2016 01 Cases

G.R. No. 178501. January 11, 2016.
NILO S. RODRIGUEZ, FRANCISCO T. ALISANGCO, BENJAMIN T. ANG, VICENTE P.

ANG, SILVESTRE D. ARROYO, RUDERICO C. BAQUIRAN, WILFREDO S. CRUZ,
EDMUNDO M. DELOS REYES, JR., VIRGILIO V. ECARMA, ISMAEL F. GALISIM, TITO
F. GARCIA, LIBERATO D. GUTIZA, GLADYS L. JADIE, LUISITO M. JOSE, PATERNO C.
LABUGA, JR., NOEL Y. LASTIMOSO, DANILO C. MATIAS, BEN T. MATURAN,
VIRGILIO N. OCHARAN, GABRIEL P. PIAMONTE, JR., ARTURO A. SABADO, MANUEL
P. SANCHEZ, MARGOT A. CORPUS as the surviving spouse of the deceased ARNOLD S.
CORPUS, and ESTHER VICTORIA A. ALCAÑESES as the surviving spouse of the deceased
EFREN S. ALCAÑESES, petitioners, vs. PHILIPPINE AIRLINES, INC., and NATIONAL
LABOR RELATIONS COMMISSION, respondents.
G.R. No. 178510. January 11, 2016.*
PHILIPPINE AIRLINES, INC., petitioner, vs. NILO S. RODRIGUEZ, FRANCISCO T.

ALISANGCO, BENJAMIN T. ANG, VICENTE P. ANG, SILVESTRE D. ARROYO,
RUDERICO C. BAQUIRAN, WILFREDO S. CRUZ, EDMUNDO M. DELOS REYES, JR.,
VIRGILIO V. ECARMA, ISMAEL F. GALISIM, TITO F. GARCIA, LIBERATO D. GUTIZA,
GLADYS L. JADIE, LUISITO M. JOSE, PATERNO C. LABUGA, JR., NOEL Y.
LASTIMOSO, DANILO C. MATIAS, BEN T. MATURAN, VIRGILIO N. OCHARAN,
GABRIEL P. PIAMONTE, JR., RODOLFO O. POE, JR., ARTURO A. SABADO, MANUEL P.
SANCHEZ, and ESTHER VICTORIA A. ALCAÑESES, as the Sole Heir of the Deceased
EFREN S. ALCAÑESES, respondents.
_______________
* FIRST DIVISION.
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Rodriguez vs. Philippine Airlines, Inc.
Remedial Law; Civil Procedure; Res Judicata; Judgments; Res judicata lays the rule that an
existing final judgment or decree rendered on the merits, and without fraud or collusion, by a
court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the
rights of the parties or their privies, in all other actions or suits in the same or any other judicial
tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.—The 1st
and 2nd ALPAP cases which became final and executory on August 29, 2002 and September 9,
2011, respectively, constitute res judicata on the issue of who participated in the illegal strike in
June 1998 and whose services were validly terminated. The Court expounded on the doctrine of
res judicata in Spouses Layos v. Fil-Estate Golf and Development, Inc., 561 SCRA 75 (2008):
Res judicata literally means “a matter adjudged; a thing judicially acted upon or decided; a thing
or matter settled by judgment.” Res judicata lays the rule that an existing final judgment or
decree rendered on the merits, and without fraud or collusion, by a court of competent
jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or
their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit.
Same; Same; Same; Granting that there is no absolute identity of parties, what is required,
however, for the application of the principle of res judicata is not absolute, but only substantial
identity of parties.—The elements for res judicata in the second concept, i.e., conclusiveness of
judgment, are extant in these cases. There is identity of parties in the 1st and 2nd ALPAP cases,
on one hand, and the Petitions at bar. While the 1st and 2nd ALPAP cases concerned ALPAP and
the present Petitions involved several individual members of ALPAP, the union acted in the 1st
and 2nd ALPAP cases in representation of its members. In fact, in the 2nd ALPAP case, the Court
explicitly recognized that the complaint for illegal lockout was filed by ALPAP on behalf of all
its members who were returning to work. Also in the said case, ALPAP raised, albeit belatedly,
exactly the same arguments as Rodriguez, et al. herein. Granting that there is no absolute identity
of parties, what is required, however, for the application of the principle of res judicata is not
absolute, but only substantial identity of parties. ALPAP and Rodriguez, et al. share an identity of
interest from which flowed an identity of relief sought, namely, the reinstatement of the
terminated ALPAP members to
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336 SUPREME COURT REPORTS ANNOTATED

their former positions. Such identity of interest is sufficient to make them privy-in-law, one to the
other, and meets the requisite of substantial identity of parties.
Same; Same; Same; In the 1st Airline Pilots Association of the Philippines (ALPAP) case, the
Supreme Court (SC) upheld the Department of Labor and Employment (DOLE) Secretary’s
Resolution dated June 1, 1999 declaring that the strike of June 5, 1998 was illegal and all
ALPAP officers and members who participated therein had lost their employment status. The SC
in the 2nd ALPAP case ruled that even though the dispositive portion of the DOLE Secretary’s
Resolution did not specifically enumerate the names of those who actually participated in the
illegal strike, such omission cannot prevent the effective execution of the decision in the 1st
ALPAP case.—There is likewise an identity of issues between the 1st and 2nd ALPAP cases and
these cases. Rodriguez, et al., insist that they did not participate in the June 1998 strike, being on
official leave or scheduled off-duty. Nonetheless, on the matter of determining the identities of
the ALPAP members who lost their employment status because of their participation in the
illegal strike in June 1998, the Court is now conclusively bound by its factual and legal findings
in the 1st and 2nd ALPAP cases. In the 1st ALPAP case, the Court upheld the DOLE Secretary’s
Resolution dated June 1, 1999 declaring that the strike of June 5, 1998 was illegal and all ALPAP
officers and members who participated therein had lost their employment status. The Court in the
2nd ALPAP case ruled that even though the dispositive portion of the DOLE Secretary’s
Resolution did not specifically enumerate the names of those who actually participated in the
illegal strike, such omission cannot prevent the effective execution of the decision in the 1st
ALPAP case. The Court referred to the records of the Strike and Illegal Lockout Cases,
particularly, the logbook, which it unequivocally pronounced as a “crucial and vital piece of
evidence.” In the words of the Court in the 2nd ALPAP case, “[t]he logbook with the heading
‘Return-To-Work Compliance/Returnees’ bears their individual signature signifying their
conformity that they were among those workers who returned to work only on June 26, 1998 or
after the deadline imposed by DOLE. x x x In fine, only those returning pilots, irrespective of
whether they comprise the entire membership of ALPAP, are bound by the June 1, 1999 DOLE
Resolution.”
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Labor Law; Termination of Employment; Illegal Dismissals; Following latest jurisprudence,
Jadie is entitled to the following reliefs/awards for her illegal dismissal: (1) separation pay
equivalent to one (1)-month salary for every year of service in lieu of reinstatement; (2)
backwages from June 9, 1998; (3) longevity pay at P500.00/month for every year of service
based on seniority date falling after June 9, 1998; (4) Christmas bonuses; (5) Jadie’s
proportionate share in the P5 Million contribution of Philippine Airlines, Inc. (PAL) to the
Retirement Fund; and (6) cash equivalent of vacation leaves and sick leaves which Jadie earned
after June 9, 1998.—Following latest jurisprudence, Jadie is entitled to the following
reliefs/awards for her illegal dismissal: (1) separation pay equivalent to one-month salary for
every year of service in lieu of reinstatement; (2) backwages from June 9, 1998; (3) longevity
pay at P500.00/month for every year of service based on seniority date falling after June 9, 1998;
(4) Christmas bonuses; (5) Jadie’s proportionate share in the P5 Million contribution of PAL to
the Retirement Fund; and (6) cash equivalent of vacation leaves and sick leaves which Jadie
earned after June 9, 1998. All of the aforementioned awards shall be computed until finality of
this Decision. Jadie is further entitled to receive benefits due her even prior to her illegal
dismissal on June 9, 1998, namely: (1) unpaid salaries for June 1 to 8, 1998; and (2) productivity
allowance, transportation allowance, and rice subsidy for May 1998 and June 1 to 8, 1998. All
monetary awards due Jadie shall earn legal interest of 6% per annum from date of finality of this
Decision until fully paid.
PETITIONS for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Sobreviñas, Hayudini, Navarro & San Juan for Nilo Rodriguez, et al.
PAL Legal Affairs Department for Philippine Airlines, Inc.
LEONARDO-DE CASTRO, J.:
Before the Court are two consolidated Petitions for Review on Certiorari under Rule 45 of the
Revised Rules of Court
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assailing the Decision1 dated November 30, 2006 and Resolution dated June 8, 2007 of the
Court of Appeals in C.A.-G.R. S.P. No. 71190.
The petitioners in G.R. No. 178501 are 24 former pilots of Philippine Airlines, Inc. (PAL),
namely, Nilo S. Rodriguez (Rodriguez), Francisco T. Alisangco (Alisangco), Benjamin T. Ang,
Vicente P. Ang, Silvestre D. Arroyo (Arroyo), Ruderico C. Baquiran (Baquiran), Wilfredo S.
Cruz, Edmundo M. Delos Reyes, Jr. (Delos Reyes), Virgilio V. Ecarma (Ecarma), Ismael F.
Galisim (Galisim), Tito F. Garcia (Garcia), Liberato D. Gutiza (Gutiza), Gladys L. Jadie (Jadie),
Luisito M. Jose (Jose), Paterno C. Labuga, Jr. (Labuga), Noel Y. Lastimoso (Lastimoso), Danilo
C. Matias (Matias), Ben T. Maturan (Maturan), Virgilio N. Ocharan (Ocharan), Gabriel M.
Piamonte, Jr. (Piamonte), Arturo A. Sabado (Sabado), Manuel P. Sanchez (Sanchez), Margot A.
Corpus as the surviving spouse of the deceased Arnold S. Corpus (Corpus), and Esther Victoria
A. Alcañeses as the surviving spouse of the deceased Efren S. Alcañeses (Alcañeses), hereinafter
collectively referred to as Rodriguez, et al., deemed by PAL to have lost their employment status
for taking part in the illegal strike in June 1998.
The petitioner in G.R. No. 178510 is PAL, a domestic corporation organized and existing under
the laws of the Republic of the Philippines, operating as a common carrier transporting
passengers and cargo through aircraft. PAL named Rodriguez, et al. and Rodolfo O. Poe (Poe) as
respondents in its Petition.
In its assailed Decision, the Court of Appeals: (1) reversed the Decision dated November 6, 2001
of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 027348-01
_______________
1 Rollo (G.R. No. 178501), pp. 80-110 and Rollo (G.R. No. 178510), pp. 68-98; penned by
Associate Justice Edgardo F. Sundiam, with Associate Justices Rodrigo V. Cosico and Celia C.
Librea-Leagogo, concurring.
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which declared the loss of employment of Rodriguez, et al. (except for Jadie) to be in accordance
with law; and (2) reinstated the Decision dated December 11, 2000 of the Labor Arbiter in NLRC
NCR Case No. 00-06-06290-99 which held PAL liable for the illegal dismissal of Rodriguez, et
al. but with the modifications directing PAL to pay the pilots their separation pay in lieu of
reinstatement and deleting the awards for moral and exemplary damages and attorney’s fees.
Rodriguez, et al., pray that the Court partially reverse the judgment of the Court of Appeals by
ordering their reinstatement with backwages and restoring the awards for moral and exemplary
damages and attorney’s fees; while PAL petitions that the same judgment be completely annulled
and set aside.
The relevant facts of the case are as follows:
On December 9, 1997, the Airline Pilots Association of the Philippines (ALPAP) filed with the
National Conciliation and Mediation Board (NCMB) a Notice of Strike, docketed as NCMB
NCR NS 12-514-97 (Strike Case), on the grounds of unfair labor practice and union-busting by
PAL.2
By virtue of the authority vested upon him under Article 263(g)3 of the Labor Code of the
Philippines (Labor Code), the
_______________
2 Rollo (G.R. No. 178510), p. 177.
3 Art. 263. Strikes, picketing, and lockouts.—x x x (g) When, in his opinion, there exists a

labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or the Commission may seek the
assistance of law
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Secretary4 of the Department of Labor and Employment (DOLE) assumed jurisdiction over the
Strike Case, and issued an Order5 on December 23, 1997 prohibiting all actual and impending
strikes and lockouts. On May 25, 1998, the DOLE Secretary issued another Order6 reiterating
the prohibition against strikes and lockouts.
Despite the above mentioned Orders of the DOLE Secretary, ALPAP filed a second Notice of
Strike on June 5, 1998 and staged a strike on the same day at around 5:30 in the afternoon. The
DOLE Secretary immediately called PAL and ALPAP for conciliation conferences on June 6 and
7, 1998 to amicably settle the dispute between them.7 After his efforts failed, the DOLE
Secretary issued an Order8 on June 7, 1998 (Return-to-Work Order) with the following directive:
WHEREFORE, FOEGOING PREMISES CONSIDERED, all striking officers and members of

ALPAP are hereby ordered to return to work within twenty-four (24) hours from receipt of this
Order and for PAL management to accept them under the same terms and conditions of
employment prior to the strike.
Our directive to both parties to cease and desist from committing any and all acts that will
exacerbate the situation is hereby reiterated.9
On June 26, 1998, the members of ALPAP reported for work but PAL did not accept them on the
ground that the 24-hour period for the strikers to return set by the DOLE Secre-
_______________
enforcement agencies to ensure compliance with this provision as well as with such orders as he
may issue to enforce the same.
4 Leonardo A. Quisumbing.
5 Rollo (G.R. No. 178510), pp. 152-154.
6 Id., at pp. 159-160. Issued by former DOLE Secretary Cresenciano B. Trajano.
7 Id., at p. 178.
8 Id., at pp. 175-176.
9 Id., at p. 176.
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VOL. 778, JANUARY 11, 2016 341
tary in his Return-to-Work Order had already lapsed, resulting in the forfeiture of their
employment.
Consequently, ALPAP filed with the NLRC on June 29, 1998 a Complaint10 for illegal lockout
against PAL, docketed as NLRC NCR Case No. 00-06-05253-98 (Illegal Lockout Case). ALPAP
averred that after its counsel received the Return-to-Work Order on June 25, 1998, its members
reported back to work on June 26, 1998 in compliance with the 24-hour period set in the said
Order. ALPAP prayed that PAL be ordered to unconditionally accept its members back to work
and pay the salaries and other benefits due them. On August 21, 1998, the Acting Executive
Labor Arbiter ordered the consolidation of the Illegal Lockout Case with the Strike Case pending
before the DOLE Secretary.11
The DOLE Secretary12 issued a Resolution13 on June 1, 1999 in the consolidated Strike and
Illegal Lockout Cases, with a dispositive portion that reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby:
xxxx
b. DECLARES the strike conducted by ALPAP on June 5, 1998 and thereafter

illegal for being procedurally infirm and in open defiance of the return-to-work
order of June 7, 1998
_______________
10 Id., at pp. 209-212.
11 Id., at pp. 213-218. Order dated August 21, 1998. The Order was affirmed by the NLRC in a
Resolution dated January 18, 1999 (id., at pp. 219-231). ALPAP filed an Urgent Petition for
Injunction to prevent the consolidation but it was denied by the NLRC in a Resolution dated
August 26, 1998 (id., at pp. 236-254). The NLRC Resolution was later affirmed by the Supreme
Court in a Resolution dated September 21, 1998 (id., at pp. 255-257).
12 Bienvenido E. Laguesma.
13 Rollo (G.R. No. 178510), pp. 258-264.
342
and consequently, the strikers are deemed to have lost their employment status; and
c. DISMISSES the complaint for illegal lockout for lack of merit.14
ALPAP filed a Motion for Reconsideration but it was denied by the DOLE Secretary in a
Resolution dated July 23, 1999.15
ALPAP assailed the foregoing Resolutions dated June 1, 1999 and July 23, 1999 of the DOLE
Secretary in the consolidated Strike and Illegal Lockout Cases in a Petition for Certiorari under
Rule 65 of the Revised Rules of Court filed before the Court of Appeals and docketed as C.A.-
G.R. S.P. No. 54880. The appellate court dismissed said Petition in a Decision16 dated August
22, 2001. ALPAP elevated the case to this Court by filing a Petition for Certiorari, bearing the
title “Airline Pilots Association of the Philippines v. Philippine Airlines, Inc.” docketed as G.R.
No. 152306 (1st ALPAP case). The Court dismissed the Petition of ALPAP in a minute
Resolution17 dated April 10, 2002 for failure of ALPAP to show grave abuse of discretion on the
part of the appellate court. Said Resolution dismissing the 1st ALPAP case became final and
executory on August 29, 2002.18
Meanwhile, 32 ALPAP members, consisting of Rodriguez, et al., Poe, Nino B. Dela Cruz (Dela
Cruz), Baltazar B. Musong (Musong), Elmer F. Peña (Peña), Cesar G. Cruz, Antonio O. Noble,
Jr. (Noble), Nicomen H. Versoza, Jr. (Versoza), and Ryan Jose C. Hinayon (Hinayon), hereinafter
collectively referred to as complainants — with varying ranks of captain, first officer, and second
officer19 — filed with the NLRC on
_______________
14 Id., at p. 264.
15 Id., at pp. 265-267.
16 Id., at pp. 269-283.
17 Id., at p. 285.
18 Id., at p. 287. Entry of Judgment.
19 The 21 captains are: Nilo S. Rodriguez, Efren S. Alcañeses, Francisco T. Alisangco,

Benjamin T. Ang, Ruderico C. Baquiran, Ar-
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VOL. 778, JANUARY 11, 2016 343
June 7, 1999 a Complaint20 for illegal dismissal against PAL, docketed as NLRC-NCR Case No.
00-06-06290-99 (Illegal Dismissal Case). The Complaint stated three causes of action, to wit:
CAUSES OF ACTION
A. ILLEGAL DISMISSAL in that [PAL] terminated the employment of the above

named complainants on 7 June 1998 (except for complainant Liberato D. Gutiza, who was
dismissed on 6 June 1998) for their alleged participation in a strike staged by ALPAP at the
Philippine Airlines, Inc. commencing on 5 June 1998 when in truth and in fact:
(i) Complainants EFREN S. ALCAÑESES, VICENTE P. ANG, BENJAMIN T.

ANG, SILVESTRE D. ARROYO, LIBERATO D. GUTIZA, LUISITO M. JOSE,
DANILO C. MATIAS, GABRIEL M. PIAMONTE, JR., MANUEL P. SANCHEZ,
and NICOMEN H. VERSOZA, JR. actually reported for work and duly
discharged all their duties and responsibilities as pilots by flying their assigned
equipment and completing their respective flights to their specified destinations, as
scheduled;
(ii) Complainants GLADYS L. JADIE and BEN T. MATURAN, having been on
_______________
nold S. Corpus, Nino B. Dela Cruz, Virgilio V. Ecarma, Ismael F. Galisim, Tito F. Garcia, Gladys
L. Jadie, Paterno C. Labuga, Jr., Noel Y. Lastimoso, Danilo C. Matias, Ben T. Maturan, Baltazar
B. Musong, Virgilio N. Ocharan, Elmer F. Peña, Rodolfo O. Poe, Arturo A. Sabado and Manuel
P. Sanchez. The nine first officers are: Vicente P. Ang, Silvestre D. Arroyo, Cesar G. Cruz,
Wilfredo S. Cruz, Edmundo M. delos Reyes, Jr., Liberato D. Gutiza, Luisito M. Jose, Antonio O.
Noble, Jr. and Nicomen H. Versoza, Jr.; and the two second officers are: Ryan Jose C. Hinayon
and Gabriel M. Piamonte, Jr.
20 CA Rollo, pp. 122-133.
344
duly approved and scheduled medical leaves, were authorized and permitted to
absent themselves from work on 5 June 1998 up to the termination of their
employment on 7 June 1998, complainant JADIE being then on maternity leave and
grounded as she was already in her ninth month of pregnancy, while complainant
MATURAN was recuperating from a laparotomy and similarly medically grounded
until 15 June 1998;
(iii) Complainants EDMUNDO M. DELOS REYES, JR., BALTAZAR B.

MUSONG, ANTONIO O. NOBLE, JR., ELMER F. PEÑA, and ARTURO A.
SABADO were not required to work and were legally excused from work on 5 June
1998 up to the termination of their employment on 7 June 1998 as they were on their
annual vacation leaves as approved and prescheduled by [PAL] as early as
December 1997 conformably with Company policy and practice on vacation leave
scheduling;
(iv) Complainants NILO S. RODRIGUEZ, RUDERICO C. BAQUIRAN,

ARNOLD S. CORPUS, CESAR G. CRUZ, WILFREDO S. CRUZ, NINO B. DELA
CRUZ, VIRGILIO V. ECARMA, ISMAEL F. GALISIM, TITO F. GARCIA, RYAN
JOSE C. HINAYON, PATERNO C. LABUGA, JR., NOEL Y. LASTIMOSO,
RODOLFO O. POE and VIRGILIO N. OCHARAN were likewise not required to
work and were legally excused from work on 5 June 1998 up to the termination of
their employment on 7 June 1998 as they were off duty and did not have any
scheduled flights based on the June 1998 monthly flights schedules issued to them
by [PAL] in May 1998; and
(v) Complainant FRANCISCO T. ALISANGCO was serving a seven-day sus-
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VOL. 778, JANUARY 11, 2016 345
pension and, thus, not required to work from 4 June 1998 to 10 June 1998 under
Memorandum of Suspension, dated 5 May 1998.
negating that there was any stoppage of work or refusal to return to work on the part of the
above named complainants, as was made the basis of the termination of their employment
by [PAL] on 7 June 1998 (6 June 1998 for complainant Gutiza), due solely to their union
affiliation and membership.
FURTHER, [PAL] denied the above named complainants due process in the termination of
their employment in that it failed to notify them in writing of the charges against them, did
not give them any opportunity to be heard and to explain their side at an administrative
investigation, and to date, has not served them with any formal notice of the termination of
their employment and the cause or causes therefor.
THUS, [PAL] summarily effected the dismissal of the above named complainants without
just or lawful cause.
B. NONPAYMENT OF SALARIES AND OTHER BENEFITS

1. Basic or guaranteed pay
2. Productivity pay
3. Transportation allowance
4. Rice subsidy
5. Retirement Fund
6. Pilots Occupational Disability Fund
7. Vacation leave
8. Sick leave
9. Unutilized days-off
10. Trip leave
11. Trip passes
C. DAMAGES
1. Actual Damages
2. Moral Damages
3. Exemplary Damages
346
4. Attorney’s Fees
5. Cost of Suit.21
Complainants alleged that they were not participants of the June 5, 1998 strike of ALPAP and
that they had no obligation to comply with the Return-to-Work Order of the DOLE Secretary.
The respective allegations of the complainants are summed up below:
_______________
21 Id., at pp. 130-131.
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348

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VOL. 778, JANUARY 11, 2016 349
PAL terminated complainants from employment together with the strikers who disobeyed the
Return-to-Work Order, even though complainants had valid reasons for not reporting for work.
Complainants, except for Gutiza,22 further asserted that PAL did not observe the twin
requirements of notice and hearing in effecting their termination; that PAL refused to admit them
when they reported for work on June 26, 1998;
_______________
22 Id., at p. 149. Gutiza, an ALPAP union officer, received a notice of termination dated June 5,
1998.
350
and that PAL, which long planned to reduce its fleet and manpower, took advantage of the strike
by dismissing its pilots en masse. Complainants thus prayed for reinstatement to their former
positions without loss of seniority rights; backwages and other monetary claims; and moral and
exemplary damages, and attorney’s fees.
In its Motion to Dismiss and/or Position Paper for Respondent,23 PAL averred that the
Complaint for illegal dismissal is an offshoot of the Strike and Illegal Lockout Cases wherein the
DOLE Secretary already adjudged with finality that the striking pilots lost their employment for
participating in an illegal strike and/or disobeying the Return-to-Work Order. Hence, PAL argued
that the Complaint was already barred by res judicata.
In addition, PAL presented the following evidence to refute complainants’ allegation that they
were not strikers: (a) the logbook showing that complainants belatedly complied with the Return-
to-Work Order on June 26, 1998; and (b) the photographs showing that some of complainants
were at the strike area or picket line, particularly: Maturan, who was supposed to be on sick
leave from June 1 to 15, 1998 but was seen picketing on June 9, 1998; Delos Reyes, Musong,
Noble, Sabado, and Peña, who were supposed to be on vacation leave but were seen in the strike
area24 and who did not report back for work after their respective vacation leaves ended;
Rodriguez, Baquiran, Corpus, Cesar G. Cruz, Wilfredo S. Cruz, De La Cruz, Ecarma, Galisim,
Garcia, Hinayon, Labuga, Lastimosa, Poe, and Ocharan, who were off-duty but participated in
the strike against PAL; and Alcañeses, Benjamin T. Ang, Vicente P. Ang, Arroyo, Gutiza, Jose,
Matias, Piamonte, Sanchez, and Versoza who, after returning from abroad and completing their
respective flights, joined the strike instead of offering their services to PAL who was in dire need
of pilots at
_______________
23 Id., at pp. 197-214.
24 Except for Peña.
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that time. As regards Jadie, PAL contended that she forfeited her employment by failing to report
for work at the end of her maternity leave.
Labor Arbiter Francisco A. Robles (Robles) rendered a Decision25 on December 11, 2000.
According to Labor Arbiter Robles, the Illegal Dismissal Case may proceed independently from
the Strike and Illegal Lockout Cases:
On the threshold issue of jurisdiction, it is unfortunately a lost cause for [PAL] to argue
that the instant case involves a dispute already assumed and decided by the Secretary of
Labor in NCMB-NCR-NS-12-514-97 and its related cases. The strike case resolved by the
Labor Secretary is not more and no less than that — a strike case wherein the validity of
ALPAP’s declared mass action on June 5, 1998 is at issue. In contrast, going by the
allegations of the complaint in the instant case, the cause of action pleaded by
complainants against [PAL] are for illegal dismissal, nonpayment of salaries and benefits,
and damages, based precisely on the pivotal fact alleged by complainants that they are not
“strikers” in the eyes of the law and yet had been inexplicably slapped with termination of
their employment along with the strikers. Not one of the consolidated cases NCMB-NCR-
NS-12-514-97, NCMB-NCR-NS-06-236-98, NLRC-NCR-No. 00-06-05235-98 shall
resolve or has already resolved the instant termination dispute.
We note that this case has not been ordered consolidated with the strike case, nor has
[PAL] at anytime asked for such consolidation. The June 1, 1999 Resolution of the
Secretary of Labor in NCMB-NCR-NS-12-514-97, cited by [PAL] as having a binding
effect on complainants do not mention the[m] at all, or purport to treat of their peculiar
case of being non-strikers dismissed as strikers. We cannot therefore subscribe to the view
advanced by [PAL] that this is a dispute already assumed by the Secretary of Labor and
decided by him with the affirmance of the strikers’
_______________
25 Rollo (G.R. No. 178501), pp. 155-208.
352
loss of employment in his June 1, 1999 Resolution in NCMB-NCR-NS-12-514-97.

Complainants should be given their day in court with respect to their claims herein as there
is simply no basis for assuming that the same have already been resolved in the strike case.
It is well-settled that as an element of res judicata, there must be between the first and
second action identity of parties, identity of subject matter and identity of causes of action.
(Linzag v. Court of Appeals, 291 SCRA 304; Nabus v. Court of Appeals, G.R. No. 91670,
February 7, 1991, 193 SCRA 732; VDA Fish Broker, et al. v. NLRC, et al., G.R. Nos.
76142-43, December 27, 1993). The parties, subject matter and causes of action involved
in this case are so vastly different from those in NCMB-NCR-NS-12-514-97, etc. that it is
difficult if not virtually impossible to conceive how the resolution of such strike case can
constitute res judicata in the case of complainants herein. This Office therefore cannot but
exercise the jurisdiction duly invoked by complainants over this termination dispute with
the filing of their complaint.26
Labor Arbiter Robles then proceeded to resolve the merits of the case in complainants’ favor:
Turning now to the merits of the case, [PAL] has not rebutted and even admits that
complainants’ status and individual circumstances at or about the time of the strike
declared on June 5, 1998 are essentially as stated by them in their complaint (i.e., that
complainants were working or were on leave of absence, day-off, etc.) and related in
further detail in their submitted individual sworn statements in the case. Since
complainants were concededly working or otherwise excused from work at the time of the
strike, their employment with [PAL] should not have been prejudiced or affected in any
way at all by its occurrence. Yet [PAL] implemented the mass dismissal of close to 600
pilots, including complainants, without distinction as to their guilt or innocence of
“striking.”
_______________
26 Id., at pp. 168-170.
353
VOL. 778, JANUARY 11, 2016 353
A strike, by definition, is a temporary stoppage of work by the concerted action of

employees as a result of an industrial or labor dispute (Art. 212[o] of the Labor Code). It is
incongruous to accuse an employee who was actually working or was excused from work
of “stoppage” of the work he was precisely carrying out or was not required to perform.
[PAL] should have made these distinctions between the pilots who staged the strike and
those peculiarly situated as complainants (working or excused from work) before taking
action against its employees for the June 5, 1998 strike, instead of dismissing them in a
sweepingly reckless, arbitrary, and oppressive manner.
Indeed, on the basis of [PAL]’s Return-to-Work Notice and the DOLE Return-to-Work
Order, loss of employment in connection with the strike was a consequence to be faced
only by “PAL pilots who joined the strike” and “all striking officers and members and
officers (sic) of ALPAP,” to whom the warning notices had expressly been issued. It should
not have been made to apply to complainants, who were working or were not at all
supposed to be working at the time of the strike, and therefore had every reason to believe
that the issuances addressed to “strikers” do not refer to them. For the same reason, it does
not make any sense to consider complainants as having “defied” the return-to-work
mandate in failing to beat the deadline prescribed for the strikers. Precisely, complainants
were not strikers.
[PAL] asserts that it “called” on its reserve pilots including complainants to man its flights
when the strike was declared and in any case complainants should have “offered” their
services at that time because it was in dire need of pilots. However, not a single piece of
evidence was ever presented by [PAL] to prove that it sent out any rush dispatch messages
to complainants, or even made a telephone call, to upgrade them to active duty or recall
them from their leave of absences/days-off/suspension on the ground that their services
were urgently needed. It being the responsibility of [PAL] under the CBA to draw up the
pilots’ monthly schedule and deploy them on flight assignments, it did not have to wait for
complainants to
354
volunteer manning PAL flights. [PAL] had the prerogative to change complainants’ flight
schedules in accordance with the CBA. It did not exercise this prerogative. It cannot now
blame complainants for the consequences of its own inaction.
As for [PAL]’s contention that the photographs taken of complainants at the picket line
proves their being “strikers,” the pictures do not show that those who admittedly were
working at the time of the strike were in fact among the picketers at the Company premises
and not on the PAL flights that they claim to have crewed for. In any case, [PAL] does not
take issue with the working status of the complainants who had flights on or about June 5,
1998; only that complainants did not report for work thereafter. On the other hand, the rest
of the complainants were excused from work. Their “free time” would be meaningless if
they were not at liberty to man the picket line while off-duty without fear of adverse
consequences from their lawful exercise of their guaranteed rights. It is to be stressed that
complainants have sufficiently shown by their uncontradicted evidence that they were
working or were excused from work during the material period of the strike until their
dismissal. Without more, the unexplained pictures of the complainants at the picket line
(most of which were taken long after June 9, 1998) cannot be said to constitute a proven
case of “striking.”
We further find pertinent the cited cases of Bangalisan v. Court of Appeals (276 SCRA
619) and Dela Cruz v. Court of Appeals (305 SCRA 303) to the effect that an alleged
“striker” who was excused from work during a strike staged by his coworkers cannot be
penalized with the loss of his employment as a striker in the absence of his actual
participation in the strike since those who avail of their free time “to dramatize their
grievances and to dialogue with the proper authorities within the bounds of the law”
cannot be held liable for their participation in the mass action against their employer, this
being a valid exercise of their constitutionally guaranteed rights. Picketers are not
necessarily strikers. If complainants had
355
VOL. 778, JANUARY 11, 2016 355
manned the picket lines at some time during their off-duty, it was their right to do so. They
cannot be accused of stoppage of work if they do.
As correctly pointed out by complainants, [PAL] certainly had the records to verify if
complainants were in fact striking, working, or off-duty as of June 5, 1998. Despite this, it
precipitately ousted complainants from their employment in a mass purging of about 600
pilots as strikers. Significantly, [PAL] had made no attempt to rebut complainants’
evidence (consisting of sworn statements of witnesses and documentary exhibits) tending
to show that:
1. Management’s declared intention since 1997 was to retrench/retire about 200

pilots and drastically downscale operations because of alleged business losses, but
its restructuring program gained no ground despite the passage of several months
because ALPAP was staunchly opposed to it and in the meantime, [PAL] continued
“bleeding”;
2. A PAL management pilot, Capt. Emmanuel Generoso, disclosed to several ALPAP

pilots that a strike by ALPAP would be a welcome development as it would make
management’s job of ridding the company pilots easier;
3. The instant ALPAP declared the strike, complainants ceased receiving their
salaries, allowances, and benefits which fell due, as though [PAL] had merely been
waiting for the strike to happen and, this done, it considered the pilots’ termination
as effected ipso facto. Complainants were not furnished any written notice requiring
them to show cause why they should not be dismissed from employment for any
offense; nor were they given written notices of termina-
356
tion (except for complainant Liberato Gutiza who received a termination letter with
the effectivity date of June 6, 1998 after being made to crew Flight No. PR-100
which arrived in Manila from Honolulu on June 7, 1998);
4. Confirming the veracity of several press statements made by [PAL] on its mass
dismissal of about 600 pilots by June 7, 1998, when some of the complainants
thereafter called PAL Flight Deck Crew Scheduling to check on their next scheduled
flights, they were informed that they were terminated employees and no longer had
any flight assignments, and would furthermore be barred from entering the Gate to
[PAL] offices;
5. Complainants were given employment application forms to accomplish and

submit if they were to resume their work as PAL pilots; and
6. [PAL] considered its dismissal of almost 600 pilots, including complainants, as

“reaffirmed” under the DOLE Return-to-Work Order as of June 9, 1998 or upon the
lapse of the 24-hour deadline fixed therein. It immediately downscaled its flight
operations on the basis of a 44-man pilot complement, shutting down several
stations in the process.
The foregoing facts, which stand in the record unrebutted by countervailing evidence from
[PAL], all too clearly reveal management’s prior decision and firm resolve to dismiss its
pilots at the first opportunity, which it found in the June 5, 1998 strike. Of course,
complainants’ case presented an unexpected complication since they cannot be lumped
together with the strikers given their circumstances at the time of the strike. [PAL] how-
357
VOL. 778, JANUARY 11, 2016 357
ever took its chances, it dismissed them anyway and is now straining in vain to rationalize
complainants’ termination as “strikers.” The facts present a classical case of dismissal in
bad faith. Complainants never had a chance to hold on to their employment since [PAL]
was hell-bent from the start on the mass dismissal of its pilots regardless of the existence
of actual and valid grounds to terminate their employment. It should be made to face the
consequences thereof.27
Ultimately, Labor Arbiter Robles adjudicated:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
(a) Finding the dismissal of complainants to be illegal;
(b) Ordering [PAL] to reinstate complainants to their former positions without loss of

seniority rights, privileges and benefits;
(c) Ordering [PAL] to pay complainants their full backwages from June 9, 1998 up to
date of reinstatement, x x x.
xxxx
and in addition, (i) longevity pay at P500.00/month for every year of service based on
seniority date falling after June 9, 1998; (ii) Christmas bonus for 1998 and 1999 per the
CBA; (iii) complainants’ proportionate share in the P5 million contribution of [PAL] to the
Retirement Fund, and (iv) cash equivalent of vacation leave and sick leave which
complainants earned from June 9, 1998 until reinstatement based on the CBA scheduled
(sic).
(d) Ordering [PAL] to pay moral damages to complainants in the amount of P300,000.00

each;
(e) Ordering [PAL] to pay exemplary damages to complainants in the amount of

P200,000.00 each;
_______________
27 Id., at pp. 170-178.
358
(f) Ordering [PAL] to pay complainants on their money claims for unpaid salaries for the
period June 1-8, 1998, and productivity allowance, transportation allowance, and rice
subsidy for May 1998 and June 1-8, 1998; and
(g) Ordering [PAL] to pay complainants attorney’s fees in an amount equivalent to ten

percent (10%) of the total monetary award.28
PAL appealed before the NLRC, docketed as NLRC NCR CA No. 027348-01. In its Decision
dated November 6, 2001, the NLRC reversed Labor Arbiter Robles’ Decision.
On the jurisdictional and procedural matters, the NLRC found that: (a) The ongoing receivership
proceedings before the Securities and Exchange Commission (SEC) involving PAL had no effect
on the jurisdiction of the Labor Arbiter or the NLRC over the Illegal Dismissal Case; (b) The
Illegal Dismissal Case was not barred by res judicata despite the prior ruling of the DOLE
Secretary in the Strike Case because the latter did not resolve the particular cause of action
asserted by the complainants in the former; and (c) The issue on forum shopping was rendered
moot by the finding of the NLRC on the absence of res judicata.
The NLRC next addressed the substantive issue of whether or not complainants were illegally
dismissed. The NLRC ruled in the negative for all the complainants except Jadie. According to
the NLRC, the strike was not a one-day affair. It started on June 5, 1998 and lasted until the later
part of June 1998. Complainants’ assertion that they were not strikers was controverted by the
photographs submitted as evidence by PAL showing that several complainants were at the strike
area on June 9, 1998, some even holding a streamer saying: “WE ARE ON STRIKE.” The
NLRC gave weight to the finding of the DOLE Secretary, affirmed by the Court of Appeals in
C.A.-G.R. S.P. No. 54880, that ALPAP was served a copy of the Return-to-
_______________
28 Id., at pp. 202-208.
359
VOL. 778, JANUARY 11, 2016 359
Work Order on June 8, 1998, thus, the ALPAP strikers had 24 hours, or until June 9, 1998, to
comply with said Order. However, based on the logbook, the complainants only reported back to
work on June 26, 1998. As a result of their defiance of the DOLE Secretary’s Return-to-Work
Order, complainants lost their employment status as of June 9, 1998. Even if complainants were
supposedly on official leave or off-duty during the strike, records revealed that their official
leave or off-duty status had expired at least two weeks before June 26, 1998. The logbook
establishing that complainants reported for work only on June 26, 1998 must prevail over the
complainants’ unsupported allegations that they called PAL offices upon the expiration of their
respective leaves or days off to verify the status of their flights. The NLRC additionally pointed
out that complainants, while claiming they were not strikers, reported back for work in
compliance with the DOLE Secretary’s Return-to-Work Order, their signatures appearing in the
logbook pages under the captions: “RETURN-TO-WORK RETURNEES,” “RETURN-TO-
WORK COMPLIANCE,” and “RETURN-TO-WORK DOLE COMPLIANCE.”
In the case of Gutiza, the NLRC held that he was dismissed for being a union officer who
knowingly participated in the illegal strike.29 The NLRC also particularly noted that while other
complainants belatedly reported for work on June 26, 1998 together with the other ALPAP pilots,
Baquiran did not ever attempt to comply with the Return-to-Work Order, and was declared to
have simply abandoned his job.30 The NLRC only spared Jadie, there being no evidence that she
participated in the illegal strike. Jadie was on leave being in her ninth month of pregnancy at the
time of the strike, actually giving birth on June 24, 1998. The NLRC opined that given her
circumstances, it was impossible for Jadie to comply with the Return-to-Work Order, hence, she
was illegally dis-
_______________
29 Id., at p. 146.
30 Id., at p. 150.
360
missed on June 9, 1998.31 However, Jadie could no longer be reinstated. Jadie’s former position
as Captain of the F-50 aircraft no longer existed as said aircraft was returned to the lessors in
accordance with the Amended and Restated Rehabilitation Plan of PAL. Also, per the
certification of the Air Transportation Office (ATO), Jadie’s license already expired in 1998.
Consequently, the NLRC directed PAL to pay Jadie backwages and separation pay, instead of
reinstatement.
The dispositive portion of the NLRC Decision dated November 6, 2001 reads:
WHEREFORE, premises considered, we hold that the following complainants lost their
employment status with respondent PAL for cause and in accordance with law: Arnold S.
Corpus, Cesar G. Cruz, Liberato D. Gutiza, Luisito M. Jose, Paterno C. Labuga, Jr.,
Baltazar B. Musong, Arturo A. Sabado, Jr., Nilo S. Rodriguez, Edmundo delos Reyes, Jr.,
Tito F. Garcia, Virgilio V. Ecarma, Noel Y. Lastimoso, Virgilio N. Ocharan, Rodolfo O.
Poe, Efren S. Alcañeses, Benjamin T. Ang, Vicente T. Ang, Silvestre D. Arroyo, Manuel P.
Sanchez, Nicomen H. Versoza, Jr., Danilo C. Matias, Francisco T. Alisangco, Antonio O.
Noble, Jr., Ben T. Maturan, Wilfredo S. Cruz, Ismael F. Galisim, Gabriel M. Piamonte, Jr.,
Elmer F. Peña, Nino B. dela Cruz, Ruderico C. Baquiran and Ryan Jose C. Hinayon.
The Labor Arbiter’s decision declaring that the aforementioned complainants were
illegally dismissed, and all the monetary awards granted to them, are hereby reversed and
set aside for lack of merit. The Labor Arbiter’s order for the reinstatement of the
complainants is likewise declared to be devoid of merit, and any claim based on said order
of reinstatement, such as, but not limited to, backwages pending appeal, is declared to be
without any legal basis.
Respondent PAL is hereby directed to pay complainant Gladys L. Jadie, the monetary
award granted in
_______________
31 Id., at p. 151.
361
VOL. 778, JANUARY 11, 2016 361
the assailed decision which is P2,024,865.00 and (I) longevity pay at P500.00/month of
every year of service based on seniority date falling after June 9, 1998; (II) Christmas
bonus for 1998 and 1999 per the CBA; (III) [Jadie’s] proportionate share in the P5 million
contribution of [PAL] to the Retirement Fund; and (IV) cash equivalent of vacation leave
and sick leave which [Jadie] earned from June 9, 1998 until September 11, 2000.
[PAL] is also ordered to pay [Jadie] her unpaid salaries for the period June 1-8, 1998 and
productivity allowance, transportation allowance, and rice subsidy for May 1998 and June
1-8, 1998.
In addition, [PAL] is ordered to pay [Jadie] separation pay equivalent to one half (1/2)-
month for every year of service as a PAL employee.
[PAL] is ordered to pay [Jadie] attorney’s fees in an amount equivalent to ten percent
(10%) of the total monetary award.32
Aggrieved, Rodriguez, et al., Dela Cruz, and Poe filed a Petition for Certiorari with the Court of
Appeals, docketed as C.A.-G.R. S.P. No. 71190, assailing the NLRC judgment for having been
rendered with grave abuse of discretion. Dela Cruz subsequently withdrew his Petition on June
25, 2003.
The Court of Appeals promulgated its Decision on November 30, 2006 favoring Rodriguez, et
al., and Poe. The appellate court adjudged that: (a) PAL indiscriminately dismissed on June 7,
1998 its more than 600 pilots, including Rodriguez, et al. and Poe, who did not comply with its
Return-to-Work Notice published in the Philippine Daily Inquirer; (b) PAL simply took
advantage of the strike on June 5, 1998 to dismiss ALPAP members en masse, regardless of
whether the members participated in the strike or not, so as to reduce its pilots complement to an
acceptable level and to erase seniority; (c) since they were already terminated on June 7, 1998,
any activity under-
_______________
32 Id., at pp. 152-154.
362
taken by Rodriguez, et al. and Poe on and after June 9, 1998 was already immaterial; (d) the
NLRC gave undue weight to the photographs and logbook presented by PAL; (e) the
photographs were not properly identified nor the circumstances under which they had been taken
satisfactorily established; (f) the logbook and its entries are self-serving because the logbook was
supplied by PAL itself and there was a dearth of explanation as to the implications of the pilots’
signatures appearing therein and the significance of the annotations “RETURN-
TO-WORK RETURNEES,” “RETURN-TO-WORK COMPLIANCE,” and “RETURN-TO-
WORK DOLE COMPLIANCE”; and (g) as for Jadie, PAL did not satisfactorily prove that her
reinstatement was an impossibility as there was no showing that her services were obsolete or
could no longer be utilized.
Although the Court of Appeals essentially agreed with the findings and conclusion of Labor
Arbiter Robles that Rodriguez, et al. and Poe were illegally dismissed, it modified Labor Arbiter
Robles’ Decision as follows:
All told, We find that [NLRC] gravely abused its discretion in setting aside the Decision of
the Labor Arbiter which found that [Rodriguez, et al. and Poe] had indeed been illegally
dismissed. We are mindful, however, that the relief of reinstatement of [Rodriguez, et al.
and Poe] may no longer be viable or practicable in view of several factors, i.e., the
animosity between the parties ([Rodriguez, et al. and Poe] occupy positions of confidence)
herein as engendered by this protracted and heated litigation, the fact that [Rodriguez, et
al. and Poe] may have already secured equivalent or other employments after the
significant lapse of time since the institution of their suit and, finally, the nature of [PAL’s]
business which require the continuous operations of its planes, and because of which, new
pilots have already been hired.
We, therefore, modify the Decision of the Labor Arbiter by affirming the grant of
backwages to [Rodriguez, et al. and Poe] but, instead, order the payment of separa-
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VOL. 778, JANUARY 11, 2016 363
tion pay in lieu of reinstatement. Moreover, We delete the awards of moral and exemplary
damages as well as attorney’s fees. Moral and exemplary damages cannot be justified
solely upon the premise that an employer dismissed his employee without cause or due
process. The termination must be attended with bad faith, or fraud or in a manner
oppressive to labor, which were not convincingly established herein. Where a party is not
entitled to actual or moral damages, an award of exemplary damages is likewise without
basis. (San Miguel Corporation v. Del Rosario, 477 SCRA 619; Tanay Recreation Center
and Development Corp. v. Fausto, 455 SCRA 457) Likewise, the policy of the law is to put
no premium on the right to litigate. Hence, the award of attorney’s fees should also be
deleted.33
The Court of Appeals decreed in the end:

WHEREFORE, premises considered, the petition for certiorari is hereby GRANTED.
The Decisions of the public respondent NLRC, dated November 6, 2001 and March 25,
2002 are hereby SET ASIDE and the Decision of Labor Arbiter Francisco Robles, dated
December 11, 2000, is REINSTATED subject to the MODIFICATIONS that in lieu of
reinstatement, [PAL] is ordered to pay [Rodriguez, et al. and Poe] separation pay and that
the awards of moral and exemplary damages and attorney’s fees are hereby deleted.
The Court NOTES the withdrawal of the petition insofar as petitioner Nino de la Cruz is
concerned.34
Rodriguez, et al., and Poe filed a Motion for Partial Reconsideration, while PAL filed a Motion
for Reconsideration of the foregoing Decision, but the appellate court denied both motions in a
Resolution35 dated June 8, 2007.
_______________
33 Id., at pp. 109-110.
34 Id., at p. 110.
35 Id., at pp. 112-114.
364
Hence, Rodriguez, et al., and PAL assail before this Court the Decision dated November 30,
2006 and Resolution dated June 8, 2007 of the Court of Appeals by way of separate Petitions for
Review on Certiorari, docketed as G.R. No. 178501 and G.R. No. 178510, respectively.
In G.R. No. 178501, Rodriguez, et al., assigned four errors on the part of the Court of Appeals,
viz.:
I. THE COURT OF APPEALS ERRED IN ORDERING THE PAYMENT OF
SEPARATION PAY TO [RODRIGUEZ, ET AL.] IN LIEU OF REINSTATEMENT, ON
THE GROUNDS THAT [RODRIGUEZ, ET AL.] “MAY HAVE ALREADY SECURED”
OTHER EMPLOYMENT AND THAT “NEW PILOTS HAVE ALREADY BEEN
HIRED,” CONTRARY TO THE EXPRESS PROVISIONS OF THE LABOR CODE,
THE IMPLEMENTING RULES AND REGULATIONS THEREOF, AS WELL AS
EXISTING JURISPRUDENTIAL POLICY, ALL MANDATING THAT ILLEGALLY
DISMISSED EMPLOYEES SHALL BE ENTITLED TO THE TWIN REMEDIES OF
REINSTATEMENT AND PAYMENT OF BACKWAGES.
II. THE COURT OF APPEALS ERRED WHEN IT DENIED THE AWARD OF

REINSTATEMENT ON THE SUPPOSITION THAT SAID RELIEF, WHICH IS A
RIGHT AUTHORIZED UNDER THE LAW AND EXISTING JURISPRUDENCE,
“MAY NO LONGER BE VIABLE OR PRACTICABLE” IN THE PRESENT CASE DUE
TO ALLEGED STRAINED RELATIONS BETWEEN THE PARTIES.
III. THE COURT OF APPEALS ERRED IN DENYING THE AWARD OF MORAL AND
EXEMPLARY DAMAGES, DESPITE ITS OWN FINDING THAT PRIVATE
RESPONDENT HAD ENGAGED IN AN “INDISCRIMINATE DISMISSAL” AND HAD
SIMPLY TAKEN ADVANTAGE OF THE 5 JUNE 1998
365
VOL. 778, JANUARY 11, 2016 365
STRIKE TO DISMISS [RODRIGUEZ, ET AL.] EN MASSE, IN VIOLATION OF LAW

AND JURISPRUDENTIAL PRECEDENTS.
IV. THE COURT OF APPEALS ERRED IN DENYING THE AWARD OF ATTORNEY’S

FEES, DESPITE FINDING THAT PRIVATE RESPONDENT HAD ARBITRARILY AND
CAPRICIOUSLY TERMINATED [RODRIGUEZ, ET AL.’S] EMPLOYMENT, THUS
FORCING THEM TO LITIGATE AND CONSEQUENTLY INCUR EXPENSES TO
PROTECT THEIR RIGHTS AND INTERESTS, CONTRARY TO SETTLED LAW AND
JURISPRUDENCE.36
Whereas PAL based its Petition in G.R. No. 178510 on the following assignment of errors:
I. [RODRIGUEZ, ET AL. AND POE’S] COMPLAINT FOR ILLEGAL DISMISSAL IS

BARRED BY THE FINAL AND EXECUTORY DECISION IN THE COMPLAINT FOR
ILLEGAL LOCKOUT FILED BY ALPAP IN BEHALF OF ALL ITS MEMBERS,
INCLUDING [RODRIGUEZ, ET AL. AND POE].
II. THE DECISION OF THIS HONORABLE COURT IN G.R. NO. 170069 FILED BY
ONE OF [RODRIGUEZ, ET AL. AND POE’S] ORIGINAL CO-COMPLAINANTS
(CESAR CRUZ) IS APPLICABLE AND BINDING ON [RODRIGUEZ, ET AL. AND
POE], BEING BASED ON THE SAME FACTS AND EVIDENCE.
III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVIEWED AND

REASSESSED THE FACTUAL FINDINGS OF THE NLRC AND SUPPLANTED THE
SAME WITH ITS OWN FACTUAL FINDINGS AND CONCLUSIONS IN A PETITION
FOR CERTIORARI WHERE THE ONLY
_______________
36 Id., at pp. 29-30.
366
ISSUE WAS WHETHER THE NLRC ACTED WITHOUT JURISDICTION OR WITH

