents,
the Court yields to the time-honored principle Justice is for all. Litigants must have
equal footing in a court of law; the rules are laid down for the benefit of all and should
not be made dependent upon a suitors sweet time and own bidding. [27]
Considering the circumstances in the instant case, the Court finds no
justification for the relaxation of the procedural rules. Other than invoking the Courts
liberality, Dan miserably failed to give any reason for her failure to comply with the
procedural requirement of submitting a verification with her appeal to the SEC en
banc. Without a valid explanation, the Court cannot be expected to be liberal or
indulgent.
Finally, the Court finds that the Court of Appeals erred in pronouncing that the
dismissal of SEC Case No. 03-99-6229 for failure to prosecute by the SEC Hearing
Officer, as affirmed by the SEC en banc, was unjustified. It cannot sustain the
reasoning of the appellate court that the postponements of the hearing were not
intended to delay the proceedings before the SEC and caused no substantial prejudice
to RBSL.
To the contrary, this Court sees no fault on the part of the SEC Hearing Officer
when it finally decided to dismiss SEC Case No. 03-99-6229 after the repeated non-
appearance of Dan and/or her counsel on the scheduled dates for the hearing of her
case.
The true test for the exercise of the power to dismiss a case on the ground of failure to
prosecute is whether, under the prevailing circumstances, the plaintiff is culpable for
want of due diligence in failing to proceed with reasonable promptitude. [28]
It must be recalled that the hearing of SEC Case No. 03-99-6229 was
originally set on 3 November 1999. It was reset to 24 November 1999 for non-
appearance of Dans counsel. However, the hearing was postponed again upon motion
of Dans counsel, who already had another hearing scheduled on the same date; hence,
the hearing was moved to 6 December 1999. Despite the fact that the hearing was
reset on her account, Dans counsel still failed to appear before the Hearing Officer on 6
December 1999. Neither Dan nor her counsel provided an explanation for their latest
absence. These events demonstrate a total lack of regard and respect for the
proceedings taking place before the SEC on the part of Dan and her counsel.
Dan blames her counsel for being negligent in handling her case before SEC
Case No. 03-99-6229. However, other than her counsels failure to attend the scheduled
hearings, Dan did not allege or present evidence demonstrative of her counsels gross
or inexcusable negligence, sufficient to release her from the binding effects of her
counsels acts.
It is a well-settled rule that a client is bound by his counsels conduct,
negligence, and mistakes in handling the case; the client cannot be heard to complain
that the result might have been different had his lawyer proceeded differently. [29]
The only exception to the general rule -- that a client is bound by the mistakes
of his counsel -- which this Court finds acceptable is when the reckless or gross
negligence of counsel deprives the client of due process of law, or when the application
of the rule results in the outright deprivation of ones property through a
technicality.[30]None of the exceptions exist in the instant case.
Moreover, Dan herself is guilty of some measure of negligence. If only she
kept herself updated as to the developments in SEC Case No. 03-99-6229, she would
have come to know that there had already been several postponements of the hearings
therein. She could have reminded and/or demanded of her counsel to give due
attention to her case and to attend the next hearing set. It must be stressed that a
plaintiff is bound to prosecute his complaint with assiduousness. Plaintiff is obliged to
give the necessary assistance to his counsel, as his interest in the outcome of the case
is at stake.[31] Failure to do so would justify the dismissal of the case. [32] It is wrong for
plaintiff to expect that all he needs to do is sit back, relax and await a favorable
outcome.[33]
The actuations of Dan and her counsel concerning SEC Case No. 02-99-6229 are
replete with negligence, laxity, and truancy, which justify the dismissal of the said
case. The evident complacency, if not delinquency, of Dan and her counsel in SEC
Case No. 02-99-6229 does not merit the Courts sympathy and consideration. For
failure to diligently pursue her Petition in SEC Case No. 02-99-6229, Dan violated the
right of RBSL to speedy trial. She also sorely tried the patience of the administrative
agency and wasted its precious time and attention. And given the foregoing finding of
this Court of negligence and fault on the part of Dan herself, Dan cannot seek protection
behind the protective veil of equity in consonance with the basic principle in law that he
who comes to court must come with clean hands.[34]

A final word. Equitable relief is not the supremacy but the entitlement of due process
previously denied the litigant.[35] There was no denial of due process in the instant case
that would warrant us to restore a right that was already lost upon the initiative and fault
of Dan.