GRAVE ABUSE OF DISCRETION.
IV. THE SIXTH DIVISION OF THE COURT OF APPEALS GRAVELY ERRED IN

HOLDING THAT PAL MERELY TOOK ADVANTAGE OF THE ALPAP STRIKE TO
DISMISS ITS PILOTS EN MASSE, CONTRARY TO THE FACTUAL FINDINGS OF
THE SECRETARY OF LABOR, THE NLRC, THE COURT OF APPEALS AND THIS
HONORABLE COURT IN EARLIER CASES INVOLVING THE SAME FACTS AND
EVIDENCE.37
In the meantime, during the pendency of the instant Petitions, the Court decided on June 6, 2011
Airline Pilots Association of the Philippines v. Philippine Airlines, Inc.38 docketed as G.R. No.
168382 (2nd ALPAP case). The 2nd ALPAP case arose from events that took place following the
finality on August 29, 2002 of the Resolution dated April 10, 2002 which dismissed the 1st
ALPAP case. Below is the factual background for the 2nd ALPAP case as summarized by the
Court in said Decision:
On January 13, 2003, ALPAP filed before the Office of the DOLE Secretary a Motion in
[the Strike Case], requesting the said office to conduct an appropriate legal proceeding to
determine who among its officers and members should be reinstated or deemed to have
lost their employment with PAL for their actual participation in the strike conducted in
June 1998. ALPAP contended that there is a need to conduct a proceeding in order to
determine who actually participated in the illegal strike since not only the striking
workers were dismissed by PAL but all of ALPAP’s officers and members, even
though some were on official leave or abroad at the time of the
_______________
37 Rollo (G.R. No. 178510), pp. 35-36.
38 665 Phil. 679; 650 SCRA 545 (2011).
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VOL. 778, JANUARY 11, 2016 367
strike. It also alleged that there were some who joined the strike and returned to work but
were asked to sign new contracts of employment, which abrogated their earned seniority.
Also, there were those who initially defied the return-to-work order but immediately
complied with the same after proper receipt thereof by ALPAP’s counsel. However, PAL
still refused to allow them to enter its premises. According to ALPAP, such measure, as
to meet the requirements of due process, is essential because it must be first
established that a union officer or member has participated in the strike or has
committed illegal acts before they could be dismissed from employment. In other
words, a fair determination of who must suffer the consequences of the illegal strike is
indispensable since a significant number of ALPAP members did not at all participate in
the strike. The motion also made reference to the favorable recommendation rendered by
the Freedom of Association Committee of the International Labour Organization (ILO) in
ILO Case No. 2195 which requested the Philippine Government “to initiate discussions in
order to consider the possible reinstatement in their previous employment of all ALPAP’s
workers who were dismissed following the strike staged in June 1998.” A Supplemental
Motion was afterwards filed by ALPAP on January 28, 2003, this time asking the DOLE
Secretary to resolve all issues relating to the entitlement to employment benefits by the
officers and members of ALPAP, whether terminated or not.
In its Comment to ALPAP’s motions, PAL argued that the motions cannot legally prosper
since the DOLE Secretary has no authority to reopen or review a final judgment of the
Supreme Court relative to [the Strike Case]; that the requested proceeding is no longer
necessary as the CA or this Court did not order the remand of the case to the DOLE
Secretary for such determination; that the NLRC rather than the DOLE Secretary has
jurisdiction over the motions as said motions partake of a complaint for illegal dismissal
with monetary claims; and that all money claims are deemed suspended in view of the fact
that PAL is under receivership.
368
On January 24, 2003, the DOLE called the parties to a hearing to discuss and clarify the
issues raised in ALPAP’s motions. In a letter dated July 4, 2003 addressed to ALPAP
President, Capt. Ismael C. Lapus, Jr., then Acting DOLE Secretary, Imson, resolved
ALPAP’s motions in the following manner:
xxxx
After a careful consideration of the factual antecedents, applicable legal principles
and the arguments of the parties, this Office concludes that [the Strike Case] has
indeed been resolved with finality by the highest tribunal of the land, the Supreme
Court. Being final and executory, this Office is bereft of authority to reopen an issue
that has been passed upon by the Supreme Court.
It is important to note that in pages 18 to 19 of ALPAP’s Memorandum, it admitted

that individual complaints for illegal dismissal have been filed by the affected pilots
before the NLRC. It is therefore an implied recognition on the part of the pilots that
the remedy to their present dilemma could be found in the NLRC.
xxxx
Thus, to avoid multiplicity of suits, splitting causes of action and forum shopping
which are all obnoxious to an orderly administration of justice, it is but proper to
respect the final and executory order of the Supreme Court in this case as well as the
jurisdiction of the NLRC over the illegal dismissal cases. Since ALPAP and the
pilots have opted to seek relief from the NLRC, this Office should respect the
authority of that Commission to resolve the dispute in the normal course of law. This
Office will no longer entertain any further initiatives to split the jurisdiction or to
shop for a forum that shall only foment
369
VOL. 778, JANUARY 11, 2016 369
multiplicity of labor disputes. Parties should not jump from one forum to another.
This Office will make sure of that.
By reason of the final ruling of the Honorable Supreme Court, the erring pilots have
lost their employment status and second, because these pilots have filed cases to
contest such loss before another forum, the Motion and Supplemental Motion of
ALPAP as well as the arguments raised therein are merely NOTED by this Office.
ALPAP filed its motion for reconsideration arguing that the issues raised in its motions
have remained unresolved hence, it is the duty of DOLE to resolve the same it having
assumed jurisdiction over the labor dispute. ALPAP also denied having engaged in forum
shopping as the individual complainants who filed the cases before the NLRC are separate
and distinct from ALPAP and that the causes of action therein are different. According to
ALPAP, there was clear abdication of duty when then Acting Secretary Imson refused to
properly act on the motions. In a letter dated July 30, 2003, Secretary Sto. Tomas likewise
merely noted ALPAP’s motion for reconsideration, reiterating the DOLE’s stand to abide
by the final and executory judgment of the Supreme Court.
Proceedings before the Court of Appeals
ALPAP filed a petition for certiorari with the CA, insisting that the assailed letters dated
July 4, 2003 and July 30, 2003, which merely noted its motions, were issued in grave
abuse of discretion.
xxxx
The CA, in its Decision dated December 22, 2004, dismissed the petition. It found no
grave abuse of discretion on the part of Sto. Tomas and Imson in refusing to conduct the
necessary proceedings to determine issues relating to ALPAP members’ employment status
and entitlement to employment benefits. The CA held that both these issues were among
the issues taken up and re-
370
solved in the June 1, 1999 DOLE Resolution which was affirmed by the CA in C.A.-G.R.
S.P. No. 54880 and subsequently determined with finality by this Court in [the 1st ALPAP
case]. Therefore, said issues could no longer be reviewed. The CA added that Sto. Tomas
and Imson merely acted in deference to the NLRC’s jurisdiction over the illegal dismissal
cases filed by individual ALPAP members.
ALPAP moved for reconsideration which was denied for lack of merit in CA Resolution
dated May 30, 2005.39 (Emphases supplied)
ALPAP once more sought remedy from this Court through a Petition for Review on Certiorari in
the 2nd ALPAP case. The Court therein denied the Petition of ALPAP for lack of merit, based on
the ratiocination extensively quoted below:
We deny the petition.
There was no grave abuse of

discretion on the part of Sto.
Tomas and Imson in merely
noting ALPAP’s twin motions
in due deference to a final and
immutable judgment rendered
by the Supreme Court.
From the June 1, 1999 DOLE Resolution, which declared the strike of June 5, 1998 as
illegal and pronounced all ALPAP officers and members who participated therein to have
lost their employment status, an appeal was taken by ALPAP. This was dismissed by the
CA in C.A.-G.R. S.P. No. 54880, which ruling was affirmed by this Court and which
became final and executory on August 29, 2002.
In the instant case, ALPAP seeks for a conduct of a proceeding to determine who among its
members and officers actually participated in the illegal strike because,
_______________
39 Id., at pp. 684-688; pp. 554-555.
371
VOL. 778, JANUARY 11, 2016 371

it insists, the June 1, 1999 DOLE Resolution did not make such determination. However,
as correctly ruled by Sto. Tomas and Imson and affirmed by the CA, such proceeding
would entail a reopening of a final judgment which could not be permitted by this Court.
Settled in law is that once a decision has acquired finality, it becomes immutable and
unalterable, thus can no longer be modified in any respect. Subject to certain recognized
exceptions, the principle of immutability leaves the judgment undisturbed as “nothing
further can be done except to execute it.”
True, the dispositive portion of the DOLE Resolution does not specifically enumerate the
names of those who actually participated in the strike but only mentions that those strikers
who failed to heed the return-to-work order are deemed to have lost their employment.
This omission, however, cannot prevent an effective execution of the decision. As was held
in Reinsurance Company of the Orient, Inc. v. Court of Appeals, any ambiguity may be
clarified by reference primarily to the body of the decision or supplementary to the
pleadings previously filed in the case. In any case, especially when there is an ambiguity,
“a judgment shall be read in connection with the entire record and construed accordingly.”
There is no necessity to conduct

a proceeding to determine the
participants in the illegal strike
or those who refused to heed
the return to work order because
the ambiguity can be cured by
reference to the body of the deci-
sion and the pleadings filed.
A review of the records reveals that in [the Strike Case], the DOLE Secretary
declared the ALPAP officers and members to have lost their employment status based
on either of two grounds, viz.: their participation in the illegal strike on June 5, 1998
or their defiance of the return-to-work order of the DOLE Secretary. The records of
the
372
case unveil the names of each of these returning pilots. The logbook with the heading
“Return to Work Compliance/Returnees” bears their individual signature signifying
their conformity that they were among those workers who returned to work only on
June 26, 1998 or after the deadline imposed by DOLE. From this crucial and vital
piece of evidence, it is apparent that each of these pilots is bound by the judgment.
Besides, the complaint for illegal lockout was filed on behalf of all these returnees.
Thus, a finding that there was no illegal lockout would be enforceable against them.
In fine, only those returning pilots, irrespective of whether they comprise the entire
membership of ALPAP, are bound by the June 1, 1999 DOLE Resolution.
ALPAP harps on the inequity of PAL’s termination of its officers and members
considering that some of them were on leave or were abroad at the time of the strike.
Some were even merely barred from returning to their work which excused them for
not complying immediately with the return-to-work order. Again, a scrutiny of the
records of the case discloses that these allegations were raised at a very late stage, that is,
after the judgment has finally decreed that the returning pilots’ termination was legal.
Interestingly, these defenses were not raised and discussed when the case was still pending
before the DOLE Secretary, the CA or even before this Court. We agree with the position
taken by Sto. Tomas and Imson that from the time the return-to-work order was issued
until this Court rendered its April 10, 2002 resolution dismissing ALPAP’s petition, no
ALPAP member has claimed that he was unable to comply with the return-to-work
directive because he was either on leave, abroad or unable to report for some reason.
These defenses were raised in ALPAP’s twin motions only after the Resolution in
G.R. No. 152306 reached finality in its last ditch effort to obtain a favorable ruling. It
has been held that a proceeding may not be reopened upon grounds already available
to the parties during the pendency
373
VOL. 778, JANUARY 11, 2016 373

of such proceedings; otherwise, it may give way to vicious and vexatious proceedings.
ALPAP was given all the opportunities to present its evidence and arguments. It
cannot now complain that it was denied due process.
Relevant to mention at this point is that when NCMB NCR NS 12-514-97

(strike/illegal lockout case) was still pending, several complaints for illegal dismissal
were filed before the Labor Arbiters of the NLRC by individual members of ALPAP,
questioning their termination following the strike staged in June 1998. PAL likewise
manifests that there is a pending case involving a complaint for the recovery of
accrued and earned benefits belonging to ALPAP members. Nonetheless, the
pendency of the foregoing cases should not and could not affect the character of our
disposition over the instant case. Rather, these cases should be resolved in a manner
consistent and in accord with our present disposition for effective enforcement and
execution of a final judgment.40 (Emphases supplied)
The Decision dated June 6, 2011 of the Court in the 2nd ALPAP case became final and executory
on September 9, 2011.
Bearing in mind the final and executory judgments in the 1st and 2nd ALPAP cases, the Court
denies the Petition of Rodriguez, et al., in G.R. No. 178501 and partly grants that of PAL in G.R.
No. 178510.
The Court, in the 2nd ALPAP case, acknowledged the illegal dismissal cases instituted by the
individual ALPAP members before the NLRC following their termination for the strike in June
1998 (which were apart from the Strike and Illegal Lockout Cases of ALPAP before the DOLE
Secretary) and affirmed the jurisdiction of the NLRC over said illegal dismissal cases. The
Court, though, also expressly pronounced in the 2nd ALPAP case that “the pendency of the
foregoing cases
_______________
40 Id., at pp. 689-693; pp. 558-560.
374

should not and could not affect the character of our disposition over the instant case. Rather,
these cases should be resolved in a manner consistent and in accord with our present disposition
for effective enforcement and execution of a final judgment.”
The Petitions at bar began with the Illegal Dismissal Case of Rodriguez, et al. and eight other
former pilots of PAL before the NLRC. Among the Decisions rendered by Labor Arbiter Robles,
the NLRC, and the Court of Appeals herein, it is the one by the NLRC which is consistent and in
accord with the disposition for effective enforcement and execution of the final judgments in the
1st and 2nd ALPAP cases.
The 1st and 2nd ALPAP cases which became final and executory on August 29, 2002 and
September 9, 2011, respectively, constitute res judicata on the issue of who participated in the
illegal strike in June 1998 and whose services were validly terminated.
The Court expounded on the doctrine of res judicata in Spouses Layos v. Fil-Estate Golf and
Development, Inc.:41
Res judicata literally means “a matter adjudged; a thing judicially acted upon or decided; a
thing or matter settled by judgment.” Res judicata lays the rule that an existing final
judgment or decree rendered on the merits, and without fraud or collusion, by a court of
competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights
of the parties or their privies, in all other actions or suits in the same or any other judicial
tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.
It is espoused in the Rules of Court, under paragraphs (b) and (c) of Section 47, Rule 39,
which provide:
SEC. 47. Effect of judgments or final orders.—The effect of a judgment or final

order rendered by a court of the Philippines,
_______________
41 583 Phil. 72, 101-105; 561 SCRA 75, 102-106 (2008).
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VOL. 778, JANUARY 11, 2016 375
having jurisdiction to pronounce the judgment or final order, may be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors-in-interest by title subsequent to
the commencement of the action or special proceeding, litigating the same thing and
under the same title and in the same capacity; and
(c) In any other litigation between the same parties or their successors-in-interest,
that only is deemed to have been adjudged in a former judgment or final order which
appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto.
The doctrine of res judicata lays down two main rules which may be stated as follows: (1)
The judgment or decree of a court of competent jurisdiction on the merits concludes the
litigation between the parties and their privies and constitutes a bar to a new action or suit
involving the same cause of action either before the same or any other tribunal; and (2) any
right, fact, or matter in issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in which a judgment or decree is
rendered on the merits is conclusively settled by the judgment therein and cannot again be
litigated between the parties and their privies whether or not the claims or demands,
purposes, or subject matters of the two suits are the same. These two main rules mark the
distinction between the principles governing the two typical cases in which a judgment
may operate as evidence. In speaking of these cases, the first general rule above stated, and
which corresponds to the aforequoted paragraph (b) of Section 47, Rule 39 of the Rules of
Court, is referred to as “bar by former judg-
376

ment”; while the second general rule, which is embodied in paragraph (c) of the same
section and rule, is known as “conclusiveness of judgment.”
The Resolution of this Court in Calalang v. Register of Deeds of Quezon City, provides the
following enlightening discourse on conclusiveness of judgment:
The doctrine res judicata actually embraces two different concepts: (1) bar by
former judgment and (b) conclusiveness of judgment.
The second concept — conclusiveness of judgment — states that a fact or question

which was in issue in a former suit and was there judicially passed upon and
determined by a court of competent jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that action and persons in privity with them
are concerned and cannot be again litigated in any future action between such parties
or their privies, in the same court or any other court of concurrent jurisdiction on
either the same or different cause of action, while the judgment remains unreversed
by proper authority. It has been held that in order that a judgment in one action can
be conclusive as to a particular matter in another action between the same parties or
their privies, it is essential that the issue be identical. If a particular point or question
is in issue in the second action, and the judgment will depend on the determination
of that particular point or question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that same point or question
was in issue and adjudicated in the first suit. (Nabus v. Court of Appeals, 193 SCRA
732 [1991]) Identity of cause of action is not required but merely identity of issue.
377
VOL. 778, JANUARY 11, 2016 377
Justice Feliciano, in Smith Bell & Company (Phils.), Inc. v. Court of Appeals (197
SCRA 201, 210 [1991]), reiterated Lopez v. Reyes (76 SCRA 179 [1977]) in regard
to the distinction between bar by former judgment which bars the prosecution of a
second action upon the same claim, demand, or cause of action, and conclusiveness
of judgment which bars the relitigation of particular facts or issues in another
litigation between the same parties on a different claim or cause of action.
The general rule precluding the relitigation of material facts or questions

which were in issue and adjudicated in former action are commonly applied to
all matters essentially connected with the subject matter of the litigation. Thus,
it extends to questions necessarily implied in the final judgment, although no
specific finding may have been made in reference thereto and although such
matters were directly referred to in the pleadings and were not actually or
formally presented. Under this rule, if the record of the former trial shows that
the judgment could not have been rendered without deciding the particular
matter, it will be considered as having settled that matter as to all future
actions between the parties and if a judgment necessarily presupposes certain
premises, they are as conclusive as the judgment itself.
Another case, Oropeza Marketing Corporation v. Allied Banking Corporation,

further differentiated between the two rules of res judicata, as follows:
There is “bar by prior judgment” when, as between the first case where the
378
judgment was rendered and the second case that is sought to be barred, there
is identity of parties, subject matter, and causes of action. In this instance,
the judgment in the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent jurisdiction
on the merits concludes the litigation between the parties, as well as their
privies, and constitutes a bar to a new action or suit involving the same cause
of action before the same or other tribunal.
But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those
matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicata known as
“conclusiveness of judgment.” Stated differently, any right, fact, or matter in
issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.
In sum, conclusiveness of judgment bars the relitigation in a second case of a fact or

question already settled in a previous case. The second case, however, may still
proceed provided that it will no longer touch on the same fact or question adjudged
in the first case. Conclusiveness of judgment requires only the identity of issues and
parties, but not of causes of action. (Emphases ours)
The elements for res judicata in the second concept, i.e., conclusiveness of judgment, are extant
in these cases.
379
VOL. 778, JANUARY 11, 2016 379
There is identity of parties in the 1st and 2nd ALPAP cases, on one hand, and the Petitions at
bar. While the 1st and 2nd ALPAP cases concerned ALPAP and the present Petitions involved
several individual members of ALPAP, the union acted in the 1st and 2nd ALPAP cases in
representation of its members. In fact, in the 2nd ALPAP case, the Court explicitly recognized
that the complaint for illegal lockout was filed by ALPAP on behalf of all its members who were
returning to work.42 Also in the said case, ALPAP raised, albeit belatedly, exactly the same
arguments as Rodriguez, et al. herein. Granting that there is no absolute identity of parties, what
is required, however, for the application of the principle of res judicata is not absolute, but only
substantial identity of parties. ALPAP and Rodriguez, et al. share an identity of interest from
which flowed an identity of relief sought, namely, the reinstatement of the terminated ALPAP
members to their former positions. Such identity of interest is sufficient to make them privy-in-
law, one to the other, and meets the requisite of substantial identity of parties.43
There is likewise an identity of issues between the 1st and 2nd ALPAP cases and these cases.
Rodriguez, et al., insist that they did not participate in the June 1998 strike, being on official
leave or scheduled off-duty. Nonetheless, on the matter of determining the identities of the
ALPAP members who lost their employment status because of their participation in the illegal
strike in June 1998, the Court is now conclusively bound by its factual and legal findings in the
1st and 2nd ALPAP cases.
In the 1st ALPAP case, the Court upheld the DOLE Secretary’s Resolution dated June 1, 1999
declaring that the strike of June 5, 1998 was illegal and all ALPAP officers and mem-
_______________
42 Airline Pilots Association of the Philippines v. Philippine Airlines, Inc., supra note 38 at p.
691; p. 558.
43 Firestone Ceramics, Inc. v. Court of Appeals, 372 Phil. 401, 422; 313 SCRA 522, 540-541
(1999).
380
bers who participated therein had lost their employment status. The Court in the 2nd ALPAP case
ruled that even though the dispositive portion of the DOLE Secretary’s Resolution did not
specifically enumerate the names of those who actually participated in the illegal strike, such
omission cannot prevent the effective execution of the decision in the 1st ALPAP case. The Court
referred to the records of the Strike and Illegal Lockout Cases, particularly, the logbook, which it
unequivocally pronounced as a “crucial and vital piece of evidence.” In the words of the Court in
the 2nd ALPAP case, “[t]he logbook with the heading ‘Return-To-Work Compliance/
Returnees’ bears their individual signature signifying their conformity that they were among
those workers who returned to work only on June 26, 1998 or after the deadline imposed by
DOLE. x x x In fine, only those returning pilots, irrespective of whether they comprise the entire
membership of ALPAP, are bound by the June 1, 1999 DOLE Resolution.”
The logbook was similarly submitted as evidence by PAL against the complainants in the Illegal
Dismissal Case now on appeal. Rodriguez, et al., except for Jadie and Baquiran, were signatories
in the logbook as returnees,44 bound by the Resolution dated June 1, 1999 of the DOLE
Secretary. The significance and weight accorded by the NLRC to the logbook can no longer be
gainsaid considering the declarations of the Court in the 2nd ALPAP case. Moreover, the logbook
entries were corroborated by photographs showing Rodriguez, et al., excluding Baquiran,
Galisim, Jadie, Wilfredo S. Cruz, and Piamonte, actually participating in the strike. The objection
that the photographs were not properly authenticated deserves scant consideration as rules of
evidence are not strictly observed in proceedings before administrative bodies like the NLRC,
where decisions may be reached on the basis of position papers only.45 It is also worth noting
that those caught on
_______________
44 Rollo (G.R. No. 178501), pp. 428-440.
45 Rabago v. National Labor Relations Commission, G.R. Nos. 82868 and 82932, August 5,
1991, 200 SCRA 158, 165.
381
VOL. 778, JANUARY 11, 2016 381
photographs did not categorically deny being at the strike area on the time/s and date/s the
photographs were taken, but assert that they were there in lawful exercise of their right while on
official leave or scheduled off-duty, or in the alternative, that they were already dismissed from
service as early as June 7, 1998 and their presence at the strike area thereafter was already
irrelevant. The Court further concurs in the observation of the NLRC that the official leave or
scheduled off-duty of Rodriguez, et al. expired at least two weeks prior to June 26, 1998, yet
they did not make any effort to return to work before said date. Rodriguez, et al. instead heeded
the advice of their lawyer to report en masse with the other ALPAP members, only proving that
they were complying not with the Return-to-Work Order of the DOLE Secretary but the orders of
their union and its counsel.
There is no compelling reason for the Court to disturb the findings of the NLRC as to Baquiran
and Jadie, the two pilots who did not sign the logbook.
To stress, the Return-to-Work Order was served on ALPAP on June 8, 1998, and its members had
24 hours or until June 9, 1998 to report back for work. There is no evidence that Baquiran
complied, or at least, attempted to comply with said Order. Neither did Baquiran report back for
work with the other ALPAP members on June 26, 1998. Baquiran, who made no attempt to
report for work at all, cannot be in a better position than the other ALPAP members who
belatedly reported for work on June 26, 1998 and were still deemed to have lost their
employment. As the NLRC declared, Baquiran “simply abandoned his job.”
Only Jadie among Rodriguez, et al., was illegally dismissed by PAL. During the strike, Jadie was
already on maternity leave. Jadie did not join the strike and could not be reasonably expected to
report back for work by June 9, 1998 in compliance with the Return-to-Work Order. Indeed,
Jadie gave birth on June 24, 1998. However, as both the NLRC and the Court of Appeals had
held, Jadie can no longer be reinstated
382
for the following reasons: (1) Jadie’s former position as Captain of the E-50 aircraft no longer
existed as said aircraft was already returned to its lessors in accordance with the Amended and
Restated Rehabilitation Plan of PAL; (2) Per ATO certification, Jadie’s license expired in 1998;
(3) the animosity between the parties as engendered by the protracted and heated litigation; (4)
the possibility that Jadie had already secured equivalent or other employment after the significant
lapse of time since the institution of the Illegal Dismissal Case; and (5) the nature of the business
of PAL which requires the continuous operations of its planes and, thus, the hiring of new pilots.
In lieu of reinstatement, Jadie is entitled to separation pay.
Following latest jurisprudence,46 Jadie is entitled to the following reliefs/awards for her illegal
dismissal: (1) separation pay equivalent to one-month salary for every year of service in lieu of
reinstatement; (2) backwages from June 9, 1998; (3) longevity pay at P500.00/month for every
year of service based on seniority date falling after June 9, 1998; (4) Christmas bonuses; (5)
Jadie’s proportionate share in the P5 Million contribution of PAL to the Retirement Fund; and (6)
cash equivalent of vacation leaves and sick leaves which Jadie earned after June 9, 1998. All of
the aforementioned awards shall be computed until finality of this Decision.
Jadie is further entitled to receive benefits due her even prior to her illegal dismissal on June 9,
1998, namely: (1) unpaid salaries for June 1 to 8, 1998; and (2) productivity allowance,
transportation allowance, and rice subsidy for May 1998 and June 1 to 8, 1998.
All monetary awards due Jadie shall earn legal interest of 6% per annum from date of finality of
this Decision until fully paid.
_______________
46 Bani Rural Bank, Inc. v. De Guzman, G.R. No. 170904, November 13, 2013, 709 SCRA 330;
Lim v. HMR Philippines, Inc., G.R. No. 201483, August 4, 2014, 731 SCRA 576.
383
VOL. 778, JANUARY 11, 2016 383
Finally, the Court acts upon the Motion for Leave to Reinstate Elmer F. Peña, Antonio P. Noble,
Baltazar B. Musong, Nicomen H. Versoza and Ryan Jose C. Hinayon as Petitioners in G.R. No.
178501. Peña, Noble, Musong, Versoza, and Hinayon, hereinafter referred to collectively as
Peña, et al., were among the original complainants in the Illegal Dismissal Case before the Labor
Arbiter. However, Peña, et al. were unable to join as petitioners in the Petition for Certiorari
before the Court of Appeals in C.A.-G.R. S.P. No. 71190, as well as the present Petition in G.R.
No. 178501, because at the time said Petitions were filed, they were already employed outside
the country. The Court denies the Motion. When Peña, et al. failed to join the Petition in C.A.-
G.R. S.P. No. 71190, the Decision dated November 6, 2001 of the NLRC in NLRC NCR CA No.
027348-01 had become final and executory as to them. Peña, et al. cannot simply be “reinstated”
as petitioners in G.R. No. 178501 since they are not parties to and had no legal interest in the
appealed Decision dated November 30, 2006 of the Court of Appeals in C.A.-G.R. S.P. No.
71190.
WHEREFORE, premises considered, judgment is hereby rendered:
(1) DISMISSING the Petition of Rodriguez, et al., in G.R. No. 178501 and PARTLY
GRANTING the Petition of PAL in G.R. No. 178510;
(2) REVERSING and SETTING ASIDE the Decision dated November 30, 2006 of the Court
of Appeals in C.A.-G.R. S.P. No. 71190;
(3) DECLARING that Jadie was illegally dismissed and ORDERING PAL to pay her the
following:
(a) As consequences of her illegal dismissal: (i) separation pay equivalent to one (1)-
month salary for every year of service in lieu of reinstatement; (ii) backwages from June 9,
1998; (iii) longevity pay at P500.00/month for every year of service based on seniority
date falling after June 9, 1998; (iv) Christmas bonuses from 1998; (v) Jadie’s proportionate
share in the P5 Million contribution
384
of PAL to the Retirement Fund; and (vi) cash equivalent of vacation leaves and sick leaves
which Jadie earned after June 9, 1998, all of which shall be computed until finality of this
Decision;
(b) Benefits due her prior to her illegal dismissal on June 9, 1998: (i) unpaid salaries for
June 1 to 8, 1998; and (ii) productivity allowance, transportation allowance, and rice
subsidy for May 1998 and June 1 to 8, 1998; and
(c) Legal interest of 6% per annum on all monetary awards due her from the date of
finality of this Decision until full payment thereof;
(4) DISMISSING for lack of merit the Complaint for Illegal Dismissal of Rodriguez,
Alisangco, Benjamin T. Ang, Vicente P. Ang, Arroyo, Baquiran, Wilfredo S. Cruz, Delos Reyes,
Ecarma, Galisim, Garcia, Gutiza, Jose, Labuga, Lastimoso, Matias, Maturan, Ocharan, Piamonte,
Sabado, Sanchez, Corpus, and Alcañeses; and
(5) DENYING the Motion for Leave to Reinstate Elmer F. Peña, Antonio P. Noble, Baltazar B.
Musong, Nicomen H. Versoza and Ryan Jose C. Hinayon as Petitioners in G.R. No. 178501.
SO ORDERED.
Sereno (CJ., Chairperson), Bersamin, Perez and Perlas-Bernabe, JJ., concur.
Petition in G.R. No. 178501 dismissed while petition in G.R. No. 178510 granted in part.
Judgment reversed and set aside.
Note.—In illegal dismissal cases, the burden of proof is upon the employer to show that the
employee’s termination from service is for a just and valid cause. (Functional, Inc. vs. Granfil,
660 SCRA 279 [2011])
——o0o——
G.R. Nos. 198916-17. January 11, 2016.*
MALAYAN INSURANCE COMPANY, INC., petitioner, vs. ST. FRANCIS SQUARE REALTY
CORPORATION, respondent.
G.R. Nos. 198920-21. January 11, 2016.*
ST. FRANCIS SQUARE REALTY CORPORATION, petitioner, vs. MALAYAN INSURANCE

COMPANY, INC., respondent.
Remedial Law; Civil Procedure; Appeals; Construction Arbitrators; Factual findings of

construction arbitrators are final and conclusive and not reviewable by the Supreme Court (SC)
on appeal; Exceptions.—In resolving in seriatim all the issues raised by both parties, the Court is
guided by the rule that findings of fact of quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only respect,
but also finality, especially when affirmed by the CA. In particular, factual findings of
construction arbitrators are final and conclusive and not reviewable by this Court on appeal. As
exceptions, however, factual findings of construction arbitrators may be
_______________
* THIRD DIVISION.
541
VOL. 778, JANUARY 11, 2016 541
Malayan Insurance Company, Inc. vs. St. Francis Square Realty Corporation
reviewed by the Court when the petitioner proves affirmatively that: (1) the award was procured
by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the
arbitrators or any of them; (3) the arbitrators were guilty of misconduct in refusing to hear
evidence pertinent and material to the controversy; (4) one or more of the arbitrators were
disqualified to act as such under Section Nine of Republic Act No. 876 and willfully refrained
from disclosing such disqualifications or of any other misbehavior by which the rights of any
party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual, final and definite award upon the subject matter
submitted to them was not made; (6) when there is a very clear showing of grave abuse of
discretion resulting in lack or loss of jurisdiction as when a party was deprived of a fair
opportunity to present its position before the Arbitral Tribunal or when an award is obtained
through fraud or the corruption of arbitrators; (7) when the findings of the CA are contrary to
those of the CIAC; and (8) when a party is deprived of administrative due process. Apart from
conflicting findings of fact of the CA and the CIAC as to the propriety of some arbitral awards,
mathematical computations, and entitlement to claim certain costs as part of the amount
necessary to complete the project, none of the other exceptions above was shown to obtain in this
case. Hence, the Court will not disturb those findings where the CA and the CIAC are consistent
with each other, but will review their findings which are inconsistent and cannot be reconciled.
Statutory Construction; Actual Remaining Construction Cost; The term Actual Remaining
Construction Cost (ARCC) should be construed in its traditional “construction” sense, rather
than in the “investment” sense.—The Court upholds the CIAC ruling to disallow the interest
expense from loans secured by Malayan to finance the completion of the project, and thus,
reverses the CA ruling that such expense in the amount of P39,348,659.88 should be included in
the computation of the ARCC. As correctly held by the CIAC, only costs directly related to
construction costs should be included in the ARCC. Interest expense should not be included in
the computation of the ARCC because it is not an actual expenditure necessary to complete the
project, but a mere financial cost. As will be discussed later, the term ARCC should be construed
in its traditional “construction” sense, rather than in the “investment” sense.
542
Taxation; Value-Added Tax; Given that input Value-Added Tax (VAT) is, strictly speaking, a
financial cost and not a direct construction cost, it cannot be denied that Malayan had to pay
input VAT as part of the contract price of goods and properties purchased, and services procured
in order to complete the project.—The Court finds no compelling reason to disturb the consistent
findings of the CA and the CIAC that Input VAT should be allowed to remain in the ARCC. As
aptly pointed out by the CA and the CIAC, ARCC refers to the actual expenditures made by
Malayan to complete the project. The Court thus agrees with Malayan that in determining
whether input VAT should be included as ARCC, the issue is not the technical classification of
taxes under accounting rules, but whether such tax was incurred and paid as part of the
construction cost. Given that input VAT is, strictly speaking, a financial cost and not a direct
construction cost, it cannot be denied that Malayan had to pay input VAT as part of the contract
price of goods and properties purchased, and services procured in order to complete the project.
Moreover, that the burden of such tax was shifted to Malayan by its suppliers and contractors is
evident from the photocopies of cash vouchers and official receipts on record, which separately
indicated the VAT component in accordance with Section 113(B) of the Tax Code.
Same; Same; In offsetting its input Value-Added Tax (VAT) against output VAT, Malayan is
merely availing of the benefits of the tax credit provisions of the law, and it cannot be said to
have benefited at the expense or to the damage of St. Francis.—Anent the claim that it would be
unjust and inequitable if Malayan would be allowed to include its input VAT in the ARCC, as
well as to offset such tax against its output tax, the Court finds that such coincidence does not
result in unjust enrichment at the expense of St. Francis. Unjust enrichment claims do not lie
simply because one party benefits from the efforts or obligations of others, but instead it must be
shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally
or unlawfully. In offsetting its input VAT against output VAT, Malayan is merely availing of the
benefits of the tax credit provisions of the law, and it cannot be said to have benefited at the
expense or to the damage of St. Francis. After all, Malayan is justified in including in the ARCC
the input VAT it had paid as part of the contract price of the goods, properties and services it had
procured to complete the project.
543
VOL. 778, JANUARY 11, 2016 543
Construction Industry; In an action arising out of cost overruns on a construction project, the
builder who has exclusive control of the project and is in a better position to know what other
factors, if any, caused the increases, has the burden of segregating the overruns attributable to
its own conduct from overruns due to other causes.—In an action arising out of cost overruns on
a construction project, the builder who has exclusive control of the project and is in a better
position to know what other factors, if any, caused the increases, has the burden of segregating
the overruns attributable to its own conduct from overruns due to other causes. As the co-owner
and developer who assumed the general supervision, management and control over the project,
and the one in possession of all the checks, vouchers, official receipts and other relevant
documents, Malayan bears the burden of proving that it incurred ARCC in excess of the RCC
and the total aggregate value of the reserved units, in which case St. Francis would no longer be
entitled to a proportionate share in the reserved units pursuant to the MOA.
Attorney’s Fees; The general rule is that attorney’s fees cannot be recovered as part of damages
because of the policy that no premium should be placed on the right to litigate.—Finding that
none of the exceptions under Article 2208 of the New Civil Code is present in this case, the
Court agrees with the CA and the CIAC that the parties’ claims for attorney’s fees must be
denied. As held in ABS-CBN Broadcasting Corporation v. Court of Appeals, 301 SCRA 572
(1999): The general rule is that attorney’s fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate. They are not to be awarded
every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208
demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate
with third persons or to incur expenses to protect his rights, still attorney’s fees may not be
awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a
case other than an erroneous conviction of the righteousness of his cause.
PETITION for partial review on certiorari and PETITION for review of a decision of the Court
of Appeals.
544
Poblador, Bautista & Reyes for Malayan Insurance Co., Inc.
Teodoro C. Baroque for St. Francis Square Realty Corporation.
PERALTA, J.:
This resolves the Petition for Partial Review on Certiorari under Rule 45 of the Rules of Court
filed by Malayan Insurance Company, Inc. and the Petition for Review filed by St. Francis
Square Realty Corporation, both seeking to reverse and/or modify the Court of Appeals’
Decision1 dated January 27, 2011 in C.A.-G.R. S.P. Nos. 109286 and 109298, which affirmed
with modifications the Award2 dated March 27, 2009 of the Construction Industry Arbitration
Commission (CIAC) in CIAC CASE No. 33-2008 entitled “ST. FRANCIS SQUARE REALTY
CORPORATION, Claimant, -versus- MALAYAN INSURANCE COMPANY, INC.,
Respondent.”
Malayan Insurance Company, Inc. (Malayan) is a duly-organized domestic corporation engaged

in insurance business. Formerly known as ASB Realty Corporation (ASB), St. Francis Square
Realty Corporation (St. Francis) is a duly-organized domestic corporation engaged in real estate
development.
The admitted facts are as follows:
1. The parties’ respective juridical existence;
1.1 The ASB Group of Companies, which include the ASB Realty Corporation (now
St. Francis Square Realty Corp.), is under rehabilitation with the Securities and
Exchange Commission (SEC) pursuant to a petition dated May 2, 2000;
_______________
1 Penned by Associate Justice Stephen C. Cruz, with Associate Justices Isaias P. Dicdican and
Jane Aurora C. Lantion, concurring.
2 Rendered by the Arbitral Tribunal composed of Alfredo F. Tadiar, Chairman, and Victor P.
Lazatin and Ricardo B. San Juan, as Members.
545
VOL. 778, JANUARY 11, 2016 545
2. [Malayan], as Owner, and [St. Francis], as Developer, executed a Joint Project
Development Agreement (JPDA) on 09 November 1995 for the construction,
development and completion of what was then known as “ASB Malayan Tower”
(“the Project”), originally a 50-storey office/residential condominium located at the
ADB Avenue cor. Opal St., Ortigas Center, Pasig City;
3. [Malayan] is the absolute and registered owner of the parcel of land (the Lot) in
Pasig City where the Project is located, as evidenced by Transfer Certificate of Title
No. PT-78585 x x x;
4. The Certificate of Registration No. 96-04-2701 issued by the Housing Land Use
and Regulatory Board (HLURB) on 12 April 1996 shows that [Malayan] is the
Owner and [St. Francis] is the developer x x x;
5. The License to Sell No. 96-05-2844 issued by the HLURB also refers to
[Malayan] as the Owner and [St. Francis] as Developer x x x;
6. The Master Deed with Declaration of Restrictions of the ASB-Malayan Tower

dated 13 May 1996 approved by the HLURB and registered with the Register of
Deeds of Pasig City, sets forth Malayan as the Developer (absolute and registered
owner) x x x;
7. ASB Realty Corporation [now, St. Francis] was not able to complete the Project;
7.1 The parties executed a Memorandum of Agreement (MOA) on 30 April

2002, under which [Malayan] undertook to complete the condominium project
then known as “ASB Malayan Project” that later became “Malayan Plaza
Tower” x x x;
8. The MOA was approved by the SEC;
9. The Lot was the subject of a Contract to Sell between [Malayan] as seller and [St.
Francis] as buyer, but [St. Francis] was unable to completely perform its obligation
under the Contract to Sell;
10. Under Sec. 2 of the MOA, [Malayan] “shall invest the amount necessary to
complete the Project,” among other obligations;
546

11. The basis for the distribution and disposition of the condominium units is the
parties’ respective capital investments in the Project as provided in Sec. 4 of the
MOA;
11.1 [St. Francis] represented and warranted to Malayan that Malayan can
complete the Project at a cost not exceeding Php452,424,849.00 (the
Remaining Construction Cost [RCC]) [Sec. 9 of MOA].
12. The net saleable area included in Schedule 4 of the 30 April 2002 MOA
(“Reserved Units”) originally covered fifty-three (53) units with thirty-eight (38)
parking spaces. The aforesaid 53 Reserved Units became only thirty-nine (39) units
after a reconfiguration was done;
13. The aggregate monetary value of the Reserved Units as fixed by [St. Francis], is
One Hundred Seventy-Five Million Eight Hundred Fifty-Six Thousand Three
Hundred Twenty-Three Pesos and 05/100 (P175,856,323.05);
14. Under the MOA, [Malayan] assumed vast powers and revoked all authorities
previously granted to [St. Francis] (Section 8 of the MOA, x x x), with the exception
of including [St. Francis] in the bidding committee for bidding of material and
services requirements of the Project (Section 9, paragraph v of the MOA, x x x). The
general supervision, management and control of the day-to-day operations were
undertaken by [Malayan] (Section 5, paragraph b of the MOA, x x x) but under Sec.
9 of the MOA, “Malayan shall allow one (1) representative of [St. Francis] to
observe the development and completion of the Project”;
15. On 24 August 2006, [St. Francis] sent a letter to [Malayan] seeking to reconcile
several items amounting to P133.64 million x x x;
16. There was a change in the specification of the floor finish from Narra Parque[t]
to Kendall Laminated Flooring;
547
VOL. 778, JANUARY 11, 2016 547
17. [Malayan] made interest expense, amounting to P37,705,346.62 as of August

2006, as part of its actual construction cost on that date;
18. [St. Francis] filed a case against the Register of Deeds of Pasig City and Atty.
Francis Serrano docketed as OMB-C-C-06-0583-J before the Office of the
Ombudsman due to alleged alterations on the Condominium Certificates of Title
over the units comprising the net saleable area in Schedule 4 of the MOA;
19. [Malayan] has included some of the units under Schedule 4 of the MOA in the
condotel pool managed by Quantum Hotels and Resorts from which it derives
income;
20. Despite the completion of the Project and the turnover of the units to [St.
Francis], [Malayan], and other buyers of units, the issue of actual cost of
construction has not been resolved to the mutual satisfaction of the parties; and
21. The parties agreed to submit a list of documents that they admitted the
authenticity and due execution thereof.3
On November 7, 2008, St. Francis filed with the CIAC a Complaint with Prayer for Interim
Relief against Malayan. St. Francis alleged that in August 2006, it secured a copy of a document
entitled “cost to complete” from Malayan which fixed the Actual Remaining Construction Cost
(ARCC) at P614,593,565.96. It disputed several cost items in the ARCC, amounting to
P145,487,496.42, and argued that their exclusion would entitle it to some reserved units.
On December 8, 2008, Malayan filed a Verified Answer (With Grounds for Immediate
Dismissal), claiming that St. Francis failed to state a cause of action because the ARCC had
already reached P635,018,369.05 as of November 30, 2008, thereby exceeding the Remaining
Construction Cost
_______________
3 Rollo (G.R. Nos. 198916-17), Vol. I, pp. 178-179. (Citations omitted)

548
(RCC) [P452,424,849.00] by more than the aggregate value of the reserved units
[P175,856,323.05]; hence, St. Francis is no longer entitled to any of such units.
On January 20, 2009, a preliminary conference was held where the parties stipulated on facts,
formulated issues, and drafted and signed the Terms of Reference (TOR) which would govern the
proceedings of the case. Aside from the above stated admitted facts, the TOR, which was later
amended, listed the following issues to be determined by the CIAC:
2. What is the meaning or scope of the term Remaining Construction Cost (RCC) as used
in the MOA as stated in par. 11.1 of the Admitted Facts?
2.1. What is the meaning or scope of the term “actual remaining construction cost”
as used in the MOA?
2.2. Specifically, were the following costs and expenses part of the actual remaining
construction cost incurred by [Malayan] and questioned by [St. Francis] to wit:
2.2.1. Awarded contracts, specifically those pertaining to Narra Parquet

Works, Interior Design Works, Sanitary/Plumbing and Fire Protection Works,
Additional Consultant’s Fees and Audio Intercom and Paging System;
2.2.2. Change Orders, pursuant to the reconfiguration done on several of the

units;
2.2.3. Interest Expense from loans incurred to finance the construction,

development and completion of the Project;
2.2.4. Input Value-Added Taxes (“VAT”) paid to the government for goods
and services utilized from the Project;
2.2.5. Attendance Fees;
2.2.6. Alleged Prolongation Costs and Extended Overhead;

549
VOL. 778, JANUARY 11, 2016 549
2.2.7. Judgment Award in CIAC Case No. 27-2007 (TVI v MICO);

[Additional issue from TOR Amendment]
2.2.8. Contractor’s All Risk Insurance;
2.2.9. Contingency Costs;
2.2.10 Other costs as mentioned in Exhibit “R-24.” [Additional issue from

TOR Amendment]
3. What is the total capital investment or contribution respectively of [St. Francis] and
[Malayan] to the Project per MOA? [Additional issue from TOR Amendment]
4. What is the actual remaining construction cost to complete the Project spent by
[Malayan] as of today in excess of [St. Francis’] estimate RCC?
5. After completion of the Project and computation of the actual remaining construction
costs to complete the same, is [St. Francis] still entitled to any of the Reserved units in
Schedule 4 of the MOA?
5.1. If so, is [St. Francis] entitled to the income therefrom?
6. Is [Malayan] entitled to its Counterclaim for the excess in the actual remaining
construction cost it incurred vis-à-vis the value of the Reserved Units?
7. Which party is entitled to attorney’s fees?
[7.1] How much?
[8.] Which party shall bear the cost of arbitration?4

On March 2, 2009, St. Francis submitted the Joint Affidavit of Witnesses of Claimant, while
Malayan submitted the Joint Affidavit of Respondent’s Witnesses. Thereafter, both parties
submitted their respective Joint Reply-Affidavits. Malayan also filed a Joint Affidavit of
Respondent’s Witnesses by Way of (1) Evidence for New Issue No. 3 Defined under the
_______________
4 Id., at pp. 180-181.
550
Amended Terms of Reference; (2) Sur-Rejoinder Affidavit of Claimant’s Witnesses; and (3)
Redirect Examination.
Trial ensued during which the witnesses of St. Francis and Malayan testified. Both parties
likewise submitted Lists of Exhibits. After trial, the parties simultaneously filed on April 27,
2009 their respective Memoranda in the form of Draft Decisions.
On May 27, 2009, the CIAC rendered its Award, the dispositive portion of which states:
WHEREFORE, AWARD is hereby made as follows:

FOR THE CLAIMANT [St. Francis]:
GRANT[S] its claims for DISALLOWANCES amounting to P52,864,385.00 from the

ARCC of P614,593,565.96 under Exhibit C-3;
ALLOCATES 37.8% ownership over the Reserved Units

(P66,551,993.09/P175,856,325.05);
As a consequence of these awards, Respondent [Malayan] is hereby DIRECTED to deliver

possession and transfer title over the Reserved Units in the proportion hereby stated.
GRANTS 37.8% proportionate share of the income realized from rentals of the
Reserved Units up to the present date.
As a consequence of these awards, Respondent [Malayan] is hereby DIRECTED to pay
the Claimant [St. Francis] its proportionate share in the income from the Reserved Units.
FOR THE RESPONDENT [Malayan]:
ALLOCATES 62.2% proportionate share of the income realized from rentals of the
Reserved Units up to the present date (P109,304,331.96/P175,856,325.05);
GRANTS 62.2% proportionate share of the income realized from rentals of the
Reserved Units up to the present date.
551
VOL. 778, JANUARY 11, 2016 551
FOR BOTH CLAIMANT [St. Francis] and RESPONDENT [Malayan], all their Claims
and Counterclaims for Attorney’s Fees are DENIED. Arbitration costs are maintained
according to the pro rata sharing that they had initially shared.
SO ORDERED.5
Dissatisfied with the CIAC Award, both parties filed with the Court of Appeals (CA) their
respective Petitions for Review under Rule 43 of the Rules of Court. On January 27, 2011, the
CA affirmed with modifications the CIAC Award, the dispositive portion of the decision reads:
WHEREFORE, premises considered, the CIAC’s Award is hereby AFFIRMED subject

to the following modifications:
1) The total amount of deductions should be P15,135,166.51 and this is, in turn, shall be
deducted from the Total Actual Remaining Construction Cost of P615,880,672.47 to arrive
at the Net amount of P600,745,505.96 as computed above;
2) St. Francis should be entitled to 16% ownership over the reserved units
(P27,535,668.09/P175,856,325.05) ownership of the reserved units to be done by drawing
of lots with the corresponding interest thereon;
3) As a consequence of the above awards, Malayan is hereby DIRECTED to deliver
possession and transfer title over the reserved units in accordance and in the proportion
above stated and to pay St. Francis its proportionate share in the income from the reserved
units reckoned from the date of completion of the Project, that is from June 7, 2006 up to
the finality of this decision, and to render full accounting of all the rentals and such other
income derived from said reserved units so awarded to St. Francis;
_______________
5 Rollo (G.R. Nos. 198920-21), p. 618. (Emphasis in the original)
552
4) Arbitration Costs shall be maintained pro rata in accordance with their respective
shares in the reserved units;
5) Malayan and all others claiming rights under it, are enjoined from exercising acts
of ownership over the reserved units relative to the proportionate share awarded to
St. Francis hereunder;
6) The concerned Register of Deeds is directed to immediately reinstate the name of

St. Francis Square Realty Corporation (formerly ASB Realty Corporation) as the
registered owner in the corresponding Condominium Certificates of Title Covering
the reserved units herein awarded to St. Francis; and
7) All other awards granted by CIAC in its Award dated 27 May 2009 not affected
by the above modifications are affirmed. No costs.
SO ORDERED.6
Aggrieved by the CA decision, both parties filed their respective motions for reconsideration,
which were denied in the Resolution dated October 4, 2011. Hence, the present petitions of both
parties.
St. Francis raises the following issues:
I.
The Court of Appeals gravely erred in ruling that interest [expenses] should be part of the
actual remaining construction cost. The ruling is contrary to law and the evidence on
record.
II.
The Court of Appeals committed serious error in finding that the actual construction cost is
P554,583,160.20. The ruling is contrary to law and the evidence on record.
_______________
6 Rollo (G.R. Nos. 198916-17), Vol. I, pp. 134-135.
553
VOL. 778, JANUARY 11, 2016 553
III.
The Court of Appeals erred in considering VAT as part of the ARCC. This is contrary to
the facts and records of the case.
IV.
The Court of Appeals committed grave error in allowing the inclusion of the alleged cost
of the Contractor’s All Risk Insurance as part of the ARCC. This is contrary to law and the
records of the case.
V.
The Court of Appeals committed grave and serious error on its allocation of the reserved
units. This is contrary to law and the records of the case.7
On the other hand, Malayan raises the following issues:
A.
THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN PLACING

THE BURDEN ON MALAYAN TO PROVE THAT IT HAD ACTUALLY INCURRED
THE ARCC, DESPITE THE FACT THAT DURING THE ARBITRAL PROCEEDINGS,
ST. FRANCIS HAD NEVER DISPUTED, AND THEREFORE, ADMITTED, THAT
MALAYAN HAD INCURRED THE ARCC. THE COURT OF APPEALS THUS
DECIDED A QUESTION OF SUBSTANCE DEFINITELY NOT IN ACCORD WITH
THE BASIC LEGAL PRINCIPLE THAT A PARTY NEED NOT PROVE WHAT HAS
NOT BEEN RAISED, DISPUTED OR PUT IN ISSUE.
B.
THE COURT OF APPEALS SERIOUSLY ERRED IN ALLOWING ST. FRANCIS TO

BELATEDLY CHANGE ITS THEORY IN ITS DRAFT DECISION FILED WITH THE
CIAC AND ITS APPEAL. THE COURT OF APPEALS THUS DECIDED A QUESTION
OF SUBSTANCE
_______________
7 Rollo (G.R. Nos. 198920-21), p. 89.
554
IN DISREGARD OF THE BASIC DUE PROCESS TENET THAT A PARTY CANNOT
CHANGE ITS THEORY AFTER TRIAL OR ON APPEAL BECAUSE IN BOTH CASES
THE OTHER PARTY IS DEPRIVED OF THE OPPORTUNITY TO MEET THE NEW
ISSUES.
C.
THE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING

UNCONTROVERTED TESTIMONIAL EVIDENCE THAT MALAYAN HAD
ACTUALLY INCURRED ITS ARCC, AND FOCUSING EXCLUSIVELY ON
DOCUMENTARY EVIDENCE.
D.
THE COURT OF APPEALS SERIOUSLY ERRED IN EXCLUDING THE FOLLOWING

COSTS FROM THE ARCC, DESPITE THE FACT THAT THEY WERE PROPER,
NECESSARY AND REASONABLE FOR THE COMPLETION OF THE PROJECT:
1. CHANGE ORDERS DUE TO RECONFIGURATION;
2. CHANGE ORDERS NOT DUE TO RECONFIGURATION;
3. HALF OF THE COSTS FOR THE NARRA PARQUET WORKS;
4. HALF OF THE COSTS FOR THE COMPREHENSIVE ALL-RISK

INSURANCE (CARI);
5. HALF OF THE COSTS FOR THE INTERIOR DESIGN WORKS;
6. CONTINGENCY COSTS; AND
7. COSTS INCURRED AND/OR PAID AFTER JUNE 2006.
E.
THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT ST. FRANCIS IS

ENTITLED TO SOME OF THE RESERVED UNITS. MALAYAN’S ARCC EXCEEDED
THE ST. FRANCIS WARRANTED RCC BY
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VOL. 778, JANUARY 11, 2016 555
MORE THAN THE VALUE OF THE RESERVED UNITS. HENCE, ST. FRANCIS
SHOULD NOT GET EVEN ONE OF THE RESERVED UNITS.
F.
THE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT ST. FRANCIS IS

ENTITLED TO THE INCOME RECEIVED BY MALAYAN FROM ST. FRANCIS’S
(sic) SHARE IN THE RESERVED UNITS, IF ANY, MALAYAN IS ENTITLED TO ALL
OF THE RESERVED UNITS. AND EVEN ASSUMING ARGUENDO THAT ST.
FRANCIS IS ENTITLED TO SOME RESERVED UNITS, THE COURT OF APPEALS’
DIRECTIVE IS IN DISREGARD OF ARTICLE 1187 OF THE CIVIL CODE.
G.
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT AWARDING MALAYAN

ITS COUNTERCLAIMS AS WELL AS ATTORNEY’S FEES, AND IN NOT
ORDERING ST. FRANCIS TO BEAR ALL THE COSTS OF ARBITRATION.8
The Court finds partial merit in both the petition for review of St. Francis and the petition for
partial review on certiorari of Malayan.
In resolving in seriatim all the issues raised by both parties, the Court is guided by the rule that
findings of fact of quasi-judicial bodies, which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only respect, but also finality,
especially when affirmed by the CA. In particular, factual findings of construction arbitrators are
final and conclusive and not reviewable by this Court on appeal.9
_______________
9 Shinryo (Philippines) Company, Inc. v. RRN Incorporated, G.R. No. 172525, October 20,
2010, 634 SCRA 123, 130, citing IBEX International, Inc. v. Government Service Insurance
System, 618 Phil. 304, 313; 603 SCRA 306, 314-315 (2009).
556
As exceptions, however, factual findings of construction arbitrators may be reviewed by the

Court when the petitioner proves affirmatively that: (1) the award was procured by corruption,
fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or any
of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and
material to the controversy; (4) one or more of the arbitrators were disqualified to act as such
under Section Nine of Republic Act No. 876 and willfully refrained from disclosing such
disqualifications or of any other misbehavior by which the rights of any party have been
materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed
them, that a mutual, final and definite award upon the subject matter submitted to them was not
made; (6) when there is a very clear showing of grave abuse of discretion resulting in lack or loss
of jurisdiction as when a party was deprived of a fair opportunity to present its position before
the Arbitral Tribunal or when an award is obtained through fraud or the corruption of arbitrators;
(7) when the findings of the CA are contrary to those of the CIAC; and (8) when a party is
deprived of administrative due process.10 Apart from conflicting findings of fact of the CA and
the CIAC as to the propriety of some arbitral awards, mathematical computations, and
entitlement to claim certain costs as part of the amount necessary to complete the project, none
of the other exceptions above was shown to obtain in this case. Hence, the Court will not disturb
those findings where the CA and the CIAC are consistent with each other, but will review their
findings which are inconsistent and cannot be reconciled.
The Court will discuss first the issues raised by St. Francis.
_______________
10 IBEX International, Inc. v. Government Service Insurance System, id., citing Uniwide Sales
Realty and Resources Corporation v. Titan-Ikeda Construction and Development Corporation,
540 Phil. 350; 511 SCRA 335 (2006) and David v. Construction Industry and Arbitration
Commission, 479 Phil. 578; 435 SCRA 654 (2004).
557
VOL. 778, JANUARY 11, 2016 557
I. Interest expense
The CIAC stated that only costs directly related to construction costs can be included in the
ARCC because such intention of the parties in the MOA can be inferred from the fact that the
baseline or starting point for the determination of the ARCC is the estimate made by St. Francis
based on Schedule 9 of the MOA.11 The CIAC held that the ARCC was intended to be spent
within and among the four categories above exclusively, subject to adjustments by reason of
price increases and awarded contracts. It also rejected Malayan’s theory that costs which are not
directly incurred for the construction, but which are actually related to it and to the completion of
the building, should be included in the ARCC. According to the CIAC, such could not have been
the intention of the parties; otherwise, St. Francis would be placed at the complete mercy of
Malayan since the determination of what costs are related to construction is left to the latter’s
entire discretion. Had such been the intention, the parties would have set up standards to guide
the discretion in determining what expenses or costs are related to construction so as to be
included in the term ARCC. Without such standards, the validity of the MOA would have been
questionable, as its interpretation would contravene Article 1308 of the New Civil Code which
provides that the performance of a contract cannot be left to the will of one of the parties.
The CA reversed the CIAC ruling and held that Malayan had to obtain loans in order to finance
the completion of the project, and in doing so, it incurred interests which are
_______________
11 Estimated Cost to Complete
I. Balance to Complete – Php161,098,039.86
Existing Contracts
II. Unawarded Contracts 224,045,419.16

III. Professional Fee 4,138,108.08
IV. Contingencies 63,143,281.10
Php452,424,849.10
558
deemed as an accessory of such loans. It added that actual expenditures should not be limited
only to traditional construction costs as the parties’ intention was to include those relative to the
actual completion of the project, for which Malayan had to invest in the form of seeking loan
facilities from banking institutions in order to fully finance the obligations set forth in the MOA.
It also stressed that it was specifically stated in the MOA that the parties’ investment in the
project would be distributed in accordance with their respective contributions
St. Francis contends that interest expense should not be included in the computation of the Actual
Remaining Construction Cost (ARCC). According to St. Francis, the term ARCC should be
understood in its ordinary context or plain meaning. The word “construction” refers to all on-site
work on buildings or altering structures from land clearance through completion, including
excavation, erection and the assembly and installation of components and equipment. Plainly,
ARCC is the actual cost of completing and building the structure which is the
condominium/project.
Malayan counters that the MOA itself is replete with provisions recognizing the parties’
contractual intent to include the ARCC interest expense and the parties’ respective capital
contributions or investment in the project. Such intent is confirmed by the parties’
contemporaneous and subsequent acts when St. Francis’ own interest expense was credited to
determine the number of units it was entitled to.
The Court upholds the CIAC ruling to disallow the interest expense from loans secured by
Malayan to finance the completion of the project, and thus, reverses the CA ruling that such
expense in the amount of P39,348,659.88 should be included in the computation of the ARCC.
As correctly held by the CIAC, only costs directly related to construction costs should be
included in the ARCC. Interest expense should not be included in the computation of the ARCC
because it is not an actual expenditure necessary to complete the project, but a
559
VOL. 778, JANUARY 11, 2016 559
mere financial cost. As will be discussed later, the term ARCC should be construed in its
traditional “construction” sense, rather than in the “investment” sense.
It also bears emphasis that part of Malayan’s investment under Section 2 of the MOA12 is the
payment of P65,804,381.00 as the principal amount of the loan obtained by ASB from the Rizal
Commercial Banking Corporation (RCBC) to finance the project. If it were the intention of the
parties to include interest expense as part of their investments, or even the ARCC, then the MOA
would have expressly indicated such intent in the provisions on investments of Malayan and of
ASB. Nowhere in the provisions of the MOA can it be gathered that interest expense is included
in the computation of the ARCC.
Apart from the ARCC’s definition as actual expenditures necessary to complete the project, the
closest provision in the MOA that could shed light on the scope and meaning of ARCC is Section
9 on the Remaining Construction Cost (RCC) whereby St. Francis represented and warranted that
Malayan can complete the project at a cost not exceeding P452,424,849.00 as set forth in ASB’s
Construction Budget Report, which reads:
Estimated Cost to Complete
I. Balance to Complete
Existing Contracts – Php161,098,039.86
_______________
12 Section 2. Investment of Malayan.—Subject to the provisions of Section 9 below, Malayan

shall invest the amount necessary to complete the Project and the following amounts:
a. P65,804,381 representing payment by Malayan, on behalf of ASB, of the principal amount

as of signing hereof of the loan obtained by ASB from the Rizal Commercial Banking
Corporation to finance the Project; and
b. P38,176,725 representing payment by Malayan, on behalf of ASB, of ASB’s outstanding
obligations to contractors of the Project as of signing hereof, (i) by offsetting from said
obligations the legally compensable P25,463,771 total advances of said contractors from ASB as
set forth in Section 5(g) and (ii) by paying the net payable to contractors/suppliers in the amount
of P12,712,954.
560
II. Unawarded Contracts 224,045,419.16
III. Professional Fee 4,138,108.08
IV. Contingencies 63,143,281.10
Php452,424,849.10
The Court concurs with the CIAC that the ARCC was intended to be spent within and among the
four categories above, subject to adjustments by reason of price increases and awarded contracts.
In construction parlance, “contingency” is an amount of money, included in the budget for
building construction, that is uncommitted for any purpose, intended to cover the cost of
unforeseen factors related to the construction which are not specifically addressed in the
budget.13 Being a cost of borrowing money, interest expense from bank loans to finance the
project completion can hardly be considered as a cost due to unforeseen factors.
That interest expense cannot be considered as part of any of the said categories is further
substantiated by the reports of the Davis Langdon Seah Philippines, Inc. (DLS) and Surequest
Development Associates (Surequest), which contain traditional construction cost components
and items, but not investment costs such as interest expense. As the one who engaged the
services of both DLS and Surequest to come up with a valuation of the cost to complete the
project and to evaluate what had been accomplished in the project prior the take-over, Malayan
cannot deny that interest expense is not included in their computation of the construction costs.
As regards the supposed contemporaneous act of St. Francis of including the amount of
P207,500,000.00 as interest expense in its claim for reimbursement for its contributions in the
project, in the form of several units per Schedules 1 and 3 of the MOA, the Court cannot
determine whether or not such expense should be considered as its contribution for purposes
_______________
13 Harris, Cyril M., McGraw-Hill, Dictionary of Architecture and Construction (Fourth edition),
p. 251.
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VOL. 778, JANUARY 11, 2016 561
of computing the return of capital investment. Unlike the investment of Malayan which is
specifically stated under Section 214 of the MOA, but does not include payment of interest of the
bank loan to finance the project, the investment of ASB (now St. Francis) is merely described as
follows:
Section 3. Recognition of ASB’s Investment.—The parties confirm that as of the date

hereof, ASB invested in the Project an amount equivalent to its entitlement to the net
saleable area of the Building under Section 4 below, including ASB’s interest as buyer
under the Contract to Sell.
From such vague definition of ASB’s investment, the Court cannot rule if St. Francis should also
be disallowed from claiming interest expense as part of its investment, unlike Malayan which is
disallowed from including interest expense as part of the ARCC contemplated in the MOA,
because such financial cost is not an actual expenditure necessary to complete the project.
Having in mind the rule that the interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity,15 the Court cannot give credence to the August 1,
2000 telefax of Evelyn Nolasco,
_______________
14 Section 2. Investment of Malayan.—Subject to the provisions of Section 9 below, Malayan
shall invest the amount necessary to complete the Project and the following amounts:
a. P65,804,381 representing payment by Malayan, on behalf of ASB, of the principal amount

as of signing hereof of the loan obtained by ASB from the Rizal Commercial Banking
Corporation to finance the Project; and
b. P38,176,725 representing payment by Malayan, on behalf of ASB, of ASB’s outstanding

obligations to contractors of the Project as of signing hereof: (i) by offsetting from said
obligations the legally compensable P25,463,771 total advances of said contractors from ASB as
set forth in Section 5(g) and (ii) by paying the net payable to contractors/suppliers in the amount
of P12,712,954. (Emphasis added)
15 New Civil Code, Art. 1377.
562
St. Francis’ former Chief Financial Officer (CFO), to Malayan’s CFO, Gema Cheng, which
shows St. Francis’ computation for reimbursement, including the claim of P207,500,000.00 as
interest expense.
Further negating Malayan’s claim that interest expense should be included in the computation of
the ARCC is the restrictive construction industry definition of the term “construction cost” which
means the cost of all construction portions of the project, generally based upon the sum of the
construction contract(s) and other direct construction costs; it does not include the compensation
paid to the architect and consultants, the cost of the land, right-of-way, or other costs which are
defined in the contract documents as being the responsibility of the owner.16 Aside from the fact
that such expense is not a directly related construction cost, Section 2 of the MOA states that
Malayan’s investment includes, among other matters, the amount it had paid to RCBC, on behalf
of ASB, for the principal loan to finance the project, but not the interest thereof. This casts doubt
on Malayan’s claim that the parties intended interest expense to become part of their capital
contribution, let alone the ARCC.
In view of the foregoing discussion, the Court will no longer delve into Malayan’s two other
contentions on the issue of interest expense, namely: (1) that since St. Francis only claimed that
such expense cannot be included as part of the ARCC as the same is not a direct construction
cost, it cannot now change its theory and argue that there is no substantial evidence to show that
Malayan incurred such expense in completing the project because it is deemed to have admitted
the same, and allowing St. Francis to do so would amount to a prohibited change of its theory;
and (2) that Malayan was able to prove that it incurred interest expense on loans which were
used to finance completion of the project.
_______________
16 Supra note 13.
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VOL. 778, JANUARY 11, 2016 563
II. Scope and total amount of ARCC
According to the CIAC, ARCC refers to actual expenditures made by Malayan to complete the
project. What is proper and necessary to complete the project is the essence of the dispute
between the parties. As used in the MOA, ARCC should be understood in the traditional
“construction” sense rather than in “investment” sense. The dispute is a construction dispute and
not an investment dispute which would have taken the dispute outside the ambit of construction
arbitration. Notably, the cost component/pay items stated in Exhibit “C-2” (MOA Schedule 9),
Exhibit “R-7” (Surequest Report) and Exhibit “R-8” (Davis Langdon Seah Report) contain basic
and traditional construction cost, and not investment cost which is broader in scope. As to the
amount of the ARCC, CIAC held that it is P614,593,565.96 as stated in Exhibit “C-3”17 which
was prepared by Malayan itself and submitted to St. Francis. Exhibit “C-3” listed the expenses
incurred as of August 10, 2006 which was close enough to the project completion date of June 7,
2006, as a basis to determine what items should be disallowed therefrom.
Reversing the CIAC’s ruling, the CA held that actual expenditures should not be limited only to
traditional construction cost as the parties’ intention when they executed the MOA was to also
include expenditures relative to the actual completion of the project. It noted that the clear
intention of the parties that whatever expenditures they have spent shall be considered as their
investment subject to the proportionate sharing after determining the actual construction cost,
can be gleaned from the following provisions of the MOA:
Section 2. Investment of Malayan.—Subject to the provisions of Section 9 below,

Malayan shall invest the amount necessary to complete the Project and the following
amounts:
_______________
17 Rollo (G.R. Nos. 198920-21), pp. 341-345.
564
xxxx
Section 3. Recognition of [St. Francis’] Investment.—The parties confirm that as

of the date hereof, [St. Francis] invested in the Project an amount equivalent to its
entitlement to the net saleable area of the Building under Section 4 below, including
[St. Francis’] interest as buyer under the Contract to Sell.
Section 4. Distribution and Disposition of Units.— (a) As a return of its capital

investment in the Project, each party shall be entitled to such portion of all the net
saleable area of the Building that their respective contributions to the Project bear to
the actual construction cost. As of the date of the execution hereof, and on the basis
of the total costs incurred to date in relation to the Remaining Construction Cost (as
defined in Section 9[a] hereof), the parties shall respectively be entitled to the
following (which entitlement shall be conditioned on, and subject to, adjustments as
provided in subparagraph [b] of Section 4 in the event that the actual remaining
construction cost exceeds the Remaining Construction Cost).
The CA stressed that based on its reading of the MOA in its entirety, the ARCC clearly means the
“investment” incurred as contributed by Malayan in the completion of the project, and that there
being no ambiguity in the MOA, its literal meaning is controlling. The CA added that its
interpretation is consistent with the rule that when the terms of agreement have been reduced into
writing, it is considered as containing all the terms agreed upon by the parties and there can be
between the parties and their successors-in-interest, no evidence of such terms other than the
contents of the written agreement.
As to the amount of the ARCC, the CA found that the gross ARCC based on evidence is
P554,583,160.20 [Including 1/11% Input VAT and 2% Withholding Tax], while the net payment
is P552,152,508.70. According to the CA, St. Francis and Malayan correctly argued that the
CIAC mainly relied on Exhibit “C-3” which is a mere summary of the expenses or a
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VOL. 778, JANUARY 11, 2016 565
tabulation of figures incurred by Malayan without any other supporting documents to prove the
contents and authenticity of the figures stated therein. In determining the ARCC, the CA thus
reviewed the records and ruled that Exhibit “C-3” and Exhibit “R-24”18 [Project Cost to
Complete as of October 2008 amounting to P648,266,145.96] should be utilized vis-à-vis Exhibit
“R-48-series” which contain construction costs and computations supported by receipts,
vouchers, checks and other documents that are necessary to arrive at the final computation of the
ARCC. In this regard, St. Francis agrees with the CA that Exhibit “R-48-series” should be taken
into account because it contains computations supported by such documentary evidence, but
gravely erred in considering only the summaries in such exhibit without actually verifying and
counter-checking if the amounts indicated in the summaries actually correspond to the amounts
reflected in the supporting documents. St. Francis points out that the ARCC considered as being
claimed by Malayan that are actually receipted is only P514,179,217.94 based on Exhibit “R-48-
series.”
Due to the conflicting findings of the CIAC and the CA on the scope, meaning and computation
of the ARCC, the Court is compelled to review them in light of the evidence on record.
As duly noted by the CA, the controversy between St. Francis and Malayan lies in the
interpretation of the term “Actual Remaining Construction Cost” (ARCC) in relation to the
Estimated Remaining Construction Cost (RCC), in order to determine the proportionate
ownership over the reserved units, if any, as embodied in their Memorandum of Agreement dated
April 30, 2002, the pertinent provisions of which read:
Section 4. Distribution and Disposition of Units.— (a) As a return of its capital

investment in the Project, each party shall be entitled to such portion of all the net saleable
area of the Building that their respective contributions to the Project bear to the actual
construction
_______________
18 Id., at pp. 346-371.
566
cost. As of the date of the execution hereof, and on the basis of the total costs incurred to
date in relation to the Remaining Construction Cost (as defined in Section 9[a] hereof), the
parties shall respectively be entitled to the following (which entitlement shall be
conditioned on, and subject to, adjustments as provided in subparagraph [b] of Section 4 in
the event that the actual remaining construction cost exceeds the Remaining
Construction Cost):
xxx
(ii) ASB [now, St. Francis] — the following net saleable area:
(C) provided that the actual remaining construction costs do not exceed the Remaining
Construction Cost, the net saleable area particularly described in Schedule 4 hereof which
shall be delivered to [St. Francis] upon completion of the Project and determination of its
actual construction costs. If the actual remaining construction costs exceed the
Remaining Construction Cost, subparagraph (b) of Section 4 shall apply.
(b) In the event that the actual remaining construction costs exceed the Remaining
Construction Cost as represented and warranted by [St. Francis] to Malayan under Section
9(a) hereof, and Malayan pays for such excess, the pro rata sharing in the net saleable area
of the Building, as provided in subparagraph (a) of this Section 4 shall be adjusted
accordingly. In such event, Malayan shall be entitled to such net saleable area in Schedule
4 that corresponds to the excess of the actual remaining cost over the Remaining
Construction Cost.
xxx
Section 9. Remaining Construction Cost.—(a) [St. Francis] represents and warrants to

Malayan that Malayan can complete the Project at a cost not exceeding Four Hundred
Fifty-Two Million Four Hundred Twenty-Four Thousand Eight Hundred Forty-Nine Pesos
(P452,424,849) (the Remaining Construction Cost) as set forth in [St. Francis’]
Construction Budget Report attached hereto and made an integral part hereof as Schedule
9 that:
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VOL. 778, JANUARY 11, 2016 567
xxx
(b) Malayan shall pay for any additional costs and expenses that may be incurred in
excess of the Remaining Construction Cost. In such event, it shall be entitled to such net
saleable area as indicated in Schedule 4 that corresponds to the increase in remaining
construction cost. [St. Francis] shall be entitled to such net saleable area, if any, remaining
in the aforesaid Schedule 4.19
The ultimate purpose of determining the ARCC, as simply stated by CIAC, is to determine the
proportionate or absolute ownership of the properties over the net saleable area of the building
(Reserved Units), as provided in subparagraph (a) of Section 4 of the MOA, by calculating how
much was spent by Malayan to complete the project in excess of the estimate (Remaining
Construction Cost) made by St. Francis.
After a careful review of the MOA as to the scope and meaning of the term “ARCC,” the Court
sustains the CIAC that such term should be understood as the actual expenditures necessary to
complete the project, which is the traditional “construction” sense rather than the “investment”
sense. The Court thus reverses the CA’s ruling that the parties’ intention was to also include in
the computation of the ARCC whatever expenditures relative to the actual completion of the
project, as such expenses are considered as their investment subject to the proportionate sharing
after determining the actual construction cost.
It bears stressing that the intent of the parties in entering into the MOA is to provide for the terms
and conditions of the completion of the Project and the allocation of the ownership of
condominium units in the Project among themselves.20 To recall, Malayan and St. Francis (then
ASB) entered into the Joint Project Development Agreement (JPDA) dated November 9, 1995 to
construct a thirty-six (36)-storey condominium [but originally a fifty (50)-storey-building]
whereby the par-
_______________
19 Emphasis added.
20 Memorandum of Agreement dated April 30, 2002, Sec. 19.
568
ties agreed (a) that Malayan would contribute a parcel of land, and ASB would defray the
construction cost of the project, and (b) that they would allocate the net saleable area of the
project, as return of their capital investment. In a Contract to Sell dated November 20, 1996,
Malayan also agreed to sell the said land to ASB (now St. Francis) for a consideration of
P640,847,928.48, but the latter was only able to pay P427,231,952.32. However, ASB was
unable to completely perform its obligations under the JPDA and the Contract to Sell because it
underwent corporate rehabilitation, and the Securities and Exchange Commission suspended,
among other things, the performance of such obligations. Since ASB had presold a number of
condominium units, and in order to protect the interests of the buyers, to preserve its interest in
the project, its goodwill and business reputation, Malayan proposed to complete the project
subject to the terms and conditions of the MOA.
Under Section 5(a) of the MOA, Malayan undertook to construct, develop and complete the
Project based on the general specifications already agreed upon by the parties and set forth in
Schedule 6 of the MOA, within two (2) years from (i) the date of effectivity of Malayan’s
obligations as provided in Section 21, or (ii) the date of approval of all financing/loan facilities
from any financial or banking institution to fully finance the obligations of Malayan under the
MOA, whichever of said dates shall come later; or within such extended period as may be agreed
upon by the parties. Section 21 of the MOA provides that Malayan shall be bound by and
perform its obligations, including the completion of the Project, only upon (i) fulfillment by St.
Francis of all its obligations under Section 6, items (a), (b), (c) and (d),21 and (ii) approval by the
Insurance Commission of the MOA.
_______________
21 Section 6. Responsibilities of ASB [now, St. Francis].—[St. Francis] undertakes to do the

following obligations:
a. Within ninety (90) days from date hereof or within such extended period as may be agreed
upon by the
569
VOL. 778, JANUARY 11, 2016 569
_______________
parties, obtain, whether on its own behalf or for the benefit of Malayan, from local or national
government agencies (including, but not limited to, the Housing and Land Use Regulatory
Board, the Securities and Exchange Commission, and the Bureau of Internal Revenue) or any
other entity or person any and all permits, licenses, approvals or consents necessary to implement
the transactions contemplated herein, including, but not limited to, the following final and
executory approvals;
i. approval by the Securities and Exchange Commission of the transactions contemplated

hereunder; and
ii. approval by the Housing and Land Use Regulatory Board of the transactions
contemplated hereunder, including any changes or amendments to the Master Deed of
Restrictions, License to Sell, or any other document relating to the Project as Malayan may
deem necessary or appropriate and as Malayan shall relay to [St. Francis] prior to the date
of signing hereof, such as the change of the name of the Project to “Malayan Tower” or
any other name that Malayan may adopt, or the right of Malayan to convert the units to a
condotel/apartelle. For this purpose, Malayan shall grant [St. Francis] a special power of
attorney to follow up the processing of said approval;
b. Upon terms and conditions acceptable to Malayan, (i) assign the construction contracts and
the amount of P36,731,086 advanced to contractors of the Project set forth in Section 5(g) to help
the parties reduce the cash requirement to complete the Project, with the contractors’ conformity
and confirmation of the amount of their net advances from [St. Francis] as set forth in Section
5(g), and/or (ii) obtain the renewal of expiring or expired construction contracts of these
contractors;
c. Within thirty (30) days from date hereof, obtain from each contractor with a net claim
against [St. Francis] as set forth in Section 5(g) an irrevocable undertaking to
570
Section 5(a) of the MOA also states that that the project shall be deemed complete, and the
obligation of Malayan fulfilled, if the construction and development of the Project is finished as
certified by the architect of the project. Upon completion of the project, the general provision
which governs the distribution and disposition of units is the first sentence of Section 4(a) of the
MOA, to wit: “[a]s a return of its capital investment in the Project, each party shall be entitled to
such portion of all the net saleable area of the Building that their respective contributions to the
Project bear to the actual construction cost.” The second sentence22 of Section 4(a) provides the
specific details on the pro rata sharing of units to which the parties are entitled based on the
RCC in relation to total costs incurred as of the date of the execution of the MOA dated April 30,
2002. It also states, however, that entitlement
_______________
execute the waiver of all its claims against the Project, upon payment by Malayan of its net
claim. Such undertaking and waiver shall conform to the undertaking and waiver attached hereto
as Schedule 7. [St. Francis] represents and warrant to Malayan that (a) the contractors listed in
Section 5(g) are the only contractors with claims against the Project and (b) their aggregate net
claims do not exceed P12,712,954;
d. Within fifteen (15) days from procurement of all approvals mentioned in Section 6(a) above,
transfer to Malayan complete and unhampered possession of the Project and turn over and
deliver to Malayan all architectural, engineering and other plans; records and other documents of
the Project as set forth in Schedule 8 hereof.
xxx
22 Section 4. Distribution and Disposition of Units.—x x x As of the date of the execution

hereof, and on the basis of the total costs incurred to date in relation to the Remaining
Construction Cost (as defined in Section 9[a] hereof), the parties shall respectively be entitled to
the following (which entitlement shall be conditioned on, and subject to adjustments as provided
in subparagraph [b] of Section 4 in the event that the actual remaining construction cost exceeds
the Remaining Construction Cost). x x x
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VOL. 778, JANUARY 11, 2016 571
to certain units are subject to adjustments in the event that the ARCC exceeds the RCC, and
Malayan pays for such excess.
Clearly, the parties foresaw that Malayan may incur additional cost and expenses in excess of the
Remaining Construction Cost (RCC) of P452,424,849.00 which amount St. Francis represented
and warranted that Malayan would have to spend to complete the project. Section 9(b)23 of the
MOA thus adds that, in such event, Malayan shall be entitled to such net saleable area as
indicated in Schedule 4 that corresponds to the increase in remaining construction costs, while
St. Francis shall be entitled to such net saleable area, if any, remaining in the said Schedule 4. As
admitted by the parties in the Amended Terms of Reference, the net saleable area included in
Schedule 4 (“Reserved Units”) originally covered fifty-three (53) units (which was reduced to
thirty-nine [39] units after reconfiguration) with thirty-eight (38) parking spaces, and the
aggregate monetary value of said units is P175,856,323.05.
In determining the entitlement of the parties to the reserved units in Schedule 4, Malayan insists
that the ARCC should include all its capital contributions to complete the project, including
financial costs which are not directly related to the construction of the building. It argues that the
_______________
23 Section 9. Remaining Construction Cost.—(a) [St. Francis] represents and warrant to
Malayan that Malayan can complete the Project at a cost not exceeding Four Hundred Fifty-Two
Million Four Hundred Twenty-Four Thousand Eight Hundred Forty-Nine Pesos
(P452,424,849[.00]) (the “Remaining Construction Cost”) as set forth in [St. Francis’]
Construction Budget Report attached hereto and made integral part hereof as Schedule 9, x x x.
(b) Malayan shall pay for any additional costs and expenses that may be incurred in excess of
the Remaining Construction Cost. In such event, it shall be entitled to such net saleable area as
indicated in Schedule 4 that corresponds to the increase in remaining construction costs. [St.
Francis] shall be entitled to such net saleable area, if any, remaining in the aforesaid Schedule 4.
572
MOA is replete with provisions recognizing the parties’ intent to include in the ARCC their
respective capital contributions or investment.
Malayan’s argument fails to persuade.
The term ARCC should only be construed in light of its plain meaning which is the actual
expenditures necessary to complete the project, and it is not equivalent to the term “investment”
under the MOA.
As stated in the MOA, the investment of Malayan is composed of (1) the amount necessary to
complete the project, and (2) the following amounts: (a) P65,804,381, representing Malayan’s
payment on behalf of ASB (now St. Francis) of the principal amount of the loan obtained by
ASB from the RCBC to finance the project; and (b) P38,176,725, representing Malayan’s
payment on behalf of ASB of the outstanding obligations to project contractors as of the signing
of the MOA.24 On the other hand, the investment of St. Francis is broadly defined as the ASB’s
invested amount equivalent to its entitlement to the net saleable area of the Building under
Section 4 of the MOA, including ASB’s interest as buyer under the Contract to Sell.25 Hence,
the Court holds that the ARCC, which pertains only to the amount necessary to complete the
project, can be considered as part of the capital investment, but they are not synonymous.
Likewise negating Malayan’s argument that all its contribution to complete the project should be
included in the ARCC is the restrictive construction industry definition of “construction cost,” to
wit: the cost of all construction portions of the project, generally based upon the sum of the
construction contract(s) and other direct construction costs; it does not include the compensation
paid to the architect and consultants, the cost of the land, right-of-way, or other costs which
_______________
24 Memorandum of Agreement dated April 30, 2002, Sec. 2.
25 Id., Sec. 3.
573
VOL. 778, JANUARY 11, 2016 573
are defined in the contract documents as being the responsibility of the owner.26
As to the computation of the ARCC, the Court agrees with the CA that the CIAC erred in relying
mainly on Exhibit “C-3,” which is a mere summary or tabulation of the cost to complete the
project as of August 10, 2006, and that Exhibit “R-24” (a 26-page Cost to Complete as of
October 2008) and Exhibit “R-48-series” (consisting of about 2,230 pages construction costs
computation, receipts, vouchers, checks and other documents) should also be considered in
determining the ARCC. After a careful review of the records, the Court finds partial merit in the
claim of St. Francis that certain items in the computations are unsubstantiated by evidence, while
the other costs should either be included or excluded in the ARCC for reasons that will be
explained below. Hence, the CA’s own computation of the ARCC based on Exhibit “R-48-series”
in the total amount of P554,583,160.20 (including 1/11% Input VAT and 2% withholding tax)
should be modified in order to arrive at the net ARCC of P505,391,573.63, thus:
Construction Cost as per receipts (Exhibit “R-48-series”)27
(with 1/11% Input VAT and 2% withholding tax) –P554,583,160.20

Total Inclusion: P8,282,974.82
Award to Total Ventures, Inc.
(Prolongation costs and extended Overhead) – + 8,282,974.82
Total ARCC: P554,583,160.20+8,282,974.82=P562,866,135.02
(Construction Costs as per receipts + Inclusion)
Total Deductions: P41,705,696.66
Interest expense paid by Malayan to RCBC – P39,348,659.88
Change orders not due to Reconfiguration – 971,796.29
Contingencies – 631,154.39
Interior Design Works – + 754,086.10
P41,705,696.66
_______________
26 Supra note 13.
27 Rollo (G.R. Nos. 198916-17), Vols. II & IV, pp. 1370-3600.
574
Total Exclusions: P15,768,864.73
(Unsubstantiated Costs)
Item 1.028 – P9,297,947.22
Items 5.3 and 5.429 – 530,563.65
Items 5.3 and 5.4 – 725,877.62
Item 5.7.130 – 50,710.61
Item 6.2.2531 – 194,171.00
Item 6.1132 – 3,499.64
Item 6.12.333 – 2,397,047.8934
Item F335 – 368,397.52

Item F3 – 448,534.59
Item F3 – 634,232.26
Professional Fees C & D36 – 427,500.00
Professional Fees N37 – + 79,022.73
P15,768,864.73
(Total Deductions) P41,705,696.66
(Total Exclusions) +15,768,864.73
P57,474,561.39
Total ARCC - Total Deductions & Exclusions = Net ARCC: P505,391,573.63
P562,866,135.02 – P57,474,561.39 = P505,391,573.63
_______________
28 Id., at p. 1371 (G.R. Nos. 198916-17), Vol. II, Exhibit “R-48-A-series.”
28 Id., at p. 1661, id., Exhibit “R-48-E-4-series.”
30 Id., at p. 1787, id., Exhibit “R-48-E-20-series.”
31 Id., at p. 2349, id., Exhibit “R-48-F-27-series.”
34 P5,100,000.00 [Item 6.12.3 per CA] - P2,702,952.11 [Item 6.12.3 per Exhibit “R-48-F-47-
series.”] = P2,397,047.89.
35 Rollo (G.R. Nos. 198916-17), p. 3523, Vol. IV, Exhibit “R-48-U-series.”
36 Id., at p. 3169, id., Exhibit “R-48-H-series.”
37 Id., at p. 3265, id., Exhibit “R-48-H-6-series.”

575
VOL. 778, JANUARY 11, 2016 575
III. Input VAT
St. Francis contends that Input VAT should not be treated as part of construction cost, because it
is not part of the costs of goods and services purchased or engaged under Section 11038 of the
National Internal Revenue Code (NIRC). Accord-
_______________
38 SEC. 110. Tax Credits.—
A. Creditable Input Tax.—
(1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with
Section 113 hereof on the following transactions shall be creditable against the output tax:
(a) Purchase or importation of goods:
(i) For sale; or
(ii) For conversion into or intended to form part of a finished product for sale
including packaging materials; or
(iii) For use as supplies in the course of business; or
(iv) For use as materials supplied in the sale of service; or
(v) For use in trade or business for which deduction for depreciation or amortization
is allowed under this Code, except automobiles, aircraft and yachts.
(b) Purchase of services on which a value-added tax has been actually paid.
(2) The input tax on domestic purchase of goods or properties shall be creditable:

(a) To the purchaser upon consummation of sale and on importation of goods or
properties; and
(b) To the importer upon payment of the value-added tax prior to the release of the goods
from the custody of the Bureau of Customs.
However, in the case of purchase of services, lease or use of properties, the input tax shall be
creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty
or fee.
576
ing to St. Francis, VAT Ruling No. 053-94, February 9, 1994, states that VAT paid by a VAT-
registered person on his pur-
_______________
(3) A VAT-registered person who is also engaged in transactions not subject to the value-added
tax shall be allowed tax credit as follows:
(a) Total input tax which can be directly attributed to transactions subject to value-added
tax; and
(b) A ratable portion of any input tax which cannot be directly attributed to either
activity.
The term “input tax” means the value-added tax due from or paid by a VAT-registered person in
the course of his trade or business on importation of goods or local purchase of goods or
services, including lease or use of property, from a VAT-registered person. It shall also include
the transitional input tax determined in accordance with Section 111 of this Code.
The term “output tax” means the value-added tax due on the sale or lease of taxable goods or
properties or services by any person registered or required to register under Section 236 of this
Code.
(B) Excess Output or Input Tax.—If at the end of any taxable quarter the output tax exceeds the
input tax, the excess shall be paid by the Vat-registered person. If the input tax exceeds the output
tax, the excess shall be carried over to the succeeding quarter or quarters. Any input tax
attributable to the purchase of capital goods or to zero-rated sales by a VAT-registered person
may at his option be refunded or credited against other internal revenue taxes, subject to the
provisions of Section 112.
(C) Determination of Creditable Input Tax.—The sum of the excess input tax carried over from
the preceding month or quarter and the input tax creditable to a VAT-registered person during the
taxable month or quarter shall be reduced by the amount of claim for refund or tax credit for
value-added tax and other adjustments, such as purchase returns or allowances and input tax
attributable to exempt sale.
The claim for tax credit referred to in the foregoing paragraph shall include not only those filed
with the Bureau of Internal Revenue but also those filed with other government agencies, such as
the Board of Investments the Bureau of Customs.
577
VOL. 778, JANUARY 11, 2016 577
chases (or input tax) is an asset account in the Balance Sheet and not to be treated as an expense,
unless he is exempt from VAT in which case the VAT paid would form part of the cost to acquire
what was purchased. In fact, per Malayan’s own documentary evidence, cash vouchers in Exhibit
“R-48-series,” input VAT is indicated as an account separate from the actual cost of services or
materials. Also, in Malayan’s audited financial statements, input VAT is treated as a separate item
and was, in fact, claimed as an asset under the heading “Other Assets.”
St. Francis further points out that Malayan’s counsel admitted that input VAT is not part of cost
when he stated that VAT and interest expense are actually financial cost and part of its capital
contribution in the construction, but, strictly speaking, not directly related construction cost. St.
Francis claims that even from an accounting standpoint, input tax is not entered into the books as
part of cost. While contract prices for contractors or suppliers are VAT inclusive, it does not
mean that input VAT is considered part of cost; input VAT is treated as account in a different
account, either under “Other assets” or “Input Tax,” which is an asset account. Besides, the input
VAT claimed by Malayan as part of its construction cost in the usual course of business as a VAT-
able entity is offset or credited against output VAT to determine the net VAT due or payable to the
government. Since Malayan also has output VAT from its sales of condo units in the project and
from sales of insurance policies, it should be able to credit such input VAT and not charge it as
part of the construction cost.
St. Francis finally notes that Malayan admitted that it can apply for refund or issuance of tax
credit for excess input tax, and will thus benefit twice from charging input VAT as part of the
construction cost. Since input VAT had already been claimed by Malayan, and its audited
financial statements show the offsetting of input VAT against output VAT, then justice and equity
dictate that it should not be allowed to claim it as part of the ARCC.
578
The Court finds no compelling reason to disturb the consistent findings of the CA and the CIAC
that Input VAT should be allowed to remain in the ARCC. As aptly pointed out by the CA and the
CIAC, ARCC refers to the actual expenditures made by Malayan to complete the project. The
Court thus agrees with Malayan that in determining whether input VAT should be included as
ARCC, the issue is not the technical classification of taxes under accounting rules, but whether
such tax was incurred and paid as part of the construction cost. Given that input VAT is, strictly
speaking, a financial cost and not a direct construction cost, it cannot be denied that Malayan had
to pay input VAT as part of the contract price of goods and properties purchased, and services
procured in order to complete the project. Moreover, that the burden of such tax was shifted to
Malayan by its suppliers and contractors is evident from the photocopies of cash vouchers and
official receipts on record,39 which separately indicated the VAT component in accordance with
Section 113(B)40 of the Tax Code.41
_______________
39 Rollo (G.R. Nos. 198916-17), Vols. II & IV, pp. 1370-3600, Exhibit “R-48-series.”
40 SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.—
xxxx
(B) Information Contained in the VAT Invoice or VAT Official Receipt.—The following

information shall be indicated in the VAT invoice or VAT official receipt:
(1) A statement that the seller is a VAT-registered person, followed by his taxpayer’s
identification number (TIN);
(2) The total amount which the purchaser pays or is obligated to pay to the seller with the
indication that such amount includes the value-added tax: Provided, That:
(a) The amount of the tax shall be shown as a separate item in the invoice or
receipt;
579
VOL. 778, JANUARY 11, 2016 579
Anent the claim that it would be unjust and inequitable if Malayan would be allowed to include
its input VAT in the ARCC, as well as to offset such tax against its output tax, the Court finds that
such coincidence does not result in unjust enrichment at the expense of St. Francis. Unjust
enrichment claims do not lie simply because one party benefits from the efforts or obligations of
others, but instead it must be shown that a party was unjustly enriched in the sense that the term
unjustly could mean illegally or unlawfully.42 In offsetting its input VAT against output VAT,
Malayan is merely availing of the benefits of the tax credit provisions of the law, and it cannot be
said to have benefited at the expense or to the damage of St. Francis. After all, Malayan is
justified in including in the ARCC the input VAT it had paid as part of the contract price of the
goods, properties and services it had procured to complete the project.
_______________
(b) If the sale is exempt from value-added tax, the term “VAT-exempt sale” shall
be written or printed prominently on the invoice or receipt;
(c) If the sale is subject to zero percent (0%) value-added tax, the term “zero-rated
sale” shall be written or printed prominently on the invoice or receipt;
“(d) If the sale involves goods, properties or services some of which are subject to
and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall
clearly indicate the breakdown of the sale price between its taxable, exempt and
zero-rated components, and the calculation of the value-added tax on each portion of
the sale shall be shown on the invoice or receipt”: Provided, That the seller may
issue separate invoices or receipts for the taxable, exempt, and zero-rated
components of the sale. x x x
41 As amended by R.A. 9337 (Effective July 1, 2005).
42 University of the Philippines v. Philab Industries, Inc., 482 Phil. 693, 709; 439 SCRA 467,
484 (2004).
580
At any rate, St. Francis would also be entitled to avail of the same tax credit provisions upon the
eventual sale of its proportionate share of the reserved units allocated and transferred to it by
Malayan. It bears emphasis that the allocation of and transfer of such units to St. Francis is
subject to output VAT which Malayan could offset against its input VAT. In turn, St. Francis
would incur input VAT which it may later offset against its output VAT upon the sale of the said
units. This is in accordance with the tax credit method of computing the VAT of a taxpayer
whereby the input tax shifted by the seller to the buyer is credited against the buyer’s output
taxes when it in turn sells the taxable goods, properties or services.43
IV. Comprehensive All Risk Insurance (CARI)
St. Francis claims that the CARI should be disallowed from being part of the ARCC because
there is no proof of expense on the part of Malayan, and only official receipts were presented.
However, the first official receipt in the amount of P2,814,672.81 is not even readable, while in
the second receipt, the description of the contract for the CARI appears to be a different project.
Considering that the assured in the receipts is not just Malayan but jointly with LANDEV
(project manager), St. Francis adds that Malayan must prove that it actually paid for this
expense.
It bears stressing that both the CIAC and the CA agreed that the CARI should be allowed as part
of the ARCC, but differed as to the amount. Due to St. Francis’ admission that it would allow
inclusion of P1,000,000.00, and considering that no basis has been suggested on how the said
amount was arrived at, the CIAC decided to split the amount contested (P2,814,678.80,
excluding premium for renewals, per Malayan) into equal shares, and allowed the CARI in the
amount of
581
VOL. 778, JANUARY 11, 2016 581
P1,407,336.40 as part of the ARCC. On the other hand, the CA allowed CARI in the amount of
P2,168,035.66 as part of ARCC, after reviewing the official receipts44 issued by Tokio Marine
Insurance Co., and finding that the total amount of the CARI should be P4,336,071.32 which
should be split between Malayan and St. Francis.
The Court holds that CARI in the amount of P4,361,291.34 is supported by official receipts;45
hence, such amount should be allowed to remain in the ARCC. Although the official receipts of
the CARI appear to have been issued in the name of Malayan and/or LANDEV, the minutes of
the December 20, 2002 Bids and Awards Committee Meeting, of which St. Francis’ President
Luke Roxas was a member, proves that it was unanimously agreed upon that the CARI would be
secured directly by the owner, Malayan. The official receipts and the said minutes prove that the
premium of the policy, as well as the renewals thereof, were shouldered by Malayan as the owner
of the project. Against the said substantial evidence of Malayan, the CA and the CIAC have no
basis in ruling why the CARI should be split between Malayan and St. Francis. As to the conflict
between the CARI premium payments shown in Exhibit “C-3” (Cost to Complete as of August
10, 2006) in the total amount of P4,006,634.85 and Exhibit “R-48M-series” (Item 5.0 Project
Insurance, Tokio Marine Malayan Insurance Co., Inc.) in the total amount of P4,361,291.34, the
latter should prevail as it is supported by official receipts.46
V. Allocation of Reserved Units
St. Francis asserts that the correct ARCC supported by receipts is only P514,179,217.94,47 and
after making all the necessary deductions, the excess ARCC over the warranted
_______________
44 Rollo (G.R. Nos. 198916-17), Vol. II, pp. 2815-2821.
45 Id., Vol. IV, pp. 3327-3333.
46 Id., at pp. 3329-3333.
47 Exhibit “C-50.”
582
RCC [P452,424,849.00] would only be around P16,446,014.66, thus entitling it to the value of
the reserved units of around P159,410,310.39, as well as the income therefrom. On the other
hand, Malayan insists that St. Francis would no longer be entitled to any reserved units, and it
would still be liable for P19,038,339.91, as the ARCC and the RCC exceeded the aggregate
value of the reserved and the total aggregate value of the reserved units by such amount.
The CIAC held that the ARCC based on Exhibit “C-3” is P614,593,565.96, and that after
deducting the total disallowances of P52,864,385.00, as well as the amount of the RCC, the
excess ARCC will be P109,304,331.96 which is equivalent to Malayan’s 62.2% share in the total
aggregate value of the reserved units (P175,856,325.05). Meanwhile, the remaining 37.8% is the
proportionate share of St. Francis in the said units.
Modifying the ruling of the CIAC, the CA ruled that based on Exhibit “C-3,” Exhibit “R-24” and
Exhibit “R-48-series,” the total ARCC is P615,880,672.47. After excluding the deductions in the
total amount of P15,135,166.51 and the amount of the RCC, the excess ARCC will be
P148,320,656.96 which is equal to Malayan’s 84% share in the total aggregate value of the
reserved units. The remaining 16% is the proportionate share of St. Francis in the said units.
After a circumspect review of the records, the Court finds that the 30% of the reserved units
should be allocated to Malayan, while 70% should be allocated to St. Francis. Below is the
computation of the parties’ proportionate share in the said units:
P505,391,573.63 [Net ARCC] - P452,424,849.00 [RCC] = P52,966,724.63 [Excess ARCC]

P52,966,724.63 [Excess ARCC]/P175,856,323.05 [Total Aggregate Value of Reserved Units] = .
3011 or 30% – share of Malayan
583
VOL. 778, JANUARY 11, 2016 583
P122,889,598.42/P175,856,323.05 = .6988 or 70% – share of St. Francis.
Prolongation Costs
and Extended Overhead
The CIAC held that Prolongation Costs and Extended Overhead in the amount of P6,000,000.00
should be excluded as part of the ARCC because it would be unfair and unjust for Malayan to
pass on its liability to St. Francis after having been found responsible for the delay. The CIAC
pointed out that the resolution of this issue hinges upon whose fault the delay in the construction
that gave rise to prolongation costs may be attributed to, and this was resolved in CIAC Case No
27-2007 entitled “Total Ventures and Project, Inc. vs. Malayan Insurance Company, Inc.” where
the arbitral tribunal awarded in favor of claimant TVI the sum of P7,743,278.89 to compensate
for the delay in the completion of construction which has been caused essentially by Malayan.
On the contrary, the CA held that it is but proper to include in the ARCC the amount of
P21,948,852.39 which Malayan had paid to Total Ventures, Inc. (TVI) for the settlement in the
CIAC Case No. 27-2007.
St. Francis points out that without consideration of its arguments and contrary to CIAC’s finding,
the CA held that Malayan had paid TVI P21,948,852.39 which should be included in the ARCC.
St. Francis states that, assuming arguendo, that such settlement in the arbitration case can be
considered part of the ARCC, the entire amount thereof cannot be included because the
combined total amount of the award of prolongation costs and extended overhead
(P7,743,278.89), and the interest (P1,430,127.50) is only (P9,173,405.94). It adds that it is very
clear in the decision of the arbitral tribunal that the causes for the delay of TVI that warranted the
grant of overhead expenses are actually attributable to Malayan, to wit:
584
Based on the foregoing documentary evidence and the testimony of the witnesses, delays
in the project implementation was mainly attributed to the reconfiguration of the room
layout of the building at Discovery side and delay in the award by MICO [Malayan] of the
subcontract packages for other trade disciplines plus, the delayed delivery of material
which had a domino effect on the work of the succeeding packages, and eventually to the
overall project completion date which had to be extended to August 31, 2005.48
The CA grossly erred in ruling that the full amount of P21,948,852.39 paid by Malayan to TVI
should be included in the ARCC. A careful review of the decision of the arbitral tribunal in CIAC
Case No. 27-2007 shows that such full amount consists of net amount due (P20,518,725.94) to
TVI after offsetting its various claims against the counterclaims of Malayan, plus the accrued
interest of P1,430,127.05.49 Based on the said decision and the amount which St. Francis itself
has conceded it may be held liable for, the Court holds that the prolongation costs and extended
overhead for the period of January 2005 to August 2005 (P6,313,846.43) and September 1, 2005
to August 31, 2005 (P1,429,432.46) in the total amount P7,743,278.89,50 as well
_______________
48 Rollo (G.R. Nos. 198916-17), Vol. I, p. 917, CIAC Decision in Case 27-2007, p. 64 of 68.
49 Id., at pp. 920-921; id., at p. 67 of 68.
50 Id., at p. 919; id., at p. 66 of 68. Accordingly, the amount of Php20,518,725.34 adjudged in

TVI’s favor shall earn interest based on the 30-day regular loan rate of the Land Bank of the
Philippines prevailing on the due date until the filing of this case with the CIAC.
As of October 30 2006, the prevailing Prime Lending Rate as certified by Land Bank of the
Philippines was 8.00% p.a. Time lapsed from October 31, 2006 (date of certification) to
September 14, 2007 (filing of case with CIAC) is 318 days. TVI is, therefore, entitled to accrued
interest computed as follows: Php20,518,725.34 (principal amount) x .08 (interest rate) x
318/365 (days elapsed) or Php1,430,127.05. (Emphasis in the original)
585
VOL. 778, JANUARY 11, 2016 585
as the accrued interest in the amount of P539,695.93,51 or a total amount of P8,282,974.82,

should be included as part of the ARCC.
The Court agrees with Malayan that the cause of the delay in the completion of TVI’s
construction works was the reconfiguration of the room layout of the building along the side
facing Discovery Suites hotel. Such delay was, in turn, caused by St. Francis deviation from the
original April 12, 1996 floor plans for the 9th to 31st floors of the project, which resulted in units
that were more typical of a high-density, low-cost condominium project. Indeed, Malayan had to
reconfigure the said layout of several units that St. Francis had constructed as they were smaller
and narrower than those provided in the original floor plans, and in order to meet St. Francis’
commitment to the buyers of presold units to create a prestigious building and collaborative
masterpiece that only the best in interior design, landscape planning and architecture can truly
offer, as well as to avoid possible liability under Section 1952 of the Subdivision and
Condominium Buyers’ Protective Decree (Presidential Decree No. 957).
The Court will now discuss jointly the first three interrelated issues raised by Malayan.
_______________
51 (P7,743,278.89x.08x318/365).
52 Section 19. Advertisements.—Advertisements that may be made by the owner or developer

through newspaper, radio, television, leaflets, circulars or any other form about the subdivision
or the condominium or its operations or activities must reflect the real facts and must be
presented in such manner that will not tend to mislead or deceive the public.
The owner or developer shall answerable and liable for the facilities, improvements,
infrastructures or other forms of development represented or promised in brochures,
advertisements and other sales propaganda disseminated by the owner or developer or his agents
and the same shall form part of the sales warranties enforceable against said owner or developer,
jointly and severally. Failure to comply with these warranties shall also be punishable in
accordance with the penalties provided for in this Decree.
586
A. Whether St. Francis had never disputed and therefore admitted that Malayan had
incurred the ARCC.
B. Whether the CA erred in allowing St. Francis’ to belatedly change its theory in its Draft
Decision and in its Appeal.
C. Whether the CA erred in disregarding the uncontroverted testimonial evidence, and

focusing solely on documentary evidence.
According to Malayan, the CA overlooked the fact that St. Francis objected only to the perceived
impropriety of including certain costs in the ARCC. That Malayan incurred these costs was never
in issue during the arbitral proceedings. In view of the rule that all facts not in issue are admitted,
and that all facts judicially admitted do not require proof, Malayan claims that it should not bear
the burden to prove that it had actually incurred its ARCC.
Malayan also notes that St. Francis’ CIAC complaint contained no allegation that Malayan had
not actually incurred the costs in its ARCC, nor was there any claim that specific costs items in
the ARCC lacked evidentiary basis, or were otherwise fictitious or fabricated. Malayan argues
that if its alleged failure to substantiate the ARCC was enough basis to question costs included
therein, it follows that St. Francis would already have disputed in its complaint the entire amount
of the ARCC. Yet, St. Francis only chose to object to selected items in the ARCC, and not
because of the alleged lack of substantiation.
Malayan adds that from the time St. Francis filed its complaint, up to the conclusion of trial, it
had the same theory, i.e., although Malayan had indeed spent for its ARCC, some costs items
ought to be excluded as they could not be considered part of the ARCC. It was only belatedly in
its Draft Decision and its Petition before the CA that St. Francis argued for the first time that new
cost items should also be deducted
587
VOL. 778, JANUARY 11, 2016 587
from the ARCC because they were allegedly unsubstantiated or not fully supported by official
receipts. In light of the rule that a party cannot change his theory on appeal when a party adopts a
certain theory in the court below, Malayan faults the CA for excluding new cost items from the
ARCC due to lack of substantiation. Besides, Malayan claims that its entire ARCC as of
February 29, 2009 was expressly affirmed by its witnesses who are competent to testify due to
their involvement in the preparation and monitoring of the project’s budget.
Stating that it did not have the burden of proving that it incurred the costs in its ARCC because
this was never in issue, Malayan concludes that the CA should have held St. Francis to its
original theory that Malayan had actually incurred all the items in its ARCC of P647,319,513.96,
instead of examining each item included therein and accepting only P615,880,672.47 as
supported by documentary evidence. Finally, Malayan insists that there can be no dispute that it
incurred the ARCC of P647,319,513.96 based on the unrebutted testimony of its witnesses and
the voluminous documents it introduced at trial.
Malayan’s contentions are misplaced.
Contrary to the claim that St. Francis admitted that Malayan had incurred the ARCC of
P647,319,513.96, the allegations in St. Francis complaint and the Amended Terms of Reference
would show that the substantiation of the cost items included in the ARCC and the exact amount
thereof are the core issues of the construction arbitration before the CIAC.
For one, the contention that St. Francis’ complaint contained no allegation that Malayan had not
actually incurred the costs in its ARCC, nor was there any claim that specific costs items in the
ARCC lacked evidentiary basis, is belied by the following allegations in same complaint:
2.9 Sometime in August of 2006, [Malayan] presented a cost to complete construction of

the Project in the amount of SIX HUNDRED FOURTEEN MILLION FIVE HUNDRED
588
NINETY-THREE THOUSAND FIVE HUNDRED SIXTY-FIVE PESOS and 96/100

(P614,593,565.96). Said cost to complete however was a mere tabulation with a listing
of items and appurtenant costs. There was no independent proof or basis as well as
evidence that claimant incurred these costs, much less, if these costs conform with the
actual construction cost as the same is understood under the MOA. x x x53
For another, one of the admitted facts in the Amended Terms of Reference states that “[d]espite
the completion of the Project and the turnover of the units to [St. Francis], [Malayan], and other
buyers of units, the issue of actual cost of construction has not been resolved to the mutual
satisfaction of the parties.”54 Not to mention, one of the issues raised before the CIAC is “[w]hat
is the actual remaining construction cost to complete the Project spent by [Malayan] as of today
in excess of [St. Francis’] estimate RCC?”55 Clearly, there is no merit in the claim that St.
Francis admitted that Malayan had incurred the ARCC of P647,319,513.96 as of October 2008. It
can be gathered from the complaint that, as early as August 2006 when the ARCC was just
P614,593,565.96, St. Francis already disputed such amount for lack of independent proof or
evidence that Malayan incurred these costs
Anent Malayan’s claim that St. Francis argued belatedly in its Draft Decision and its petition
before the CA that new cost items should also be deducted from the ARCC because they were
allegedly unsubstantiated or not fully supported by official receipts, suffice it to state that
whether such cost items should be excluded from the ARCC is impliedly included in the issue of
“[w]hat is the actual remaining construction cost to complete
_______________
53 Rollo (G.R. Nos. 198920-21), p. 263. (Emphasis added)
54 Rollo (G.R. Nos. 198916-17), Vol. I, p. 179.
55 Id., at p. 180.
589
VOL. 778, JANUARY 11, 2016 589
the Project spent by [Malayan] as of today in excess of [St. Francis’] estimate RCC?”56
Moreover, in an action arising out of cost overruns on a construction project, the builder who has
exclusive control of the project and is in a better position to know what other factors, if any,
caused the increases, has the burden of segregating the overruns attributable to its own conduct
from overruns due to other causes.57 As the co-owner and developer who assumed the general
supervision, management and control over the project, and the one in possession of all the
checks, vouchers, official receipts and other relevant documents, Malayan bears the burden of
proving that it incurred ARCC in excess of the RCC and the total aggregate value of the reserved
units, in which case St. Francis would no longer be entitled to a proportionate share in the
reserved units pursuant to the MOA.
In view of the foregoing discussion, the Court finds no merit in Malayan’s contentions (1) that it
did not have the burden of proving that it incurred the costs in its ARCC because this was never
in issue; and (2) that there can be no dispute that it had incurred the ARCC of P647,319,513.96
based on the unrebutted testimony of its witnesses and the voluminous documents it introduced
at trial.
D. Erroneous Cost Exclusions from the ARCC.
D.1. Change Orders due to Reconfiguration.
The CIAC held that costs of reconfiguration should be allowed to remain as part of the ARCC on
account of the greater savings generated. It found that Malayan has sufficiently established that
the reconfiguration did not result in additional costs, and net savings were realized. Since St.
Francis
_______________
56 Id.
57 13 Am. Jur. 2d § 122, Building, etc. Contracts.