WHEREFORE, in view of the foregoing, the instant Petition

is GRANTED. The Decision dated 21 October 2002 and Resolution dated 7 August
2006 of the Court of Appeals in CA-G.R. SP No. 59193 are REVERSED and SET
ASIDE. The Decision of the Securities and Exchange Commission en banc, dated 9
May 2000, affirming the dismissal of SEC Case No. 03-99-6229, is
hereby REINSTATED. No costs.

SO ORDERED.
 THIRD DIVISION The dispute arose when Landex started the construction of a concrete wall on one of
its lots. To restrain construction of the wall, Aneco filed a complaint for injunction[5] with
the RTC in Quezon City. Aneco later filed two (2) supplemental complaints seeking to
ANECO REALTY AND G.R. No. 165952 demolish the newly-built wall and to hold Landex liable for two million pesos in
DEVELOPMENT damages.[6]
CORPORATION, Present:
Petitioner, Landex filed its Answer[7] alleging, among others, that Aneco was not deprived access
YNARES-SANTIAGO, J., to its lots due to the construction of the concrete wall. Landex claimed that Aneco has
Cha its own entrance to its property along Miller Street, Resthaven Street, and San
irperson, Francisco del Monte Street. The Resthaven access, however, was rendered
AUSTRIA-MARTINEZ, inaccessible when Aneco constructed a building on said street. Landex also claimed
- versus - CHICO-NAZARIO, that FHDI sold ordinary lots, not subdivision lots, to Aneco based on the express
NACHURA, and stipulation in the deed of sale that FHDI was not interested in pursuing its own
REYES, JJ. subdivision project.

LANDEX DEVELOPMENT Promulgated:

CORPORATION,
Respondent. July 28, 2008
RTC Disposition
x--------------------------------------------------x
On June 19, 1996, the RTC rendered a Decision[8] granting the complaint for injunction,
DECISION disposing as follows:

Wherefore, premises considered, and in the light aforecited

REYES, R.T., J.: decision of the Supreme Court judgment is hereby rendered in favor
of the plaintiff and the defendant is hereby ordered:

THIS is a simple case of a neighbor seeking to restrain the landowner from fencing his 1. To stop the completion of the concrete wall and
own property. The right to fence flows from the right of ownership. Absent a clear legal excavation of the road lot in question and if
and enforceable right, We will not unduly restrain the landowner from exercising an the same is already completed, to remove
inherent proprietary right. the same and to return the lot to its original
situation;
Before Us is a petition for review on certiorari of the Decision[1] of the Court of
Appeals (CA) affirming the Order[2] of the Regional Trial Court (RTC) dismissing the 2. To pay actual and compensatory damage to the
complaint for injunction filed by petitioner AnecoRealty and Development Corporation plaintiff in the total amount of P50,000.00;
(Aneco) against respondent Landex Development Corporation (Landex).
3. To pay attorneys fees in the amount
Facts of P20,000.00;

Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract 4. To pay the cost.
of land in San Francisco Del Monte, Quezon City. FHDI subdivided the land into thirty-
nine (39) lots.[3] It later sold twenty-two (22) lots to petitioner Aneco and the remaining SO ORDERED.[9]
seventeen (17) lots to respondent Landex.[4]
Landex moved for reconsideration.[10] Records reveal that Landex failed to include a
notice of hearing in its motion for reconsideration as required under Section 5, Rule 15
of the 1997 Rules of Civil Procedure. Realizing the defect, Landex later filed a
motion[11] setting a hearing for its motion for reconsideration. Aneco countered with a
motion for execution[12] claiming that the RTC decision is already final and executory.
Acting on the motion of Landex, the RTC set a hearing on the motion for
reconsideration on August 28, 1996. Aneco failed to attend the slated
hearing. The RTC gave Aneco additional time to file a comment on the motion for
reconsideration.[13]
On March 13, 1997, the RTC issued an order[14] denying the motion for
execution of Aneco.
On March 31, 1997, the RTC issued an order granting the motion for
reconsideration of Landex and dismissing the complaint of Aneco. In granting
reconsideration, the RTC stated:
In previously ruling for the plaintiff, this Court anchored its
decision on the ruling of the Supreme Court in the case of White
Plains Association vs. Legaspi, 193 SCRA 765, wherein the issue
involved was the ownership of a road lot, in an existing, fully
developed and authorized subdivision, which after a second look, is
apparently inapplicable to the instant case at bar, simply because the
property in question never did exist as a subdivision. Since, the
property in question never did exist as a subdivision, the limitations
imposed by Section 1 of Republic Act No. 440, that no portion of a
subdivision road lot shall be closed without the approval of the Court
is clearly in appropriate to the case at bar.
The records show that the plaintiffs property has access to
a public road as it has its own ingress and egress along Miller St.;
That plaintiffs property is not isolated as it is bounded by Miller St.
and Resthaven St. in San Francisco del Monte, Quezon City; that
plaintiff could easily make an access to a public road within the
bounds and limits of its own property; and that the defendant has not
yet been indemnified whatsoever for the use of his property, as
mandated by the Bill of rights. The foregoing circumstances, negates
the alleged plaintiffs right of way.[15]
Aneco appealed to the CA.[16]
CA Disposition
On March 31, 2003, the CA rendered a Decision[17] affirming the RTC order, disposing
as follows:
WHEREFORE, in consideration of the foregoing, the instant
appeal is perforce dismissed. Accordingly, the order dated 31 March
1996 is hereby affirmed.
SO ORDERED.[18]
In affirming the RTC dismissal of the complaint for injunction, the CA held
that Aneco knew at the time of the sale that the lots sold by FHDI were not subdivision
units based on the express stipulation in the deed of sale that FHDI, the seller, was no
longer interested in pursuing its subdivision project, thus:
The subject property ceased to be a road lot when its former
owner (Fernandez Hermanos, Inc.) sold it to appellant Aneco not as
subdivision lots and without the intention of pursuing the subdivision
project. The law in point is Article 624 of the New Civil Code, which
provides:
Art. 624. The existence of an apparent
sign of easement between two estates,
established or maintained by the owner of both,
shall be considered, should either of them be
alienated, as a title in order that the easement may
continue actively and passively, unless, at the time
the ownership of the two estates is divided, the
contrary should be provided in the title of
conveyance of either of them, or the sign aforesaid
should be removed before the execution of the
deed. This provision shall also apply in case of the
division of a thing owned in common by two or
more persons.
Viewed from the aforesaid law, there is no question that the
law allows the continued use of an apparent easement should the
owner alienate the property to different persons. It is noteworthy to
emphasize that the lot in question was provided by the previous
owner (Fernandez Hermanos, Inc.) as a road lot because of its
intention to convert it into a subdivision project. The previous owner
even applied for a development permit over the subject
property. However, when the twenty-two (22) lots were sold to
appellant Aneco, it was very clear from the sellers deed of sale that
the lots sold ceased to be subdivision lots. The seller even warranted
that it shall undertake to extend all the necessary assistance for
the consolidation of the subdivided lots, including the execution of
the requisite manifestation before the appropriate government
 agencies that the seller is no longer interested in pursuing the Issues
subdivision project. In fine, appellant Aneco knew from the very start
that at the time of the sale, the 22 lots sold to it were not intended as Petitioner Aneco assigns quadruple errors to the CA in the following tenor:
subdivision units, although the titles to the different lots have yet to
be consolidated. Consequently, the easement that used to exist on A.
the subject lot ceased when appellant Aneco and the former owner THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING
agreed that the lots would be consolidated and would no longer be PETITIONERS APPEAL AND SUSTAINING THE TRIAL
intended as a subdivision project. COURTS ORDER DATED 31 MARCH 1997 GRANTING
RESPONDENTS MOTION FOR RECONSIDERATION WHICH IS
Appellant Aneco insists that it has the intention of FATALLY DEFECTIVE FOR LACK OF NOTICE OF HEARING.
continuing the subdivision project earlier commenced by the former
owner. It also holds on to the previous development permit granted B.
to Fernandez Hermanos, Inc. The insistence is THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE
futile. Appellant Aneco did not acquire any right from the said TRIAL COURTS ORDER WHICH
previous owner since the latter itself expressly stated in their GAVE FULL WEIGHT AND CREDIT TO THE
agreement that it has no more intention of continuing the subdivision MISLEADING AND ERRONEOUS CERTIFICATION ISSUED BY
project. If appellant desires to convert its property into a subdivision GILDA E. ESTILO WHICH SHE LATER
project, it has to apply in its own name, and must have its own EXPRESSLY AND CATEGORICALLY RECANTED BY WAY OF
provisions for a road lot.[19] HER AFFIDAVIT.