590
only concern was to minimize costs and maximize savings, there is no longer any basis to object
to the reconfiguration and the change order that were approved as a results thereof.
In contrast, the CA ruled that the CIAC erred in allowing the increased cost of P7,434,129.85 to
be included in the ARCC because it is immaterial whether there were net savings generated from
the reconfiguration, and the fact remains that there was an increase in the budgeted construction
cost, which Malayan alone should bear.
Finding substantial evidence on record to support the CIAC ruling, the Court reverses the CA
ruling and upholds the CIAC that the increased costs of P7,434,129.52 should be included in the
ARCC. The Court sustains the CIAC’s observation that although such reconfiguration was not
really necessary for the completion of the project and was undertaken only to make the units
more saleable, St. Francis had consented thereto on the condition that it would result in savings
rather than additional costs.58 No persuasive reason was shown to disturb the CIAC finding that
despite the increased costs of P7,434,129.52 as claimed by St. Francis, and even including the
consultants’ fees in the aggregate amount of P3,081,725.00, the savings amounting to
P14,096,239.07 due to reconfiguration, would still be in excess of the costs of additive change
orders.59 In arriving at such computation, the CIAC went over the disputed change orders due to
reconfiguration, and proceeded to calculate whether the cost of the additive works exceeded the
savings realized from the deductive works. Notably, no similar effort was exerted by the CA in
arriving at its ruling. Without stating any reason, the CA reversed the CIAC ruling that net
savings were generated on account of change orders due to reconfiguration.
_______________
58 Rollo (G.R. Nos. 198920-21), p. 605.
59 Id., at p. 608.
591
VOL. 778, JANUARY 11, 2016 591
D.2. Change Order not due to Reconfiguration.
With respect to change orders not due to reconfiguration amounting to P971,796.29, the CIAC
held that such costs should be excluded from the computation of the ARCC because they were
clearly not within the scope of the original work covered by the MOA, but were plainly additive
works ordered by Malayan to improve or enhance the project. It also found no legal or equitable
reason to allow Malayan to pass on the costs of such unnecessary improvements or
enhancements to St. Francis.
The CA deemed it unnecessary to disturb the CIAC’s findings on the change of orders not due to
reconfiguration, as the latter had extensively discussed the issue. According to the CA, the CIAC
correctly ruled that the change orders not due to reconfiguration cannot be considered as part of
the ARCC as these were not within the scope of the work agreed upon by the parties in the
MOA. It also noted that it is clear from Section 5 of the MOA that Malayan shall undertake,
among other things, to construct, develop and complete the Project based on the general
specifications already agreed upon by the parties and as set forth in the Schedule 6 of the MOA,
with full powers to enter into agreement with contractors, subcontractors, and suppliers for the
completion of the various phases of work. It concluded that when Malayan undertook additional
works, improvements or enhancements not within the specifications agreed upon, it presupposes
that it shall bear the costs thereof.
Since the findings of the CIAC and the CA on this issue are consistent, the Court perceives no
cogent reason to overturn such findings which are supported by substantial evidence. Besides,
the Court takes issue with Malayan’s claim that the CA gravely erred in rigidly applying the
specifications in Schedule 6 of the MOA, considering that they were “general” in character and
“for reference” purposes only. It is notewor-
592

thy that Schedule 660 not only provides for the Schedule of Finishes and Materials of ASB
Malayan Tower as of 26 October 2000, covering Exterior Works, Interior Works, Elevators,
Intercom, Fire Alarm System, Standby Generator Set, Lightning Protection and Pumps, among
other things, but also includes the project floor plans from Basement 2 to 6, and levels 4, 5, 7 to
12, 14 to 18, 20, 22 to 31, 33 to 35, penthouse and upper penthouse. When a building contract
refers to the plans and specifications and so makes them a part of itself, the contract is to be
construed as to its terms and scope together with the plans and specifications.61 When the plans
and specifications are by express terms made part of the contract, the terms of the plans and
specifications will control with the same force as if they were physically incorporated in the very
contract itself.62 Malayan cannot, therefore, brush aside Schedule 6 as “general” and “for
reference only” matters in the interpretation of the MOA.
As to the costs incurred due to the supposed reasonable deviations from specifications in the
exercise of its sound discretion as the developer, Malayan would do well to bear in mind that if
the terms of a contract are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of its stipulations shall control.63 Under Section 5 of the MOA, Malayan
undertook to construct, develop and complete the project based on the general specifications
already agreed upon by the parties and set forth in Schedule 6 thereof. As duly pointed out by the
CIAC, since the parties to the MOA had agreed on the specifications that will control the
construction and completion of the project, anything that alters or adds to these specifications
which adds to the costs, should not be part of the ARCC.
_______________
61 13 Am. Jur. 2d § 13, Building, etc. Contracts.
62 Id.
63 New Civil Code, Art. 1370.
593
VOL. 778, JANUARY 11, 2016 593

D.3. Half of Costs for Narra Parquet Works.
The CIAC allowed only half of the increased flooring costs [P4,982,798.44] in the amount of
P2,491,399.22, plus the original budgeted expense for this item in the amount of P12,770,000.00,
or a total amount of P15,261,399.22, as part of the ARCC. According to the CIAC, since the
cause of change in flooring material and the increased cost was a force majeure (government log
ban) for which no one can be blamed, it is but fair that both parties will equally share the
increased cost.
The CA ruled that the CIAC did not err in dividing the increased cost between the parties. It
stressed that the dispute pertains to the proportionate entitlement of the parties to the reserved
units after determining the actual construction cost. Thus, both parties should share in the
reserved units, as it is but fair that the increased cost should also be equally divided between
them, and half of the increased amount should be included in the computation of the ARCC.
Although the findings of the CA and the CIAC on this issue are consistent, the Court finds their
reasoning contrary to the MOA. The construction cost increase due to the change from Narra
parquet to Kendall laminated flooring is undisputedly due to the government logging ban which
is a force majeure. However, the equal sharing of such cost increase is contrary to the MOA
which provides for the proportionate entitlement of the parties to the reserved units, depending
on the excess ARCC over the RCC and the total aggregate value of the reserved units. In
addition, such increased cost due to force majeure falls under the category of “Contingencies”
under Schedule 9 of the MOA, which term is defined as an amount of money, included in the
budget for building construction, that is uncommitted for any purpose, intended to cover the cost
of unforeseen factors related to the construction which are not specifically addressed in the
budget.64 The Court
_______________
64 Supra note 13.
594

therefore holds that the entire increased cost of P4,982,798.44 due to the unforeseen necessity of
change in flooring materials, should be included in the computation of the ARCC.
D.4. Half of Costs for CARI.
As discussed above, the CARI in the amount of P4,361,291.3465 is supported by official

receipts; hence, such amount should be allowed to remain in the ARCC. Although the official
receipts of the CARI appear to have been issued in the name of Malayan and/or LANDEV, the
minutes of the December 20, 2002 Bids and Awards Committee Meeting, of which St. Francis’
President Luke Roxas was a member, proves that it was unanimously agreed upon that the CARI
would be secured directly by the owner, Malayan. The official receipts and the said minutes
prove that the premium of the policy, as well as the renewals thereof, were shouldered by
Malayan as the owner of the project. Against the said substantial evidence of Malayan, the CA
and CIAC have no basis in ruling why the CARI should be split equally between Malayan and
St. Francis.
D.5. Half of Costs for Interior Design Works.
In resolving this issue, the CIAC noted that it is crucial to determine whether the disputed
amount was spent to improve the original design or to comply with St. Francis’ commitments to
the buyers. According to the CIAC, force majeure (government log ban) also justified the change
of flooring materials from wood parquet to homogenous tiles and marble flooring. However, the
difficulty in resolving this issue is that the increased cost is not only because of the change of
flooring materials, but also due to the change of specifications and the inclusion of gym
equipment. Thus, it is impossible to separate the increased cost arising from flooring change and
those from
_______________
65 Rollo (G.R. Nos. 198916-17), Vol. IV, pp. 3329-3333.

595
VOL. 778, JANUARY 11, 2016 595
causes other than gym equipment which is worth P962,250.00 and the underlay of plywood and
rubber pads worth P96,967.73.
The CIAC noted that the budgeted amount for this item of P5,600,000.00 made by St. Francis
was increased to P9,000,000.00 in Malayan’s budget, and that the difference of P3,400,000.00
reflects the increase from unspecified causes such as supervening price increase. It added that
both parties agreed on the increase due to cost of glass doors, hardware and plumbing fixtures
amounting to P2,100,415.00. It was convinced that what is being contested by St. Francis is the
increase in the actual cost (P14,150,324.73) vis-à-vis the Effective Budget for Interior Design
Works of P11,100,415.00 or a net increase of P3,049,909.73.
In view of the above stated difficulty in resolving this issue, the CIAC held that the total increase
of P3,049,909.73 as cost of interior design works should be equally shared by both parties
(P1,524,954.86 each), as well as the cost of the gym equipment (P962,250.00) and the underlay
of plywood and rubber pads (P96,967.73), both amounting to P1,059,217.73. In sum, it allowed
only P2,054,563.73 or half of the total cost increase (P4,109,127.46) of such works to be
included in the ARCC.
Upon review of the records under Exhibit “R-48-series,” the CA found that the official receipts
show that the total payment due was P12,642,152.52. It agreed with the CIAC that the increased
cost for this item should be divided equally between the parties, but reduced the amount to
P1,508,172.2166 (or P754,086.10 each), instead of P3,049,909.73. The CA did not also disturb
the CIAC’s ruling on the disallowance of one-half of the cost of gym equipment and the underlay
of plywood, and rubber pads. Having noted a discrepancy in the total amount of P962,250.00
stated in Exhibit “C-3” [Cost to Complete as of 10 August 2006], the adjusted contract price of
P987,250.00, and the official receipts showing the total pay-
_______________
66 P14,150,324.73 (actual cost) - P12,642,152.52 (total payment) = P1,508,172.21.

596
ment of P978,275.01, the CA determined that the share of each of the parties should be
P493,625.00.
Malayan claims that no explanation was given why the costs for interior design works had to be
divided equally between the parties. In any event, the said works were awarded in accordance
with the MOA and St. Francis’ original marketing representations to the buyers of the presold
units, and they were proper and necessary for the completion of the project. As regards the costs
incurred for the gym equipment and the underlay of plywood and rubber pads, they should be
included in full in the ARCC because: (1) Section 6 of the MOA provides that the project must
have a “Gym/Lounge/Children’s Play Area”; (2) the general specifications of the project lists as
one of the amenities a gym with equipment; and (3) St. Francis included such amenities in the
marketing brochures and fliers it gave to buyers of the presold units.
The Court agrees with the CA and the CIAC rulings that the costs for interior design works
should be included in the computation of the ARCC, and that what is being contested is whether
the net increase of P3,049,909.73 from the original budget of P11,100,415.00. As correctly found
by the CA based on the official receipts, the net increase should only be P1,508,172.21. The
Court also sustains the CA that such increase should be equally divided between the parties
(P754,086.10 each) due to the impossibility of separating the increased cost arising from flooring
change and those from causes (change of specifications) other than gym equipment and the
underlay of plywood and rubber pads.
However, there being no valid reason to extend such equal sharing of costs with respect to the
gym items, the Court reverses the CA and the CIAC in ruling that costs of the gym equipment
(P962,250.00) and the underlay of plywood and rubber (P96,967.73) amounting to
P1,059,217.73 should be equally shared by the parties. The Court, thus, holds that the full
amount thereof should be included in the computation of the ARCC.
597
VOL. 778, JANUARY 11, 2016 597

D.6. Contingency Costs.
The CIAC disallowed the amount of P2,000,000.00 in contingency costs to be included in the
ARCC as they are not directly related to the completion of the project. The CIAC noted that what
was included in the ARCC is the amount of P631,154.39 as payment for professional services
and various expenses connected with the claim for damages to the car that was hit by falling
construction debris, but Malayan included the amount of P2,000,000.00 in the ARCC. It added
that Malayan, being insured under the CARI, should assert its claim against the insurance
company. If Malayan failed to do so, or if it was able to recover less than what it had claimed, it
would be unfair to pass on (to St. Francis) the amount it failed to claim by adding it as part of the
ARCC.
The CA upheld the CIAC’s ruling that contingency costs in the amount of P631,154.39 should
not be passed on to St. Francis, considering that what was paid as damages and expenses was a
consequence of an incident that occurred when a falling debris hit the Volvo car owned by
Celestra. The CA noted that Malayan should assert its claim against the insurer to recover
whatever damages it incurred in the course of the construction project. It added that legal fees
paid to lawyers who defended Malayan against the claim of one Tan-Yee, cannot be considered
actual construction cost, as no evidence was submitted relative thereto.
Malayan claims that the incident which led to the payment of contingency costs was
construction-related because a case was filed against it as a result of the incident and that a
temporary restraining order (TRO) was issued enjoining further construction works; hence, the
engagement of lawyers was necessary to ensure the immediate resumption of the construction
project.
The Court sustains the CA in ruling that the contingency costs in the amount of P631,154.39
should not be included in the computation of the ARCC. As duly noted by the CIAC and
598

the CA, legal fees cannot be considered as part of the ARCC, as they are not directly related to
the completion of the project. Despite the allegation that a TRO was issued, no proof of such
order was presented by Malayan. Hence, such costs should not be included as part of the ARCC,
but should be charged against the party responsible for the incident, or Malayan as the one
responsible for the general supervision, management, control over the project.
D.7. Costs Incurred/Paid after June 2006.
The CIAC found it is unnecessary to resolve the issue: “What is the actual remaining
construction cost to complete the Project spend by [Malayan] as of today [20 January 2009] in
excess of St. Francis’ estimated RCC?” Instead, it resolved the same issue based on Exhibit “C-
3” which is the ARCC amounting to P614,593,565.96 as of August 10, 2006. Noting that Exhibit
“C-3” was prepared by Malayan itself and submitted to St. Francis, and was close enough to June
7, 2006 when the project was completed, the CIAC used such evidence as the basis upon which
disallowances were to be made, in order to arrive at the ARCC of P561,729,180.96.
The CA agreed with the CIAC that it is important to determine when the project was completed,
as costs incurred after the cutoff date should no longer be included in the computation of the
ARCC, and that the incontrovertible proof that the project was completed on June 7, 2006 is the
Certificate of Occupancy67 submitted by C.E. Manzanero, the duly-licensed architect of
Malayan.
The Court finds no compelling reason to disturb the CA and the CIAC rulings that are consistent
with Section 5 of the MOA which expressly states that the project “shall be deemed complete,
and the obligation of Malayan fulfilled, if the construction and development of Project is finished
as certified by
_______________
67 Exhibit “C-33.”
599
VOL. 778, JANUARY 11, 2016 599

the architect of the Project.” Indeed, costs and expenses incurred after completion of the project
cannot be considered as part of the ARCC.
E. Entitlement to Reserved Units.
As discussed and computed above, the Court holds that 30% of the reserved units should be
allocated to Malayan, while 70% should be allocated to St. Francis.
F. Income from Reserved Units.
The CIAC held that income realized from rental of the reserved units during the period from
June 7, 2006 and the present date, should be determined as having been received by Malayan in
trust for such party that would be determined to be the owner/s thereof. Considering its
determination of the excess ARCC over the RCC, the CIAC stated that the said income should be
proportionately shared as follows: 37.8% for St. Francis and 62.2% for Malayan. According to
the CIAC, based on Sections 4(a)(ii)(C)68 and 4(b),69 ownership of the
_______________
68 Section 4. Distribution and Disposition of Units.—(a) As a return of its capital

investment in the Project, each party shall be entitled to such portion of all the net saleable area
of the Building that their respective contributions to the Project bear to the actual construction
cost. As of the date of the execution hereof, and on the basis of the total costs incurred to date in
relation to the Remaining Construction Cost (as defined in Section 9[a] hereof), the parties shall
respectively be entitled to the following (which entitlement shall be conditioned on, and subject
to, adjustments as provided in subparagraph [b] of Section 4 in the event that the actual
remaining construction cost exceeds the Remaining Construction Cost):
xxxx
(ii) ASB — the following net saleable area:
xxxx
(C) provided, that the actual remaining construction cost do not exceed the Remaining
Construction Cost, the
600
reserved units is in doubt during the intervening period from completion of the project and final
determination of costs because of the phrases “shall be delivered to ASB” and “Malayan shall be
entitled.” Clearly, that the ownership of the reserved units shall be determined only upon
completion of the project and the determination of the ARCC, because only then could it be
computed if there is an excess ARCC over the RCC.
The CIAC observed that had the computation been done on the completion date of the project on
June 7, 2006, there would already have been an allocation of ownership over the reserved units.
Since the determination of the ARCC was done only almost three (3) years later during the
arbitration proceedings, the issue had arisen as to who between the parties is entitled to the rental
income from the reserved units which are deposited in the account of Malayan.
The CA agreed with the CIAC’s ruling but modified the proportionate sharing of the reserved
units, thus: 84% for Malayan and 16% for St. Francis. The CA explained that the income realized
from rentals and sales of reserved units from June 7, 2006 until the finality of this case shall be
considered as having been received by Malayan; thus, it must be subject
_______________
net saleable area, particularly described in Schedule 4 hereof shall be delivered to ASB [St.
Francis] upon completion of the Project and determination of its actual construction costs. If the
actual remaining construction costs exceed the Remaining Construction Cost, subparagraph (b)
of this Section 4 shall apply. (Emphasis added)
69 Id. (b) In the event that the actual remaining construction costs exceed the Remaining
Construction Cost as represented and warranted by [St. Francis] to Malayan under Section 9(a)
hereof, and Malayan pays for such excess, the pro rata sharing in the net saleable area of the
Building, as provided in subparagraph (a) of this Section 4 shall be adjusted accordingly. In such
event, Malayan shall be entitled to such net saleable area in Schedule 4 that corresponds to the
excess of the actual remaining cost over the Remaining Construction Cost. (Emphasis added)
601
VOL. 778, JANUARY 11, 2016 601
to proper accounting in order to arrive at the proper sharing in accordance with the general
principles of equity, and pursuant to the said proportionate sharing ratio.
Malayan contends that as the owner of the project, it is entitled to all of the civil fruits, including
the rents from the lease of the reserved units. With respect to the accruing fruits, Malayan
invokes Article 118770 of the New Civil Code, and claims that it is entitled to appropriate all the
fruits and interests realized from the reserved units prior to the happening of two (2) suspensive
conditions, i.e., the completion of the project and the determination of the ARCC. Malayan adds
that it is iniquitous to award St. Francis a share in the income from the reserved units without
making it share in the expenses and upkeep thereof.
The Court finds that Malayan’s obligation to give the reserved units is unilateral because it was
subject to 2 suspensive conditions, i.e., the completion of the project and the determination of the
ARCC, the happening of which are entirely dependent upon Malayan, without any equivalent
prestation on the part of St. Francis. Even if the obligation is unilateral, Malayan cannot
appropriate all the civil fruits received because it could be inferred from the nature and
circumstances of the obligation that the intention of the person constituting the same was
different. Section 9(b) of the MOA states that in the event that Malayan shall pay additional cost
and expenses in excess of the RCC, it shall be entitled
_______________
70 ART. 1187. The effects of a conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon the parties, then fruits and interests during the
pendency of the condition shall be deemed to have been mutually compensated. If the obligation
is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature
and circumstances of the obligation it should be inferred that the intention of the person
constituting the same was different.
602
to such net saleable areas indicated in Schedule 4 that corresponds to the increase in the
remaining construction costs, while St. Francis shall be entitled to such remaining areas, if any.
As aptly noted by the CIAC, the determination of the ARCC should have been made upon the
date of completion of the project on June 7, 2006, but it was only about 3 years later during the
arbitration proceedings that such determination was done. Not until now has the issue of the
correct computation of the ARCC been finally resolved. Such long delay in the determination of
the ARCC and the proportionate distribution of units in the project could not have been the
intention of the parties. The Court, therefore, sustains the CA and the CIAC rulings that the
income realized from the reserved units from the completion date until present, should be
considered as having been received by Malayan in trust for such party that shall be determined to
be the owner thereof. In light of the determination of the excess of the ARCC over the RCC, the
income should be proportionately shared as follows: 30% for Malayan and 70% for St. Francis.
Subject to proper accounting, upkeep expenses for the reserved units should also be shared by
the parties in the same proportion.
G. Counterclaims, Attorney’s fees and Arbitration costs.
Counterclaims
Having determined above that the ARCC does not exceed the RCC and the total aggregate value
of the reserved units, the Court joins the CA and the CIAC in ruling that Malayan is not entitled
to its counterclaims.
Attorney’s fees
The CIAC denied for lack of factual or legal basis the parties’ respective claims and
counterclaims for the award of attorney’s fees. It noted that the parties failed to point out the
contractual stipulation on attorney’s fees and expenses of
603
VOL. 778, JANUARY 11, 2016 603
litigation in support of their respective claims therefor. According to the CIAC, based on its
extensive discussions made in disposing the claims and counterclaims of the parties, it is clear
that the two exceptions71 under Article 2208 of the New Civil Code cited by St. Francis and
Malayan do not obtain in this case. The CIAC explained that Malayan’s denial of St. Francis’
claims cannot be characterized as made in gross and evident bad faith, and that the disallowances
of the ARCC in favor of St. Francis disprove that the filing of the arbitration case was “clearly
unfounded.” The CA affirmed the CIAC.
Finding that none of the exceptions under Article 220872 of the New Civil Code is present in this
case, the Court agrees
_______________
71 Article 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
xxxx
(4) In case of clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s
plainly valid, just and demandable claim.
xxxx
72 Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other
than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim;
(6) In actions for legal support;
604
with the CA and the CIAC that the parties’ claims for attorney’s fees must be denied. As held in
ABS-CBN Broadcasting Corporation v. Court of Appeals:73
The general rule is that attorney’s fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate. They are not to be
awarded every time a party wins a suit. The power of the court to award attorney’s fees
under Article 2208 demands factual, legal, and equitable justification. Even when a
claimant is compelled to litigate with third persons or to incur expenses to protect his
rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith
could be reflected in a party’s persistence in a case other than an erroneous conviction of
the righteousness of his cause.
Arbitration costs
The CIAC held that arbitration costs shall be maintained at the same level as initially shared
based on the pro rata sharing in accordance with the amounts claimed and counterclaimed by the
parties. Stating that Section 1, Rule 14274 of
_______________
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen’s compensation and employer’s liability
laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney’s fees and
expenses of litigation should be recovered.
In all cases, the attorney’s fees and expenses of litigation must be reasonable.
73 361 Phil. 499, 529; 301 SCRA 572, 601 (1999).
74 SECTION 1. Costs ordinarily follow results of suit.—Unless otherwise provided in these

rules, costs shall be allowed to the prevailing party as a matter of course, but the court shall have
605
VOL. 778, JANUARY 11, 2016 605
the Rules of Court suppletorily applies to arbitration proceedings since there is no corresponding
provision in the CIAC rules of procedure, the CIAC ruled that there are good reasons to maintain
their initial pro rata sharing thereof, considering that their respective claims and counterclaims
have merits. Thus, it is just and equitable that both Malayan and St. Francis pay for their
respective shares based on proportionate cost or amount of the claim. In contrast, the CA ruled
that arbitration costs shall be maintained pro rata in accordance with the parties’ respective
shares in the reserved units.
After reviewing the conflicting rulings of the CIAC and the CA on arbitration costs, the Court
finds the one rendered by CIAC to be in accord with law. Unlike the CA’s ruling which is based
only on the MOA provision on distribution and disposition of reserved units, the CIAC’s ruling is
based on the Amended Terms of Reference (TOR) which specifically provides that the costs of
arbitration shall be on a pro rata basis subject to the determination of the CIAC which of the
parties shall eventually shoulder such costs or the mode of sharing thereof.75
Citing Section 1, Rule 142 of the Rules of Court, the CIAC found it just and equitable that both
Malayan and St. Francis pay for their respective shares based on the pro rata sharing in
accordance with the amounts claimed and counterclaimed by the parties. Under the amended
TOR, the Summary of Claims/Counterclaims and the arbitration expenses are as follows:
_______________
power, for special reasons, adjudge that either party shall pay the costs of an action, or that the
same be divided, as may be equitable. x x x
75 Rollo (G.R. Nos. 198916-17), Vol. I, p. 182.
606
Based on the parties’ claims and counterclaims involving the total disputed sum of
P228,814,375.17, the arbitration expenses in the total amount of P1,064,517.38 should be shared
in the following proportion:
1. St. Francis: P202,161,179.09/P228,814,375.17 = P936,775.29
0.88 x P1,064,517.38
2. Malayan: P26,653,196.08/P228,814,375.17 = 127,742.09
0.12xP1,064,517.38 =
Total Arbitration Expenses = P1,064,517.38
_______________
76 Id., at pp. 181-182.
607
VOL. 778, JANUARY 11, 2016 607
WHEREFORE, premises considered, the Court of Appeals’ Decision dated January 27, 2011 in
C.A.-G.R. S.P. Nos. 109286 and 109298, is AFFIRMED with the following
MODIFICATIONS:
1) The total amount of P57,474,561.39 should be deducted and excluded from the gross Actual
Remaining Construction Cost (ARCC) of P562,866,135.02 to arrive at the net ARCC of
P505,391,573.63;
2) Malayan is entitled to 30% ownership over the reserved units

(P52,966,724.63/P175,856,325.05), together with the corresponding interest in the income
realized thereon in the same proportion; while St. Francis is entitled to 70%
(P122,889,598.42/P175,856,325.05) ownership of the said units, as well as to its corresponding
share in the said income. The distribution of the parties’ proportionate share in the units shall be
made by drawing of lots;
3) Malayan is directed to deliver possession and transfer title over the reserved units in the
proportion above stated, to pay St. Francis its proportionate share of the income from the
reserved units reckoned from the date of the completion of the project on June 7, 2006 up to the
finality of this decision, and to render full accounting of all the upkeep expenses, rentals and
such other income derived from the reserved units so awarded to St. Francis;
4) Arbitration costs are maintained pursuant to the pro rata sharing that the parties had initially
shared in accordance with the amounts claimed and counterclaimed by them, namely, St. Francis:
P936,775.29; and Malayan: P127,742.09;
5) Malayan and all others claiming rights under it, are enjoined from exercising acts of
ownership over the reserved units relative to the proportionate share awarded to St. Francis;
608
6) The Register of Deeds of Pasig City is directed to immediately reinstate the name of St.
Francis Square Realty Corporation (formerly ASB Realty Corporation) as the registered owner in
the corresponding Condominium Certificates of Title covering the reserved units awarded to St.
Francis; and
7) All other awards granted by CIAC in its Award dated May 27, 2009 which are not affected by
the above modifications are affirmed. No costs.
SO ORDERED.
Velasco, Jr. (Chairperson), Villarama, Jr., Reyes and Jardeleza, JJ., concur.
Judgment affirmed with modifications.
Notes.—The input Value-Added Tax (VAT) is a tax liability of, and legally paid by, a VAT-
registered seller of goods, properties or services used as input by another VAT-registered person
in the sale of his own goods, properties, or services. (Commissioner of Internal Revenue vs. San
Roque Power Corporation, 690 SCRA 336 [2013])
A Value-Added Tax (VAT)-registered taxpayer claiming for refund or tax credit of their excess
and unutilized input VAT must file their administrative claim within two years from the close of
the taxable quarter when the sales were made. (Team Energy Corporation [formerly Mirant
Pagbilao Corporation] vs. Commissioner of Internal Revenue, 713 SCRA 142 [2014])
——o0o——
G.R. No. 212623. January 11, 2016.*
ENRIQUE G. DE LEON, petitioner, vs. PEOPLE OF THE PHILIPPINES and SPO3 PEDRITO
L. LEONARDO, respondents.
Remedial Law; Civil Procedure; Judgments; A decision that does not clearly and distinctly state
the facts and the law on which it is based leaves the parties in the dark as to how it was reached
and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of
the court for review by a higher tribunal.—Under Section 14, Article VIII of the Constitution, no
decision shall be rendered by any court without expressing therein clearly and distinctly the facts
and the law on which it is based. Section 1 of Rule 36 of the Rules of Court provides that a
judgment or final order determining the merits of the case shall be in writing personally and
directly prepared by the judge, stating clearly and distinctly the facts and the law on which it is
based, signed by him and filed with the clerk of the court. Faithful adherence to the requirements
of Section 14, Article VIII of the Constitution is indisputably a paramount component of due
process and fair play. A decision that does not clearly and distinctly state the facts and the law on
which it is
_______________
* SECOND DIVISION.
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De Leon vs. People
based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the
losing party, who is unable to pinpoint the possible errors of the court for review by a higher
tribunal. More than that, the requirement is an assurance to the parties that, in arriving at a
judgment, the judge did so through the processes of legal reasoning. It is, thus, a safeguard
against the impetuosity of the judge, preventing him from deciding ipse dixit.
Same; Same; Same; The standard “expected of the judiciary” is that the decision rendered
makes clear why either party prevailed under the applicable law to the facts as established. Nor
is there any rigid formula as to the language to be employed to satisfy the requirement of clarity
and distinctness.—The standard “expected of the judiciary” is that the decision rendered makes
clear why either party prevailed under the applicable law to the facts as established. Nor is there
any rigid formula as to the language to be employed to satisfy the requirement of clarity and
distinctness. The discretion of the particular judge in this respect, while not unlimited, is
necessarily broad. There is no sacramental form of words which he must use upon pain of being
considered as having failed to abide by what the Constitution directs. It is understandable that
courts, with heavy dockets and time constraints, often find themselves with little to spare in the
preparation of decisions to the extent most desirable. Judges might learn to synthesize and to
simplify their pronouncements. Nevertheless, concisely written such as they may be, decisions
must still distinctly and clearly express, at least in minimum essence, its factual and legal bases.
Same; Same; Same; Judgment on the Merits; Unless there is concrete proof that a judge has a
personal interest in the proceedings and that his bias stems from an extrajudicial source, the
Supreme Court (SC) shall always presume that a magistrate shall decide on the merits of a case
with an unclouded vision of its facts.—Unless there is concrete proof that a judge has a personal
interest in the proceedings and that his bias stems from an extrajudicial source, this Court shall
always presume that a magistrate shall decide on the merits of a case with an unclouded vision of
its facts. Bias and prejudice cannot be presumed, in light especially of a judge’s sacred obligation
under his oath of office to administer justice with impartiality. There should be clear and
convincing evidence to prove the charge; mere suspicion of partiality is not enough.
86
De Leon vs. People

Criminal Law; Oral Defamation or Slander; Oral Defamation or Slander is libel committed by
oral (spoken) means, instead of in writing.—Oral Defamation or Slander is libel committed by
oral (spoken) means, instead of in writing. It is defined as “the speaking of base and defamatory
words which tend to prejudice another in his reputation, office, trade, business or means of
livelihood.” The elements of oral defamation are: (1) there must be an imputation of a crime, or
of a vice or defect, real or imaginary, or any act, omission, status or circumstances; (2) made
orally; (3) publicly; (4) and maliciously; (5) directed to a natural or juridical person, or one who
is dead; (6) which tends to cause dishonour, discredit or contempt of the person defamed. Oral
defamation may either be simple or grave. It becomes grave when it is of a serious and insulting
nature. An allegation is considered defamatory if it ascribes to a person the commission of a
crime, the possession of a vice or defect, real or imaginary or any act, omission, condition, status
or circumstance which tends to dishonor or discredit or put him in contempt or which tends to
blacken the memory of one who is dead. To determine whether a statement is defamatory, the
words used in the statement must be construed in their entirety and should be taken in their plain,
natural and ordinary meaning as they would naturally be understood by persons reading them,
unless it appears that they were used and understood in another sense. It must be stressed that
words which are merely insulting are not actionable as libel or slander per se, and mere words of
general abuse however opprobrious, ill-natured, or vexatious, whether written or spoken, do not
constitute a basis for an action for defamation in the absence of an allegation for special
damages. The fact that the language is offensive to the plaintiff does not make it actionable by
itself.
Same; Same; It is a rule that uttering defamatory words in the heat of anger, with some
provocation on the part of the offended party constitutes only a light felony.—Whether the
offense committed is serious or slight oral defamation, depends not only upon the sense and
grammatical meaning of the utterances but also upon the special circumstances of the case, like
the social standing or the advanced age of the offended party. “The gravity depends upon: (1) the
expressions used; (2) the personal relations of the accused and the offended party; and (3) the
special circumstances of the case, the antecedents or relationship between the offended party and
the offender, which may tend to prove the intention of the offender at the
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De Leon vs. People
time. In particular, it is a rule that uttering defamatory words in the heat of anger, with some
provocation on the part of the offended party constitutes only a light felony.”
Same; Same; It has been held that a public officer should not be too onion-skinned and should
be tolerant of criticism.—The Court finds that even though SPO3 Leonardo was a police officer
by profession, his complaint against De Leon for oral defamation must still prosper. It has been
held that a public officer should not be too onion-skinned and should be tolerant of criticism. The
doctrine, nevertheless, would only apply if the defamatory statement was uttered in connection
with the public officer’s duty.
Same; Same; Constructive Criticism; When one makes commentaries about the other’s
performance of official duties, the criticism is considered constructive, then aimed for the
betterment of his or her service to the public.—One of man’s most prized possessions is his
integrity. There lies a thin line between criticism and outright defamation. When one makes
commentaries about the other’s performance of official duties, the criticism is considered
constructive, then aimed for the betterment of his or her service to the public. It is thus, a
continuing duty on the part of the public officer to make room for improvement on the basis of
this constructive criticism inasmuch as it is imperative on the part of the general public to make
the necessary commentaries should they see any lapses on the part of the public officer. In this
case, however, the criticism was more destructive than constructive and, worse, it was directed
towards the personal relations of the parties.
Same; Same; Calling him “walanghiya” and “mangongotong na pulis” was evidently geared
towards his reputation as a private individual of the community.—Their altercation and De
Leon’s subsequent defamation were not in connection with SPO3 Leonardo’s public duties.
Taking into account the circumstances of the incident, calling him “walanghiya” and
“mangongotong na pulis” was evidently geared towards his reputation as a private individual of
the community. Thus, the defamation committed by De Leon, while only slight in character, must
not go unpunished.
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De Leon vs. People
LEONEN, J., Dissenting Opinion:
Criminal Law; Oral Defamation or Slander; View that petitioner’s choice of words could hardly
be considered “personal,” especially in light of the heightened emotions brought about by the
gun-pointing incident.—Petitioner should be absolved of any criminal liability. The words he
allegedly used against SPO3 Leonardo were “walanghiya,” “mangongotong na pulis,” and “ang
yabang[-]yabang.” These utterances must be assessed against the following context: the
backdrop of SPO3 Leonardo being a public servant, and that the incident allegedly happened as
the parties were about to enter the People’s Law Enforcement Board for SPO3 Leonardo’s
administrative hearing. The words chosen by petitioner could hardly be considered to ascribe to
SPO3 Leonardo anything seriously offensive, much less to impute a vice that would put to
question the police officer’s morality or professionalism. As a public servant, SPO3 Leonardo
cannot be thin-skinned, as criticism is a natural consequence of being a person clothed with
authority. Petitioner’s choice of words could hardly be considered “personal,” especially in light
of the heightened emotions brought about by the gun-pointing incident. That the incident
allegedly happened just before the parties entered the People’s Law Enforcement Board’s office
also diminishes any claim that the utterances were made to publicly embarrass SPO3 Leonardo.
Same; Same; View that the standard for oral defamation, especially in cases involving persons of
authority, should be subject to a reevaluation.—It is my position that the standard for oral
defamation, especially in cases involving persons of authority, should be subject to a
reevaluation. In Chavez v. Court of Appeals, 514 SCRA 279 (2007), the objective of libel laws
was explained, thus: Libel stands as an exception to one of the most cherished constitutional
rights, that of free expression. While libel laws ensure a modicum of responsibility in one’s own
speech or expression, a prescribed legal standard that conveniences the easy proliferation of
libel suits fosters an atmosphere that inhibits the right to speak freely. When such a prescribed
standard is submitted for affirmation before this Court, as is done in this petition, it must receive
the highest possible scrutiny, as it may interfere with the most basic of democratic rights.
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De Leon vs. People
Same; Same; View that a police officer, who is a public servant cloaked with authority, should be
prepared to take criticism especially in instances where emotions are running high and there is
no apparent intent to malign his or her person.—A police officer, who is a public servant
cloaked with authority, should be prepared to take criticism especially in instances where
emotions are running high and there is no apparent intent to malign his or her person. Being
“sensitive” has no place in this line of service, more so when allowing otherwise has the
potential to create a chilling effect on the public. In a democratic country like ours, the protection
of free expression is primordial as it is tantamount to upholding the sovereignty of the People.
The People should be allowed to express themselves without the threat of government reprisal
over the slightest feeling of offense.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
Fortun and Santos Law Offices for petitioner.
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the November 14, 2013
Decision1 and the May 20, 2014 Resolution2 of the Court of Appeals (CA) in C.A.-G.R. CR No.
35390, which affirmed the September 28, 2012 Decision3 of the Regional Trial Court, Branch
27, Manila (RTC), sustaining the conviction of accused Enrique De Leon (De Leon) for Grave
Oral Defamation by the Metropolitan Trial Court, Branch 6, Manila (MeTC).
Records show that De Leon was charged with Grave Oral Defamation in the Information filed
before the MeTC, dock-
_______________
1 Rollo, pp. 49-63; penned by Associate Justice Apolinario D. Bruselas, Jr., with Associate
Justices Rebecca De Guia-Salvador and Samuel H. Gaerlan, concurring.
2 Id., at pp. 65-66.
3 Id., at pp. 219-224, penned by Judge Teresa P. Soriaso.
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De Leon vs. People
eted as Criminal Case No. 453376-CR, the accusatory portion of which reads:
That, on or about April 17, 2006, in the City of Manila, Philippines, the said accused, with
the deliberate intent to besmirch the honor and reputation of one SPO3 PEDRITO L.
LEONARDO, did and there wilfully, unlawfully, feloniously publicly proffer against the
latter slanderous words and expressions such as “WALANGHIYA KANG
MANGONGOTONG NA PULIS KA, ANG YABANG-YABANG MO NOON. PATAY KA SA
AKIN MAMAYA[,]” and other words and expressions of similar import, thereby bringing
the said SPO3 PEDRITO L. LEONARDO into public contempt, discredit and ridicule.
Contrary to law.4
Upon arraignment, De Leon entered a plea of not guilty. Pursuant to the Supreme Court Circular
No. 20-2002, De Leon and private respondent SPO3 Pedrito Leonardo (SPO3 Leonardo)
appeared before the Philippine Mediation Center to settle the civil aspect of the case. The
conciliation meeting, however, bogged down. Hence, the proceedings before the lower court
continued. During the pretrial, the parties pre-marked their respective exhibits and moved for the
trial to commence.
Version of the Prosecution
The prosecution presented three witnesses, namely: private respondent SPO3 Leonardo, Carlito
Principe (Principe) and Jennifer Malupeng (Malupeng). Their combined testimonies narrated
that De Leon and his son, John Christopher De Leon (John), filed a complaint for Grave
Misconduct against SPO3 Leonardo before the People’s Law Enforcement Board (PLEB),
docketed as Administrative Case Nos. 06-02-060 (291) II and 06-02-061 (292) II.
_______________
4 Id., at p. 77.
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De Leon vs. People
The first hearing was scheduled on April 17, 2006 at the PLEB office on the 5th Floor of the
Manila City Hall; at around 1:30 o’clock in the afternoon, while waiting outside the PLEB office
on the 5th floor of the Manila City Hall, SPO3 Leonardo noticed De Leon and several of his
companions approaching. Before entering the PLEB office, De Leon uttered these words to
SPO3 Leonardo, “Walanghiya kang mangongotong na pulis ka, ang yabang-yabang mo noon.
Patay ka sa akin ngayon.”
The words uttered by De Leon caused SPO3 Leonardo embarrassment because there were
several persons present at the PLEB premises. He could have arrested De Leon but he did not
want to make a scene. Afterwards, De Leon’s wife, Concepcion, emerged from the said office
and apologized to Leonardo for her husband’s actuations. SPO3 Leonardo calmly proceeded to
the Special Operations Group of the Philippine National Police (PNP) located at the Manila City
Hall to have the incident entered in its blotter. On the same day, SPO3 Leonardo filed his
complaint at the Office of the City Prosecutor (OCP) together with Principe.5
Version of the Defense
The defense presented Fernando Manalo (Manalo), Ruperto Molera (Molera), Concepcion De
Leon (Concepcion) and the accused himself as witnesses.
From their testimonies, the defense claimed that there was a prior incident that took place on the
morning of February 27, 2006 when De Leon, with his son John, while having breakfast with
their fellow joggers at the Philippine National Railroad-Tutuban Station, were approached by
SPO3 Leonardo who arrived on his scooter. With his gun drawn, SPO3 Leonardo walked fast
towards the group and at a distance of two meters, more or less, he said, “Putang ina mo, tapos
ka na Ricky Boy, referring to De Leon.” He pressed the trigger but
_______________
5 Id., at pp. 78-80.
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De Leon vs. People
the gun did not fire, when he was to strike again, De Leon was able to escape with the help of
John.6
Consequently, De Leon and John filed an administrative complaint for grave misconduct against
SPO3 Leonardo before the PLEB and the first hearing was set on April 17, 2006. In his
Sinumpaang Salaysay sa Paghahabla filed before the PLEB, De Leon narrated that he and SPO3
Leonardo were former jogging buddies and that the latter wanted to borrow money from the
former in the amount of P150,000.00, but he declined. SPO3 Leonardo became upset with him,
culminating in the gun-pointing incident.7
On April 17, 2006, at around 1:30 o’clock in the afternoon, De Leon, in the company of his wife
Concepcion, Manalo, Molera, and several others went to the PLEB office to attend the hearing.
When De Leon and his companions arrived at the PLEB, they saw SPO3 Leonardo seated on the
bench alone; that they were about to pass when SPO3 Leonardo stood up, badmouthed and
threatened De Leon by uttering the words, “Putang ina mong mayabang ka, pag di mo inurong
demanda mo sa akin, papatayin kita.”
Moments later, they caused the incident to be entered in the police blotter. From there, they
returned to the PLEB office where they were advised to file charges against SPO3 Leonardo in
Camp Crame. Malupeng and Principe were not seen at the PLEB office premises. Molera even
tried to pacify SPO3 Leonardo by saying, “Itok (referring to SPO3 Leonardo), ano ka ba naman
andito na tayo sa husgado, ayaw mo pang tigilan ang kamumura kay Ricky, referring to De
Leon.” De Leon did not do anything, he simply entered the PLEB office and sat down there
because he got nervous. He also denied apologizing to SPO3 Leonardo.
_______________
6 Id., at pp. 206-207.
7 Id., at pp. 143-144.
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De Leon vs. People
Also on April 17, 2006, De Leon utilized the police blotter to file a case against SPO3 Leonardo
in Camp Crame. He filed the said case only after he received the subpoena from the OCP for the
case filed against him by SPO3 Leonardo. Although he was with his lawyer when he went to
Camp Crame, the latter did not advise him to file a complaint in the OCP right away. According
to De Leon, he also saw SPO3 Leonardo deposit his service firearm while at the PLEB office.8
The Ruling of the MeTC
In its Decision,9 dated April 15, 2011, the MeTC found De Leon guilty beyond reasonable doubt
of Grave Oral Defamation. The trial court considered SPO3 Leonardo’s police blotter as prima
facie evidence of the facts contained therein. His actuations on the day of the incident were
spontaneous. As borne by the records, he immediately reported the incident and filed his
complaint on that very same day. Considering the animosity between him and De Leon, it was
contrary to human experience to expect him to arrest the latter right there and then when his
motives would necessarily be met with doubt later on. Neither was there any ill motive on the
part of witness Principe whose testimony was given great probative consequence.10 The MeTC
found De Leon’s defense as only an afterthought and self-serving as he merely filed the counter-
charges against Leonardo after he had received the subpoena from the OCP. The dispositive
portion of the MeTC decision reads:
WHEREFORE, with the foregoing, the Court finds the accused Enrique De Leon y
Garcia GUILTY beyond reasonable doubt of the crime charged and is hereby
SENTENCED to suffer the indeterminate penalty of 4
_______________
8 Id., at pp. 81-84.
9 Id., at pp. 77-89.
10 Id., at p. 86.
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De Leon vs. People
months and 1 day of arresto mayor, as minimum penalty, to 1 year, 1 month and 11 days
of prisión correccional in its minimum period, as maximum penalty.
On the civil aspect ex delicto, the accused is ORDERED to pay the private complainant
P10,000 as moral damages.
SO ORDERED.11
The verdict being unacceptable to him, De Leon filed his Notice of Appeal,12 dated April 18,
2011.
On May 4, 2011, the RTC issued the Order13 directing De Leon to file his appeal memorandum.
De Leon, however, failed to comply. For his failure to file the same, the RTC issued another
Order,14 dated December 28, 2011, dismissing his appeal. De Leon then filed a motion for
reconsideration15 on January 30, 2012, which was granted by the RTC in its Order,16 dated May
22, 2012.
On June 15, 2012, De Leon filed his appeal memorandum17 and argued, among others, that the
MeTC decision lacked the necessary constitutional and procedural requirements of a valid
decision.
The Ruling of the RTC
On September 28, 2012, the RTC rendered its decision affirming in toto the ruling of the MeTC.
It opined that where the issue was the extent of credence properly given to the declarations made
by witnesses, the findings of the trial court were accorded great weight and respect. In
appreciating the
_______________
11 Id., at pp. 88-89.
12 Id., at pp. 90-91.
13 Id., at p. 165.
14 Id., at p. 96.
15 Id., at pp. 98-106.
16 Id., at pp. 176-177.
17 Id., at pp. 178-205.
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De Leon vs. People
evidence of the prosecution, the RTC observed that the MeTC properly discussed in seriatim
how it arrived at De Leon’s conviction. Thus, contrary to his contentions, the findings of the
MeTC were clearly elucidated.18
On October 30, 2012, De Leon filed his motion for reconsideration,19 but it was denied by the
RTC in its November 27, 2012 Order.
Aggrieved, De Leon filed a petition for review under Rule 42 before the CA.
The Ruling of the CA
The CA affirmed the RTC decision with modification as to the imposed penalty. The CA stated
that the issue of credibility was already raised with the RTC and was resolved against De Leon.
The CA found that he had not shown any sufficient reason to justify a departure from the factual
findings of the MeTC, which were affirmed by the RTC.20
According to the CA, to call SPO3 Leonardo a “walanghiya,” “mayabang” and “mangongotong”
in public unquestionably constituted grave oral defamation. These words seriously attacked
SPO3 Leonardo’s character. The term “mangongotong” actually imputed a crime that was
dishonorable to him as a police authority. There having been no provocation on the part of SPO3
Leonardo and that the utterances complained of were not made in the heat of unrestrained anger
or obfuscation, the RTC did not err in upholding the judgment against De Leon for the crime of
grave oral defamation.21 The decretal portion of the CA decision reads:
_______________
18 Id., at p. 224.
19 Id., at pp. 225-232.
20 Id., at p. 59.
21 Id., at p. 61.
96
De Leon vs. People
WHEREFORE, the petition for review is DENIED. The assailed decision of the RTC is
AFFIRMED except that the minimum sentence of imprisonment is modified to the extent
that the penalty to be served shall be: four (4) months as minimum [minus the one (1) day]
to a maximum of one (1) year, one (1) month and eleven (11) days, (as imposed by the trial
court).
IT IS SO ORDERED.22
De Leon moved for partial reconsideration of the CA decision but to no avail.
Hence, this petition, where De Leon raises matters in question that can be summarized as
follows:
Issues
I. WHETHER THE DECISION OF THE MeTC FAILED TO INCLUDE THE

FACTS AND THE LAW UPON WHICH THE DECISION WAS BASED.
II. WHETHER DE LEON’S GUILT HAS BEEN PROVEN BEYOND

REASONABLE DOUBT.
In his Petition for Review,23 De Leon again argues that the MeTC decision suffers from
constitutional infirmity. The lower court should have decided the case on the basis of the
testimonies of the witnesses for the defense. Also, the conviction was based simply on De Leon’s
conduct during trial and not on the merits of the case.24
In its Comment,25 the Office of the Solicitor General (OSG) countered that the testimonies of
SPO3 Leonardo and Principe were credible and competent. Further, in the absence of
_______________
22 Id., at p. 63.
23 Id., at pp. 3-41.
24 Id., at p. 27.
25 Id., at pp. 265-287.
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clear and convincing extrinsic evidence to prove the charge of bias and partiality on the part of
MeTC Judge Teresa Soriaso (Judge Soriaso), the presumption of regularity in the performance of
the judge’s function will stand.26
In his Reply,27 however, De Leon insisted that the prosecution failed to prove his guilt beyond
reasonable doubt. The intent on his part to diminish the esteem, goodwill or confidence of SPO3
Leonardo or to excite adverse, derogatory or unpleasant feelings or opinion of others against him
was lacking as his testimony was made in good faith, without malice. He also reiterated his stand
that there was no finding of clear and distinct facts and law to serve as a basis for its conclusion
of convicting him for the crime charged and that the MeTC decision was not based on the merits,
rather on the personal sentiments harbored by Judge Soriaso against him.28
The Court’s Ruling
The MeTC Decision clearly

stated the facts and the law
on which it was based
Under Section 14, Article VIII of the Constitution, no decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is based.
Section 1 of Rule 36 of the Rules of Court provides that a judgment or final order determining
the merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him and filed with the
clerk of the court.
_______________
26 Id., at p. 282.
27 Id., at pp. 297-312.
28 Id., at pp. 300-309.
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De Leon vs. People
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. A decision that does not
clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark
as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint
the possible errors of the court for review by a higher tribunal.
More than that, the requirement is an assurance to the parties that, in arriving at a judgment, the
judge did so through the processes of legal reasoning. It is, thus, a safeguard against the
impetuosity of the judge, preventing him from deciding ipse dixit.29
The standard “expected of the judiciary” is that the decision rendered makes clear why either
party prevailed under the applicable law to the facts as established. Nor is there any rigid formula
as to the language to be employed to satisfy the requirement of clarity and distinctness. The
discretion of the particular judge in this respect, while not unlimited, is necessarily broad. There
is no sacramental form of words which he must use upon pain of being considered as having
failed to abide by what the Constitution directs.30
It is understandable that courts, with heavy dockets and time constraints, often find themselves
with little to spare in the preparation of decisions to the extent most desirable. Judges might learn
to synthesize and to simplify their pronouncements. Nevertheless, concisely written such as they
may be, decisions must still distinctly and clearly express, at least in minimum essence, its
factual and legal bases.31
_______________
29 Dela Peña v. Court of Appeals, 598 Phil. 862, 975; 579 SCRA 396, 409 (2009).
30 Bernabe v. Geraldez, 160 Phil. 102, 104; 65 SCRA 96, 99 (1975).
31 Chung, Jr. v. Mondragon, G.R. No. 179754, November 21, 2012, 686 SCRA 112.
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In this case, there was no breach of the constitutional mandate that decisions must express clearly
and distinctly the facts and the law on which they are based. The CA correctly stated that the
MeTC clearly emphasized in its decision, the factual findings, as well as the credibility and the
probative weight of the evidence for the defense vis-à-vis the evidence of the prosecution. The
MeTC presented both the version of the prosecution and that of the defense. De Leon was not
left in the dark. He was fully aware of the alleged errors of the MeTC. The RTC, as an appellate
court, found no reason to reverse the decision of the MeTC.
Likewise, when it comes to credibility of witnesses, this Court accords the highest respect, even
finality, to the evaluation by the lower court of the testimonies of the witnesses presented before
it.32
Although De Leon claims that the testimony of Principe is incredible, the MeTC, the RTC and
the CA perceived it otherwise. First, there was no ill motive on the part of Principe for him to
weave a tale of lies against De Leon. Second, Judge Soriaso was able to observe Principe’s
demeanor during trial. He was observed to be candid and composed and his conduct on the
witness stand did not mirror that of an insincere or false witness.
No bias and partiality on

the part of Judge Soriaso
Unless there is concrete proof that a judge has a personal interest in the proceedings and that his
bias stems from an extrajudicial source, this Court shall always presume that a magistrate shall
decide on the merits of a case with an unclouded vision of its facts.33 Bias and prejudice cannot
be pre-
_______________
32 Lumanog v. People, 644 Phil. 296, 395; 630 SCRA 42, 120-121 (2010).
33 Gochan v. Gochan, 446 Phil. 433, 439; 398 SCRA 323, 325 (2003).
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De Leon vs. People
sumed, in light especially of a judge’s sacred obligation under his oath of office to administer
justice with impartiality. There should be clear and convincing evidence to prove the charge;
mere suspicion of partiality is not enough.34
De Leon posits that Judge Soriaso harbored ill feelings towards him which eventually resulted in
his conviction. No evidence, however, was ever adduced to justify such allegation. Thus, such
argument must also fail.
The crime committed is only

Slight Oral Defamation
Oral Defamation or Slander is libel committed by oral (spoken) means, instead of in writing. It is
defined as “the speaking of base and defamatory words which tend to prejudice another in his
reputation, office, trade, business or means of livelihood.”35 The elements of oral defamation
are: (1) there must be an imputation of a crime, or of a vice or defect, real or imaginary, or any
act, omission, status or circumstances; (2) made orally; (3) publicly; (4) and maliciously; (5)
directed to a natural or juridical person, or one who is dead; (6) which tends to cause dishonour,
discredit or contempt of the person defamed. Oral defamation may either be simple or grave. It
becomes grave when it is of a serious and insulting nature.
An allegation is considered defamatory if it ascribes to a person the commission of a crime, the

possession of a vice or defect, real or imaginary or any act, omission, condition, status or
circumstance which tends to dishonor or discredit or put him in contempt or which tends to
blacken the memory of one who is dead. To determine whether a statement is defamatory, the
words used in the statement must be construed in their entirety and should be taken in their plain,
natural
_______________
34 Lorenzana v. Austria, A.M. No. RTJ-09-2200, April 2, 2014, 720 SCRA 319.
35 Villanueva v. People, 521 Phil. 191, 200; 487 SCRA 42, 53 (2006).
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De Leon vs. People
and ordinary meaning as they would naturally be understood by persons reading them, unless it
appears that they were used and understood in another sense.36 It must be stressed that words
which are merely insulting are not actionable as libel or slander per se, and mere words of
general abuse however opprobrious, ill-natured, or vexatious, whether written or spoken, do not
constitute a basis for an action for defamation in the absence of an allegation for special
damages. The fact that the language is offensive to the plaintiff does not make it actionable by
itself.37
In this case, the Court agrees that the words uttered by De Leon were defamatory in nature. It is,
however, of the view that the same only constituted simple oral defamation.
Whether the offense committed is serious or slight oral defamation, depends not only upon the
sense and grammatical meaning of the utterances but also upon the special circumstances of the
case, like the social standing or the advanced age of the offended party.38 “The gravity depends
upon: (1) the expressions used; (2) the personal relations of the accused and the offended party;
and (3) the special circumstances of the case, the antecedents or relationship between the
offended party and the offender, which may tend to prove the intention of the offender at the
time. In particular, it is a rule that uttering defamatory words in the heat of anger, with some
provocation on the part of the offended party constitutes only a light felony.”39
There are cases where the Court considered the circumstances of the concerned parties and held
that the defamation was grave serious in nature.
_______________
36 Lopez v. People, 658 Phil. 20, 31; 642 SCRA 668, 679-680 (2011).
37 MVRS Publications, Inc. v. Islamic Da’wah Council of the Philippines, Inc., 444 Phil. 230,
241; 396 SCRA 210, 219 (2003).
38 Reyes, The Revised Penal Code, Book 2, p. 1020, 2008 ed.
39 Agbayani v. Court of Appeals, 689 Phil. 11, 28; 674 SCRA 358, 375 (2012).
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De Leon vs. People
In U.S. v. Tolosa,40 where a woman of violent temper hurled offensive and scurrilous epithets
including words imputing unchastity against a respectable married lady and tending to injure the
character of her young daughters, the Court ruled that the crime committed was grave slander. In
Balite v. People,41 the accused was found guilty of grave oral defamation as the scurrilous words
he imputed to the offended party constituted the crime of estafa.
In some cases, the Court has declared that the defamatory utterances were not grave on the basis
of the peculiar situations obtaining.
In the case of People v. Arcand,42 a priest called the offended party a gangster in the middle of
the sermon. The Court affirmed the conviction of the accused for slight slander as there was no
imputation of a crime, a vice or immorality. In Pader v. People,43 the Court ruled that the crime
committed was only slight oral defamation as it considered the expression, “putang ina mo,” as
expression to convey anger or displeasure. Such utterance was found not seriously insulting
considering that he was drunk when he uttered those words and his anger was instigated by what
the private complainant did when the former’s father died. Also in Jamilano v. Court of
Appeals,44 where calling someone “yabang” (boastful or arrogant) was found not defamatory,
the complainant’s subsequent recourse to the law on oral defamation was not sustained by the
Court.
Considering the factual backdrop of this case, the Court is convinced that the crime committed
by De Leon was only slight oral defamation for the following reasons:
_______________
40 37 Phil. 166 (1917).
41 124 Phil. 868 (1956).
42 68 Phil. 601 (1939).
43 381 Phil. 932, 937; 325 SCRA 117, 122 (2000).
44 140 Phil. 524, 532; 30 SCRA 127, 130 (1969).

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De Leon vs. People
First, as to the relationship of the parties, they were obviously acquainted with each other as they
were former jogging buddies. Prior to the purported gun-pointing incident, there was no reason
for De Leon to harbor ill feelings towards SPO3 Leonardo.
Second, as to the timing of the utterance, this was made during the first hearing on the
administrative case, shortly after the alleged gun-pointing incident. The gap between the gun-
pointing incident and the first hearing was relatively short, a span of time within which the
wounded feelings could not have been healed. The utterance made by De Leon was but a mere
product of emotional outburst, kept inside his system and unleashed during their encounter.
Third, such words taken as a whole were not uttered with evident intent to strike deep into the
character of SPO3 Leonardo as the animosity between the parties should have been considered.
It was because of the purported gun-pointing incident that De Leon hurled those words. There
was no intention to ridicule or humiliate SPO3 Leonardo because De Leon’s utterance could
simply be construed as his expression of dismay towards his actions as his friend and member of
the community.
The defamatory remarks

were not in connection with
the public officer’s duty
Finally, the Court finds that even though SPO3 Leonardo was a police officer by profession, his
complaint against De Leon for oral defamation must still prosper. It has been held that a public
officer should not be too onion-skinned and should be tolerant of criticism. The doctrine,
nevertheless, would only apply if the defamatory statement was uttered in connection with the
public officer’s duty. The following cases are illustrative:
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De Leon vs. People
In the case of Evangelista v. Sepulveda,45 petitioner lawyer made the following statements in his
appeal brief:
THIS BLUNDER of the TRIAL COURT, AT ONCE SHOCKING AND

UNPARDONABLE, BETRAYS BOTTOMLESS IGNORANCE OF LEGAL
FUNDAMENTALS AND IS A BLACK REFLECTION ON THE COMPETENCE OF
ITS INCUMBENT. IT COULD BE A GROUND FOR PROSECUTION AND
ADMINISTRATIVE ACTION.
This shocking, colossal blunder deserves condemnation no end and cries for immediate
relief in order to avoid repetitions of miscarriages of justice.
Appalled by the contents of the brief, the trial court judge charged the petitioner for indirect
contempt. In absolving the latter, this Court recognized that lawyers sometimes get carried away
and forget themselves especially if they act as their own counsel. Hence, if the judge had felt
insulted, he should have sought redress by other means as it was not seemly for him to be a judge
of his own cause.
In Yabut v. Ombudsman,46 petitioner vice mayor was directing traffic as he was concurrently the
commander of the Traffic Management Division at that time. Onboard his vehicle was private
respondent Doran, who was impatient about the traffic. Angry words turned into an exchange of
punches and Doran stuck a dirty finger at petitioner. Charged with an administrative case before
the Office of the Ombudsman, petitioner vice mayor was suspended. The attendant
circumstances served no excuse for the mauling incidents that followed. Though the acts of
Doran were no less than “an act of spite, degradation and mockery,” it did not justify an equally
abhorrent reaction from petitioner. This Court wrote that public officers, especially those who
were elected, should not
_______________
45 206 Phil. 598; 121 SCRA 684 (1983).
46 G.R. No. 111304, June 17, 1994, 233 SCRA 310.

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De Leon vs. People
be too onion-skinned as they are always looked upon to set the example how public officials
should correctly conduct themselves even in the face of extreme provocation.
In both cases, the criticisms directed towards the public officer were made in connection with the
dissatisfaction of the performance of their respective duties. Here, however, the malicious
imputations were directed towards the public officer with respect to their past strained personal
relationship. To note, De Leon’s displeasure towards SPO3 Leonardo could be traced to a gun-
pointing incident where the latter was angered when the former failed to grant him a private loan
transaction in the amount of P150,000.00.
One of man’s most prized possessions is his integrity. There lies a thin line between criticism and
outright defamation. When one makes commentaries about the other’s performance of official
duties, the criticism is considered constructive, then aimed for the betterment of his or her
service to the public. It is thus, a continuing duty on the part of the public officer to make room
for improvement on the basis of this constructive criticism inasmuch as it is imperative on the
part of the general public to make the necessary commentaries should they see any lapses on the
part of the public officer. In this case, however, the criticism was more destructive than
constructive and, worse, it was directed towards the personal relations of the parties.
To reiterate, their altercation and De Leon’s subsequent defamation were not in connection with
SPO3 Leonardo’s public duties. Taking into account the circumstances of the incident, calling
him “walanghiya” and “mangongotong na pulis” was evidently geared towards his reputation as
a private individual of the community. Thus, the defamation committed by De Leon, while only
slight in character, must not go unpunished.
Accordingly, De Leon should be meted out only the penalty of arresto mayor or a fine not
exceeding P200.00 pesos, for
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De Leon vs. People
committing slight oral defamation as prescribed under Article 358 of the Revised Penal Code.
WHEREFORE, the petition is PARTIALLY GRANTED. The April 15, 2011 Decision of the
Metropolitan Trial Court, Branch 6, Manila, is hereby MODIFIED to read as follows:
WHEREFORE, finding Enrique De Leon guilty beyond reasonable doubt of the crime of Slight
Oral Defamation, the Court hereby sentences him to pay a fine of P200.00, with subsidiary
imprisonment in case of insolvency, and to pay the costs.
On the civil aspect ex delicto, the accused is ordered to pay the private complainant P5,000.00 as
moral damages.
SO ORDERED.
Carpio (Chairperson), Brion and Del Castillo, JJ., concur.
Leonen, J., See Dissenting Opinion.
DISSENTING OPINION
LEONEN, J.:
I vote to grant the Petition. Petitioner should be acquitted of the crime of oral defamation.
The Decision downgrades petitioner’s liability from grave oral defamation to slight oral
defamation. This is due to the following circumstances: firstly, petitioner and SPO3 Pedrito L.
Leonardo (SPO3 Leonardo) had been acquaintances and jogging buddies prior to their dispute.
Petitioner allegedly had no reason to harbor ill feelings towards SPO3 Leonardo before the gun-
pointing incident.1 Secondly, the alleged defamation occurred during the first administrative
hearing of SPO3
_______________
1 Ponencia, p. 103.
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De Leon vs. People
Leonardo’s Grave Misconduct case. At that time, petitioner’s emotions, brought about by the
gun-pointing incident, could have still been in a heightened state and could have led to the
utterances.2 Lastly, petitioner’s words could not be considered as having been driven by the
intent to ridicule or humiliate, but were a mere expression of his disappointment over SPO3
Leonardo’s actions as a police officer.3
In Victorio v. Court of Appeals,4 oral defamation or slander was defined as “the speaking of base
and defamatory words [that] tend to prejudice another in his reputation, office, trade, business or
means of livelihood[.]”5 In Sazon v. Court of Appeals,6 which involved a libel case, this court
discussed the test to determine whether the words chosen by an accused are defamatory:
Jurisprudence has laid down a test to determine the defamatory character of words used in
the following manner, viz.:
“Words calculated to induce suspicion are sometimes more effective to destroy

reputation than false charges directly made. Ironical and metaphorical language is a
favored vehicle for slander. A charge is sufficient if the words are calculated to
induce the hearers to suppose and understand that the person or persons against
whom they were uttered were guilty of certain offenses, or are sufficient to impeach
their honesty, virtue, or reputation, or to hold the person or persons up
_______________
2 Id., at pp. 90 and 103.
3 Id., at p. 105.
4 255 Phil. 630; 173 SCRA 645 (1989) [Per J. Bidin, Third Division].
5 Id., at p. 636; p. 652. It is noted that the case referred to American jurisprudence for this
definition.
6 325 Phil. 1053; 255 SCRA 692 (1996) [Per J. Hermosisima, Jr., First Division].
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De Leon vs. People
to public ridicule[.]”7 (Emphasis in the original, citation omitted)
Petitioner should be absolved of any criminal liability. The words he allegedly used against
SPO3 Leonardo were “walanghiya,” “mangongotong na pulis,” and “ang yabang[-]yabang.”8
These utterances must be assessed against the following context: the backdrop of SPO3
Leonardo being a public servant, and that the incident allegedly happened as the parties were
about to enter the People’s Law Enforcement Board for SPO3 Leonardo’s administrative hearing.
The words chosen by petitioner could hardly be considered to ascribe to SPO3 Leonardo
anything seriously offensive, much less to impute a vice that would put to question the police
officer’s morality or professionalism. As a public servant, SPO3 Leonardo cannot be thin-
skinned, as criticism is a natural consequence of being a person clothed with authority.
Petitioner’s choice of words could hardly be considered “personal,” especially in light of the
heightened emotions brought about by the gun-pointing incident. That the incident allegedly
happened just before the parties entered the People’s Law Enforcement Board’s office also
diminishes any claim that the utterances were made to publicly embarrass SPO3 Leonardo.
It is my position that the standard for oral defamation, especially in cases involving persons of
authority, should be subject to a reevaluation. In Chavez v. Court of Appeals,9 the objective of
libel laws was explained, thus:
Libel stands as an exception to one of the most cherished constitutional rights, that of free
expression. While libel laws ensure a modicum of responsibility in one’s own
_______________
7 Id., at pp. 1063-1064; p. 699.

8 Ponencia, p. 90. The Ponencia quotes the Information in Criminal Case No. 453376-CR for
Grave Oral Defamation.
9 543 Phil. 262; 514 SCRA 279 (2007) [Per J. Tinga, Second Division].
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De Leon vs. People
speech or expression, a prescribed legal standard that conveniences the easy proliferation
of libel suits fosters an atmosphere that inhibits the right to speak freely. When such a
prescribed standard is submitted for affirmation before this Court, as is done in this
petition, it must receive the highest possible scrutiny, as it may interfere with the most
basic of democratic rights.10 (Emphasis supplied)
A police officer, who is a public servant cloaked with authority, should be prepared to take
criticism especially in instances where emotions are running high and there is no apparent intent
to malign his or her person. Being “sensitive” has no place in this line of service, more so when
allowing otherwise has the potential to create a chilling effect on the public. In a democratic
country like ours, the protection of free expression is primordial as it is tantamount to upholding
the sovereignty of the People. The People should be allowed to express themselves without the
threat of government reprisal over the slightest feeling of offense.
ACCORDINGLY, I vote to GRANT the Petition.
Petition partially granted.
Notes.—An order granting the accused’s demurrer to evidence is a resolution of the case on the
merits amounting to an acquittal — any further prosecution of the accused after an acquittal
would violate the proscription on double jeopardy. (People vs. Sumingwa, 603 SCRA 638
[2009])
As defined in Villanueva v. People, 487 SCRA 42 (2006), oral defamation or slander is the
speaking of base and defamatory words which tend to prejudice another in his reputation, office,
trade, business or means of livelihood. (Agbayani vs. Court of Appeals, 674 SCRA 358 [2012])
——o0o——
_______________
G.R. No. 209387. January 11, 2016.*
ERWIN LIBO-ON DELA CRUZ, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; A petition for
review on certiorari under Rule 45 must be differentiated from appeals under Rule 124, Section
13 involving
_______________
* SECOND DIVISION.
35
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Dela Cruz vs. People
cases where the lower court imposed on the accused the penalty of reclusion perpetua, life
imprisonment, or, previously, death.—The present criminal case was brought to this court under
Rule 45 of the Rules of Court. The penalty imposed on petitioner by the trial court is material in
determining the mode of appeal to this court. A petition for review on certiorari under Rule 45
must be differentiated from appeals under Rule 124, Section 13 involving cases where the lower
court imposed on the accused the penalty of reclusion perpetua, life imprisonment, or,
previously, death.
Same; Same; Same; Same; It is settled that in petitions for review on certiorari, only questions of
law are reviewed by this court.—It is settled that in petitions for review on certiorari, only
questions of law are reviewed by this court. The rule that only questions of law may be raised in
a petition for review under Rule 45 is based on sound and practical policy considerations
stemming from the differing natures of a question of law and a question of fact: A question of
law exists when the doubt or controversy concerns the correct application of law or jurisprudence
to a certain set of facts; or when the issue does not call for an examination of the probative value
of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists
when the doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances as well as their relation to each
other and to the whole, and the probability of the situation.
Same; Criminal Procedure; Appeals; An appeal in a criminal case “throws the whole case open
for review.”—An appeal in a criminal case “throws the whole case open for review[.]” The
underlying principle is that errors in an appealed judgment, even if not specifically assigned, may
be corrected motu propio by the court if the consideration of these errors is necessary to arrive at
a just resolution of the case. Nevertheless, “the right to appeal is neither a natural right nor a part
of due process, it being merely a statutory privilege which may be exercised only in the manner
provided for by law[.]”
Port Personnel; While there is a distinction between port personnel and port police officers in
this case, considering that port
36
personnel are not necessarily law enforcers, both should be considered agents of government
under Article III of the Constitution.—The Cebu Port Authority is clothed with authority by the
state to oversee the security of persons and vehicles within its ports. While there is a distinction
between port personnel and port police officers in this case, considering that port personnel are
not necessarily law enforcers, both should be considered agents of government under Article III
of the Constitution. The actions of port personnel during routine security checks at ports have the
color of a state-related function.
Constitutional Law; Criminal Procedure; Searches and Seizures; Searches pursuant to port
security measures are not unreasonable per se. The security measures of x-ray scanning and
inspection in domestic ports are akin to routine security procedures in airports.—With port
security personnel’s functions having the color of state-related functions and deemed agents of
government, People v. Marti, 193 SCRA 57 (1991), is inapplicable in the present case.
Nevertheless, searches pursuant to port security measures are not unreasonable per se. The
security measures of x-ray scanning and inspection in domestic ports are akin to routine security
procedures in airports.
Port Personnel; The port personnel’s actions proceed from the authority and policy to ensure the
safety of travelers and vehicles within the port.—The port personnel’s actions proceed from the
authority and policy to ensure the safety of travelers and vehicles within the port. At this point,
petitioner already submitted himself and his belongings to inspection by placing his bag in the x-
ray scanning machine. The presentation of petitioner’s bag for x-ray scanning was voluntary.
Petitioner had the choice of whether to present the bag or not. He had the option not to travel if
he did not want his bag scanned or inspected. X-ray machine scanning and actual inspection
upon showing of probable cause that a crime is being or has been committed are part of
reasonable security regulations to safeguard the passengers passing through ports or terminals.
Constitutional Law; Criminal Procedure; Warrantless Searches and Seizures; The Supreme
Court (SC) lays down the exceptions where warrantless searches are deemed legitimate: (1)
warrantless search incidental to a lawful arrest; (2) seizure in “plain view”; (3) search of a
moving vehicle; (4) consented warrantless search; (5) customs search; (6) stop and frisk; and
(7) exigent and emergency cir-
37
VOL. 779, JANUARY 11, 2016 37
cumstances.—The Constitution safeguards a person’s right against unreasonable searches and

seizures. A warrantless search is presumed to be unreasonable. However, this court lays down the
exceptions where warrantless searches are deemed legitimate: (1) warrantless search incidental
to a lawful arrest; (2) seizure in “plain view”; (3) search of a moving vehicle; (4) consented
warrantless search; (5) customs search; (6) stop and frisk; and (7) exigent and emergency
circumstances.
Remedial Law; Criminal Procedure; Appellate courts accord the highest respect to the
assessment of witnesses’ credibility by the trial court, because the latter was in a better position
to observe their demeanor and deportment on the witness stand.—“[A]ppellate courts accord the
highest respect to the assessment of witnesses’ credibility by the trial court, because the latter
was in a better position to observe their demeanor and deportment on the witness stand.” We do
not find anything erroneous as to the findings of fact of both the trial court and the Court of
Appeals.
Constitutional Law; Criminal Procedure; Searches and Seizures; Customs Searches; Customs
searches, as exception to the requirement of a valid search warrant, are allowed when “persons
exercising police authority under the customs law . . . effect search and seizure . . . in the
enforcement of customs laws.”—The consented search conducted on petitioner’s bag is different
from a customs search. Customs searches, as exception to the requirement of a valid search
warrant, are allowed when “persons exercising police authority under the customs law . . . effect
search and seizure . . . in the enforcement of customs laws.” The Tariff and Customs Code
provides the authority for such warrantless search, as this court ruled in Papa, et al. v. Mago, et
al., 22 SCRA 857 (1968): The Code authorizes persons having police authority under Section
2203 of the Tariff and Customs Code to enter, pass through or search any land, enclosure,
warehouse, store or building, not being a dwelling house; and also to inspect, search and examine
any vessel or aircraft and any trunk, package, box or envelope or any person onboard, or stop and
search and examine any vehicle, beast or person suspected of holding or conveying any dutiable
or prohibited article introduced into the Philippines contrary to law, without mentioning the need
of a search warrant in said cases.
38
Same; Same; Same; Requirements for a Valid Customs Searches.—Hence, to be a valid customs
search, the requirements are: (1) the person/s conducting the search was/were exercising police
authority under customs law; (2) the search was for the enforcement of customs law; and (3) the
place searched is not a dwelling place or house. Here, the facts reveal that the search was part of
routine port security measures. The search was not conducted by persons authorized under
customs law. It was also not motivated by the provisions of the Tariff and Customs Code or other
customs laws. Although customs searches usually occur within ports or terminals, it is important
that the search must be for the enforcement of customs laws.
Criminal Law; Election Offenses; Gun Ban; Elements of.—In Abenes v. Court of Appeals, 515
SCRA 690 (2007), this court enumerated the elements for a violation of the Gun Ban: “1) the
person is bearing, carrying, or transporting firearms or other deadly weapons; 2) such possession
occurs during the election period; and 3) the weapon is carried in a public place.” This court also
ruled that under the Omnibus Election Code, the burden to show that he or she has a written
authority to possess a firearm is on the accused. We find that the prosecution was able to
establish all the requisites for violation of the Gun Ban. The firearms were found inside
petitioner’s bag. Petitioner did not present any valid authorization to carry the firearms outside
his residence during the period designated by the Commission on Elections. He was carrying the
firearms in the Cebu Domestic Port, which was a public place.
Same; Same; Same; Penalties; Under Section 264 of Batas Pambansa (BP) Blg. 881, persons
found guilty of an election offense “shall be punished with imprisonment of not less than one (1)
year but not more than six (6) years and shall not be subject to probation.”—We note that the
trial court imposed the penalty of imprisonment for a period of one (1) year and to suffer
disqualification to hold public office and deprivation of the right to suffrage. Under Section 264
of Batas Pambansa Blg. 881, persons found guilty of an election offense “shall be punished with
imprisonment of not less than one year but not more than six years and shall not be subject to
probation.” The Indeterminate Sentence Law applies to offenses punished by both the Revised
Penal Code and special laws. The penalty to be imposed is a matter of law that courts must
follow. The trial court should have provided minimum and maximum terms for petitioner’s
penalty of imprisonment as required by the Indetermi-
39
VOL. 779, JANUARY 11, 2016 39
nate Sentence Law. Accordingly, we modify the penalty imposed by the trial court. Based on the
facts, we deem it reasonable that petitioner be penalized with imprisonment of one (1) year as
minimum to two (2) years as maximum.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals, Cebu
City.
Public Attorney’s Office for petitioner.
Office of the Solicitor General for respondent.
LEONEN, J.:
Routine baggage inspections conducted by port authorities, although done without search
warrants, are not unreasonable searches per se. Constitutional provisions protecting privacy
should not be so literally understood so as to deny reasonable safeguards to ensure the safety of
the traveling public.
For resolution is a Petition for Review on Certiorari1 assailing the Decision2 dated September
28, 2012 and the Resolution3 dated August 23, 2013 of the Court of Appeals, Cebu City.4 The
Court of Appeals affirmed5 the trial court’s Judgment6 finding petitioner Erwin Libo-on Dela
Cruz (Dela Cruz)
_______________
1 Rollo, pp. 8-21.
2 Id., at pp. 56-63. The case was docketed as C.A.-G.R. CEB CR No. 01606. The Decision was
penned by Associate Justice Ramon Paul L. Hernando (Chair) and concurred in by Associate
Justices Gabriel T. Ingles and Zenaida T. Galapate-Laguilles of the Special Twentieth Division,
Court of Appeals, Cebu.
3 Id., at pp. 68-69. The Resolution was penned by Associate Justice Ramon Paul L. Hernando
and concurred in by Associate Justices Edgardo L. Delos Santos (Chair) and Gabriel T. Ingles of
the Special Former Special Twentieth Division, Court of Appeals, Cebu.
4 Id., at p. 17, Petition.
5 Id., at p. 63, Court of Appeals Decision.
6 Id., at pp. 23-31, Regional Trial Court’s Consolidated Judgment. The Consolidated Judgment
was penned by Presiding Judge
40
guilty beyond reasonable doubt of possessing unlicensed firearms under Commission on

Elections Resolution No. 77647 in relation to Section 2618 of Batas Pambansa Blg. 8819 during
the 2007 election period.10
Dela Cruz was an on-the-job trainee of an inter-island vessel.11 He frequently traveled, “coming
back and forth taking a vessel.”12 At around 12:00 noon of May 11, 2007, Dela Cruz
_______________
Estela Alma A. Singco of Branch 12 of the Regional Trial Court, Cebu City.
7 Rules and Regulations on: (A) Bearing, Carrying or Transporting Firearms or Other Deadly
Weapons; (B) Security Personnel or Bodyguards; (C) Bearing Arms by any Member of Security
or Police Organization of Government Agencies and Other Similar Organization; (D)
Organization or Maintenance of Reaction Forces during the Election Period in connection with
the May 14, 2007 National and Local Elections.
8 Batas Pambansa Blg. 881 (1985), Sec. 261(q) provides:
Section 261. Prohibited Acts.—The following shall be guilty of an election offense:
....
(q) Carrying firearms outside residence or place of business.—Any person who, although

possessing a permit to carry firearms, carries any firearms outside his residence or place of
business during the election period, unless authorized in writing by the Commission: Provided,
That a motor vehicle, water or air craft shall not be considered a residence or place of business or
extension hereof. (Par. [l], id.) This prohibition shall not apply to cashiers and disbursing officers
while in the performance of their duties or to persons who by nature of their official duties,
profession, business or occupation habitually carry large sums of money or valuables.
9 Omnibus Election Code of the Philippines.
10 Rollo, p. 30, Regional Trial Court’s Consolidated Judgment.
11 Id., at p. 12, Petition, and p. 27, Regional Trial Court’s Consolidated Judgment; defense’s
version of the facts as summarized by the trial court.
12 Id., at p. 27, Regional Trial Court’s Consolidated Judgment.
41
VOL. 779, JANUARY 11, 2016 41

was at a pier of the Cebu Domestic Port to go home to Iloilo.13 While buying a ticket, he
allegedly left his bag on the floor with a porter.14 It took him around 15 minutes to purchase a
ticket.15
Dela Cruz then proceeded to the entrance of the terminal and placed his bag on the x-ray
scanning machine for inspection.16 The operator of the x-ray machine saw firearms inside Dela
Cruz’s bag.17
Cutie Pie Flores (Flores) was the x-ray machine operator-on-duty on May 11, 2007.18 She saw
the impression of what appeared to be three (3) firearms inside Dela Cruz’s bag.19 Upon seeing
the suspected firearms, she called the attention of port personnel Archie Igot (Igot) who was the
baggage inspector then.20
Igot asked Dela Cruz whether he was the owner of the bag.21 Dela Cruz answered Igot in the
affirmative and consented to Igot’s manual inspection of the bag.22
“Port Police Officer Adolfo Abregana [(Officer Abregana)] was on duty at the terminal of the
Cebu Domestic Port in Pier 1-G when his attention was called by . . . Igot.”23 Igot told Officer
Abregana that there were firearms in a bag owned by a
_______________
13 Id., at pp. 25 and 27, Regional Trial Court’s Consolidated Judgment, and p. 58, Court of
Appeals Decision.
14 Id., at p. 27.
15 Id.
16 Id.
17 Id., at pp. 26-27.
18 Id., at p. 26.
19 Id.
20 Id.
21 Id.
22 Id.
23 Id., at p. 58, Court of Appeals Decision. In the trial court’s Consolidated Judgment, the port
personnel was named “Archie” Igot. The Court of Appeals Decision refers to the port personnel
as “Arcie” Igot.
42
certain person.24 Igot then pointed to the person.25 That person was later identified as Dela
Cruz.26
Dela Cruz admitted that he was owner of the bag.27 The bag was then inspected and the
following items were found inside: three (3) revolvers; NBI clearance; seaman’s book; other
personal items; and four (4) live ammunitions placed inside the cylinder.28 When asked whether
he had the proper documents for the firearms, Dela Cruz answered in the negative.29
Dela Cruz was then arrested and informed of his violation of a crime punishable by law.30 He
was also informed of his constitutional rights.31
In the Information dated November 19, 2003, Dela Cruz was charged with violation of Republic
Act No. 8294 for illegal possession of firearms:32
Criminal Case No. CBU-80084
That on or about the 11th day of May 2007, at about 12:45 p.m. in the City of Cebu,
Philippines, and within the jurisdiction of this Honorable Court, the said accused, with the
deliberate intent and without being authorized by law, did then and there possess and carry
outside his residence one (1) Cal. 38 Simith [sic] & Wesson revolver without serial
number; one (1) .22 Smith & Wesson Magnum revolver without serial number; one (1)
North American Black Widow magnum revolver without serial number and four rounds of
live ammunitions for cal. 38
_______________
24 Id.
25 Id.
26 Id.
27 Id.
28 Id., at pp. 58-59.
29 Id., at p. 11, Petition, and p. 59, Court of Appeals Decision.
31 Id.
32 Id., at p. 57.
43
VOL. 779, JANUARY 11, 2016 43
without first securing the necessary license to possess and permit to carry from the proper
authorities.
CONTRARY TO LAW.33
Subsequently, another Information was filed charging Dela Cruz with the violation of
Commission on Elections Resolution No. 7764, in relation to Section 261 of Batas Pambansa
Blg. 881:34
Criminal Case No. CBU-80085
That on or about the 11th day of May 2007, at about 12:45 in the afternoon, which is
within the election period for the May 14, 2007 National and Local Elections, in the City
of Cebu, Philippines and within the jurisdiction of this Honorable Court, the said accused,
with deliberate intent, did then and there possess and carry outside his residence the
following:
One (1) cal. .38 Simith [sic] & Wesson revolver without serial number; One (1) cal. .22
Smith & Wesson Magnum revolver without serial number; One (1) North American Black
Widow magnum revolver without serial number and four (4) rounds of live ammunitions
for cal. 38.
CONTRARY TO LAW.35
Dela Cruz entered a plea of not guilty to both charges during arraignment.36
After trial, Branch 12 of the Regional Trial Court, Cebu City found Dela Cruz guilty beyond
reasonable doubt of violating the Gun Ban under Commission on Elections Resolution No. 7764,
in relation to Section 261 of Batas Pambansa Blg. 881 in
_______________
33 Id.
34 Id., at p. 58.
35 Id.
36 Id., at p. 11, Petition, and p. 25, Regional Trial Court’s Consolidated Judgment.
44

Criminal Case No. CBU-80085.37 Dela Cruz was sentenced to suffer imprisonment of one (1)
year with disqualification from holding public office and the right to suffrage.38
According to the trial court, the prosecution was able to prove beyond reasonable doubt that Dela
Cruz committed illegal possession of firearms.39 It proved the following elements: “(a) the
existence of the subject firearm and (b) the fact that the accused who owned or possessed it does
not have the license or permit to possess the same.”40 The prosecution presented the firearms
and live ammunitions found in Dela Cruz’s possession.41 It also presented three (3) prosecution
witnesses who testified that the firearms were found inside Dela Cruz’s bag.42 The prosecution
also presented a Certification that Dela Cruz did not file any application for license to possess a
firearm, and he was not given authority to carry a firearm outside his residence.43
The trial court also held that the search conducted by the port authorities was reasonable and,
thus, valid:44
Given the circumstances obtaining here, the court finds the search conducted by the port
authorities reasonable and, therefore, not violative of the accused’s constitutional rights.
Hence, when the search of the bag of the accused revealed the firearms and ammunitions,
accused is deemed to have been caught in flagrante delicto, justifying his arrest even
without a warrant under Section 5(a), Rule 113 of the Rules of Criminal Procedure.
_______________
37 Id., at p. 30, Regional Trial Court’s Consolidated Judgment, and pp. 59-60, Court of Appeals
Decision.
38 Id., at p. 30, Regional Trial Court’s Consolidated Judgment, and p. 60, Court of Appeals
Decision.
39 Id., at pp. 27-28, Regional Trial Court’s Consolidated Judgment.
40 Id.
41 Id., at p. 28.
42 Id., at pp. 25-28.
43 Id., at p. 29.
44 Id., at p. 28.
45
VOL. 779, JANUARY 11, 2016 45
The firearms and ammunitions obtained in the course of such valid search are thus
admissible as evidence against [the] accused.45
The trial court did not give credence to Dela Cruz’s claim that the firearms were “planted” inside
his bag by the porter or anyone who could have accessed his bag while he was buying a ticket.46
According to the trial court, Dela Cruz’s argument was “easy to fabricate, but terribly difficult to
disprove.”47 Dela Cruz also did not show improper motive on the part of the prosecution
witnesses to discredit their testimonies.48
The trial court dismissed the case for violation of Republic Act No. 8294.49 It held that
“Republic Act No. 8294 penalizes simple illegal possession of firearms, provided that the person
arrested committed ‘no other crime.’”50 Dela Cruz, who had been charged with illegal
possession of firearms, was also charged with violating the Gun Ban under Commission on
Elections Resolution No. 7764.51
The dispositive portion of the trial court’s Consolidated Judgment reads:
WHEREFORE, the Court finds the accused guilty beyond reasonable doubt of violation
of COMELEC Resolution No. 7764 in relation to Section 261 of BP Blg. 881 in Criminal
Case No. CBU-80085, and hereby sentences him to suffer an imprisonment for a period of
one (1) year, and to suffer disqualification to hold public office and deprivation of the right
to suffrage.
_______________
45 Id.
46 Id., at p. 29.
47 Id.
48 Id.
50 Id., at p. 29, Regional Trial Court’s Consolidated Judgment.
51 Id., at p. 30.
46
While Criminal Case No. CBU-80084 for Violation of RA 8294 is hereby DISMISSED.
Accordingly, the cash bond posted by accused therein for his provisional liberty is hereby
ordered cancelled and released to said accused.
The subject firearms (Exhs. “H,” “I,” & “J”), and the live ammunitions (Exhs. “K to K-2”)
shall, however, remain in custodia legis for proper disposition of the appropriate
government agency.
SO ORDERED.52 (Emphasis in the original)

On appeal, the Court of Appeals affirmed the trial court’s Judgment.53 It held that the defense
failed to show that the prosecution witnesses were moved by improper motive; thus, their
testimonies are entitled to full faith and credit.54 The acts of government authorities were found
to be regular.55
The Court of Appeals did not find Dela Cruz’s defense of denial meritorious.56 “Denial as a
defense has been viewed upon with disfavor by the courts due to the ease with which it can be
concocted.”57 Dela Cruz did not present any evidence “to show that he had authority to carry
outside of residence firearms and ammunition during the period of effectivity of the Gun Ban
[during] election time.”58 The prosecution was able to prove Dela Cruz’s guilt beyond
reasonable doubt.
The dispositive portion of the assailed Decision provides:
WHEREFORE, premises considered, the appeal is hereby DENIED. The assailed

January 27, 2010 Consolidated Judgment of the Regional Trial Court (RTC), Branch 12 of
Cebu City in Criminal Case CBU-59434 is hereby AFFIRMED. Costs on accused-
appellant.
_______________
52 Id., at pp. 30-31.
54 Id., at pp. 60-61.
55 Id., at p. 61.
56 Id., at p. 62.
57 Id.
58 Id., at pp. 62-63.
47
VOL. 779, JANUARY 11, 2016 47

Dela Cruz filed a Motion for Reconsideration,60 which was denied by the Court of Appeals in its
Resolution dated August 23, 2013.61
Dela Cruz filed this Petition on November 4, 2013.62 In the Resolution63 dated December 9,
2013, this court required respondent, through the Office of the Solicitor General, to submit its
Comment on the Petition. Respondent submitted its Comment64 on March 6, 2014, which this
court noted in the Resolution65 dated March 19, 2014.
Dela Cruz claims that he was an on-the-job trainee for an inter-island vessel.66 He was
“well[-]acquainted with [the] inspection scheme [at the] ports.”67 He would not have risked
placing prohibited items such as unlicensed firearms inside his luggage knowing fully the
consequences of such an action.68
According to Dela Cruz, when he arrived at the port on May 11, 2007, he left his luggage with a
porter to buy a ticket.69 “A considerable time of fifteen minutes went by before he could secure
the ticket while his luggage was left sitting on the floor with only the porter standing beside
it.”70 He claims that someone must have placed the unlicensed firearms in-
_______________
59 Id., at p. 63.
60 Id., at pp. 64-67.
61 Id., at p. 69, Court of Appeals Resolution.
63 Id., at p. 72.
64 Id., at pp. 83-95.
65 Id., at p. 97.

67 Id.
68 Id.
69 Id., at p. 15.
70 Id.
48
side his bag during the period he was away from it.71 He was surprised when his attention was
called by the x-ray machine operator after the firearms were detected.72
Considering the circumstances, Dela Cruz argues that there was no voluntary waiver against
warrantless search:73
In petitioner’s case, it may well be said that, with the circumstances attending the search of
his luggage, he had no actual intention to relinquish his right against warrantless searches.
He knew in all honest belief that when his luggage would pass through the routine x-ray
examination, nothing incriminating would be recovered. It was out of that innocent
confidence that he allowed the examination of his luggage. . . . [H]e believed that no
incriminating evidence w[ould] be found. He knew he did not place those items. But what
is strikingly unique about his situation is that a considerable time interval lapsed, creating
an opportunity for someone else to place inside his luggage those incriminating items.74
(Emphasis in the original)
Respondent argues that there was a valid waiver of Dela Cruz’s right to unreasonable search and
seizure, thus warranting his conviction.75 Dela Cruz was “caught in flagrante delicto carrying
three (3) revolvers and four (4) live ammunitions when his bag went through the x-ray machine
in the Cebu Domestic Port on May 11, 2007, well within the election
period.”76 The firearms were seized during a routine baggage
x-ray at the port of Cebu, a common seaport security procedure.77
_______________
71 Id.
72 Id.
73 Id., at pp. 15-16.
74 Id., at p. 16.
75 Id., at p. 88 and pp. 90-91, Comment.
76 Id., at p. 88.
77 Id.
49
VOL. 779, JANUARY 11, 2016 49
According to respondent, this case is similar to valid warrantless searches and seizures conducted
by airport personnel pursuant to routine airport security procedures.78
Records are also clear that Dela Cruz voluntarily waived his right to unreasonable searches and
seizure.79 The trial court found that Dela Cruz voluntarily gave his consent to the search.80
Dela Cruz’s claim that his bag was switched is also baseless.81 The witnesses categorically
testified that Dela Cruz was “in possession of the bag before it went through the x-ray machine,
and he was also in possession of the same bag that contained the firearms when he was
apprehended.”82
Dela Cruz raised the lone issue of “whether the Court of Appeals gravely erred in finding [him]
guilty beyond reasonable doubt of the crime charged despite the failure of the prosecution to
establish his guilt beyond reasonable doubt[.]”83
The issues for resolution in this case are:
First, whether petitioner Erwin Libo-on Dela Cruz was in possession of the illegal firearms
within the meaning of the Commission on Elections Resolution No. 7764, in relation to Section
261 of Batas Pambansa Blg. 881;
Second, whether petitioner waived his right against unreasonable searches and seizures; and
Lastly, assuming that there was no waiver, whether there was a valid search and seizure in this
case.
We deny the Petition.
_______________
78 Id., at pp. 89-90.
79 Id., at p. 90.
80 Id., at p. 92, citing the Regional Trial Court’s Consolidated Judgment, p. 6.
81 Id., at p. 92.
82 Id., at pp. 92-93.
50

I
The present criminal case was brought to this court under Rule 45 of the Rules of Court. The
penalty imposed on petitioner by the trial court is material in determining the mode of appeal to
this court. A petition for review on certiorari under Rule 45 must be differentiated from appeals
under Rule 124, Section 1384 involving cases where the lower court imposed on the accused the
penalty of reclusion perpetua, life imprisonment, or, previously, death.85
_______________
84 Rules of Court, Rule 124, Sec. 13, as amended by A.M. No. 00-5-03-SC dated September 28,
2004, provides:
Sec. 13. Certification or appeal of case to the Supreme Court.—(a) Whenever the Court of

Appeals finds that the penalty of death should be imposed, the court shall render judgment but
refrain from making an entry of judgment and forthwith certify the case and elevate its entire
record to the Supreme Court for review.
(b) Where the judgment also imposes a lesser penalty for offenses’ committed on the same
occasion or which arose out of the same occurrence that gave rise to the more severe offense for
which the penalty of death is imposed, and the accused appeals, the appeal shall be included in
the case certified for review to the Supreme Court.
(c) In cases where the Court of Appeals imposes reclusion perpetua, life imprisonment or a
lesser penalty, it shall render and enter judgment imposing such penalty. The judgment may be
appealed to the Supreme Court by notice of appeal filed with the Court of Appeals.
See People v. Rocha, 558 Phil. 521, 530-535; 531 SCRA 761, 777 (2007) [Per J. Chico-Nazario,
Third Division], for a discussion on the difference between appeal for cases involving imposition
of life imprisonment and reclusion perpetua, and automatic review for cases involving
imposition of death penalty. See also People v. Mateo, 477 Phil. 752, 768-773; 433 SCRA 640,
656 (2004) [Per J. Vitug, En Banc].
85 See Republic Act No. 9346, entitled “An Act Prohibiting the Imposition of Death Penalty in
the Philippines.”
51
VOL. 779, JANUARY 11, 2016 51

In Mercado v. People:86
Where the Court of Appeals finds that the imposable penalty in a criminal case brought to
it on appeal is at least reclusion perpetua, death or life imprisonment, then it should
impose such penalty, refrain from entering judgment thereon, certify the case and elevate
the entire records to this Court for review. This will obviate the unnecessary, pointless and
time-wasting shuttling of criminal cases between this Court and the Court of Appeals, for
by then this Court will acquire jurisdiction over the case from the very inception and can,
without bothering the Court of Appeals which has fully completed the exercise of its
jurisdiction, do justice in the case.
On the other hand, where the Court of Appeals imposes a penalty less than reclusion
perpetua, a review of the case may be had only by petition for review on certiorari under
Rule 45 where only errors or questions of law may be raised.87 (Emphasis supplied,
citations omitted)
It is settled that in petitions for review on certiorari, only questions of law are reviewed by this
court.88 The rule that only questions of law may be raised in a petition for review under Rule 45
is based on sound and practical policy consid-
_______________
86 441 Phil. 216; 392 SCRA 687 (2002) [Per J. Bellosillo, Second Division]. The case was
decided in 2002 before the amendment of the Rules in A.M. No. 00-5-3-SC dated September 28,
2004.
87 Id., at pp. 222-223; p. 692.
88 Rules of Court, Rule 45, Sec. 1 provides:
SECTION 1. Filing of petition with Supreme Court.—A party desiring to appeal by certiorari

from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the
Regional Trial Court or other courts whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The petition shall raise only questions of law
which must be distinctly set forth.
See Tan v. People, 604 Phil. 68, 78; 586 SCRA 139, 151 (2009) [Per J. Chico-Nazario, Third
Division].
52
erations stemming from the differing natures of a question of law and a question of fact:
A question of law exists when the doubt or controversy concerns the correct application of
law or jurisprudence to a certain set of facts; or when the issue does not call for an
examination of the probative value of the evidence presented, the truth or falsehood of
facts being admitted. A question of fact exists when the doubt or difference arises as to the
truth or falsehood of facts or when the query invites calibration of the whole evidence
considering mainly the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances as well as their relation to each other and to the whole, and the
probability of the situation.89
Concomitantly, factual findings of the lower courts as affirmed by the Court of Appeals are
binding on this court.90
In contrast, an appeal in a criminal case “throws the whole case open for review[.]”91 The
underlying principle is that errors in an appealed judgment, even if not specifically assigned, may
be corrected motu propio by the court if the consideration of these errors is necessary to arrive at
a just resolution of the case.92 Nevertheless, “the right to appeal is neither a natural right nor a
part of due process, it being merely
_______________
89 Ruiz v. People, 512 Phil. 127, 135; 475 SCRA 476, 484-485 (2005) [Per J. Callejo, Sr.,
Second Division], citing Republic v. Sandiganbayan, 425 Phil. 752, 765-766; 375 SCRA 145,
154 (2002) [Per CJ. Davide, Jr., En Banc].
90 See People v. Cardenas, G.R. No. 190342, March 21, 2012, 668 SCRA 827, 844-845 [Per J.
Sereno (now CJ.), Second Division].
91 People v. Galigao, 443 Phil. 246, 261; 395 SCRA 195, 204 (2003) [Per J. Ynares-Santiago,
En Banc], citing People v. Taño, 387 Phil. 465, 478; 331 SCRA 449, 460 (2000) [Per J.
Panganiban, En Banc] and People v. Castillo, 382 Phil. 499, 506; 325 SCRA 613, 619 (2000)
[Per J. Puno, En Banc].
92 Id., citing People v. Pirame, 384 Phil. 286, 300; 327 SCRA 552, 567 (2000) [Per J.
Quisumbing, Second Division].
53
VOL. 779, JANUARY 11, 2016 53
a statutory privilege which may be exercised only in the manner provided for by law[.]”93
II
Petitioner argues that the firearms found in his bag were not his. Thus, he could not be liable for
possessing the contraband. Key to the resolution of this case is whether petitioner possessed
firearms without the necessary authorization from the Commission on Elections. Petitioner was
charged under special laws: Republic Act No. 8294 and Commission on Elections Resolution
No. 7764, in relation to Section 261 of Batas Pambansa Blg. 881.
The law applicable is Section 2(a) of Commission on Elections Resolution No. 7764, which
provides:
SECTION 2. Prohibitions.—During the election period from January 14, 2007 it shall

be unlawful for:
a. Any person, including those possessing a permit to carry firearms outside of

residence or place of business, to bear, carry or transport firearms or other deadly
weapons in public places including any building, street, park, private vehicle or
public conveyance. For the purpose firearm includes airgun, while deadly weapons
include hand grenades or other explosives, except pyrotechnics[.]
Section 261(q) of Batas Pambansa Blg. 881 states:
....
_______________
93 People v. Laguio, Jr., 547 Phil. 296, 309; 518 SCRA 393, 402 (2007) [Per J. Garcia, First
Division].
54
(q) Carrying firearms outside residence or place of business.—Any person who,

although possessing a permit to carry firearms, carries any firearms outside his residence
or place of business during the election period, unless authorized in writing by the
Commission: Provided, That a motor vehicle, water or air craft shall not be considered a
residence or place of business or extension hereof. (Par. [l], id.)
This prohibition shall not apply to cashiers and disbursing officers while in the
performance of their duties or to persons who by nature of their official duties, profession,
business or occupation habitually carry large sums of money or valuables.
For a full understanding of the nature of the constitutional rights involved, we will examine three
(3) points of alleged intrusion into the right to privacy of petitioner: first, when petitioner gave
his bag for x-ray scanning to port authorities; second, when the baggage inspector opened
petitioner’s bag and called the Port Authority Police; and third, when the police officer opened
the bag to search, retrieve, and seize the firearms and ammunition.
III
The first point of intrusion occurred when petitioner presented his bag for inspection to port
personnel — the x-ray machine operator and baggage inspector manning the x-ray machine
station.94 With regard to searches and seizures, the standard imposed on private persons is
different from that imposed on state agents or authorized government authorities.
In People v. Marti,95 the private forwarding and shipping company, following standard operating
procedure, opened packages sent by accused Andre Marti for shipment to Zurich, Switzerland
and detected a peculiar odor from the packages.96
_______________
96 Id., at pp. 54-55; p. 61.
55
VOL. 779, JANUARY 11, 2016 55

The representative from the company found dried marijuana leaves in the packages.97 He
reported the matter to the National Bureau of Investigation and brought the samples to the
Narcotics Section of the Bureau for laboratory examination.98 Agents from the National Bureau
of Investigation subsequently took custody of the illegal drugs.99 Andre Marti was charged with
and was found guilty of violating Republic Act No. 6425, otherwise known as the Dangerous
Drugs Act.100
This court held that there was no unreasonable search or seizure.101 The evidence obtained
against the accused was not procured by the state acting through its police officers or authorized
government agencies.102 The Bill of Rights does not govern relationships between individuals;
it cannot be invoked against the acts of private individuals:103
If the search is made upon the request of law enforcers, a warrant must generally be first
secured if it is to pass the test of constitutionality. However, if the search is made at the
behest or initiative of the proprietor of a private establishment for its own and private
purposes, as in the case at bar, and without the intervention of police authorities, the right
against unreasonable search and seizure cannot be invoked for only the act of private
individual, not the law enforcers, is involved. In sum, the protection against unreasonable
searches and seizures cannot be extended to acts committed by private individuals so as to
bring it within the ambit of alleged unlawful intrusion by the government.104
_______________
97 Id., at p. 55; p. 61.
98 Id.
99 Id.
100 Id., at p. 56; p. 62.
101 Id., at p. 60; p. 67.
102 Id.
103 Id., at p. 61; p. 67.