Anent the issue of compulsory easement of right of way, the CA held C.

that Aneco failed to prove the essential requisites to avail of such right, thus:
An easement involves an abnormal restriction on the
property of the servient owner and is regarded as a charge or
encumbrance on the servient owner and is regarded as a charge or
encumbrance on the servient estate (Cristobal v. CA, 291 SCRA
122). The essential requisites to be entitled to a compulsory
easement of way are: 1) that the dominant estate is surrounded by
other immovables and has no adequate outlet to a public highway;
2) that proper indemnity has been paid; 3) that the isolation was not
due to acts of the proprietor of the dominant estate; 4) that the right
of way claimed is at a point least prejudicial to the servient estate and
in so far as consistent with this rule, where the distance from the
dominant estate to a public highway may be the shortest (Cristobal v.
Court of Appeals, 291 SCRA 122).
An in depth examination of the evidence adduced and
offered by appellant Aneco, showed that it had failed to prove the
existence of the aforementioned requisites, as the burden thereof lies
upon the appellant Aneco.[20]
Aneco moved for reconsideration but its motion was denied. [21] Hence, the
present petition or appeal by certiorari under Rule 45.
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE
LIBERAL CONSTRUCTION OF THE RULES IN ORDER TO
SUSTAIN THE TRIAL COURTS ORDER DATED 31 MARCH 1997.
D.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE
TRIAL COURTS ORDER THAT MADE NO PRONOUNCEMENTS
AS TO COSTS, AND IN DISREGARDING THE MERIT OF THE
PETITIONERS CAUSE OF ACTION.[22]
Our Ruling
The petition is without merit.
Essentially, two (2) issues are raised in this petition. The first is the procedural
issue of whether or not the RTC and the CA erred in liberally applying the rule on notice
of hearing under Section 5, Rule 15 of the 1997 Rules of Civil Procedure. The second
is the substantive issue of whether or not Aneco may enjoin Landex from constructing
a concrete wall on its own property.
We shall discuss the twin issues sequentially.
Strict vs. Liberal
Construction of Procedural
Rules; Defective motion was
cured when Aneco was given
an opportunity to comment
on the motion for
reconsideration.
Section 5, Rule 15 of the 1997 Rules of Civil Procedure[23] requires a notice of
hearing for a contested motion filed in court. Records disclose that the motion for
reconsideration filed by Landex of the RTC decision did not contain a notice of
hearing. There is no dispute that the motion for reconsideration is
defective. The RTC and the CA ignored the procedural defect and ruled on the
substantive issues raised by Landex in its motion for reconsideration. The issue
before Us is whether or not the RTC and the CA correctly exercised its discretion in
ignoring the procedural defect. Simply put, the issue is whether or not the requirement
of notice of hearing should be strictly or liberally applied under the circumstances.
Aneco bats for strict construction. It cites a litany of cases which held that
notice of hearing is mandatory. A motion without the required notice of hearing is a
mere scrap of paper. It does not toll the running of the period to file an appeal or a
motion for reconsideration. It is argued that the original RTC decision is already final
and executory because of the defective motion.[24]
Landex counters for liberal construction. It similarly cites a catena of cases
which held that procedural rules may be relaxed in the interest of substantial
justice. Landex asserts that the procedural defect was cured when it filed a motion
setting a hearing for its motion for reconsideration. It is claimed that Aneco was properly
informed of the pending motion for reconsideration and it was not deprived of an
opportunity to be heard.[25]
It is true that appeals are mere statutory privileges which should be exercised
only in the manner required by law. Procedural rules serve a vital function in our judicial
system. They promote the orderly resolution of cases.Without procedure, there will be
chaos. It thus behooves upon a litigant to follow basic procedural rules. Dire
consequences may flow from procedural lapses.
Nonetheless, it is also true that procedural rules are mere tools designed to
facilitate the attainment of justice. Their strict and rigid application should be relaxed
when they hinder rather than promote substantial justice. Public policy dictates that
court cases should, as much as possible, be resolved on the merits not on mere
technicalities.Substantive justice trumps procedural rules. In Barnes v. Padilla,[26] this
Court held:
Let it be emphasized that the rules of procedure should be
viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial
justice, must always be eschewed. Even the Rules of Court reflect
this principle. The power to suspend or even disregard rules can
be so pervasive and compelling as to alter even that which this Court
itself has already declared to be final x x x.
The emerging trend in the rulings of this Court is to afford
every party litigant the amplest opportunity for the proper and just
determination of his cause, free from the constraints of
technicalities. Time and again, this Court has consistently held that
rules must not be applied rigidly so as not to override substantial
justice.[27]
Here, We find that the RTC and the CA soundly exercised their discretion in opting for
a liberal rather than a strict application of the rules on notice of hearing. It must be