104 Id., at p. 62; pp. 67-68.
56
Hence, by virtue of Marti, items seized pursuant to a reasonable search conducted by private
persons are not covered by the exclusionary rule.105
To determine whether the intrusion by the port personnel in this case was committed by private
or public persons, we revisit the history and organizational structure of the Philippine Ports
Authority.
Port security measures are consistent with the country’s aim to develop transportation and trade
in conjunction with national and economic growth. In 1974, the Philippine Ports
_______________
105 Id., at p. 58; p. 64. See Stonehill v. Diokno, 126 Phil. 738; 20 SCRA 383 (1967) [Per CJ.
Concepcion, En Banc]. In People v. Alicando, 321 Phil. 656, 690-691; 251 SCRA 293, 314-315
(1995) [Per J. Puno, En Banc], this court explained the doctrine of fruit of the poisonous tree as
adopted in this jurisdiction: “We have not only constitutionalized the Miranda warnings in our
jurisdiction. We have also adopted the libertarian exclusionary rule known as the ‘fruit of the
poisonous tree,’ a phrase minted by Mr. Justice Felix Frankfurter in the celebrated case of
Nardone v. United States. According to this rule, once the primary source (the ‘tree’) is shown to
have been unlawfully obtained, any secondary or derivative evidence (the ‘fruit’) derived from it
is also inadmissible. Stated otherwise, illegally seized evidence is obtained as a direct result of
the illegal act, whereas the ‘fruit of the poisonous tree’ is the indirect result of the same illegal
act. The ‘fruit of the poisonous tree’ is at least once removed from the illegally seized evidence,
but it is equally inadmissible. The rule is based on the principle that evidence illegally obtained
by the State should not be used to gain other evidence because the originally illegally obtained
evidence taints all evidence subsequently obtained. We applied this exclusionary rule in the
recent case of People v. Salanga, et al., a ponencia of Mr. Justice Regalado. Salanga was the
appellant in the rape and killing of a 15-year-old barrio lass. He was, however, illegally arrested.
Soldiers took him into custody. They gave him a body search which yielded a lady’s underwear.
The underwear was later identified as that of the victim. We acquitted Salanga. Among other
reasons, we ruled that ‘the underwear allegedly taken from the appellant is inadmissible in
evidence, being a so-called fruit of the poisonous tree.’”
57
VOL. 779, JANUARY 11, 2016 57
Authority was created for the reorganization of port administration and operation functions.106
The Philippine Ports Authority’s Charter was later revised through Presidential Decree No. 857.
The Revised Charter provided that the Authority may:
after consultation with relevant Government agencies, make rules or regulations for the
planning, development, construction, maintenance, control, supervision and management
of any Port or Port District and the services to be provided therein, and for the
maintenance of good order therein, and generally for carrying out the process of this
Decree.107
The Philippine Ports Authority was subsequently given police authority through Executive Order
No. 513,108 which provides:
Sec. 2. Section 6 is hereby amended by adding a new paragraph to read as follows:
Section 6-c. Police Authority.—The Authority shall have such police authority

within the ports administered by it as may be necessary to carry out its powers and
functions and attain its purposes and objectives, without prejudice to the exercise of
the functions of the Bureau of Customs and other law enforcement bodies within the
area. Such police authority shall include the following:
_______________
106 See Pres. Decree No. 505 (1974), entitled Providing for the Reorganization of Port
Administration and Operation Functions in the Country, Creating the Philippine Port Authority,
Paving the Way for the Establishment of Individual, Autonomous Port/Industrial Zone
Authorities in the Different Port Districts, and for Other Purposes.
107 Pres. Decree No. 857 (1974), Art. VIII, Sec. 26(a).
108 Exec. Order No. 513 (1978) is entitled Reorganizing the Philippine Ports Authority.
58
a) To provide security to cargoes, port equipment, structure, facilities, personnel and
documents: Provided, however, That in ports of entry, physical security to import and
export cargoes shall be exercised jointly with the Bureau of Customs;
b) To regulate the entry to, exit from, and movement within the port, of persons and
vehicles, as well as movement within the port of watercraft;
c) To maintain peace and order inside the port, in coordination with local police
authorities;
d) To supervise private security agencies operating within the port area; and
e) To enforce rules and regulations promulgated by the Authority pursuant to law.
(Emphasis supplied)
In 1992, the Cebu Port Authority was created to specifically administer all ports located in the
Province of Cebu.109 The Cebu Port Authority is a “public-benefit corporation . . . under the
supervision of the Department of Transportation and Communications for purposes of policy
coordination.”110 Control of the ports was transferred to the Cebu Port Authority on January 1,
1996, when its operations officially began.111
In 2004, the Office for Transportation Security was designated as the “single authority
responsible for the security of the transportation systems [in] the country[.]”112 Its powers
_______________
109 See Rep. Act No. 7621 (1992), entitled An Act Creating the Cebu Port Authority Defining
its Powers and Functions, Providing Appropriation therefor, and for Other Purposes.
110 Id., Sec. 3.
111 See Cebu Port Authority, Corporate Profile, History <http://www.cpa.gov.ph/index.php?

option=com_content&view=article&id=142&mId=110&mItemId= 111> (visited September 1,
2015).
112 See Exec. Order No. 311 (2004), entitled Designating the Office for Transportation Security
as the Single Authority Responsible for the Security of the Transportation Systems of the
Country, Expanding its Powers and Functions and for Other Purposes. See also Exec. Order No.
277 (2004).
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and functions included providing security measures for all transportation systems in the country:
b. Exercise operational control and supervision over all units of law enforcement
agencies and agency personnel providing security services in the transportation systems,
except for motor vehicles in land transportation, jointly with the heads of the bureaus or
agencies to which the units or personnel organically belong or are assigned;
c. Exercise responsibility for transportation security operations including, but not
limited to, security screening of passengers, baggage and cargoes, and hiring, retention,
training and testing of security screening personnel;
d. In coordination with the appropriate agencies and/or instrumentalities of the

government, formulate, develop, promulgate and implement comprehensive security plans,
policies, measures, strategies and programs to ably and decisively deal with any threat to
the security of transportation systems, and continually review, assess and upgrade such
security plans, policies, measures, strategies and programs, to improve and enhance
transportation security and ensure the adequacy of these security measures;
e. Examine and audit the performance of transportation security personnel, equipment

and facilities, and, thereafter, establish, on a continuing basis, performance standards for
such personnel, equipment and facilities, including for the training of personnel;
f. Prepare a security manual/master plan or programme which shall prescribe the rules
and regulations for the efficient and safe operation of all transportation systems, including
standards for security screening procedures, prior screening or profiling of individuals for
the issuance of security access passes, and determination of levels of security clearances
for personnel of the OTS, the DOTC and its attached agencies, and other agencies of the
government;
g. Prescribe security and safety standards for all transportation systems in accordance
with existing laws, rules, regulations and international conventions;
60
h. Subject to the approval of the Secretary of the DOTC, issue Transportation Security
Regulations/Rules and amend, rescind or revise such regulations or rules as may be
necessary for the security of the transportation systems of the country[.]113 (Emphasis
supplied)
The Cebu Port Authority has adopted security measures imposed by the Office for Transportation
Security, including the National Security Programme for Sea Transport and Maritime
Infrastructure.114
The Cebu Port Authority is clothed with authority by the state to oversee the security of persons
and vehicles within its ports. While there is a distinction between port personnel and port police
officers in this case, considering that port personnel are not necessarily law enforcers, both
should be considered agents of government under Article III of the Constitution. The actions of
port personnel during routine security checks at ports have the color of a state-related function.
In People v. Malngan,115 barangay tanod and the Barangay Chairman were deemed as law
enforcement officers for purposes of applying Article III of the Constitution.116 In People v.
Lauga,117 this court held that a “bantay bayan,” in relation to the authority to conduct a
custodial investigation under Article
_______________
113 Id., Sec. 2.
114 See Cebu Port Authority Admin. Order No. 04 (2008)

<http://www.cpa.gov.ph/external/pdf/all_admin_order/2008/AO_04-2008.pdf> (visited
September 1, 2015).
115 534 Phil. 404; 503 SCRA 294 (2006) [Per J. Chico-Nazario, En Banc]. This case applied the
ruling in Marti on the inapplicability of the Bill of Rights against private individuals. However, it
found that barangay tanod and the Barangay Chairman are law enforcement officers for
purposes of applying Article III, Section 12(1) and (3) of the Constitution.
116 Id., at p. 439; p. 324.
117 629 Phil. 522; 615 SCRA 548 (2010) [Per J. Perez, Second Division].
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III, Section 12118 of the Constitution, “has the color of a state-related function and objective
insofar as the entitlement of a suspect to his constitutional rights[.]”119
Thus, with port security personnel’s functions having the color of state-related functions and
deemed agents of government, Marti is inapplicable in the present case. Nevertheless, searches
pursuant to port security measures are not unreasonable per se. The security measures of x-ray
scanning and inspection in domestic ports are akin to routine security procedures in airports.
In People v. Suzuki,120 the accused “entered the predeparture area of the Bacolod Airport
Terminal.”121 He was “bound for Manila via flight No. 132 of the Philippine Airlines and was
carrying a small traveling bag and a box marked ‘Bongbong’s
_______________
118 Const., Art. III, Sec. 12 provides:
SECTION 12. (1) Any person under investigation for the commission of an offense shall

have the right to be informed of his right to remain silent and to have competent and independent
counsel preferably of his own choice. If the person cannot afford the services of counsel, he must
be provided with one. These rights cannot be waived except in writing and in the presence of
counsel.
(2) No torture, force, violence, threat, intimidation, or any other means which vitiate the free
will shall be used against him. Secret detention places, solitary, incommunicado, or other similar
forms of detention are prohibited.
(3) Any confession or admission obtained in violation of this or Section 17 hereof shall be

inadmissible in evidence against him.
(4) The law shall provide for penal and civil sanctions for violations of this section as well as
compensation to and rehabilitation of victims of torture or similar practices, and their families.
119 People v. Lauga, supra note 117 at p. 531; p. 558.
120 G.R. No. 120670, October 23, 2003, 414 SCRA 43 [Per J. Sandoval-Gutierrez, En Banc].
121 Id., at p. 45.
62
piaya.’”122 The accused “proceeded to the ‘walk-through metal detector,’ a machine which
produces a red light and an alarm once it detects the presence of metallic substance or
object.”123 “Thereupon, the red light switched on and the alarm sounded, signifying the
presence of metallic substance either in his person or in the box he was carrying.”124 When the
accused was asked to open the content of the box, he answered “open, open.”125 Several packs
of dried marijuana fruiting tops were then found inside the box.126 Suzuki argued that the box
was only given to him as “pasalubong” by a certain Pinky, whom he had sexual relations with
the night before.127 He did not know the contents of the box.128
This court in Suzuki found that the search conducted on the accused was a valid exception to the
prohibition against warrantless searches as it was pursuant to a routine airport security
procedure:129
It is axiomatic that a reasonable search is not to be determined by any fixed formula but is
to be resolved according to the facts of each case. Given the circumstances obtaining here,
we find the search conducted by the airport authorities reasonable and, therefore, not
violative of his constitutional rights. Hence, when the search of the box of piaya revealed
several marijuana fruiting tops, appellant is deemed to have been caught in flagrante
delicto, justifying his arrest even without a warrant under Section 5(a), Rule 113 of the
Rules of Criminal Procedure. The packs of marijuana obtained in the course of
_______________
122 Id.
123 Id., at p. 46.
124 Id.
125 Id.
126 Id.
127 Id., at p. 47.

128 Id.
129 Id., at p. 53.
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such valid search are thus admissible as evidence against appellant.130 (Citations omitted)
The reason behind it is that there is a reasonable reduced expectation of privacy when coming
into airports or ports of travel:
Persons may lose the protection of the search and seizure clause by exposure of their
persons or property to the public in a manner reflecting a lack of subjective expectation of
privacy, which expectation society is prepared to recognize as reasonable. Such
recognition is implicit in airport security procedures. With increased concern over airplane
hijacking and terrorism has come increased security at the nation’s airports. Passengers
attempting to board an aircraft routinely pass through metal detectors; their carry-on
baggage as well as checked luggage are routinely subjected to x-ray scans. Should these
procedures suggest the presence of suspicious objects, physical searches are conducted to
determine what the objects are. There is little question that such searches are reasonable,
given their minimal intrusiveness, the gravity of the safety interests involved, and the
reduced privacy expectations associated with airline travel. Indeed, travelers are often
notified through airport public address systems, signs and notices in their airline tickets
that they are subject to search and, if any prohibited materials or substances are found,
such would be subject to seizure. These announcements place passengers on notice that
ordinary constitutional protections against warrantless searches and seizures do not apply
to routine airport procedures.131 (Emphasis supplied, citations omitted)
This rationale was reiterated more recently in Sales v. People.132 This court in Sales upheld the
validity of the search
_______________
130 Id., at pp. 56-57.
131 Id., at pp. 53-54.
132 G.R. No. 191023, February 6, 2013, 690 SCRA 141 [Per J. Villarama, Jr., First Division].
64
conducted as part of the routine security check at the old Manila Domestic Airport — now
Terminal 1 of the Ninoy Aquino International Airport.133
Port authorities were acting within their duties and functions when it used x-ray scanning
machines for inspection of passengers’ bags.134 When the results of the x-ray scan revealed the
existence of firearms in the bag, the port authorities had probable cause to conduct a search of
petitioner’s bag. Notably, petitioner did not contest the results of the x-ray scan.
IV
Was the search rendered unreasonable at the second point of intrusion — when the baggage
inspector opened petitioner’s bag and called the attention of the port police officer?
We rule in the negative.
The port personnel’s actions proceed from the authority and policy to ensure the safety of
travelers and vehicles
_______________
133 Id., at pp. 145 and 152.
134 Police authority has been delegated to different government agencies and instrumentalities
through law. See Tariff Code, Sec. 2203; Pres. Decree No. 1716-A (1980), entitled Further
Amending Presidential Decree No. 66 dated November 20, 1972, Creating the Export Processing
Zone Authority, Sec. 7; and Exec. Order No. 903 (1983), entitled Providing for a Revision of
Executive Order No. 778 Creating the Manila International Airport Authority, Transferring
Existing Assets of the Manila International Airport to the Authority, and Vesting the Authority
with Power to Administer and Operate the Manila International Airport. See also Salvador v.
People, 502 Phil. 60; 463 SCRA 489 (2005) [Per J. Sandoval-Gutierrez, Third Division]; Pacis
v. Pamaran, 155 Phil. 17; 56 SCRA 16 (1974) [Per J. Fernando, Second Division]; Manikad v.
Tanodbayan, 212 Phil. 669; 127 SCRA 724 (1984) [Per J. Escolin, En Banc]; and Manila
International Airport Authority v. Court of Appeals, 528 Phil. 181; 495 SCRA 591 (2006) [Per J.
Carpio, En Banc].
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within the port. At this point, petitioner already submitted himself and his belongings to
inspection by placing his bag in the x-ray scanning machine.
The presentation of petitioner’s bag for x-ray scanning was voluntary. Petitioner had the choice
of whether to present the bag or not. He had the option not to travel if he did not want his bag
scanned or inspected. X-ray machine scanning and actual inspection upon showing of probable
cause that a crime is being or has been committed are part of reasonable security regulations to
safeguard the passengers passing through ports or terminals. Probable cause is:
reasonable ground of suspicion supported by circumstances sufficiently strong in
themselves to induce a cautious man to believe that the person accused is guilty of the
offense charged. It refers to the existence of such facts and circumstances that can lead a
reasonably discreet and prudent man to believe that an offense has been committed, and
that the items, articles or objects sought in connection with said offense or subject to
seizure and destruction by law are in the place to be searched.135
It is not too burdensome to be considered as an affront to an ordinary person’s right to travel if

weighed against the safety of all passengers and the security in the port facility.
As one philosopher said, the balance between authority and an individual’s liberty may be
confined within the harm that the individual may cause others. John Stuart Mill’s “harm
principle” provides:
[T]he sole end for which mankind are warranted, individually or collectively, in interfering
with the liberty of
_______________
135 People v. Mariacos, 635 Phil. 315, 329; 621 SCRA 327, 341 (2010) [Per J. Nachura,
Second Division], citing People v. Aruta, 351 Phil. 868, 880; 288 SCRA 626, 638 (1998) [Per J.
Romero, Third Division], citing in turn People v. Encinada, 345 Phil. 301, 317; 280 SCRA 72,
85-86 (1997) [Per J. Panganiban, Third Division].
66

action of any of their number, is self-protection. That the only purpose for which power
can be rightfully exercised over any member of a civilized community, against his will, is
to prevent harm to others. His own good, either physical or moral, is not a sufficient
warrant. He cannot rightfully be compelled to do or forbear because it will be better for
him to do so, because it will make him happier, because, in the opinions of others, to do so
would be wise, or even right. These are good reasons for remonstrating with him, or
reasoning with him, or persuading him, or entreating him, but not for compelling him, or
visiting him with any evil in case he do otherwise. To justify that, the conduct from which
it is desired to deter him must be calculated to produce evil to someone else. The only part
of the conduct of any one, for which he is amenable to society, is that which concerns
others. In the part which merely concerns himself, his independence is, of right, absolute.
Over himself, over his own body and mind, the individual is sovereign.136
Any perceived curtailment of liberty due to the presentation of person and effects for port
security measures is a permissible intrusion to privacy when measured against the possible harm
to society caused by lawless persons.
A third point of intrusion to petitioner’s right to privacy occurred during petitioner’s submission
to port security measures. This court should determine whether the requirements for a valid
waiver against unreasonable searches and seizures were met.
After detection of the firearms through the x-ray scanning machine and inspection by the
baggage inspector, Officer Abregana was called to inspect petitioner’s bag.
_______________
136 John Stuart Mill, On Liberty <https://www.gutenberg.org/files/34901/34901-h/34901-

h.htm> (visited September 1, 2015).
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The Constitution safeguards a person’s right against unreasonable searches and seizures.137 A
warrantless search is presumed to be unreasonable.138 However, this court lays down the
exceptions where warrantless searches are deemed legitimate: (1) warrantless search incidental
to a lawful arrest; (2) seizure in “plain view”; (3) search of a moving vehicle; (4) consented
warrantless search; (5) customs search; (6) stop and frisk; and (7) exigent and emergency
circumstances.139
In Caballes v. Court of Appeals:140
In case of consented searches or waiver of the constitutional guarantee against obtrusive

searches, it is fundamental that to constitute a waiver, it must first appear that (1) the right
exists; (2) that the person involved had knowledge, either actual or constructive, of the
existence of such right; and (3) the said person had an actual intention to relinquish the
right.141
_______________
137 Const., Art. III, Sec. 2 provides:
SECTION 2. The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly describing the place to be
searched and the persons or things to be seized.
138 See People v. Aruta, supra note 135.
139 See People v. Cogaed, G.R. No. 200334, July 30, 2014, 731 SCRA 427, 440-441 [Per J.
Leonen, Third Division]. See also Villanueva v. People, G.R. No. 199042, November 17, 2014,
740 SCRA 456, 463 [Per CJ. Sereno, First Division].
140 424 Phil. 263; 373 SCRA 221 (2002) [Per J. Puno, First Division].
141 Id., at p. 289; p. 242. See People v. Figueroa, 390 Phil. 561; 335 SCRA 249 (2000) [Per CJ.
Davide, First Division].
68
Petitioner anchors his case on the claim that he did not validly consent to the search conducted
by the port authorities. He argues that he did not have an actual intention to relinquish his right
against a warrantless search.
In cases involving the waiver of the right against unreasonable searches and seizures, events
must be weighed in its entirety. The trial court’s findings show that petitioner presented his bag
for scanning in the x-ray machine.142 When his bag went through the x-ray machine and the
firearms were detected, he voluntarily submitted his bag for inspection to the port authorities:
Prosecutor Narido:
Q. What did he tell you?
A. I asked him if I can check his bag?
Q. What was his response?
A. He consented and cooperated. I checked the bag.143
It was after the port personnel’s inspection that Officer Abregana’s attention was called and the
bag was inspected anew with petitioner’s consent.144
“[A]ppellate courts accord the highest respect to the assessment of witnesses’ credibility by the
trial court, because the latter was in a better position to observe their demeanor and deportment
on the witness stand.”145 We do not find anything erroneous as to the findings of fact of both the
trial court and the Court of Appeals.
There was probable cause that petitioner was committing a crime leading to the search of his
personal effects. As the trial court found:
_______________
142 Rollo, pp. 26-28, Regional Trial Court’s Consolidated Judgment.
143 Id., at p. 28.
144 Id., at pp. 25-27.
145 People v. Lacerna, 344 Phil. 100, 124; 278 SCRA 561, 582 (1997) [Per J. Panganiban,
Third Division].
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Given the circumstances obtaining here, the court finds the search conducted by the port
authorities reasonable and, therefore, not violative of the accused’s constitutional rights.
Hence, when the search of the bag of the accused revealed the firearms and ammunitions,
accused is deemed to have been caught in flagrante delicto, justifying his arrest even
without a warrant under Section 5(a), Rule 113 of the Rules of Criminal Procedure. The
firearms and ammunitions obtained in the course of such valid search are thus admissible
as evidence against [the] accused.146
Similar to the accused in People v. Kagui Malasugui147 and People v. Omaweng148 who
permitted authorities to search their persons and premises without a warrant, petitioner is now
precluded from claiming an invalid warrantless search when he voluntarily submitted to the
search on his person. In addition, petitioner’s consent to the search at the domestic port was not
given under intimidating or coercive circumstances.149
This case should be differentiated from that of Aniag, Jr. v. Commission on Elections,150 which
involved the search of a moving vehicle at a checkpoint.151 In that case, there was no implied
acquiescence to the search since the checkpoint set up by the police authorities was conducted
without proper consultation, and it left motorists without any choice except to subject themselves
to the checkpoint:
_______________
147 63 Phil. 221 (1936) [Per J. Diaz, En Banc], citing Cooley, Thomas, Constitutional
Limitations, Vol. I, p. 631 (8th ed.).
148 G.R. No. 99050, September 2, 1992, 213 SCRA 462, 470-471 [Per J. Davide, Jr., Third
Division].
149 See Caballes v. Court of Appeals, supra note 140 at p. 289; p. 242.
150 G.R. No. 104961, October 7, 1994, 237 SCRA 424 [Per J. Bellosillo, En Banc].
151 Id., at p. 429.
70
It may be argued that the seeming acquiescence of Arellano to the search constitutes an
implied waiver of petitioner’s right to question the reasonableness of the search of the
vehicle and the seizure of the firearms.
While Resolution No. 2327 authorized the setting up of checkpoints, it however stressed
that “guidelines shall be made to ensure that no infringement of civil and political rights
results from the implementation of this authority,” and that “the places and manner of
setting up of checkpoints shall be determined in consultation with the Committee on
Firearms Ban and Security Personnel created under Sec. 5, Resolution No. 2323.” The
facts show that PNP installed the checkpoint at about five o’clock in the afternoon of 13
January 1992. The search was made soon thereafter, or thirty minutes later. It was not
shown that news of impending checkpoints without necessarily giving their locations, and
the reason for the same have been announced in the media to forewarn the citizens. Nor
did the informal checkpoint that afternoon carry signs informing the public of the purpose
of its operation. As a result, motorists passing that place did not have any inkling
whatsoever about the reason behind the instant exercise. With the authorities in control to
stop and search passing vehicles, the motorists did not have any choice but to submit to
the PNP’s scrutiny. Otherwise, any attempt to turnabout albeit innocent would raise
suspicion and provide probable cause for the police to arrest the motorist and to conduct
an extensive search of his vehicle.
In the case of petitioner, only his driver was at the car at that time it was stopped for
inspection. As conceded by COMELEC, driver Arellano did not know the purpose of the
checkpoint. In the face of fourteen (14) armed policemen conducting the operation, driver
Arellano being alone and a mere employee of petitioner could not have marshalled the
strength and the courage to protest against the extensive search conducted in the vehicle.
In such scenario, the “implied acquiescence,” if there was any, could not be more than a
mere passive conformity on Arellano’s part to the search, and “consent” given under
intimidating or coercive circumstances is no consent
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VOL. 779, JANUARY 11, 2016 71
within the purview of the constitutional guaranty.152 (Emphasis supplied, citations

omitted)
We also cannot subscribe to petitioner’s argument that there was no valid consent to the search
because his consent was premised on his belief that there were no prohibited items in his bag.
The defendant’s belief that no incriminating evidence would be found does not automatically
negate valid consent to the search when incriminating items are found. His or her belief must be
measured against the totality of the circumstances.153 Again, petitioner voluntarily submitted
himself to port security measures and, as he claimed during trial, he was familiar with the
security measures since he had been traveling back and forth through the sea port.
Consequently, we find respondent’s argument that the present petition falls under a valid
consented search and during routine port security procedures meritorious. The search conducted
on petitioner’s bag is valid.
VI
The consented search conducted on petitioner’s bag is different from a customs search.
Customs searches, as exception to the requirement of a valid search warrant, are allowed when
“persons exercising police authority under the customs law . . . effect search and seizure . . . in
the enforcement of customs laws.”154 The Tariff and Customs Code provides the authority for
such warrantless search, as this court ruled in Papa, et al. v. Mago, et al.:155
_______________
152 Id., at pp. 436-437.
153 See Caballes v. Court of Appeals, supra note 140 at p. 286; pp. 239-240.
154 Papa v. Mago, 130 Phil. 886, 902; 22 SCRA 857, 870 (1968) [Per J. Zaldivar, En Banc].
155 Id.
72

The Code authorizes persons having police authority under Section 2203 of the Tariff and
Customs Code to enter, pass through or search any land, inclosure, warehouse, store or
building, not being a dwelling house; and also to inspect, search and examine any vessel or
aircraft and any trunk, package, box or envelope or any person onboard, or stop and search
and examine any vehicle, beast or person suspected of holding or conveying any dutiable
or prohibited article introduced into the Philippines contrary to law, without mentioning
the need of a search warrant in said cases.156 (Citation omitted)
The ruling in Papa was echoed in Salvador v. People,157 in that the state’s policy to combat
smuggling must not lose to the difficulties posed by the debate on whether the state has the duty
to accord constitutional protection to dutiable articles on which duty has not been paid, as with a
person’s papers and/or effects.158
Hence, to be a valid customs search, the requirements are: (1) the person/s conducting the search
was/were exercising police authority under customs law; (2) the search was for the enforcement
of customs law; and (3) the place searched is not a dwelling place or house. Here, the facts reveal
that the search was part of routine port security measures. The search was not conducted by
persons authorized under customs law. It was also not motivated by the provisions of the Tariff
and Customs Code or other customs laws. Although customs searches usually occur within ports
or terminals, it is important that the search must be for the enforcement of customs laws.
_______________
156 Id., at pp. 901-902; p. 872.
157 Salvador v. People, supra note 134.
158 Id., at p. 72; p. 500.
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VII
In violations of the Gun Ban, the accused must be “in possession of a firearm . . . outside of his
residence within the period of the election gun ban imposed by the COMELEC sans
authority[.]”159
In Abenes v. Court of Appeals,160 this court enumerated the elements for a violation of the Gun
Ban: “1) the person is bearing, carrying, or transporting firearms or other deadly weapons; 2)
such possession occurs during the election period; and 3) the weapon is carried in a public
place.”161 This court also ruled that under the Omnibus Election Code, the burden to show that
he or she has a written authority to possess a firearm is on the accused.162
We find that the prosecution was able to establish all the requisites for violation of the Gun Ban.
The firearms were found inside petitioner’s bag. Petitioner did not present any
_______________
159 See Escalante v. People, G.R. No. 192727, January 9, 2013, 688 SCRA 362, 373 [Per J.
Reyes, First Division].
160 544 Phil. 614; 515 SCRA 690 (2007) [Per J. Austria-Martinez, Third Division]. In this case,
the accused was convicted of violating the Gun Ban but was acquitted of violating Presidential
Decree No. 1866. (Id., at p. 634; p. 707); This court held: “While the prosecution was able to
establish the fact that the subject firearm was seized by the police from the possession of the
petitioner, without the latter being able to present any license or permit to possess the same, such
fact alone is not conclusive proof that he was not lawfully authorized to carry such firearm. In
other words, such fact does not relieve the prosecution from its duty to establish the lack of a
license or permit to carry the firearm by clear and convincing evidence, like a certification from
the government agency concerned.” (Id., at p. 631; pp. 704-705)
161 Id., at p. 633; p. 706. Abenes involved the Commission on Elections’ imposed Gun Ban
through Rep. Act No. 7166 (1991), Sec. 32, which is substantially the same with COMELEC
Resolution No. 7764 (2006), Sec. 2, in relation to Batas Pambansa Blg. 881 (1985), Sec. 261.
162 Id., at p. 632; p. 706.
74

valid authorization to carry the firearms outside his residence during the period designated by the
Commission on Elections. He was carrying the firearms in the Cebu Domestic Port, which was a
public place.
However, petitioner raised the following circumstances in his defense: (1) that he was a frequent
traveler and was, thus, knowledgeable about the security measures at the terminal; (2) that he left
his bag with a porter for a certain amount of time; and (3) that he voluntarily put his bag on the
x-ray machine for voluntary inspection. All these circumstances were left uncontested by the
prosecution.
This court is now asked to determine whether these circumstances are sufficient to raise
reasonable doubt on petitioner’s guilt.
When petitioner claimed that someone planted the illegal firearms in his bag, the burden of
evidence to prove this allegation shifted to him. The shift in the burden of evidence does not
equate to the reversal of the presumption of innocence. In People v. Villanueva,163 this court
discussed the difference between burden of proof and burden of evidence, and when the burden
of evidence shifts to the accused:
Indeed, in criminal cases, the prosecution bears the onus to prove beyond reasonable doubt not
only the commission of the crime but likewise to establish, with the same quantum of proof, the
identity of the person or persons responsible therefor. This burden of proof does not shift to the
defense but remains in the prosecution throughout the trial. However, when the prosecution has
succeeded in discharging the burden of proof by presenting evidence sufficient to convince the
court of the truth of the allegations in the information or has established a prima facie case
against the accused, the burden of evidence shifts to the accused making it incumbent upon him
to adduce evidence in order to meet and nullify, if not to
_______________
163 536 Phil. 998; 506 SCRA 280 (2006) [Per J. Ynares-Santiago, First Division].
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VOL. 779, JANUARY 11, 2016 75
overthrow, that prima facie case.164 (Emphasis supplied, citation omitted)
Petitioner failed to negate the prosecution’s evidence that he had animus possidendi or the intent
to possess the illegal firearms. In People v. De Gracia,165 this court elucidated on the concept of
animus possidendi and the importance of the intent to commit an act prohibited by law as
differentiated from criminal intent.166 The accused was charged with the qualified offense of
illegal possession of firearms in furtherance of rebellion under Presidential Decree No. 1866
resulting from the coup d’état staged in 1989 by the Reform Armed Forces Movement-Soldiers
of the Filipino People.167 This court held that the actions of the accused established his intent to
possess the illegal firearms:
When the crime is punished by a special law, as a rule, intent to commit the crime is not
necessary. It is sufficient that the offender has the intent to perpetrate the act prohibited by
the special law. Intent to commit the crime and intent to perpetrate the act must be
distinguished. A person may not have consciously intended to commit a crime; but he did
intend to commit an act, and that act is, by the very nature of things, the crime itself. In the
first (intent to commit the crime), there must be criminal intent; in the second (intent to
perpetrate the act) it is enough that the prohibited act is done freely and consciously.
In the present case, a distinction should be made between criminal intent and intent to
possess. While mere possession, without criminal intent, is sufficient to convict a person
for illegal possession of a firearm, it must still be shown that there was animus possidendi
or an in-
_______________
164 Id., at pp. 1003-1004; pp. 286-287.
165 G.R. Nos. 102009-10, July 6, 1994, 233 SCRA 716 [Per J. Regalado, Second Division].
166 Id., at pp. 726-727.
167 Id., at pp. 720-721.
76
tent to possess on the part of the accused. Such intent to possess is, however, without
regard to any other criminal or felonious intent which the accused may have harbored in
possessing the firearm. Criminal intent here refers to the intention of the accused to
commit an offense with the use of an unlicensed firearm. This is not important in
convicting a person under Presidential Decree No. 1866. Hence, in order that one may be
found guilty of a violation of the decree, it is sufficient that the accused had no authority
or license to possess a firearm, and that he intended to possess the same, even if such
possession was made in good faith and without criminal intent.
Concomitantly, a temporary, incidental, casual, or harmless possession or control of a

firearm cannot be considered a violation of a statute prohibiting the possession of this kind
of weapon, such as Presidential Decree No. 1866. Thus, although there is physical or
constructive possession, for as long as the animus possidendi is absent, there is no offense
committed.
Coming now to the case before us, there is no doubt in our minds that appellant De Gracia
is indeed guilty of having intentionally possessed several firearms, explosives and
ammunition without the requisite license or authority therefor. Prosecution witness Sgt.
Oscar Abenia categorically testified that he was the first one to enter the Eurocar Sales
Office when the military operatives raided the same, and he saw De Gracia standing in the
room and holding the several explosives marked in evidence as Exhibits D to D-4. At first,
appellant denied any knowledge about the explosives. Then, he alternatively contended
that his act of guarding the explosives for and in behalf of Col. Matillano does not
constitute illegal possession thereof because there was no intent on his part to possess the
same, since he was merely employed as an errand boy of Col. Matillano. His pretension of
impersonal or indifferent material possession does not and cannot inspire credence.
Animus possidendi is a state of mind which may be determined on a case to case basis,
taking into consideration the prior and coetaneous acts of the accused and the
77
VOL. 779, JANUARY 11, 2016 77
surrounding circumstances. What exists in the realm of thought is often disclosed in the
range of action. It is not controverted that appellant De Gracia is a former soldier, having
served with the Philippine Constabulary prior to his separation from the service for going
on absence without leave (AWOL). We do not hesitate, therefore, to believe and conclude
that he is familiar with and knowledgeable about the dynamites, “molotov” bombs, and
various kinds of ammunition which were confiscated by the military from his possession.
As a former soldier, it would be absurd for him not to know anything about the dangerous
uses and power of these weapons. A fortiori, he cannot feign ignorance on the import of
having in his possession such a large quantity of explosives and ammunition. Furthermore,
the place where the explosives were found is not a military camp or office, nor one where
such items can ordinarily but lawfully be stored, as in a gun store, an arsenal or armory.
Even an ordinarily prudent man would be put on guard and be suspicious if he finds
articles of this nature in a place intended to carry out the business of selling cars and which
has nothing to do at all, directly or indirectly, with the trade of firearms and
ammunition.168 (Emphasis supplied, citations omitted)
The disquisition in De Gracia on the distinction between criminal intent and intent to possess,
which is relevant to convictions for illegal possession of firearms, was reiterated in Del Rosario
v. People.169 This court ruled that “[i]n the absence of animus possidendi, the possessor of a
firearm incurs no criminal liability.”170
In this case, petitioner failed to prove that his possession of the illegal firearms seized from his
bag was “temporary, incidental, casual, or harmless possession[.]”171 As put by the trial
_______________
168 Id., at pp. 726-728.
169 Del Rosario v. People, 410 Phil. 642, 664; 358 SCRA 373, 393-394 (2001) [Per J. Pardo,
First Division].
170 Id.
171 People v. De Gracia, supra note 165 at p. 727.
78
court, petitioner’s claim that anyone could have planted the firearms in his bag while it was
unattended is flimsy.172 There are dire consequences in accepting this claim at face value,
particularly that no one will be caught and convicted of illegal possession of firearms.
Courts must also weigh the accused’s claim against the totality of the evidence presented by the
prosecution. This includes determination of: (1) the motive of whoever allegedly planted the
illegal firearm(s); (2) whether there was opportunity to plant the illegal firearm(s); and (3)
reasonableness of the situation creating the opportunity.
Petitioner merely claims that someone must have planted the firearms when he left his bag with
the porter. He did not identify who this person could have been and he did not state any motive
for this person to plant the firearms in his possession, even if there was indeed an opportunity to
plant the firearms.
However, this court is mindful that, owing to the nature of his work, petitioner was a frequent
traveler who is well-versed with port security measures. We cannot accept that an average
reasonable person aware of travel security measures would leave his belongings with a stranger
for a relatively long period of time. Also, records show that petitioner had only one (1) bag.
There was no evidence to show that a robust young man like petitioner would have need of the
porter’s services. The defense did not identify nor present this porter with whom petitioner left
his bag.
VIII
The trial court was correct when it dismissed Criminal Case No. CBU-80084 for violation of
Republic Act No. 8294, otherwise known as illegal possession of firearms. Section 1 of Republic
Act No. 8294 provides:
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VOL. 779, JANUARY 11, 2016 79
SECTION 1. Section 1 of Presidential Decree No. 1866, as amended, is hereby further

amended to read as follows:
SECTION 1. Unlawful Manufacture, Sale, Acquisition, Disposition or Possession

of Firearms or Ammunition or Instruments Used or Intended to be Used in the
Manufacture of Firearms or Ammunition.—The penalty of prisión correccional in
its maximum period and a fine of not less than Fifteen thousand pesos (P15,000)
shall be imposed upon any person who shall unlawfully manufacture, deal in,
acquire, dispose, or possess any low powered firearm, such as rimfire handgun, .380
or .32 and other firearm of similar firepower, part of firearm, ammunition, or
machinery, tool or instrument used or intended to be used in the manufacture of any
firearm or ammunition: Provided, That no other crime was committed. (Emphasis
supplied)
Agote v. Judge Lorenzo173 already settled the question of whether there can be a “separate
offense of illegal possession of firearms and ammunition if there is another crime
committed[.]”174 In that case, the petitioner was charged with both illegal possession of firearms
and violation of the Gun Ban under Commission on Elections Resolution No. 2826.175 This
court acquitted petitioner in the case for illegal possession of firearms since he simultaneously
violated the Gun Ban.176 This court also held that the unlicensed firearm need not be actually
used in the course of committing the other crime for the application of Section 1 of Republic Act
No. 8294.177
Similarly, Madrigal v. People178 applied the ruling in Agote and held that Section 1 of Republic
Act No. 8294 is express in
_______________
173 502 Phil. 318; 464 SCRA 60 (2005) [Per J. Garcia, En Banc].
174 Id., at p. 332; p. 74.
175 Id., at pp. 323-324; p. 74.
176 Id., at p. 335; p. 75.
177 Id., at pp. 331-334; p. 76.
178 584 Phil. 241; 562 SCRA 246 (2008) [Per J. Corona, First Division].
80
its terms that a person may not be convicted for illegal possession of firearms if another crime
was committed.179
IX
We note that the trial court imposed the penalty of imprisonment for a period of one (1) year and
to suffer disqualification to hold public office and deprivation of the right to suffrage. Under
Section 264 of Batas Pambansa Blg. 881, persons found guilty of an election offense “shall be
punished with imprisonment of not less than one year but not more than six years and shall not
be subject to probation.”180 The Indeterminate Sentence Law applies to offenses punished by
both the Revised Penal Code and special laws.181
The penalty to be imposed is a matter of law that courts must follow. The trial court should have
provided minimum and maximum terms for petitioner’s penalty of imprisonment
_______________
179 Id., at p. 245; p. 249.
180 Batas Pambansa Blg. 881 (1985), Sec. 264 provides:
SECTION 264. Penalties.—Any person found guilty of any election offense under this Code
shall be punished with imprisonment of not less than one year but not more than six years and
shall not be subject to probation. In addition, the guilty party shall be sentenced to suffer
disqualification to hold public office and deprivation of the right of suffrage. If he is a foreigner,
he shall be sentenced to deportation which shall be enforced after the prison term has been
served. Any political party found guilty shall be sentenced to pay a fine of not less than ten
thousand pesos, which shall be imposed upon such party after criminal action has been instituted
in which their corresponding officials have been found guilty.
181 See Uriarte v. People, 540 Phil. 477, 501; 511 SCRA 471, 495 (2006) [Per J. Callejo, Sr.,
First Division] and People v. Simon, G.R. No. 93028, July 29, 1994, 234 SCRA 555, 579-581
[Per J. Regalado, En Banc].
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VOL. 779, JANUARY 11, 2016 81

as required by the Indeterminate Sentence Law.182 Accordingly, we modify the penalty imposed
by the trial court. Based on the facts, we deem it reasonable that petitioner be penalized with
imprisonment of one (1) year as minimum to two (2) years as maximum.183
The records are unclear whether petitioner is currently detained by the state or is out on bail.
Petitioner’s detention is relevant in determining whether he has already served more than the
penalty imposed upon him by the trial court as modified by this court, or whether he is qualified
to the credit of his preventive imprisonment with his service of sentence.
Article 29184 of the Revised Penal Code states:
_______________
182 Act No. 4103 (1933), Sec. 1, as amended by Act No. 4225 (1935), Sec. 1, provides:
SEC. 1. Hereafter, in imposing a prison sentence for an offense punished by the Revised Penal
Code, or its amendments, the court shall sentence the accused to an indeterminate sentence the
maximum term of which shall be that which, in view of the attending circumstances, could be
properly imposed under the rules of the said Code, and to a minimum which shall be within the
range of the penalty next lower to that prescribed by the Code for the offense; and if the offense
is punished by any other law, the court shall sentence the accused to an indeterminate sentence,
the maximum term of which shall not exceed the maximum fixed by said law and the minimum
shall not be less than the minimum term prescribed by the same. See Escalante v. People, supra
note 159.
183 In Abenes v. Court of Appeals, supra note 160 at p. 634; p. 707, this court imposed the
indeterminate sentence of one (1) year of imprisonment as minimum to two (2) years of
imprisonment as maximum. In Madrigal v. People, supra note 178 at p. 245; pp. 249-250, the
accused was “sentenced to suffer the indeterminate penalty of imprisonment from one year as
minimum to three years as maximum[.]”
184 As amended by Rep. Act No. 10592 (2012), Sec. 1.
82
ART. 29. Period of preventive imprisonment deducted from term of imprisonment.—

Offenders or accused who have undergone preventive imprisonment shall be credited in
the service of their sentence consisting of deprivation of liberty, with the full time during
which they have undergone preventive imprisonment if the detention prisoner agrees
voluntarily in writing after being informed of the effects thereof and with the assistance of
counsel to abide by the same disciplinary rules imposed upon convicted prisoners, except
in the following cases:
1. When they are recidivists, or have been convicted previously twice or more
times of any crime; and
2. When upon being summoned for the execution of their sentence they have
failed to surrender voluntarily.
If the detention prisoner does not agree to abide by the same disciplinary rules imposed
upon convicted prisoners, he shall do so in writing with the assistance of a counsel and
shall be credited in the service of his sentence with four-fifths of the time during which he
has undergone preventive imprisonment.
Credit for preventive imprisonment for the penalty of reclusion perpetua shall be deducted
from thirty (30) years.
Whenever an accused has undergone preventive imprisonment for a period equal to the
possible maximum imprisonment of the offense charged to which he may be sentenced and
his case is not yet terminated, he shall be released immediately without prejudice to the
continuation of the trial thereof or the proceeding on appeal, if the same is under review.
Computation of preventive imprisonment for purposes of immediate release under this
paragraph shall be the actual period of detention with good conduct time allowance:
Provided, however, That if the accused is absent without justifiable cause at any stage of
the trial, the court may motu proprio order the rearrest of the accused: Provided, finally,
That recidivists, habitual delinquents, escapees and persons charged with heinous crimes
are excluded from the coverage of this Act. In case the maximum penalty to which the
accused may be sentenced
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VOL. 779, JANUARY 11, 2016 83
is lestierro [sic], he shall be released after thirty (30) days of preventive imprisonment.
In case credit of preventive imprisonment is due, petitioner must first signify his agreement to
the conditions set forth in Article 29 of the Revised Penal Code.185 If petitioner has already
served more than the penalty imposed upon him by the trial court, then his immediate release
from custody is in order unless detained for some other lawful cause.186
WHEREFORE, the Petition is DENIED. The Court of Appeals’ Decision dated September 8,
2012 and the Resolution dated August 23, 2013 in C.A.-G.R. CEB CR No. 01606 are
AFFIRMED with MODIFICATIONS. Petitioner Erwin Libo-on Dela Cruz is sentenced to
imprisonment of one (1) year as minimum to two (2) years as maximum in accordance with the
Indeterminate Sentence Law. The period of his preventive imprisonment shall be credited in his
favor if he has given his written conformity to abide by the disciplinary rules imposed upon
convicted prisoners in accordance with Article 29 of the Revised Penal Code, as amended, and if
he is not out on bail.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ., concur.
Petition denied, judgment and resolution affirmed with modifications.
Notes.—In lawful arrests, it becomes both the duty and the right of the apprehending officers to
conduct warrantless search not only on the person of the suspect, but also in the permissible area
within the latter’s reach. (People vs. Uyboco, 640 SCRA 146 [2011])
_______________
185 People v. Oloverio, G.R. No. 211159, March 28, 2015, 754 SCRA 1, 27-28 [Per J. Leonen,
Second Division].
186 Agote v. Lorenzo, supra note 173 at p. 335; p. 77.

84
What constitutes a reasonable or unreasonable warrantless search or seizure is purely a judicial

question, determinable from the uniqueness of the circumstances involved, including the purpose
of the search or seizure, the presence or absence of probable cause, the manner in which the
search and seizure was made, the place or thing searched, and the character of the articles
procured. (Miclat, Jr. vs. People, 656 SCRA 539 [2011])
——o0o——
G.R. No. 197825. January 11, 2016.*
CAMILO SIBAL, petitioner, vs. PEDRO BUQUEL, SANTIAGO BUQUEL, JR., ROSALINDA
BUQUEL, represented by FRANCISCO BUQUEL, respondents.
Remedial Law; Civil Procedure; Annulment of Judgments; A petition for annulment of judgment
is a remedy in equity so exceptional in nature that it may be availed of only if the judgment, final
order, or final resolution sought to be annulled was rendered by a court lacking jurisdiction or
through extrinsic fraud, and only when other remedies are wanting.—A petition for annulment of
judgment is a remedy in equity so exceptional in nature that it may be availed of only if the
judgment, final order, or final resolution sought to be annulled was rendered by a court lacking
jurisdiction or through extrinsic fraud, and only when other remedies are wanting. In the present
case, Sibal was able to avail of other remedies when he filed before the RTC a motion to quash
the writ of execution and a motion to annul judgment.
Same; Same; Same; Extrinsic Fraud; As a ground for annulment of judgment, extrinsic fraud
must arise from an act of the adverse party, and the fraud must be of such nature as to have
deprived the petitioner of its day in court.—It must be emphasized that not every kind of fraud
justifies the action of annulment of judgment. Only extrinsic fraud does. According to Cosmic
Lumber Corporation v. Court of Appeals, 265 SCRA 168 (1996), fraud is extrinsic when the
unsuccessful party has been prevented from fully exhibiting his case, by fraud or deception
practiced on him by his opponent, as by keeping him away from court, a false promise of a
compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by
the acts of the plaintiff; or where an attorney fraudulently or without authority connives at his
defeat; these and similar cases which show that there has never been a real contest in the trial or
hearing of the case are reasons for which a new suit may be sustained to set aside and annul the
former judgment and open the case for a new and fair hearing. As a ground for annulment of
judg-
_______________
* THIRD DIVISION.
518
Sibal vs. Buquel
ment, extrinsic fraud must arise from an act of the adverse party, and the fraud must be of such
nature as to have deprived the petitioner of its day in court. The fraud is not extrinsic if the act
was committed by the petitioner’s own counsel.
Same; Same; Same; Same; Even in the presence of fraud, annulment will not lie unless the fraud
is committed by the adverse party, not by one’s own lawyer.—What is certain, for purposes of
application of Rule 47, is that mistake and gross negligence cannot be equated to the extrinsic
fraud under Rule 47. By its very nature, extrinsic fraud relates to a cause that is collateral in
character, i.e., it relates to any fraudulent act of the prevailing party in litigation which is
committed outside of the trial of the case, where the defeated party has been prevented from
presenting fully his side of the cause, by fraud or deception practiced on him by his opponent.
And even in the presence of fraud, annulment will not lie unless the fraud is committed by the
adverse party, not by one’s own lawyer. In the latter case, the remedy of the client is to proceed
against his own lawyer and not to relitigate the case where judgment had been rendered.
Melchor A. Battung for petitioner.
Carmelo O. Villacete for respondents.
PERALTA, J.:
Before the Court is a Petition for Review under Rule 45 of the Rules of Court which petitioner
Camilo Sibal filed, assailing the Decision1 of the Court of Appeals (CA), dated March 16, 2011,
and its Resolution2 dated July 7, 2011 in C.A.-G.R. S.P.
_______________
1 Penned by Associate Justice Sesinando E. Villon, with Associate Justices Andres B. Reyes, Jr.
(now Presiding Justice) and Elihu A. Ybañez, concurring; Rollo, pp. 84-97.
2 Id., at p. 109.
519
VOL. 778, JANUARY 11, 2016 519
Sibal vs. Buquel
No. 104774. The CA affirmed the Decision3 of the Regional Trial Court (RTC) of Tuguegarao
City, Cagayan, Branch 02, dated January 5, 2007, in Civil Case No. 6429.
The facts, as gathered from the records, are as follows:
Respondents Pedro Buquel, Santiago Buquel, Jr., Rosalinda Buquel and Francisco Buquel
inherited from their parents, Santiago Buquel, Sr. and Faustina Buquel, a parcel of land
consisting of 81,022 sq. m. covered by Original Certificate of Title No. O-725. Sometime in
January 1999, petitioner Camilo Sibal and Tobi Mangoba took possession of a portion of the
property which belonged to Santiago, Sr. Thereafter, the Buquels made several demands against
Sibal and Mangoba for them to vacate and turn over the property, but the latter refused to do so.
Hence, they filed a complaint before the Tuguegarao RTC for recovery of possession and
damages.
On January 5, 2007, the Tuguegarao RTC ruled in favor of the Buquels, the decretal portion of
the Decision provides:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor
of the Plaintiffs Pedro Buquel, Santiago Buquel, Jr., Rosalinda Buquel, and Francisco
Buquel as against Defendants Camilo Sibal and Tobi Mangoba ordering:
1. The restoration to Plaintiffs of their peaceful possession of the land in question,

specifically on the share of Santiago Buquel, Jr.;
2. The Defendants to pay the plaintiffs the amount of Ten Thousand Pesos for
Attorney’s Fees; and
3. The Defendants to pay to the Plaintiffs the amount of Fifteen Thousand Pesos as
moral and actual damages.
SO ORDERED.4
_______________
3 Penned by Judge Vilma T. Pauig; id., at pp. 38-40.
4 Id., at p. 24.
520

Sibal vs. Buquel
Thereafter, said RTC Decision became final and executory; hence, the trial court issued a writ of
execution.
On August 8, 2008, Sibal filed a Petition for Annulment of the RTC Decision before the CA,
where he raised lack of jurisdiction and extrinsic fraud as grounds. On March 16, 2011, the CA
dismissed Sibal’s petition, thus:
WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack
of merit.
SO ORDERED.5
Sibal filed a Motion for Reconsideration, but the same was denied. Thus, he filed the instant
petition.
Sibal maintains that the RTC did not acquire jurisdiction over the case and that the Buquels were
guilty of extrinsic fraud.
The petition is devoid of merit.
Sibal contends that the RTC Decision should be annulled on the ground that the RTC never
acquired jurisdiction over the case as the complaint filed merely alleged that the value of the
subject property is P51,190.00, without, however, categorically mentioning its assessed value,
and only the real property tax order of payment was attached to the complaint and not the tax
declaration that would determine the assessed value of the property. But, upon review of the
records, the Court notes that the Real Property Tax Order of Payment No. 091-05713-03 dated
November 24, 2002, or “Exhibit C,” shows that the amount of P51,190.00 is truly the assessed
value of the property, which fact Sibal failed to refute.
A petition for annulment of judgment is a remedy in equity so exceptional in nature that it may
be availed of only if the judgment, final order, or final resolution sought to be annulled was
rendered by a court lacking jurisdiction or through
_______________
5 Id., at p. 97. (Emphasis on the original)

521
VOL. 778, JANUARY 11, 2016 521
Sibal vs. Buquel
extrinsic fraud, and only when other remedies are wanting.6 In the present case, Sibal was able
to avail of other remedies when he filed before the RTC a motion to quash the writ of execution
and a motion to annul judgment.
Moreover, parties aggrieved by final judgments, orders or resolutions cannot be allowed to easily
and readily abuse a petition for annulment of judgment. Thus, the Court has instituted safeguards
by limiting the grounds for annulment to lack of jurisdiction and extrinsic fraud, and by
prescribing in Section 1 of Rule 47 of the Rules of Court that the petitioner should show that the
ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no
longer available without fault on the part of the petitioner. A petition for annulment that ignores
or disregards any of the safeguards cannot prosper.7
Further, it must be emphasized that not every kind of fraud justifies the action of annulment of
judgment. Only extrinsic fraud does. According to Cosmic Lumber Corporation v. Court of
Appeals,8 fraud is extrinsic when the unsuccessful party has been prevented from fully
exhibiting his case, by fraud or deception practiced on him by his opponent, as by keeping him
away from court, a false promise of a compromise; or where the defendant never had knowledge
of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently
or without authority connives at his defeat; these and similar cases which show that there has
never been a real contest in the trial or hearing of the case are reasons for which a new suit may
be sustained to set aside and annul the former judgment and open the case for a new and fair
hearing.
_______________
6 Pinausukan Seafood House Roxas Boulevard, Inc. v. FEBTC, now BPI, G.R. No. 159926,
January 20, 2014, 714 SCRA 226, 240.
7 Id.
8 332 Phil. 948, 961-962; 265 SCRA 168, 180 (1996).

522
Sibal vs. Buquel
As a ground for annulment of judgment, extrinsic fraud must arise from an act of the adverse
party, and the fraud must be of such nature as to have deprived the petitioner of its day in court.
The fraud is not extrinsic if the act was committed by the petitioner’s own counsel.9
The case at bar is closely similar to, if not the same with the case of Pinausukan Seafood House
v. FEBTC.10 In this case, the Court noticed that the petition’s own language mentioned mistake
and gross negligence on the part of petitioner’s own counsel. The petition even suggested that the
negligence of its counsel may constitute professional misconduct. The Court then ruled that such
neglect of counsel, even if it were true, was not tantamount to extrinsic fraud because it did not
emanate from any act of FEBTC as the prevailing party, and did not occur outside the trial of the
case. What is certain, for purposes of application of Rule 47, is that mistake and gross negligence
cannot be equated to the extrinsic fraud under Rule 47. By its very nature, extrinsic fraud relates
to a cause that is collateral in character, i.e., it relates to any fraudulent act of the prevailing party
in litigation which is committed outside of the trial of the case, where the defeated party has been
prevented from presenting fully his side of the cause, by fraud or deception practiced on him by
his opponent. And even in the presence of fraud, annulment will not lie unless the fraud is
committed by the adverse party, not by one’s own lawyer. In the latter case, the remedy of the
client is to proceed against his own lawyer and not to relitigate the case where judgment had
been rendered.
Sibal asserts that the negligence of his former counsel in handling his defense during the
proceedings in Civil Case No. 6429 resulted in violation of his right to due process. He claims
that his counsel’s inexcusable negligence denied him of his day in court. However, he admitted
that he attended only
_______________
9 Supra note 6 at p. 249.
10 Id.
523
VOL. 778, JANUARY 11, 2016 523
Sibal vs. Buquel
one stage of the proceedings below, which was the preliminary conference. He was not aware of
the subsequent proceedings as he was totally dependent on his former counsel and would merely
wait for the latter to notify him if his attendance would be required. There was likewise no
indication that his counsel was in fact in cahoots with the Buquels to obtain the assailed
judgment. Sibal must therefore bear the unfortunate consequences of his actions. As a litigant, he
should not have entirely left the case in his counsel’s hands, for he had the continuing duty to
keep himself abreast of the developments, if only to protect his own interest in the litigation. He
could have discharged said duty by keeping in regular touch with his counsel, but he failed to do
so.11
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated March 16,
2011 and its Resolution dated July 7, 2011 in C.A.-G.R. S.P. No. 104774 are hereby
AFFIRMED.
SO ORDERED.
Petition denied, judgment and resolution affirmed.
Notes.—The remedy of annulment of judgment has been long authorized and sanctioned in the
Philippines. (Pinausukan Seafood House, Roxas Boulevard, Inc. vs. Far East Bank & Trust
Company, now Bank of the Philippine Islands, 714 SCRA 226 [2014])
The remedy of petition for annulment of judgment, although seen as “a last remedy,” is not an
alternative to the ordinary remedies of new trial, appeal and petition for relief. (Id.)
——o0o——
_______________
11 Id., at p. 250.
G.R. No. 171722. January 11, 2016.*
REMEDIOS PASCUAL, petitioner, vs. BENITO BURGOS, et al., respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; The Rules of Court
reqauire that only questions of law should be raised in petitions filed under Rule 45.—Review of
appeals filed before this court is “not a matter of right, but of sound judicial discretion[.]” This
court’s action is discretionary. Petitions filed “will be granted only when there are special and
important reasons[.]” This is especially applicable in this case, where the issues have been fully
ventilated before the lower courts in a number of related cases. The Rules of Court require that
only questions of law should be raised in petitions filed under Rule 45. This court is not a trier of
facts. It will not entertain questions of fact as the factual findings of the appellate courts are
“final, binding[,] or conclusive on the parties and upon this [c]ourt” when supported by
substantial evidence. Factual findings of the appellate courts will not be reviewed nor disturbed
on appeal to this court. However, these rules do admit exceptions. Over time, the exceptions to
these rules have expanded. At present, there are 10 recognized exceptions that were first listed in
Medina v. Mayor Asistio, Jr., 191 SCRA 218 (1990): (1) When the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; (2) When the inference made is
manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4)
When the judgment is based on a misapprehension of facts; (5) When the findings of fact are
conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee; (7) The findings
of the Court of Appeals are contrary to those of the trial court; (8) When the findings of fact are
conclusions without citation of specific evidence on which they are based; (9) When the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the
respondents; and (10) The finding of fact of the Court of Appeals is premised on the sup-
_______________
* SECOND DIVISION.
190
Pascual vs. Burgos
posed absence of evidence and is contradicted by the evidence on record.
Grave Abuse of Discretion; Words and Phrases; By grave abuse of discretion is meant such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.—The
Court of Appeals must have gravely abused its discretion in its appreciation of the evidence
presented by the parties and in its factual findings to warrant a review of factual issues by this
court. Grave abuse of discretion is defined, thus: By grave abuse of discretion is meant such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse
of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility and must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in
contemplation of law. Grave abuse of discretion refers not merely to palpable errors of
jurisdiction; or to violations of the Constitution, the law and jurisprudence. It refers also to cases
in which, for various reasons, there has been a gross misapprehension of facts.
Remedial Law; Civil Procedure; Courts; Court of Appeals; The Court of Appeals (CA), acting as
an appellate court, is still a trier of facts. Parties can raise questions of fact before the CA and it
will have jurisdiction to rule on these matters.—The Court of Appeals’ reversal or modification
of the factual findings of the trial court does not automatically mean that it gravely abused its
discretion. The Court of Appeals, acting as an appellate court, is still a trier of facts. Parties can
raise questions of fact before the Court of Appeals and it will have jurisdiction to rule on these
matters. Otherwise, if only questions of law are raised, the appeal should be filed directly before
this court. This is not to say that the trial court’s findings of fact, especially with regard to the
credibility of witnesses, are of little weight. The doctrine in the cases cited by petitioner, People
v. Vitancur, 345 SCRA 414 (2000) and People v. Mendez, 335 SCRA 147 (2000), is a time-
honored rule. The trial court’s findings of fact are given much weight because of the trial court
judges’ firsthand knowledge and familiarity with the disposition of the witnesses who testified
before them, and this is important in certain cases. However, this doctrine does not diminish the
Court of Appeals’ jurisdiction in reviewing the factual findings of the trial court. Further, in the
cited cases, the
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Pascual vs. Burgos
Court of Appeals did not even have the opportunity to review the factual findings of the trial
court as the case was directly elevated to this court on automatic appeal.
Wilfredo O. Arceo for petitioner.
Oliviano R. Regalado for respondent.
LEONEN, J.:
Only questions of law may be raised in a petition for review on certiorari.1 The factual findings
of the Court of Appeals bind this court.2 Although jurisprudence has provided several exceptions
to these rules, exceptions must be alleged, substantiated, and proved by the parties so this court
may evaluate and review the facts of the case. In any event, even in such cases, this court retains
full discretion on whether to review the factual findings of the Court of Appeals.
This Petition for Review on Certiorari3 assails the Court of Appeals’ Decision4 that reversed the
trial court Decision, and ordered the trial court to disallow redemption of the property and to
consolidate ownership upon respondents, and Resolu-
_______________
1 Rules of Court, Rule 45, Sec. 1.
2 Bank of the Philippine Islands v. Leobrera, 461 Phil. 461, 469; 416 SCRA 15, 21 (2003) [Per
J. Ynares-Santiago, Special First Division].
3 Rollo, pp. 10-25.
4 Id., at pp. 26-40. The case was docketed as C.A.-G.R. CV No. 73060. The Decision was
penned by Associate Justice Magdangal M. De Leon and concurred in by Associate Justices
Salvador J. Valdez, Jr. (Chair) and Mariano C. Del Castillo (now an Associate Justice of this
court) of the Eighth Division.
192
Pascual vs. Burgos
tion that denied reconsideration.5 The Court of Appeals reversed the factual findings of the trial
court.6
Ernesto and Remedios Pascual (Pascual Spouses) and Benito Burgos, et al. (Burgos, et al.)7 co-
own a fishpond situated in Bulacan covered by Original Certificate of Title No. 21.8
On September 8, 1965, Burgos, et al. filed an action for partition of the fishpond and prayed for
an “accounting of the income of the . . . fishpond from 1945[.]”9
On August 31, 1976, the trial court rendered the Decision apportioning to Burgos, et al. 17% and
to the Pascual Spouses 83% of the fishpond.10 The Pascual Spouses were also ordered to pay
Burgos, et al. their unpaid shares in the income of the property since 1945, until the actual
partition and delivery of shares.11
The Pascual Spouses appealed the trial court Decision before the Court of Appeals,12 which was
denied on June 30, 1983.13 The Petition for Review on Certiorari filed before this court was
also denied on January 11, 1984, and the Motion for Reconsideration denied on March 22,
1984.14
_______________
5 Id., at pp. 41-42. The Resolution was penned by Associate Justice Magdangal M. De Leon
and concurred in by Associate Justices Mariano C. Del Castillo (Chair) and Arturo D. Brion
(now an Associate Justice of this court) of the Special Former Eighth Division.
7 The names of the other respondents are not indicated in the Rollo or in the lower courts’
records.
8 RTC Records, p. 18, Court of Appeals Decision in C.A.-G.R. CV No. 15902.
9 Id.
10 Id., at pp. 18-19.
11 Id.
12 Rollo, p. 29, Court of Appeals Decision. The case was docketed as C.A.-G.R. No. 62252-R.
13 Id.
14 Id., at p. 30.
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Pascual vs. Burgos
While the appeal of the trial court Decision on the partition case was pending, several incidents
happened. On November 25, 1976, Burgos, et al. filed a Motion for Execution Pending Appeal
of the money portion of the trial court Decision.15 The Motion was granted by the trial court.16
The Pascual Spouses then filed a Petition for Certiorari before the Court of Appeals.17
On July 5, 1978, the Court of Appeals dismissed the Pascual Spouses’ Petition for Certiorari
assailing the grant of the Motion for Execution Pending Appeal.18 The Pascual Spouses then
filed a Petition for Review before this court, which was denied on May 16, 1979.19
On December 28, 1981, the trial court issued another order granting execution pending appeal.20
Thus, on February 9, 1982, the Deputy Sheriff of Bulacan addressed a Notice of Levy to the
Register of Deeds of Bulacan, notifying that the fishpond and all its improvements were being
levied.21
The Deputy Sheriff then issued a Notice of Auction Sale of Real Property setting the public
auction on March 23, 1982.22 The auction sale was on the Pascual Spouses’ share of the
fishpond.23
On March 23, 1982, the auction sale was conducted and the Pascual Spouses’ share of the
fishpond was sold for P95,000.00 to Burgos, et al., through a certain Marcial Mene-
_______________
15 Id., at p. 27.
16 Id.
17 Id. The case was docketed as C.A.-G.R. No. 07052-R.
18 Id.
19 Id.
20 Id., at p. 28.
21 Id.
22 Id.
23 Id.
194
Pascual vs. Burgos
ses, the highest bidder.24 A Certificate of Sale was then issued.25

On February 23, 1983, after almost a year since the conduct of the auction sale, the Pascual
Spouses filed an Omnibus Motion before the trial court assailing the Writ of Execution issued on
December 28, 1981 and the ensuing levy and sale of their share in the fishpond.26 The Pascual
Spouses also “offer[ed] to post a bond to stay execution[.]”27 On April 21, 1983, the trial court
denied the Pascual Spouses’ Omnibus Motion since the assailed orders had already become final
and executory.28
On April 25, 1983, the Pascual Spouses filed an Urgent Motion for Reconsideration and/or
Extension of Time to Redeem before the trial court.29 They argued that the sale was void since
the trial court Decision30 on the partition case, which was the basis for the Motion for
Execution, was still pending appeal.31 They also argued that the Decision ordered that “the
disputed property should not be touched pending appeal[.]”32 The Pascual Spouses also prayed
that they be given until May 16, 1983 to redeem the property considering that the period of
redemption already expired on April 15, 1983.33
_______________
24 Id.
25 Id.
26 Id.
27 Id.
28 Id.
29 Id.
30 RTC Records, pp. 18-30. The case was docketed as C.A.-G.R. CV No. 15902. The Decision
was penned by Associate Justice Hector L. Hofileña and concurred in by Associate Justices
Pedro A. Ramirez and Cancio C. Garcia of the Eighth Division.
31 Rollo, pp. 28-29, Court of Appeals Decision.
32 RTC Records, p. 20.
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Pascual vs. Burgos
Burgos, et al. filed a Motion for Confirmation of Sale on July 8, 1983, and then a Motion for
Issuance of Writ of Possession on August 30, 1983.34
In the Order dated September 16, 1983, the trial court denied the Pascual Spouses’ Urgent
Motion for Reconsideration and/or Extension of Time to Redeem and granted Burgos, et al.’s
Motions for Confirmation of Sale and Issuance of Writ of Possession.35
Undeterred, the Pascual Spouses filed on September 26, 1983 an Urgent Motion to Quash and/or
Recall Writ of Possession also before the trial court.36 They argued for the first time that
irregularities attended the auction sale, alleging anomalies in the number of times the notice of
sale was published, the unconscionably low price the fishpond was sold at the auction sale, the
lack of authority of Marcial Meneses to buy the fishpond on behalf of Burgos, et al., and the
insufficiency in the description of rights and interests to be sold in the notice of sale.37
Without waiting for the resolution of the Urgent Motion to Quash and/or Recall Writ of
Possession, the Pascual Spouses initiated on April 24, 1984 a separate case for annulment of
execution of sale against Burgos, et al.38 This was raffled to Branch 6 of the Regional Trial
Court, Malolos, Bulacan.39 Burgos, et al. then filed a Motion for Preliminary Hearing of their
defense of lack of jurisdiction.40 The trial court denied the Motion, which prompted Burgos, et
al. to file a Petition for Certiorari before the Court of Appeals.41 The Court of Appeals
_______________
34 Id., at p. 29.
35 Id.
36 Id., at p. 30.
37 Id.
38 Id. The case was docketed as Civil Case No. 7442-M.
39 Id.
40 Id., at p. 31.
41 Id.; RTC Records, p. 22, Court of Appeals Decision in C.A.-G.R. CV No. 15902. The case
was docketed as C.A.-G.R. No. 19179.
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Pascual vs. Burgos
granted the Petition and ordered the dismissal of the Pascual Spouses’ annulment of execution
sale case.42 The Pascual Spouses filed a Petition for Review before this court, which was denied
on March 10, 1989.43
As to the Pascual Spouses’ Urgent Motion to Quash and/or Recall Writ of Possession, the trial
court denied the Motion in the Decision dated October 10, 1984.44 The Pascual Spouses filed a
Motion for Partial Reconsideration that was denied by the trial court in the Order dated
December 18, 1986.45 The trial court also rejected the Pascual Spouses’ argument on the
irregularities of the auction sale and, instead, upheld its validity.46 Thus, the Pascual Spouses
filed a Petition for Review before the Court of Appeals assailing the trial court’s October 10,
1984 Decision and its December 18, 1986 Order.47
On May 6, 1994, the Court of Appeals48 affirmed the trial court’s Decision upholding the
validity of the auction sale.49 However, it considered the Pascual Spouses’ allegation that the
price at which the fishpond was sold was unconscionably low.50 The Court of Appeals ordered
the remand of the case to the trial court for reception of evidence in order to determine the fair
market value of the fishpond at the time of the auction sale and whether equity demands that the
Pascual
_______________
42 RTC Records, pp. 22-23, Court of Appeals Decision in C.A.-G.R. CV No. 15902.
43 Id., at p. 23.
44 Id., at pp. 21-22.
45 Id., at p. 22.
46 Id.
47 Id., at p. 18.
48 Id., at pp. 18-30. The case was docketed as C.A.-G.R. CV No. 15902. The Decision was
penned by Associate Justice Hector L. Hofileña and concurred in by Associate Justices Pedro A.
Ramirez and Cancio C. Garcia of the Eighth Division.
49 Id., at pp. 24-27.
50 Id., at p. 29.
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Pascual vs. Burgos
Spouses still be allowed to redeem the property.51 The dispositive portion of the Decision states:
WHEREFORE, this case is hereby remanded to the lower court, which is hereby directed
to receive evidence solely for the purpose of determining the fair market value of the
property in question on March 23, 1982, when the rights and interests of defendants-
appellants therein were sold at public action, and to decide on the basis thereof, whether or
not it is equitable to allow the defendants-appellants to redeem the said rights and interests.
In all other aspects not inconsistent with this, the orders herein appealed from are hereby
AFFIRMED, with costs against the defendants-appellants.52
Burgos, et al. filed before this court a Petition for Review on Certiorari assailing the Court of
Appeals’ Decision remanding the case to the trial court.53 This court denied the Petition on July
12, 1995, and the Resolution became final and executory on October 9, 1995.54 The case was
then remanded to the Regional Trial Court.55
On April 23, 1999, the trial court set the case for hearing pursuant to the Court of Appeals’
Decision dated May 6, 1994.56
The Pascual Spouses presented three (3) witnesses57 to prove that the fair market value of the
fishpond sold at public
_______________
51 Id.
52 Id.
53 Id., at p. 34.
54 Id.
55 Id., at p. 35.
56 Id., at p. 36.
57 Rollo, p. 43, Regional Trial Court Decision. The witnesses were “Silvestre Pascual, the son of
the former owner of the property and a fishpond operator himself, Guillermo Samonte, a
fishpond caretaker of Lito Samonte and a former fishpond caretaker of Antonio Gonzales at
Taliptip, Bulacan, Bulacan, and Atty. Antonio Gon-
198
Pascual vs. Burgos
auction in 1982 was P200,000.00 per hectare. On the other hand, Burgos, et al. presented three
(3) witnesses58 to prove that the fishpond’s fair market value was only P10,000.00 to P20,000.00
per hectare.
The Pascual Spouses’ first witness, Silvestre Pascual, is the brother of Ernesto Pascual.59 He
testified that, as the son of the fishpond’s owner and as a fishpond operator himself, he knew the
value of the fishpond.60 Silvestre Pascual testified that in 1963 or 1964, the fishpond previously
owned by his mother was sold to Ernesto Pascual for P100,000.00.61 In 1982, he learned from
his friends and neighbors who were also fishpond operators that the value of the fishpond was
already P200,000.00 per hectare.62
The Pascual Spouses’ second witness was Guillermo Samonte, a fishpond caretaker.63 He
testified that the market value of the fishpond was P200,000.00 per hectare in 1982.64 He knew
this amount as he witnessed the sale transaction between the Fishermen Corporation and
Precillano65 Gonzales Development Corporation.66 To prove the transaction, Guillermo
Samonte presented a Deed of Absolute Sale67 dated November 19, 1981 and testified that the
total consideration
_______________
zales, the former President of Prescillano Gonzales Development Corporation.”
58 Id., at p. 44. The witnesses were “Policarpio A. [d]ela Cruz, the son of one of the heirs,
Patricia de los [sic] Reyes, the great grandniece of plaintiff Benito Burgos and Antonio
Magpayo[,] Jr., the Municipal Assesor [sic] of Bulacan, Bulacan.”
59 Id.
60 Id., at p. 43.
61 Id., at p. 44.
62 Id.
63 Id.
64 Id.
65 Prescillano (id., at p. 43) and Precillano (id., at p. 45) are used interchangeably in the records.
66 Id., at p. 45.
67 RTC Records, pp. 94-97.
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Pascual vs. Burgos
was P10,000,000.00.68 The Deed documented a sale of a 481,461-square-meter parcel of land in

Bulacan for P4,000,000.00.69
Antonio Gonzales was the Pascual Spouses’ third witness. He was the former President of
Precillano Gonzales Development Corporation and he purchased the property testified to by
Guillermo Samonte for the Corporation.70 He corroborated the testimony of Guillermo Samonte
and clarified that P4,000,000.00 was paid in cash to the seller and the seller’s loan of
P6,000,000.00 to Philippine National Bank was assumed by the buyer, totaling
P10,000,000.00.71
Burgos, et al.’s first witness, Policarpio dela Cruz, was the son of Catalina Antonio, one of the
former owners of the fishpond who sold her share to the Pascual Spouses.72 He claimed
knowledge of the prices of fishponds as he grew up in and continued visiting Bulacan.73 He
testified that in 1982, first-class fishponds were sold at P20,000.00 to P30,000.00 per hectare
“while second[-]class fishponds were sold at a lower price.”74 The fishpond in this case is
considered second-class so it was priced at P10,000.00 to P20,000.00 per hectare.75
Policarpio dela Cruz presented two (2) tax declarations.76 The first tax declaration with number
223,77 Series of 1974 covered the fishpond. The tax declaration states that the market value of
the fishpond was P202,694.00.78 The second tax declaration with number 10468,79 Series of
1980 covered a
_______________
68 Rollo, pp. 44-45, Regional Trial Court Decision.
69 RTC Records, p. 96, Deed of Absolute Sale.
70 Rollo, p. 45, Regional Trial Court Decision.
71 Id.
72 Id., at pp. 45-46.
73 Id., at p. 46.
74 Id., at p. 45.
75 Id.
76 Id., at p. 46.
78 Id.
79 Id., at p. 109.
200
Pascual vs. Burgos
parcel of land in Bulacan used as a fishpond with an area of 12.9493 hectares.80 The market
value of the property was P388,479.00.81
Patricia delos Reyes was Burgos, et al.’s second witness. She testified that she is the great
grandniece of Benito Burgos and was in possession of the property pursuant to this court’s
Decision.82 She presented two (2) tax declarations covering the property to prove its market
value.83 The first was the same tax declaration presented by Policarpio dela Cruz with number
223,84 Series of 1974. It showed that the property had an area of 10.1347 hectares and market
value of P202,694.00.85 Tax declaration number 223, Series of 1974 was cancelled by tax
declaration number 1280786 dated April 9, 1985,87 the second tax declaration presented by
Patricia delos Reyes. Tax declaration number 12807 states that the market value of the property
is P304,041.00.88
Burgos, et al.’s last witness was Antonio Magpayo, the Municipal Assessor in Bulacan in 1975
and reappointed in 1995.89 Antonio Magpayo identified and showed in his Book of Tax
Declarations the tax declaration presented by Patricia delos Reyes.90 He also testified that no tax
declaration was issued in 1982.91
_______________
80 Id.
81 Id.
83 Id.
85 Id.
86 Id., at p. 128.
87 Id.
88 Id.
90 Id.
91 Id.
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Pascual vs. Burgos
On September 24, 2001, the trial court92 gave credence to the evidence presented by the Pascual
Spouses.93 The trial court considered the testimony of Antonio Gonzales authoritative, having
come from a disinterested witness who was a fishpond operator himself and who negotiated the
sale of a 48-hectare fishpond also in Bulacan.94 The trial court did not give any weight to the tax
declarations presented by Burgos, et al.’s witnesses as these did not reflect the actual fair market
value of the properties covered by these tax declarations.95 The trial court held:
WHEREFORE, this Court finds the fair market value of the fishpond in question to be
P200,000.00 per hectare or P2,000,000.00 in 1982. Considering that it was only sold at an
unusually lower price of P95,000.00 than its true value, the Court consequently finds it
equitable to allow the defendants to redeem the rights and interests thereto within a period
of ninety (90) days after the finality of this decision.
SO ORDERED.96
Burgos, et al. appealed the trial court Decision.97
On June 30, 2005, the Court of Appeals rendered the Decision granting the appeal.98 It
emphasized that the Decision, which remanded the case to the trial court, still affirmed the
validity of the auction sale and the issuance of a Writ of Possession in favor of Burgos.99 The
case was remanded solely to determine the fair market value of the property to decide on
_______________
92 The Decision was penned by Judge Manuel R. Ortiguerra of Branch 8 of the Regional Trial
Court of Malolos, Bulacan.
94 Id.
95 Id.
96 Id.
98 Id., at p. 39.
99 Id., at p. 33.
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Pascual vs. Burgos
whether the Pascual Spouses can still redeem the property as a matter of equity.100
Upon review of the evidence presented by the parties, the Court of Appeals found that there was
a discrepancy between the testimony of Antonio Gonzales and the provisions in the Deed of Sale
presented.101 Antonio Gonzales testified that the purchase price of the fishpond in the sale
between The Fishermen Corporation and Precillano Gonzales Development Corporation was
P10,000,000.00.102 P4,000,000.00 was paid in cash, while the buyer had to assume the
P6,000,000.00 loan of the seller.103 However, the Deed of Sale provides otherwise:
From the purchase price of P4,000,000.00, the BUYER shall undertake to pay the existing
indebtedness of SELLER to the National Investment and Development Corporation and
the Philippine National Bank in order to secure the release of the mortgaged property. The
amount paid to the National Investment and Development Corporation shall be considered
as part of the purchase price.104 (Underscoring in the original)
The Pascual Spouses offered no proof to clarify this inconsistency.105 Moreover, the sale
testified to by the witnesses of the Pascual Spouses was an isolated transaction.106 No evidence
was presented to show that the fishpond subject of the sale was the same type, quality, and
quantity of the disputed fishpond.107 The Court of Appeals held that this sale cannot be
_______________
100 Id., at pp. 33 and 39.
101 Id., at p. 35.
102 Id.
103 Id.
104 Id.
105 Id., at p. 37.
106 Id., at p. 38.
107 Id.
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Pascual vs. Burgos
deemed to reflect the fair market value of the disputed fishpond.108

On the other hand, the tax declarations presented by Burgos, et al., being public documents, are
prima facie evidence of the statements written there, including the market value of the
property.109 Thus, the Pascual Spouses must present ample proof to substantiate a contrary
allegation,110 which they failed to do. Thus:
WHEREFORE, this appeal is GRANTED. The Decision dated September 24, 2001 of
the Regional Trial Court, Branch 8, Malolos, Bulacan is hereby REVERSED and SET
ASIDE. The trial court is ordered not to allow appellees to redeem their former rights,
interests and participation in the property covered by Original Certificate of Title No. 21,
and to consolidate ownership of the same upon appellants.111
The Pascual Spouses filed a Motion for Reconsideration, which was denied by the Court of
Appeals in the Resolution dated February 13, 2006.112
Remedios Pascual filed this Petition for Review on Certiorari assailing the Court of Appeals’
Decision and Resolution, which reversed and set aside the trial court Decision.
Upon order113 of this court, Burgos, et al. filed a Comment114 on September 21, 2006. This
court then required Remedios
_______________
108 Id.
109 Id., at p. 36.
110 Id.
111 Id., at p. 39.
112 Id., at pp. 41-42, Court of Appeals Resolution.
113 Id., at p. 63, Supreme Court Resolution dated June 26, 2006.
114 Id., at pp. 76-82.

204
Pascual vs. Burgos
Pascual to file a Reply.115 Remedios Pascual filed a Manifestation116 stating that she was not
filing a Reply.
The issues raised by petitioner Remedios Pascual and respondents Benito Burgos, et al. are:
First, whether a petition for review before this court allows a review of the factual findings of the
lower courts; and
Second, whether this case presents an exception to the rule on this court’s power to review
decisions of the Court of Appeals via a petition for review. If in the affirmative, whether the price
at which the fishpond was sold is unconscionably low.
We find that the case does not fall under any of the exceptions. Thus, we do not delve into the
factual issues of the case and affirm the Decision of the Court of Appeals.
Review of appeals filed before this court is “not a matter of right, but of sound judicial
discretion[.]”117 This court’s action is discretionary. Petitions filed “will be granted only when
there are special and important reasons[.]”118 This is especially applicable in this case, where
the issues have been fully ventilated before the lower courts in a number of related cases.
The Rules of Court require that only questions of law should be raised in petitions filed under
Rule 45.119 This court is not a trier of facts. It will not entertain questions of fact as the factual
findings of the appellate courts are “final, bind-
_______________
115 Id., at p. 87, Supreme Court Resolution dated November 29, 2006.
116 Id., at pp. 93-94.

118 Id.
205
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Pascual vs. Burgos
ing[,] or conclusive on the parties and upon this [c]ourt”120 when supported by substantial
evidence.121 Factual findings of the appellate courts will not be reviewed nor disturbed on
appeal to this court.122
However, these rules do admit exceptions. Over time, the exceptions to these rules have
expanded. At present, there are 10 recognized exceptions that were first listed in Medina v.
Mayor Asistio, Jr.:123
(1) When the conclusion is a finding grounded entirely on speculation, surmises or

conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3)
Where there is a grave abuse of discretion; (4) When the judgment is based on a
misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the
Court of Appeals, in making its findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee; (7) The findings of the Court
of Appeals are contrary to those of the trial court; (8) When the findings of fact are
conclusions without citation of specific evidence on which they are based; (9) When the
facts set forth in the petition as well as in the petitioner’s main and reply briefs are not
disputed by the respondents; and (10) The finding of fact of the Court of Appeals is
premised on the supposed ab-
_______________
120 Commissioner of Internal Revenue v. Embroidery and Garments Industries (Phil.), Inc., 364
Phil. 541, 546; 305 SCRA 70, 74 (1999) [Per J. Pardo, First Division].
121 Siasat v. Court of Appeals, 425 Phil. 139, 145; 374 SCRA 326, 330-331 (2002) [Per J.
Pardo, First Division]; Tabaco v. Court of Appeals, 239 SCRA 485, 490 (1994) [Per J. Bellosillo,
First Division]; and Padilla v. Court of Appeals, 241 Phil. 776, 781; 157 SCRA 729, 738 (1988)
[Per J. Paras, Second Division].
122 Supra note 2 at p. 469; p. 18.
206
Pascual vs. Burgos
sence of evidence and is contradicted by the evidence on record.124 (Citations omitted)
These exceptions similarly apply in petitions for review filed before this court involving
civil,125 labor,126 tax,127 or criminal cases.128
A question of fact requires this court to review the truthfulness or falsity of the allegations of the
parties.129 This review includes assessment of the “probative value of the evidence
presented.”130 There is also a question of fact when the issue presented before this court is the
correctness of the lower courts’ appreciation of the evidence presented by the parties.
Petitioner asks this court to review the facts of the case:
This Honorable Court is now, from the foregoing, confronted with a controversy as to
which will prevail —
_______________
124 Id., at p. 232; pp. 223-224.

125 Dichoso, Jr. v. Marcos, G.R. No. 180282, April 11, 2011, 647 SCRA 495, 501-502 [Per J.
Nachura, Second Division] and Caoili v. Court of Appeals, 373 Phil. 122, 132; 314 SCRA 345,
353 (1999) [Per J. Gonzaga-Reyes, Third Division].
126 Go v. Court of Appeals, 474 Phil. 404, 411; 430 SCRA 358, 365 (2004) [Per J. Ynares-
Santiago, First Division] and Arriola v. Pilipino Star Ngayon, Inc., G.R. No. 175689, August 13,
2014, 732 SCRA 656, 673 [Per J. Leonen, Third Division].
127 Supra note 120 at pp. 546-547; p. 72.
128 Macayan, Jr. v. People, G.R. No. 175842, March 18, 2015, 753 SCRA 445 [Per J. Leonen,
Second Division]; Benito v. People, G.R. No. 204644, February 11, 2015, 750 SCRA 450 [Per J.
Leonen, Second Division].
129 Republic v. Ortigas and Company Limited Partnership, G.R. No. 171496, March 3, 2014,
717 SCRA 601, 613 [Per J. Leonen, Third Division] and Cirtek Employees Labor Union-
Federation of Free Workers v. Cirtek Electronics, Inc., 665 Phil. 784, 788; 650 SCRA 656, 659
(2011) [Per J. Carpio-Morales, Third Division].
130 Id., at p. 612.
207
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Pascual vs. Burgos
the findings of facts of the trial court which is based on preponderance of evidence or the
findings of facts of the court a quo which is based on the alleged misapprehension of facts
allegedly committed by the former court.131
Petitioner admits that she is raising factual issues that this court cannot entertain.132 However,
she argues that this case falls under the exceptions to this rule.133
II
Parties praying that this court review the factual findings of the Court of Appeals must
demonstrate and prove that the case clearly falls under the exceptions to the rule. They have the
burden of proving to this court that a review of the factual findings is necessary.134 Mere
assertion and claim that the case falls under the exceptions do not suffice.
Petitioner claims that this case presents two (2) exceptions to the rule against a review of factual
findings by this court.135 Petitioner alleges that the Court of Appeals committed grave abuse of
discretion.136 Further, she states that the findings of fact of the Court of Appeals and of the
Regional Trial Court are contrary to each other.137
_______________
131 Rollo, p. 23, Petition.
132 Id., at p. 20.
133 Id., at p. 21.
134 Borlongan v. Madrideo, 380 Phil. 215, 223; 323 SCRA 248, 255 (2000) [Per J. De Leon, Jr.,
Second Division]: “In civil cases the burden of proof to be established by preponderance of
evidence is on the plaintiff who is the party asserting the affirmative of an issue. He has the
burden of presenting evidence required to obtain a favorable judgment, and he, having the
burden of proof, will be defeated if no evidence were given on either side.”
136 Id., at p. 22.
137 Id.
208
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Respondents counter that the Court of Appeals’ Decision is “more consistent with the testimony
of the witnesses and the evidence presented by the parties during the trial[.]”138
III
The Court of Appeals must have gravely abused its discretion in its appreciation of the evidence
presented by the parties and in its factual findings to warrant a review of factual issues by this
court. Grave abuse of discretion is defined, thus:
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the
power is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility and must be so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act at all in contemplation of law.
Grave abuse of discretion refers not merely to palpable errors of jurisdiction; or to

violations of the Constitution, the law and jurisprudence. It refers also to cases in which,
for various reasons, there has been a gross misapprehension of facts.139 (Citations
omitted)
This exception was first laid down in Buyco v. People, et al.:140
In the case at bar, the Tenth Amnesty Commission, the court of first instance and the Court
of Appeals found, in effect, that the evidence did not suffice to show
_______________
138 Id., at p. 77, Comment.
139 United Coconut Planters Bank v. Looyuko, 560 Phil. 581, 591-592; 534 SCRA 322, 331
(2007) [Per J. Austria-Martinez, Third Division].
140 95 Phil. 453 (1954) [Per J. Concepcion, En Banc].

209
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Pascual vs. Burgos
that appellant had acted in the manner contemplated in the amnesty proclamation.
Moreover, unlike the Barrioquinto cases, which were appealed directly to this Court,
which, accordingly, had authority to pass upon the validity of the findings of fact of the
court of first instance and of its conclusions on the veracity of the witnesses, the case at bar
is before us on appeal by certiorari from a decision of the Court of Appeals, the findings
and conclusions of which, on the aforementioned subjects, are not subject to our review,
except in cases of grave abuse of discretion, which has not been shown to exist.141
(Emphasis supplied)
Petitioner fails to convince this court that the Court of Appeals committed grave abuse of
discretion in reversing the trial court’s factual findings and appreciation of the evidence
presented by the parties. Petitioner claims that:
[T]he court a quo gravely abused its discretion when it rendered its assailed decision and
resolution since it contravened the principle that “findings of fact of trial courts are entitled
to great respect and are bindings [sic] on the Supreme Court in the absence of showing
bias, partiality, or grave abuse of discretion on the part of the presiding judge” — (People
v. Vitancur, 345 SCRA 414) and the principle that “in the absence of a palpable error or
grave abuse of discretion on the part of the trial judge, the trial court’s evaluation of the
credibility of witnesses will not be disturbed on appeal” — (People v. Mendez, 335 SCRA
147).142
Other than saying that the Court of Appeals allegedly failed to apply doctrines laid down by this
court, petitioner has not presented this court with cogent reasons why the Court of Appeals
gravely abused its discretion when it re-
_______________
141 Id., at p. 461.

210
Pascual vs. Burgos
evaluated the evidence presented by the parties and reached different factual findings.
Grave abuse of discretion, to be an exception to the rule, must have attended the evaluation of
the facts and evidence presented by the parties. In Cariño v. Court of Appeals,143 the issue
presented before this court was “whether the respondent Court of Appeals committed grave
abuse of discretion in concluding that the Deed of Sale of House and Transfer of Rights (Exhibit
‘D-1’), on which the petitioners have based their application over the questioned lot, is simulated
and, therefore, an inexistent deed of sale.”144 To resolve the issue, this court examined whether
there was substantial and convincing evidence to support the factual findings of the Court of
Appeals.145
In any case, the Court of Appeals’ reversal or modification of the factual findings of the trial
court does not automatically mean that it gravely abused its discretion. The Court of Appeals,
acting as an appellate court, is still a trier of facts. Parties can raise questions of fact before the
Court of Appeals and it will have jurisdiction to rule on these matters. Otherwise, if only
questions of law are raised, the appeal should be filed directly before this court.
This is not to say that the trial court’s findings of fact, especially with regard to the credibility of
witnesses, are of little weight. The doctrine in the cases cited by petitioner, People v. Vitancur146
and People v. Mendez,147 is a time-honored rule. The trial court’s findings of fact are given
much weight because of the trial court judges’ firsthand knowledge and fa-
_______________
143 236 Phil. 566; 152 SCRA 529 (1987) [Per J. Padilla, Second Division].
144 Id., at p. 573; pp. 533-534.
145 Id.
146 399 Phil. 131; 345 SCRA 414 (2000) [Per J. Mendoza, Second Division].
147 People v. Mendez, 390 Phil. 449; 335 SCRA 147 (2000) [Per J. Gonzaga-Reyes, En Banc].
211
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Pascual vs. Burgos
miliarity with the disposition of the witnesses who testified before them, and this is important in
certain cases. However, this doctrine does not diminish the Court of Appeals’ jurisdiction in
reviewing the factual findings of the trial court. Further, in the cited cases, the Court of Appeals
did not even have the opportunity to review the factual findings of the trial court as the case was
directly elevated to this court on automatic appeal.148
IV
The Court of Appeals’ appreciation of the weight of the evidence presented by the parties is
opposed to that of the trial court. Unlike the trial court, the Court of Appeals did not give any
weight to Antonio Gonzales’ testimony.149 Instead, it relied on the tax declarations presented by
the parties to find the market value of the fishpond in 1982.150
While the factual findings of the Court of Appeals are contrary to those of the trial court, this
alone does not automatically warrant a review of factual findings by this court. In Uniland
Resources v. Development Bank of the Philippines:151
It bears emphasizing that mere disagreement between the Court of Appeals and the trial
court as to the facts of a case does not of itself warrant this Court’s review of the same. It
has been held that the doctrine that the findings of fact made by the Court of Appeals,
being conclusive in nature, are binding on this Court, applies even if the Court of Appeals
was in disagreement with the lower court as to the weight of evidence with a consequent
reversal of its findings of fact, so long as the find-
_______________
148 People v. Vitancur, supra note 146 at p. 133; p. 421 and People v. Mendez, id., at p. 454; p.
155.
150 Id., at pp. 36-37.
151 G.R. No. 95909, August 16, 1991, 200 SCRA 751 [Per J. Gancayco, First Division].
212
Pascual vs. Burgos
ings of the Court of Appeals are borne out by the record or based on substantial evidence.
While the foregoing doctrine is not absolute, petitioner has not sufficiently proved that his
case falls under the known exceptions.152 (Citations omitted)
The lower courts’ disagreement as to their factual findings, at most, presents only prima facie
basis for recourse to this court:
One such exception, of course, is where — as here — the factual findings of the Court of
Appeals conflict with those of the Trial Court, but it is one that must be invoked and
applied only with great circumspection and upon a clear showing that manifestly correct
findings have been unwarrantedly rejected or reversed. On the one hand, the trial court is
the beneficiary of the rule that its findings of fact are entitled to great weight and respect;
on the other, the Court of Appeals is, as a general proposition, the ultimate judge of the
facts in a case appealed to it — a prerogative which is at the same time a duty conferred
upon it by law. Thus, while a conflict in their findings may prima facie provide basis for a
recourse to this Court, only a showing, on the face of the record, of gross or extraordinary
misperception or manifest bias in the Appellate Court’s reading of the evidence will justify
this Court’s intervention by way of assuming a function usually within the former’s
exclusive province. There is no showing here of such exceptional circumstances,
petitioners advertence to certain findings of the Court of Appeals in her view contrary to
the weight or import of the evidence notwithstanding. In short, nothing in the record
warrants this Court’s substituting its own assessment of the evidence for that of the Court
of Appeals in contravention of the general rule that restricts to
_______________
152 Id., at p. 755.
213
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Pascual vs. Burgos
questions of law the scope of its review of the latter’s decisions.153 (Citation omitted)
Garcia, et al. v. Court of Appeals, et al.,154 the case cited by Medina155 as basis for this
exception, supports this pronouncement. In Garcia, this court considered the contrary findings of
the Court of Appeals and the trial court as one of the circumstances compelling this court to find
out whether the case falls under the exceptions allowing it to review factual findings of the Court
of Appeals.156 Thus:
The preliminary question which poses itself in connection with this first assignment of
error is whether this Court may make its own findings of fact independently of those made
by the Court of Appeals. The general rule is that the appellate court’s findings are
conclusive, but this rule is not without some recognized exceptions, such as:
(1) When the conclusion is a finding grounded entirely on speculations, surmises or

conjectures; (2) when the inference is manifestly mistaken, absurd or impossible; (3)
when there is a grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the
Court of Appeals, in making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and appellee.
Several circumstances compelled us to go into the record of this case in order to find out
whether or not it falls within the exceptions above stated: first, the findings of the Court of
Appeals are contrary to those of the trial
_______________
153 Fernan v. Court of Appeals, 260 Phil. 594, 598-599; 181 SCRA 546, 550 (1990) [Per J.
Narvasa, First Division].
154 Garcia v. Court of Appeals, 144 Phil. 615; 33 SCRA 622 (1970) [Per J. Makalintal, En
Banc].
155 Medina v. Asistio, Jr., supra note 123 at p. 232; p. 223.
156 Garcia v. Court of Appeals, supra at p. 619; p. 625.
214
Pascual vs. Burgos
court; second, said findings are in the nature of conclusions, without citation of the specific
evidences on which they are based; and third, the facts set forth in the petition as well as in
the petitioners’ main and reply briefs, with the corresponding references to the record, are
not disputed by the respondents. These facts are necessary for a clear understanding and
proper resolution of the issue of rescission in this case.157 (Emphasis supplied)
The three (3) circumstances in Garcia that compelled this court to look into the records of the
case to determine whether an exception exists were then included as exceptions to the rule in
Tolentino v. De Jesus158 and subsequent cases.159 In Remalante v. Tibe,160 this court, in a
footnote, discussed:
In Sacay v. Sandiganbayan, the Court enumerated four more exceptions:
. . . (7) the findings of the Court of Appeals are contrary to those of the trial court; (8) said
findings of fact are conclusions without citation of specific evidence on which they are
based; (9) the facts set forth in the petition as well as in the petitioners’ main and reply
briefs are not disputed by the respondents; (10) the finding of fact of the Court of Appeals
is premised on the supposed absence of evidence and is contradicted by the evidence on
record.
_______________
157 Id., at pp. 618-619; pp. 624-625, citing Roque v. Buan, 128 Phil. 738, 746-747; 21 SCRA
642, 651 (1967) [Per J. Angeles, En Banc]; Ramos v. Pepsi-Cola Bottling Co. of the P.I., 125
Phil. 701, 704; 19 SCRA 289, 291-292 (1967) [Per J. J. P. Bengzon, En Banc]; and Hilario v.
City of Manila, 128 Phil. 100, 101; 19 SCRA 931 (1967) [Per J. J. P. Bengzon, En Banc].
158 155 Phil. 144, 151; 56 SCRA 167, 172 (1974) [Per J. Makasiar, First Division].
159 Sacay v. Sandiganbayan, 226 Phil. 496, 512; 142 SCRA 593, 609 (1986) [Per J. Feria, En
Banc] and AMA Computer College-East Rizal v. Ignacio, 608 Phil. 436, 454; 590 SCRA 633,
651 (2009) [Per J. Chico-Nazario, Third Division].
160 241 Phil. 930; 158 SCRA 138 (1988) [Per J. Cortes, En Banc].
215
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Pascual vs. Burgos
However, in Garcia, the Court considered exception Nos. 7, 8 and 9 as circumstances that,
taken together, compelled it to go into the record of the case in order to find out whether or
not it fell within any of the six established exceptions.
On the other hand, exception No. 10 may be considered as an illustration of the fourth
exception — that the judgment is based on a misapprehension of facts.161
Petitioner failed to show why the factual findings of the Court of Appeals are without any basis.
Petitioner does not dispute the tax declarations relied upon by the Court of Appeals. Instead,
petitioner insists that the testimony of Antonio Gonzales should be given weight despite the valid
and substantial basis provided by the Court of Appeals to find otherwise. She still failed to
clarify and explain the anomaly between Antonio Gonzales’ testimony on the purchase price of
the fishpond sold to Precillano Gonzales Development Corporation and the provision on the
purchase price in the Deed of Sale presented.
We do not find any compelling reason to review the factual findings of the Court of Appeals. It is
time for this long dispute that has vexed both parties to be finally laid to rest.
WHEREFORE, the Petition for Review is DENIED.
SO ORDERED.
Petition denied.
_______________
161 Id., at p. 936; pp. 146-147, citing Sacay v. Sandiganbayan, supra note 159 at p. 512; p. 609;
Garcia v. Court of Appeals, supra note 154 at p. 619; p. 625 and Salazar v. Gutierrez, 144 Phil.
233, 239; 33 SCRA 242, 247 (1970) [Per J. Makalintal, En Banc].
216
Pascual vs. Burgos
Notes.—Under the doctrine of hierarchy of courts, a party should first file his petition before the
Court of Appeals before seeking relief from the Supreme Court. (Dacanay vs. Yrastorza, Sr., 598
SCRA 20 [2009])
The Court of Appeals (CA) is primarily designed as an appellate court that reviews the
determination of facts and law made by the trial courts. It is collegiate in nature. (The Diocese of
Bacolod vs. Commission on Elections, 747 SCRA 1 [2015])
——o0o——
CASES REPORTED
SUPREME COURT REPORTS ANNOTATED
____________________
G.R. No. 178110. January 12, 2016.*
AYALA LAND, INC. and CAPITOL CITIFARMS, INC., petitioners, vs. SIMEONA
CASTILLO, LORENZO PERLAS, JESSIELYN CASTILLO, LUIS MAESA, ROLANDO
BATIQUIN, and BUKLURAN MAGSASAKA NG TIBIG, as represented by their Attorney-in-
Fact, SIMEONA CASTILLO, respondents.
Remedial Law; Evidence; Admissions; Admission Against Interest; The concept of admissions
against interest is governed by Section 26 of Rule 130 of the Rules of Court.—The concept of
admis-
_______________
* EN BANC.
Ayala Land, Inc. vs. Castillo