stressed that there are no vested right to technicalities. It is within the courts sound
discretion to relax procedural rules in order to fully adjudicate the merits of a case. This
Court will not interfere with the exercise of that discretion absent grave abuse or
palpable error. Section 6, Rule 1 of the 1997 Rules of Civil Procedure even mandates
a liberal construction of the rules to promote their objectives of securing a just, speedy,
and inexpensive disposition of every action and proceeding.
To be sure, the requirement of a notice of hearing in every contested motion is part of
due process of law. The notice alerts the opposing party of a pending motion in court
and gives him an opportunity to oppose it. What the rule forbids is not the mere absence
of a notice of hearing in a contested motion but the unfair surprise caused by the lack
of notice. It is the dire consequences which flow from the procedural error which is
proscribed. If the opposing party is given a sufficient opportunity to oppose a defective
motion, the procedural lapse is deemed cured and the intent of the rule is substantially
complied. In E & L Mercantile, Inc. v. Intermediate Appellate Court,[28]this Court held:
Procedural due process is not based solely on a
mechanistic and literal application of a rule such that any deviation is
inexorably fatal. Rules of procedure, and this includes the three (3)
days notice requirement, are liberally construed in order to promote
their object and to assist the parties in obtaining just, speedy, and
inexpensive determination of every action and proceeding (Section
2, Rule 1, Rules of Court). In Case and Nantz v. Jugo (77 Phil. 517),
this Court made it clear that lapses in the literal observance of a rule
of procedure may be overlooked when they have not prejudiced the
adverse party and have not deprived the court of its authority.
A party cannot ignore a more than sufficient opportunity to
exercise its right to be heard and once the court performs its duty
and the outcome happens to be against that negligent party,
 suddenly interpose a procedural violation already cured, insisting
that everybody should again go back to square one. Dilatory tactics
cannot be the guiding principle.
The rule in De Borja v. Tan (93 Phil. 167), that what the law
prohibits is not the absence of previous notice, but the absolute
absence thereof and lack of opportunity to be heard, is the applicable
doctrine. (See also Aguilar v. Tan, 31 SCRA 205; Omico v. Vallejos,
63 SCRA 285; Sumadchat v. Court of Appeals, 111 SCRA
488.) x x x[29]
We also find that the procedural lapse committed by Landex was
sufficiently cured when it filed another motion setting a hearing for its defective motion
for reconsideration. Records reveal that the RTC set a hearing for the motion for
reconsideration but Anecos counsel failed to appear. The RTC then
gave Aneco additional time to file comment on the motion for reconsideration.[30]
Aneco was afforded procedural due process when it was given an opportunity to
oppose the motion for reconsideration. It cannot argue unfair surprise because it was
afforded ample time to file a comment, as it did comment, on the motion for
reconsideration. There being no substantial injury or unfair prejudice, the RTC and the
CA correctly ignored the procedural defect.
Well-settled is the rule that factual findings and conclusions of law of the trial court when
affirmed by the CA are accorded great weight and respect. Here, We find no cogent
reason to deviate from the factual findings and conclusion of law of the trial court and
the appellate court. We have meticulously reviewed the records and agree
that Aneco failed to prove any clear legal right to prevent, much less
restrain, Landex from fencing its own property.
Aneco cannot rely on the road lot under the old subdivision project of FHDI because it
knew at the time of the sale that it was buying ordinary lots, not subdivision lots, from
FHDI. This is clear from the deed of sale between FHDI and Aneco where FHDI
manifested that it was no longer interested in pursuing its own subdivision
project. If Aneco wants to transform its own lots into a subdivision project, it must make
its own provision for road lots. It certainly cannot piggy back on the road lot of the
defunct subdivision project of FHDI to the detriment of the new
owner Landex. The RTC and the CA correctly dismissed the complaint for injunction
of Aneco for lack of merit.
WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED.
SO ORDERED.

The RTC and the CA did not

err in dismissing the
complaint for injunction;
factual findings and
conclusions of law of
the RTC and the CA are
afforded great weight and
respect.

Anent the substantive issue, We agree with the RTC and the CA that the complaint for
injunction against Landexshould be dismissed for lack of merit. What is involved here
is an undue interference on the property rights of a landowner to build a concrete wall
on his own property. It is a simple case of a neighbor, petitioner Aneco, seeking to
restrain a landowner, respondent Landex, from fencing his own land.

Article 430 of the Civil Code gives every owner the right to enclose or fence
his land or tenement by means of walls, ditches, hedges or any other means. The right
to fence flows from the right of ownership. As owner of the land, Landex may fence his
property subject only to the limitations and restrictions provided by law. Absent a clear
legal and enforceable right, as here, We will not interfere with the exercise of an
essential attribute of ownership.