sions against interest is governed by Section 26 of Rule 130 of the Rules of Court, which
provides: Sec. 26. Admissions of a party.—The act, declaration or omission of a party as to a
relevant fact may be given in evidence against him. The above rule considers admissions against
interest as admissible evidence, but does not dispense with the requirement that the admission be
offered in evidence. In this case, precisely because respondents did not raise the issue at all,
petitioners did not have any opportunity to inspect or question the authenticity and due execution
of the documents. It would be offensive to the basic rules of fair play, justice, and due process to
suddenly reverse the decisions of three DAR Secretaries and the Office of the President based on
an alleged document — especially if that document has not been presented, authenticated, or
offered in evidence — without giving the other party any opportunity to contradict the purported
admission.
Same; Civil Procedure; Appeals; The Supreme Court (SC) has already established that issues
raised for the first time on appeal and not raised in the proceedings below ought not to be
considered by a reviewing court.—This Court has already established that issues raised for the
first time on appeal and not raised in the proceedings below ought not to be considered by a
reviewing court. Points of law, theories, issues, and arguments not brought to the attention of the
trial court are barred by estoppel. The rule becomes crucial in this particular case. Here, DAR is
the most competent agency that can make a factual determination regarding the Notice of
Acquisition and its effect on the Conversion Order long issued by Secretary Garilao. As it stands,
none of the DAR Secretaries was ever given the opportunity to dwell on this issue. On the
contrary, Secretary Pagdanganan issued an Order on 13 August 2003 ruling that Secretary
Braganza’s Order affirming the conversion had become final.
Agrarian Reform; Comprehensive Agrarian Reform Law; Republic Act (RA) No. 6657 or the
Comprehensive Agrarian Reform Law (CARL) states that all lands with a slope of eighteen
percent (18%) and over, and undeveloped, shall be exempt from the Act.—Clearly, the DAR had
long investigated and ruled that the property was not suitable for agricultural use, as it had
remained undeveloped without any source of irrigation. Hence, it is not “prime agricultural land”
as contemplated under A.O. 12-94. Additionally, Republic Act 6657 or the Comprehensive
Agrarian Law states that all lands with
VOL. 780, JANUARY 12, 2016 3

a slope of 18% and over, and undeveloped, shall be exempt from the Act. If the said landholding
has been developed for any other purpose — e.g., residential, commercial, or industrial — then it
will not fall under the coverage of CARP.
Same; Comprehensive Agrarian Reform Program; The Supreme Court (SC) has held that before
the Department of Agrarian Reform (DAR) could place a piece of land under Comprehensive
Agrarian Reform Program (CARP) coverage, there must first be a showing that the land is an
agricultural land, i.e., devoted or suitable for agricultural purposes.—This Court has held that
before the DAR could place a piece of land under CARP coverage, there must first be a showing
that the land is an agricultural land, i.e., devoted or suitable for agricultural purposes. In this
determination, we cannot substitute our own judgment for that of the DAR. To do so would run
counter to another basic rule that courts will not resolve a controversy involving a question that
is within the jurisdiction of an administrative tribunal prior to the latter’s resolution of that
question. Since the DAR’s findings herein are supported by substantial evidence, and affirmed by
the OP, our only course is to sustain it.
Same; Same; Conversion; On the issue of conversion, the Supreme Court (SC) must respect the
findings of the Department of Agrarian Reform (DAR), which is the only agency charged with
the mandate of approving or disapproving applications for conversion.—On the issue of
conversion, this Court must respect the findings of the DAR, which is the only agency charged
with the mandate of approving or disapproving applications for conversion. The CA Decision
effectively enfeebles the Orders of no less than three Secretaries of the DAR and the policy
pronouncements of the OP. The rule that conversion orders, once final and executory, may no
longer be questioned is contradicted by the actions of respondents: accepting disturbance
compensation for the land; seeking petitioners’ compliance with the terms of the Conversion
Order; then reversing themselves by assailing the Order itself long after the proper period has
prescribed.
Same; Department of Agrarian Reform; Jurisdiction; Doctrine of Primary Jurisdiction; The

doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to
resolve a controversy the jurisdiction over which is initially lodged with an adminis-

trative body of special competence.—The Court is not a trier of facts. It relies on the expertise of
administrative agencies. In Roxas & Co., Inc. v. Court of Appeals, 321 SCRA 106 (1999), it
declared the DAR to be in a better position to resolve a petition for revocation. DAR is the
primary agency that possesses the necessary expertise on the matter: The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself authority to resolve a controversy the
jurisdiction over which is initially lodged with an administrative body of special competence.
Respondent DAR is in a better position to resolve petitioner’s petition for revocation, being
primarily the agency possessing the necessary expertise on the matter. The power to determine
whether Haciendas Palico, Banilad and Caylaway are nonagricultural, hence, exempt from the
coverage of the CARL lies with the DAR, not with this court.
VILLARAMA, JR., J., Dissenting Opinion:
Agrarian Reform; View that conveyance or sale by the original landowner is subject to
restrictions or limitations under the Comprehensive Agrarian Reform Law (CARL).—
Notwithstanding the favorable ruling of Executive Secretary Torres, MBC still sought DAR
clearance to sell all its foreclosed assets which have been placed under CARP coverage. This
further confirms that the subject lands have already been subjected to compulsory acquisition
under R.A. No. 6657. Secretary Garilao in his Order dated October 3, 1997 clarified that despite
the sale to be effected by MBC, which is allowed under Section 73-A of R.A. No. 6657, as
amended by R.A. No. 7881, the subject lands remain subject to compulsory transfer pursuant to
Section 71 of said law, and also directed that only those parcels not yet covered by Certificate of
Land Ownership Awards or Emancipation Patents may be sold or conveyed by MBC.
Apparently, MBC and CCFI did not disclose that the subject lands have already been sold by
CCFI to ALI as early as December 1995. While Secretary Garilao acknowledged the fact that a
cease and desist order was issued by the OP, he nevertheless maintained that the landholdings
remained subject to the provisions on acquisition under CARL although the acquisition of
petitioners’ properties was thereby suspended. The clearance to sell requested by MBC was thus
granted simply because the sale and/or transfer of agricultural land in case such sale, transfer or
conveyance is made necessary as a result of a bank’s foreclosure of the mortgaged land, is
permitted under Section 73-A, R.A. No. 6657, as
VOL. 780, JANUARY 12, 2016 5

amended by R.A. No. 7881. But such clearance was granted to enable MBC, the foreclosing
mortgagee bank, to sell the subject lands as a consequence of foreclosure under the law and not
for their disposition by CCFI. Indeed, conveyance or sale by the original landowner is subject to
restrictions or limitations under the CARL.
Remedial Law; Evidence; Admissions; Admission Against Interest; View that an admission
against interest is the best evidence that affords the greatest certainty of the facts in dispute,
based on the presumption that no man would declare anything against himself unless such
declaration is true.—In view of the circumstances, we hold that CCFI’s May 1996 request for
the lifting of Notice of Acquisition constitutes an admission against interest of the fact that such
notice had been issued following the earlier issuance of Notice of Coverage over its
landholdings. Admissions against interest are those made by a party to a litigation or by one in
privity with or identified in legal interest with such party, and are admissible whether or not the
declarant is available as a witness. An admission against interest is the best evidence that affords
the greatest certainty of the facts in dispute, based on the presumption that no man would declare
anything against himself unless such declaration is true. ALI being the successor-in-interest of
CCFI was therefore bound by such admission and may not be allowed at this stage to dispute the
issuance of the Notices of Coverage and Acquisition.
Same; Civil Procedure; Theory of the Case; Change of Theory; View that in the interest of
justice and within the sound discretion of the appellate court, a party may change his legal
theory on appeal only when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly meet the issue raised in
the new theory.—Jurisprudence has laid down certain exceptions to the general rule that points of
law, theories, issues, and arguments not brought to the attention of the trial court ought not to be
considered by a reviewing court, as these cannot be raised for the first time on appeal. Though
not raised below, the following issues may be considered by the reviewing court: lack of
jurisdiction over the subject matter, as this issue may be raised at any stage; plain error,
jurisprudential developments affecting the issues; or the raising of a matter of public policy. We
have also held that in the interest of justice and within the sound discretion of the appellate court,
a party may change his legal theory on

appeal only when the factual bases thereof would not require presentation of any further
evidence by the adverse party in order to enable it to properly meet the issue raised in the new
theory.
Agrarian Reform; Comprehensive Agrarian Reform Program; Conversion; View that those
landholdings which have already been placed under Comprehensive Agrarian Reform Program
(CARP) through compulsory acquisition or Voluntary Offer to Sell (VOS) were expressly
excluded from conversion such that Department of Agrarian Reform (DAR) officials were
explicitly directed not to give due course to applications for conversion over these lands.—Those
landholdings which have already been placed under CARP through compulsory acquisition or
Voluntary Offer to Sell (VOS) were expressly excluded from conversion such that DAR officials
were explicitly directed not to give due course to applications for conversion over these lands.
There was no ambiguity in the terminology used in paragraph VI(E) of AO No. 12, Series 1994.
Paragraph B(3)(b) applies only if the lands were not yet subjected to CARP under either
compulsory acquisition or VOS process. This is evident from the opening statement of paragraph
B setting forth certain criteria as bases for approving applications for conversion.
Same; Department of Agrarian Reform; Jurisdiction; View that Department of Agrarian

Reform’s (DAR’s) primary mandate is to acquire and distribute agricultural lands to as many
qualified beneficiaries as possible.—Paragraph VI(E) is a separate provision mandating the
exclusion of all landholdings already subjected to CARP under compulsory acquisition or VOS
from the exercise of administrative power to approve conversion applications. Hence, the
statement that Secretary Garilao had authority to “balance the guiding principle in paragraph E
against that in paragraph B(3) and to find for conversion” undermines the true intent of AO No.
12, Series of 1994 considering that, as a matter of policy, the government already exempted those
landholdings from the Secretary’s approving authority. This interpretation is more consistent
with paragraph A under the same Policies and Guiding Principles stating that “DAR’s primary
mandate is to acquire and distribute agricultural lands to as many qualified beneficiaries as
possible.”
Same; View that in those instances where the mortgaged agricultural lands are foreclosed, the
defaulting landowner alone should
VOL. 780, JANUARY 12, 2016 7

bear the loss in case of deficiency because the foreclosure buyer is merely substituted to the
landowner entitled only to just compensation pursuant to Republic Act (RA) No. 6657 and its
implementing rules.—Accordingly, in those instances where the mortgaged agricultural lands are
foreclosed, the defaulting landowner alone should bear the loss in case of deficiency because the
foreclosure buyer is merely substituted to the landowner entitled only to just compensation
pursuant to R.A. No. 6657 and its implementing rules. While Sec. 73-A of the law was amended
by R.A. No. 7881 to permit the sale of mortgaged agricultural lands made necessary as a result of
a bank’s foreclosure, it did not exempt the land sold from the operation of CARP.
MOTION FOR RECONSIDERATION of a decision of the Supreme Court.
The facts are stated in the resolution of the Court.
Manuel Joseph R. Bretaña III for petitioner Ayala Land, Inc.
Henry B. So for respondents.
Vincent Z. Bolivar and Emmie-Lou L. Siongco for Bangko Sentral ng Pilipinas.
RESOLUTION
SERENO, CJ.:
To grant this Motion for Reconsideration is to reverse several doctrines that build up a stable
judicial system.
First, the doctrine of finality of judgment. The doctrine is grounded on the fundamental principle
of public policy and sound practice that, at the risk of occasional error, the judgment of courts
and the award of quasi-judicial agencies must become final on some definite date fixed by law.
On 29 August 1995, the Supreme Court in G.R. Nos. 85960 and 92610 allowed the Bangko
Sentral ng Pilipinas, as receiver, to sell the assets of the Manila Banking Corporation
8
(MBC), including the subject property, to a third party.1 It may be recalled that the property was
earlier mortgaged to the MBC by Capitol Citifarms, Inc. (CCFI), and was later awarded to the
former in an auction sale. Pursuant to the Court’s Resolution, a “Deed of Absolute Sale”2 over
the property was executed in favor of Ayala Land, Inc. (ALI) in December 1995.3
On 13 August 2003, Case No. A-9999-04-CV-203-00 — or the Petition for Revocation filed by
Lamberto Javier, et al. — was also deemed closed as far as the Department of Agrarian Reform
(DAR) was concerned.5 The Bureau of Agrarian Legal Assistance was also directed to issue a
Certificate of Finality of the Order dated 26 September 2002 issued by former DAR Secretary
Hernani Braganza reversing the revocation of the Conversion Order.
Second, the rule that he who alleges must prove. Rule 131, Section 1 of the Rules of Court,
places the burden of proof on the alleging party to present evidence on the facts in issue
necessary to establish the claim or defense.
It is simply not the role of the Court to apply the missing Notice of Acquisition in perpetuity.
Even the Dissent concedes that the records are bereft of any trace of the Notice of Acqui-
_______________
1 On 29 August 1995, the Supreme Court issued a Resolution in G.R. Nos. 85960 and 92610;
Rollo, pp. 644-645.
2 Although denominated as such, the sale was not absolute, but conditional, i.e., subject to terms
and conditions other than the payment of the price and the delivery of the titles. According to the
Deed, the MBC was to continue to have custody of the corresponding titles for as long as any
obligation to the MBC remained due.
3 CA Rollo, p. 140.
In a Resolution dated 27 July 1999, the Court considered G.R. Nos. 85960 and 92610 closed and
terminated.4
4 Rollo, p. 659.
5 Order issued by DAR Secretary Roberto Pagdanganan; id., at pp. 158-163.

9
VOL. 780, JANUARY 12, 2016 9
sition. This is not a case of a feudal landowner unjustly enriched by the hard work of a long-
suffering tenant. ALI is in the precarious position of having been that third party buyer that
offered the terms and conditions most helpful to, ultimately, the BSP. Prior to that acquisition,
there was absolutely no relationship between ALI and the farmers. Respondents, on the other
hand, are residents who have not yet established any claim — let alone substantial rights — over
the land. On the contrary, what has been duly established is that they have received disturbance
compensation.6
Respondents never raised the issue regarding the existence or effect of a Notice of
Acquisition. Their arguments revolved on the alleged illegality of the sale and the
submission of a Sangguniang Bayan resolution, instead of an ordinance. Their brief was
primarily on the form in which the local government’s action was contained. We also note
that they were specifically ordered by the Court of Appeals (CA) to submit a copy of the
Notice of Acquisition, but they failed to comply.7 They made no attempt at all to explain
their inability to present a copy of the Notice of Acquisition.
Third, the duty of the Court to correct reversible errors of law committed by the CA. It was a
grave error on the part of the CA to base its ruling on a conclusion of fact that is not supported by
the records of the case. It is settled that issues raised for the first time on appeal and not raised in
the proceedings below ought not to be considered by a reviewing court. Points of law, theories,
issues, and arguments not brought to the attention of the trial court are barred by estoppel.
Especially, as in this case, when the document being cited is not in the record.
_______________
6 In his Order dated 18 December 2000, Secretary Morales ruled that CCFI and ALI did not fail
to pay/effect payment of disturbance compensation; Rollo, p. 118.
7 In a Resolution dated 16 November 2004; CA Rollo, p. 98.
10
Fourth, the doctrine of primary jurisdiction. We reiterate what has been said in the Decision.
That is, even assuming that the Notice of Acquisition did exist, considering that CCFI and ALI
have had no chance to controvert the CA finding of its legal bar to conversion, this Court is
unable to ascertain the details of the Notice of Acquisition at this belated stage, or rule on its
legal effect on the Conversion Order duly issued by the DAR, without undermining the technical
expertise of the DAR itself. This whole controversy was reviewed and the Conversion Order
validated by no less than two DAR Secretaries.
The doctrine of primary jurisdiction holds that if a case is such that its determination would
require the expertise, specialized training, and knowledge of an administrative body, relief must
first be obtained in an administrative proceeding before resorting to the courts, even if the matter
may well be within the latter’s proper jurisdiction.
Fifth, the great weight and respect accorded to factual findings of administrative agencies. The
factual findings of the DAR Secretary, who, by reason of his official position, has acquired
expertise in specific matters within his jurisdiction, deserve full respect. Except for a justifiable
reason, these findings ought not to be altered, modified or reversed.
Facts Subsequent to the Decision
On 15 June 2011, this Court promulgated a Decision8 granting the Petition for Review on
Certiorari9 filed by ALI and CCFI, and reversing the CA Decision in C.A.-G.R. S.P. No.
86321.10 The Court thereby upheld the Conversion Order11 issued by then DAR Secretary
Ernesto Garilao on 31 October
_______________
8 Id., at pp. 468-496.
9 Id., at pp. 14-53.
10 Id., at pp. 58-66.
11 Id., at pp. 332-334.

11
VOL. 780, JANUARY 12, 2016 11
1997, as well as the Decision12 of the Office of the President (OP) affirming the Order.
Respondents Simeona Castillo, et al. filed a Motion for Reconsideration13 presenting the same
arguments they raised in their Comment,14 viz.:
I. The CARP coverage is not a new issue or matter on appeal, as it was previously raised
before the DAR and the OP, hence, the CA is not barred from entertaining the claim.
II. Under DAR Administrative Order No. 12, Series of 1994 (DAR A.O. 12-94), the
guiding principle is to preserve prime agricultural land.
III. The Petition for Revocation is not barred by prescription.
IV. Petitioners committed a misrepresentation, because there was no reclassification

zoning ordinance.
V. Conversion is not a legal mode to exempt the property from the coverage of CARP.
In a Resolution15 dated 3 August 2011, the members of the Special Third Division referred the
case to the Court En Banc. On 16 August 2011, the Court En Banc resolved to accept the case.16
The Court then issued a Resolution17 requiring petitioners, the BSP and the DAR, which was
represented by the Office of the Solicitor General (OSG), to file their respective Comments on
the Motion for Reconsideration.
_______________
12 Id., at pp. 202-208.

13 Id., at pp. 532-549.
14 Id., at pp. 280-282.
15 Id., at p. 579.
16 Id., at p. 557.
17 Dated 6 September 2011; id., at p. 623.
12
On 10 January 2012, the general counsel of the BSP submitted a Manifestation.18 It explained
that its interest in the case stemmed from its receivership-liquidation of the MBC, particularly
the settlement of the latter’s obligations to the BSP.19 As discussed in our Decision, the Supreme
Court in G.R. No. 85960 allowed petitioner CCFI, as the mortgage debtor of MBC, to sell its
assets, including the subject landholding, “at their fair market value, under the best terms and
condition and for the highest price under current real estate appraisals.”20 Counsel for the BSP
posited that its interest in the case ended upon the sale of the subject land to ALI, after which the
BSP entered into settlement scheme with MBC.21
On the same date, petitioner ALI filed its Opposition22 to the Motion for Reconsideration. The
OSG’s Comment23 was filed on 10 February 2012; respondents’ Comment,24 on 14 May 2012.
We note, as a preliminary matter, petitioner ALI’s Manifestation and Motion25 apprising the
Court that several individuals who affixed their signatures to the verification portion of the
Motion for Reconsideration were NOT petitioners in the Petition for Revocation filed with the
DAR.26 According to petitioners, these repeated defects in the pleadings filed by respondents
show a blatant disregard for the rule requiring proper verification, and which justify the outright
denial of the Motion for Reconsideration.27
_______________
18 Id., at pp. 637-643.

19 Id., at p. 639.
20 Resolution dated 29 August 1995; id., at pp. 470, 644-655.
21 Id., at pp. 640-642.
22 Id., at pp. 663-681.
23 Id., at pp. 740-765.
24 Id., at pp. 810-834.
25 Id., at pp. 723-725.
26 Id., at pp. 551-554.
27 Id., at p. 724.
13
VOL. 780, JANUARY 12, 2016 13
Respondents failed to this address issue of improper verification in their Comment. Instead, they
merely rehashed their arguments in the Motion for Reconsideration. However, since the ends of
justice would be better served if the core issues are squarely addressed, this Court writes finis to
the present controversy on substantive grounds.
We DENY the Motion for Reconsideration.
With the repeated refutation of their theory that the Conversion Order should be revoked because
the sale between CCFI and ALI was illegal and CCFI committed misrepresentation in its
application for conversion, respondents have based their arguments by simply latching on to a
baseless phrase found in the CA Decision: “no less than the cited DAR Administrative Order No.
12 enjoins the conversion of lands directly under a notice of acquisition.”
A careful reading shows that the CA did not discuss or even refer to the provision that allegedly
disallows applications for conversion. It may have relied on paragraph VI, subparagraph E of
A.O. No. 12-94, which reads:
VI. POLICIES AND GOVERNING PRINCIPLES
xxxx
E. No application for conversion shall be given due course if 1) the DAR has issued a
Notice of Acquisition under the Compulsory Acquisition (CA) process x x x
In our Decision, we have emphatically ruled that a mere principle cannot be interpreted as an
absolute proscription on conversion. From a reading of subparagraph E in isolation, it may be
culled that what bars conversion is a notice of acquisition, not a notice of coverage. Assuming
arguendo that a conver order may be revoked if a notice of acquisition has already been issued,
we still cannot grant respondent’s MR, because what has been presented before the DAR, the OP,
the CA, and this Court is just the notice of coverage.
14
I. The CA committed reversible

error when it decided an issue
raised for the first time on
appeal and based its ruling
merely on respondents’ self-
serving allegation.
Respondents argue that they raised the issue regarding the Notice of Acquisition in their Petition
for Revocation, particularly in paragraph 5 thereof, which states:
That the subsequent application for conversion filed by respondents was a mere ploy to
cover up the said illegal transaction and to evade the coverage of the property under the
Comprehensive Agrarian Reform Program (CARP).28
Respondents cannot gloss over the fatal defect of its claim from the nonexistence of the Notice of
Acquisition just by reducing the issue to “CARP coverage.” As stated above, they are contending
that petitioners’ application for conversion was a ploy to cover up the illegality of the Deed of
Absolute Sale and Partial Redemption between CCFI and ALL What they repeatedly claimed
was that ALI fraudulently concealed the sale agreement from the DAR. Three DAR Secretaries,
including Secretary Garilao who issued the Conversion Order, rightly found these allegations
baseless. This point was also raised and judiciously passed upon in the OP Order dated 26
September 2003. In contrast, the Notice of Acquisition is a separate issue altogether which has
never been raised in the proceedings below.
The grounds relied upon by respondents in their Petition for Revocation are as follows:
_______________
28 Id., at pp. 536, 729.
15
VOL. 780, JANUARY 12, 2016 15
3. That the respondents29 grossly violated the Conversion Order because instead of
developing the land within five years from the issuance of the Order, it sold said land to
the present possessor, Ayala Land, Inc. x x x30
xxxx
6. That the respondents likewise committed gross misrepresentation of the fact in that
they made it appear before the DAR that the landholding in question has been duly
reclassified from agricultural uses such as residential, commercial and industrial, when in
truth and in fact, the Municipality of Silang does not have an approved town plan/zoning
ordinance as of 24 October 1997 as per Certification issued by CAROLINA A. CASAJE,
Officer-in-Charge, Board Secretariat of the Housing and Land Use Regulatory Board
(HLURB).31
xxxx
8. That the respondents likewise failed to comply with the undertaking to pay/effect
complete payment of the disturbance compensation of tenant-farmers in the subject
landholding x x x32
While the Decision has extensively discussed the error committed by the CA in passing upon and
ruling on a new issue on appeal, we did not grant the Petition for Review on this technical
ground alone. We went over the records and found no admissible proof presented to support
respondents’ claim that a Notice of Acquisition had been issued. What was attached to the
Petition for Review filed before the CA was a mere photocopy of the Notice of Coverage. The
purported Notice of Acquisition was never offered in evidence before the DAR and never
became part of the records
_______________
29 Pertaining to CCFI and ALI, respondents in the Petition for Revocation.
30 Rollo, p. 99.
31 Id., at p. 100.
32 Id., at p. 101.
16

even at the proceedings a quo. Hence, we found that the CA committed reversible error when it
gave credence to a mere assertion of the tenant-farmers.
As a prelude to our ruling that new issues cannot be raised for the first time on appeal, we
contemplated the scenario in which the farmers had submitted the proper document to the CA.
We then said, assuming arguendo they did, the appellate court could not have reversed the OP
Decision based on nothing more than this submission, as the issue of the Notice of Acquisition
had never been raised before the administrative agency concerned.
As contended by the OSG and as exhaustively discussed in our Decision, the CA decided an
issue raised for the first time on appeal. It held that the DAR had issued a Notice of Acquisition,
which served as a perpetual ban on the conversion of the subject lands. However, respondents
never attached a copy, certified or otherwise, to their 1) Petition for Revocation, 2) Motions for
Reconsideration in the proceedings a quo, or 3) Appeal Memorandum to the OP. This is because
they never raised the purpose of the notice as an issue in their Petition for Revocation of the
Conversion Order or in their Motion for Reconsideration before the OP. What they repeatedly
argued was that fraud had been perpetrated by CCFI and ALI.
Respondents expressed their agreement with the point made by Justice Martin S. Villarama, Jr. in
his Dissenting Opinion that the coverage of the land under CARL was confirmed by the
following documents:
(1) the stipulation/condition in the Deed of Partial Redemption and Deed of Absolute

Sale, both dated August 25, 1995, in which CCFI undertook to obtain DAR approval for
CARP exemption or conversion to nonagricultural use;
(2) CCFI’s letter-request dated May 7, 1996 addressed to the DAR Regional Director for
the lifting of the Notice of Acquisition;
17
VOL. 780, JANUARY 12, 2016 17

(3) BSP’s request in 1995 made in behalf of MBC for exemption of the subject property
from CARL coverage, and the letter-denial of DAR Secretary who directed the distribution
of the land to qualified farmer beneficiaries;
(4) the Decision dated October 11, 1996 of Executive Secretary Ruben D. Torres on the
appeal of BSP from the DAR Secretary’s denial of its request for exemption, in which the
DAR was directed to defer proceeding with the distribution of lands already covered by
CARL and petitioner was granted the opportunity to present proof that the lands are
qualified for exemption or conversion; and
(5) MBC’s request for DAR clearance in October 1997 to sell its landholdings placed
under CARL coverage, which includes the subject property.33
With the exception of item 2, there was no reference to a Notice of Acquisition in any of these
documents. According to the Dissent of Justice Villarama, considering the attendant
circumstances, the letter-request of CCFI for the lifting of the Notice of Acquisition constituted
an admission against interest of the fact that the notice was issued.
The concept of admissions against interest is governed by Section 26 of Rule 130 of the Rules of
Court, which provides:
Sec. 26. Admissions of a party.—The act, declaration or omission of a party as to a

relevant fact may be given in evidence against him.
The above rule considers admissions against interest as admissible evidence, but does not
dispense with the requirement that the admission be offered in evidence. In this case, precisely
because respondents did not raise the issue at all, petitioners did not have any opportunity to
inspect or question the authenticity and due execution of the documents. It would be offensive to
the basic rules of fair play, justice, and
_______________
33 Id., at p. 516.
18
due process to suddenly reverse the decisions of three DAR Secretaries and the Office of the
President based on an alleged document — especially if that document has not been presented,
authenticated, or offered in evidence — without giving the other party any opportunity to
contradict the purported admission.
CCFI, much less ALI, cannot be bound to whatever inference is being made only now on the
purported CCFI letter requesting the lifting of the Notice of Acquisition. They had never been
apprised throughout the administrative proceedings of its alleged existence, nor of the inference
sought to be drawn therefrom. They were never given the chance to inspect the document as any
piece of evidence should be so subjected.
Further, it must be noted that the letter does not identify the document itself, i.e., the Notice of
Acquisition, as to date, as to signatory, as to amount tendered. It only asks that the Notice of
Acquisition be lifted. It is probable, if this letter is genuine, that the alleged representative of
CCFI was referring to the Notice of Coverage, which is an admitted fact, and is precisely the
reason why the Bangko Sentral ng Pilipinas had to ask for, and was granted, permission by this
Court in G.R. Nos. 85960 and 92610 to sell the land.
It is serious error for the CA to base its ruling on a conclusion of fact not supported by the
records of this case — whether before us, the CA, the OP, or the DAR. This point becomes all
the more crucial, as the CA admitted it would have upheld the findings of the DAR and the OP,
were it not for the Notice of Acquisition:
At the concluding part of its discussion, it alluded to another memorandum circular of the
DAR (Memorandum Circular No. 11-79) that land use conversion may be allowed when it
is by reason of the changes in the predominant land use brought about by urban
development. It then pointed to the fact that the close proximity of the province of Cavite
to Metro Manila has opened it to the
19
VOL. 780, JANUARY 12, 2016 19

effects of modernization and urbanization. It warned that we would only succeed in

hindering progress if under these conditions we would still insist on CARP coverage.
The argument is valid if the agricultural land is still not subjected to compulsory
acquisition under CARP. But as we saw, there has already been a notice of coverage and
notice of acquisition issued for the property.34 (Emphasis supplied)
The OP rightly ruled that:
x x x Appellants’ lapses in not raising the issues before the DAR which has the expertise to
resolve the same and in a position to conduct due hearings and reception of evidence from
contending parties pertaining to the issue, puts the appellants in estoppel to question the
same for the first time on appeal. Jurisprudence dictates the following:
The petitioner for the first time, to allow him to assume a different posture when he comes
before the court and challenge the position he had accepted at the administrative level,
would be to sanction a procedure whereby the court — which is supposed to review
administrative determinations — would not review, but determine and decide for the first
time, a question not raised at the administrative forum. This cannot be permitted, for the
same reason that underlies the requirement of prior exhaustion of administrative remedies
to give administrative authorities the prior authority to decide controversies within its
competence, and in much the same way that, on the judicial level, issues not raised in the
lower court cannot be raised for the first time on appeal. (Aguinaldo Industries
Corporation v. Commissioner of Internal Revenue & Court of Tax Appeals, 112 SCRA
136)35 (Emphasis supplied)
_______________
34 Rollo, pp. 391-392.
35 OP Decision; id., at p. 206.

20
This Court has already established that issues raised for the first time on appeal and not raised in
the proceedings below ought not to be considered by a reviewing court. Points of law, theories,
issues, and arguments not brought to the attention of the trial court are barred by estoppel.36 The
rule becomes crucial in this particular case. Here, DAR is the most competent agency that can
make a factual determination regarding the Notice of Acquisition and its effect on the
Conversion Order long issued by Secretary Garilao. As it stands, none of the DAR Secretaries
was ever given the opportunity to dwell on this issue. On the contrary, Secretary Pagdanganan
issued an Order on 13 August 2003 ruling that Secretary Braganza’s Order affirming the
conversion had become final.
Basic considerations of fairness and due process also impel this rule, which according to the
Court, is but a logical effect of the regard for due process:
A perusal of the questions raised in the SAC and the CA shows that the issue on the
existence of a consummated sale between the DAR and petitioners was not among the
issues therein. Hence, this issue is being raised for the first time on appeal.
It is a fundamental rule that this Court will not resolve issues that were not properly
brought and ventilated in the lower courts... An issue, which was neither averred in the
complaint nor raised during the trial in the lower courts, cannot be raised for the first
time on appeal because it would be offensive to the basic rule of fair play and justice, and
would be violative of the constitutional right to due process of the other party.37
_______________
36 Atlas Consolidated Mining and Development Corp. v. Commissioner of Internal Revenue,

190 Phil. 195; 102 SCRA 246 (1981).
37 Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines, 634 Phil. 9; 619 SCRA
609 (2010), citing Fuentes v. Caguimbal, 563 Phil. 339; 538 SCRA 12 (2007) and Sanchez v.
Court of Appeals, 345 Phil. 155, 186; 279 SCRA 647, 678 (1997).
21
VOL. 780, JANUARY 12, 2016 21
II. Assuming that respondents

properly raised the above issue
before the DAR, the proscrip-
tion on conversion is a mere
guiding principle, because
DAR A.O. 12-94 specifies that it
is not applicable to lands
which have not been proven to
be “prime agricultural lands.”
Respondents reassert their stand that the guiding principle of DAR A.O. No. 12-1994 is to
preserve prime agricultural lands, which under paragraph VI-D is considered nonnegotiable for
conversion. In our view, this principle alone does not justify reversing the conversion order. Even
if we ignore the lapses of the CA and assume that a Notice of Acquisition did exist, it cannot
serve as a perpetual bar on conversion, which is merely a guiding principle; and second, this
principle applies only to prime agricultural lands.
The claim that a prior notice of acquisition bars the issuance of a conversion order is found under
paragraph VI(e) of DAR A.O. 12-94. Yet the said paragraph falls under heading VI, “Policies and
Guiding Principles.” By no stretch of the imagination can a mere policy or principle be
interpreted as an absolute ban on conversion, such policy having been formulated by the same
agency which ordered the conversion. Paragraph VI-E cannot operate to diminish the authority
and jurisdiction of the DAR over the land.
As rightly pointed out by the OSG and respondents themselves, the guiding principle governs
only prime agricultural lands.38 The findings of the DAR — which are binding on this Court —
and those of the Central Land Use Planning Policy and Implementation (CLUPPI), as well as the
Municipal Agrarian Reform Officer (MARO), are as follows:
_______________
38 OSG Comment; Rollo, p. 748.

22
a) The property is about 10 kilometers from the Provincial Road.
b) The land sits on a mountainside overlooking Santa Rosa technopark.
c) The topography of the landholding is hilly and has an average slope of more than 18%.
It is undeveloped and mostly covered with a wild growth of vines, bushes, and secondary
growth of forest trees.
d) The dominant use of the surrounding area is its industrial/forest growth as the
landholding is sitting on a mountain slope overlooking the Sta. Rosa Technopark.
e) The area is not irrigated and no irrigation system was noted in the area.39
Clearly, the DAR had long investigated and ruled that the property was not suitable for
agricultural use, as it had remained undeveloped without any source of irrigation. Hence, it is not
“prime agricultural land” as contemplated under A.O. 12-94. Additionally, Republic Act 6657 or
the Comprehensive Agrarian Law states that all lands with a slope of 18% and over, and
undeveloped, shall be exempt from the Act.40 If the said landholding has been developed for any
other purpose — e.g., residential, commercial, or industrial — then it will not fall under the
coverage of CARP.41
_______________
39 Cited in the 15 June 2011 Decision of this Court, pp. 21-22; id., at pp. 488-489.
40 Republic Act No. 6657, Sec. 10.
41 DAR Opinion No. 59-97, issued on 2 June 1997. The relevant paragraph reads: “Anent your
second query, a qualification should be made. It is provided under R.A. No. 6657 that a
landholding having a slope of 18% or more and undeveloped is not within the ambit of the
CARP. Thus, if such has been developed for the purpose for which the CARP has been enacted
(agricultural purposes), regardless of who developed it (i.e., landowner or farmer), the same
23
VOL. 780, JANUARY 12, 2016 23
This Court has held that before the DAR could place a piece of land under CARP coverage, there
must first be a showing that the land is an agricultural land, i.e., devoted or suitable for
agricultural purposes.42 In this determination, we cannot substitute our own judgment for that of
the DAR. To do so would run counter to another basic rule that courts will not resolve a
controversy involving a question that is within the jurisdiction of an administrative tribunal prior
to the latter’s resolution of that question. Since the DAR’s findings herein are supported by
substantial evidence, and affirmed by the OP, our only course is to sustain it. In Heirs of Arcadio
Castro, Sr. v. Lozada,43 the Court held as follows:
It has been peremptorily determined by OP and, before it, by the DAR, acting on
investigations reports of its provincial (Batangas) office, as reviewed and validated by its
regional office, that the OLT coverage of the disputed landholdings was erroneous, it being
established that the lands covered are not primarily devoted to rice and corn and that the
tenancy relationship has not been clearly established. Absent palpable error by both
agencies, of which this Court finds none, their determination as to the use of the property
and/or to the dubious status of petitioners as de jure tenants is controlling.
x x x [I]t is settled that factual findings of administrative agencies are generally accorded
respect and even finality by this Court, if such findings are supported by substantial
evidence, a situation that obtains in this case. The factual findings of the Secretary of
Agrarian Reform, who, by reason of his official position,
_______________
shall be covered by the said law. On the other hand, if said landholding has been developed for
any other purpose, e.g., residential, commercial, or industrial, then said landholding will not fall
within the coverage of CARP.”
42 Gonzalo Puyat & Sons, Inc. v. Alcaide, 680 Phil. 609; 664 SCRA 600 (2012).
43 693 Phil. 431; 679 SCRA 271 (2012), citing Aninao v. Asturias Chemical Industries Inc., 502
Phil. 766; 464 SCRA 526 (2005).
24
has acquired expertise in specific matters within his jurisdiction, deserve full respect,
and without justifiable reason, ought not to be altered, modified or reversed.
(Emphasis supplied)
On the issue of conversion, this Court must respect the findings of the DAR, which is the only
agency charged with the mandate of approving or disapproving applications for conversion.44
The CA Decision effectively enfeebles the Orders of no less than three Secretaries of the DAR
and the policy pronouncements of the OP. The rule that conversion orders, once final and
executory, may no longer be questioned is contradicted by the actions of respondents: accepting
disturbance compensation for the land; seeking petitioners’ compliance with the terms of the
Conversion Order; then reversing themselves by assailing the Order itself long after the proper
period has prescribed.
III. The Petition for Revocation

was barred by prescription.
The argument of respondents that the Petition for Revocation was not barred by prescription was
anchored on the interpretation of Secretary Morales in his Order dated 18 December 2000. He
opined therein that the provisions of DAR A.O. No. 1, Series of 1999 (DAR A.O. 1-99),
particularly Section 3445 on prescription, was not applicable. He quoted the
_______________
44 Roxas & Co., Inc. v. Court of Appeals, 378 Phil. 727; 321 SCRA 106 (1999).
45 SECTION 34. Filing of Petition.—A petition for cancellation or withdrawal of the
conversion order may be filed at the instance of DAR or any aggrieved party before the
approving authority within ninety (90) days from discovery or facts which would warrant such
cancellation but not more than one (1) year from issuance of the order: Provided, That where the
ground refers to any of those enumerated in Sec. 35(b), (e), and (f), the petition may be filed
within ninety (90) days from discovery of such facts but not beyond the
25
VOL. 780, JANUARY 12, 2016 25
Civil Code provision on the non-retroactivity of laws. On the other hand, the Dissent volunteered
that DAR A.O. 1-99 expressly provides for the remedy of cancellation or revocation of a
conversion order within a five-year period, if the petition is based on a violation of relevant rules
and regulations of the DAR.
As to respondents’ contention, we reproduce and underscore the relevant portion of the Decision:
Respondents assume that the rule to be applied is that prevailing at the time of the issuance
of the Conversion Order. This is incorrect. The rule applicable in determining the
timeliness of a petition for cancellation or withdrawal of a conversion order is the rule
prevailing at the time of the filing of that petition, and not at the time of the issuance of the
Conversion Order. It is axiomatic that laws have prospective effect, as the Administrative
Code provides. While A.O. 01-99 was not yet promulgated at the time of the issuance of
the Conversion Order, it was already published and in effect when the Petition for
Revocation was filed on 19 May 2000.
Regarding the question on when the one-year prescription period should be reckoned, it
must be still be resolved in conformity with the prospective character of laws and rules. In
this case, the one-year period should be reckoned from the date of effectivity of A.O. 1-99,
which is 31 March 1999. Therefore, no petition for cancellation or withdrawal of
conversion of lands already converted as of 30 March 1999 may be filed after 1 March
2000.
The Petition for Revocation was filed on 19 May 2000.
_______________
period for development stipulated in the order of conversion: Provided, further, that where the
ground is lack of jurisdiction, the petition shall be filed with the Secretary and the period
prescribed herein shall not apply.
26
We now address the contention raised in the Dissent. The alleged violations of rules and
regulations of the DAR pertain to the “noncompliance with the condition of developing the area
within five years, the illegal sale transaction made by CCFI to evade coverage under CARL, and
CCFI’s gross misrepresentation before the DAR that the land subject of conversion had already
been reclassified to nonagricultural uses.” These violations, according to respondents, paved the
way for the extended prescriptive period of five years. It must be noted, however, that Secretary
Morales gave due course to, and even granted, the Petition for Revocation. He resolved the
substantial issues raised and made a categorical factual finding that there had been no
misrepresentation.46 As regards the alleged illegal sale, we have extensively discussed the issue
in the Decision.
IV. Conversion was still pos-

sible despite the nonexistence
of a zoning ordinance.
Respondents insist that there was a clear misrepresentation committed by CCFI when it
submitted a resolution instead of an ordinance. They proffer the argument that the submission of
a zoning ordinance as approved by the HLURB was a requirement for the approval of the
application for conversion under DAR A.O. No. 12-94.47 They quote paragraph 6, Part VII(A)
of the administrative issuance:
A. Requirements for all applicants
xxxx
6. Zoning Certification from the HLURB Regional Office when the subject land is
within a city/municipality with a land use plan (zoning ordinance approved and certified
by the HLURB (LUC Form No. 2, Series 1994).
_______________
46 Rollo, p. 118.
47 Id., at p. 545.
27
VOL. 780, JANUARY 12, 2016 27
They, however, conveniently ignore paragraph 4 of Part VI(B), which states:
4. If the city/municipality does not have a comprehensive development plan and zoning
ordinance duly approved by HLRB/SP but the dominant use of the area surrounding the
land subject of the application for conversion is no longer agricultural, or if the proposed
use is similar to, or compatible with the dominant use of the surrounding areas as
determined by the DAR, conversion may be possible.
Respondents themselves point to a certification48 dated 23 July 2003 by the board secretary of
the HLURB stating that, to date, the Municipality of Silang does not have an approved town
plan/zoning ordinance/comprehensive land use plan.49 They also admit that the submission of an
ordinance was by recommendation of the CLUPPI-1, and that the ordinance has not been
adopted by Secretary Garilao.50
V. The property is exempt from
CARL coverage.
Respondents “beg the kind indulgence” of the Court to take judicial notice of Section 2051 of
R.A. 7160 that land covered by
_______________
48 Id., at p. 152.
49 Id., at pp. 820-821.
50 Id., at p. 545.
51 SECTION 20. Reclassification of Lands.—(a) A city or municipality may, through an

ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize
the reclassification of agricultural lands and provide for the manner of their utilization or
disposition in the following cases: (1) when the land ceases to be economically feasible and
sound for agricultural purposes as determined by the Department of Agriculture or (2) where the
land shall have substantially greater economic value for residential, commercial, or industrial
purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall
be
28
CARP shall not be affected by the reclassification and conversion of that land.
Respondents insist that the land in question is covered by CARP. However, the DAR has already
conclusively found that the topography is hilly and has an average slope of more than
_______________
limited to the following percentage of the total agricultural land area at the time of the passage of
the ordinance:
(1) For highly urbanized and independent component cities, fifteen percent (15%);
(2) For component cities and first to the third class municipalities, ten percent (10%); and
(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That
agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act
Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise known as “The
Comprehensive Agrarian Reform Law,” shall not be affected by the said reclassification and the
conversion of such lands into other purposes shall be governed by Section 65 of said Act.
(b) The President may, when public interest so requires and upon recommendation of the
National Economic and Development Authority, authorize a city or municipality to reclassify
lands in excess of the limits set in the next preceding paragraph.
(c) The local government units shall, in conformity with existing laws, continue to prepare
their respective comprehensive land use plans enacted through zoning ordinances which shall be
the primary and dominant bases for the future use of land resources: Provided, That the
requirements for food production, human settlements, and industrial expansion shall be taken
into consideration in the preparation of such plans.
(d) Where approval by a national agency is required for rectification, such approval shall not
be unreasonably withheld. Failure to act on a proper and complete application for reclassification
within three (3) months from receipt of the same shall be deemed as approval thereof.
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any

manner the provisions of R.A. No. 6657.
29
VOL. 780, JANUARY 12, 2016 29
18%. Hence, the land is exempt from CARP coverage under Section 10 of R.A. 6657:
SECTION 10. Exemptions and Exclusions.—Lands actually, directly and exclusively
used and found to be necessary for parks, wildlife, forest reserves, reforestation, fish
sanctuaries and breeding grounds, watersheds, and mangroves, national defense, school
sites and campuses including experimental farm stations operated by public or private
schools for educational purposes, seeds and seedlings research and pilot production
centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal
farms actually worked by the inmates, government and private research and quarantine
centers and all lands with eighteen percent (18%) slope and over, except those already
developed shall be exempt from the coverage of the Act. (Emphasis supplied)
The Court is not a trier of facts. It relies on the expertise of administrative agencies. In Roxas &
Co., Inc. v. Court of Appeals,52 it declared the DAR to be in a better position to resolve a
petition for revocation. DAR is the primary agency that possesses the necessary expertise on the
matter:
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. Respondent DAR is in a better position to
resolve petitioner’s petition for revocation, being primarily the agency possessing the
necessary expertise on the matter. The power to determine whether Haciendas Palico,
Banilad and Caylaway are nonagricultural, hence, exempt from the coverage of the
CARL lies with the DAR, not with this court. (Emphasis supplied)
_______________
52 Supra note 44.
30

Lastly, respondents claim that their failures are mere technicalities that cannot prevail over their
substantive rights as farmers, who should have “more in law.” This statement is a gross
oversimplification of the issue. The Notice of Acquisition which was mentioned in passing and
only at a late stage, has no evidentiary support available in the records. The DAR and the OP
have both ruled for CCFI and ALI, and the CA itself has admitted that the stand of CCFI and ALI
would have been valid if not for the issuance of the alleged Notice of Acquisition. The CA
should have therefore been more circumspect in verifying whether anything on record remotely
supported the self-serving claim of the farmers. Even the Notice of Coverage that they presented
does not vest substantive rights, as it does not automatically transfer ownership of the land to
them. A notice of coverage does not ipso facto render the land subject thereof a land reform
area.53
In Gonzalo Puyat & Sons, Inc. v. Alcaide,54 both a Notice of Coverage and a Notice of
Acquisition were already issued over the subject property. More crucially, the existence of the
Notice of Acquisition was properly raised and proved before the trial court. Yet, the CA Decision
favoring the farmer-beneficiaries was reversed on the ground that they must still comply with
procedural rules:
Time and again, it has been held that the right to appeal is not a natural right or a part of
due process, but merely a statutory privilege and may be exercised only in the manner and
in accordance with the provisions of the law. The party who seeks to avail of the same
must comply with the requirements of the rules, failing in which the right to appeal is lost.
_______________
53 Pasco v. Pison-Arceo Agricultural and Development Corporation, 520 Phil. 387; 485 SCRA
514 (2006).
54 Supra note 42.
31
VOL. 780, JANUARY 12, 2016 31

We understand the plight of prospective farmer-beneficiaries all over the country; nevertheless,
we cannot see the alleged injustice in this particular case. While it is true that litigation is not a
game of technicalities, it is equally true that elementary considerations of due process require
that petitioners in this case be duly apprised of a claim against them before judgment may be
rendered.55
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby DENIED
with FINALITY.
No further pleadings or motions will be entertained.
Let entry of judgment be made in due course.
SO ORDERED.
Carpio, Velasco, Jr., Brion, Del Castillo, Perez, Mendoza, Reyes and Perlas-Bernabe, JJ.,
concur.
Leonardo-De Castro, J., I join the dissent of Justice Villarama.
Peralta, J., I join J. Villarama’s dissent.
Bersamin, J., I join the dissent of J. Villarama.
Villarama, Jr., J., Pls. see Dissenting Opinion.
Leonen, J., I join the dissent of J. Villarama.
Jardeleza, J., No part.
_______________
55 Titan Construction Corporation v. David, Sr., 629 Phil. 346; 615 SCRA 362 (2010).
32

DISSENTING OPINION
VILLARAMA, JR., J.:
This resolves the motion for reconsideration1 of our Decision2 promulgated on June 15, 2011
which granted the petition for certiorari filed by Ayala Land, Inc. (ALI) and Capitol Citifarms,
Inc. (CCFI) and reversed the Decision dated January 31, 2007 of the Court of Appeals (CA) in
C.A.-G.R. S.P. No. 86321.
In their Motion for Reconsideration, respondents argued that the majority ruling failed to take
cognizance of the following:
(1) The Comprehensive Agrarian Reform Program (CARP) coverage is not a new issue or
matter on appeal as it was previously raised before the Department of Agrarian Reform
(DAR) and the Office of the President (OP). Hence, the CA is not barred from entertaining
the claim;
(2) Under DAR Administrative Order (AO) No. 12, Series of 1994, the guiding principle is
to preserve prime agricultural land. Petitioners must strictly comply with the said AO.
(3) The petition for revocation is not barred by prescription.
(4) There is no reclassification zoning ordinance. Hence, there was a clear

misrepresentation on the part of petitioners.
_______________
1 Rollo, pp. 532-550.
2 Ayala Land, Inc. v. Castillo, G.R. No. 178110, June 15, 2011, 652 SCRA 143.
33
VOL. 780, JANUARY 12, 2016 33

(5) For lands covered under the CARP, conversion is not the legal mode to exempt the
property as only two cases of exemption or exclusion is provided in Section 10 of R.A.
No. 6657.3
Petitioner ALI filed its Opposition wherein it emphasized that the CA had decided an issue raised
for the first time on appeal by the respondents, i.e., the purported issuance of notices of coverage
and acquisition of the subject land. It is also pointed out that photocopies of the said notices
appeared only for the first time in the petition in C.A.-G.R. S.P. No. 86321 as an “exhibit.” As to
the significance of the “guiding principle” in DAR AO No. 12, Series of 1994 “to preserve prime
agricultural land,” ALI asserts that the subject property is not prime agricultural land to begin
with, as found by the Center for Land Use Policy, Planning and Implementation-1 (CLUPPI-1)
Executive Committee and cited in the Conversion Order.
ALI likewise maintains that the petition for revocation/

cancellation of the conversion order is already barred by prescription under Section 34 of DAR
AO No. 1, Series of 1999. On respondents’ continuing claim of lack of compliance with the
requirements of a valid reclassification, ALI contends that this Court correctly rejected such
argument when it ruled that conversion and reclassification are two separate and distinct
procedures. Respondents’ invocation of Section 20 of R.A. No. 7160 is thus misplaced
considering that what took place was not the reclassification of the subject property but its
conversion.
In its Comment, the Office of the Solicitor General stated that the motion for reconsideration
should be denied as it fully concurs with the findings and conclusions contained in the Decision
rendered by this Court.
_______________
3 Rollo, pp. 535-536.
34

Upon reexamination of the facts on record and applicable laws and jurisprudence, the Court
resolves to grant the motion for reconsideration.
The issuance of Notice of Ac-

quisition is an admitted fact
In the Decision, the Court ruled that even assuming the proper document had been submitted to
the CA, the issuance of a Notice of Acquisition over the land subject of this controversy could
not have, by nothing more than such submission, reversed the OP Decision because the matter
had never been raised before the DAR as in fact records show that “this issue was not raised in
the original Petition for Revocation in the second Motion for Reconsideration filed by the
farmers before the DAR, and that no Notice of Acquisition was attached to their Appeal
Memorandum to the OP.”4 The Decision thus pointed out that Secretaries Pagdanganan,
Braganza and Morales did not have the opportunity to dwell on this issue as what the
respondents persistently alleged is the concealment by petitioners of the sale of the subject land
to Ali.
After taking a second look on this case, we find that based on records of the DAR, the fact of
issuance of the Notice of Coverage and Notice of Acquisition pertaining to the 221.3048 hectares
of agricultural land in the name of CCFI under Transfer Certificate of Title (TCT) No. 128672
was never disputed by petitioners during the proceedings before the DAR. While it is true that
the exhibits attached to respondents’ petition before the CA were plain photocopies, the totality
of documentary evidence indisputably established that the property was already placed under
CARP coverage through the issuance by DAR of a Notice of Coverage and Notice of Acquisition
in 1989. Such was the actual status of the subject land notwithstanding the absence of reference
to
_______________
35
VOL. 780, JANUARY 12, 2016 35

these issuances in the Morales Order.5 Clearly, the proceedings for acquisition of private
agricultural lands had formally commenced with the issuance of Notice of Coverage and Notice
of Acquisition, and CCFI thereafter exhausted the available administrative remedies which
effectively delayed their implementation.
That the subject lands have already been placed under CARP coverage even before the Manila
Banking Corporation (MBC), CCFI’s creditor-mortgagee, acquired the subject property is further
confirmed by the following documentary evidence: (1) the stipulation/condition in the Deed of
Partial Redemption and Deed of Absolute Sale, both dated August 25, 1995, whereby CCFI
undertook to obtain DAR approval for CARP exemption or conversion to nonagricultural use;
(2) CCFI’s letter-request dated May 7, 1996 addressed to the DAR Regional Director for the
lifting of the Notice of Acquisition; (3) BSP’s request in 1995 made in behalf of MBC for
exemption of the subject property from Comprehensive Agrarian Reform Law (CARL) coverage,
and the letter-denial of DAR Secretary who directed the distribution of the land to qualified
farmer beneficiaries; (4) the Decision dated October 11, 1996 of Executive Secretary Ruben D.
Torres on the appeal of BSP from the DAR Secretary’s denial of its request for exemption, in
which the DAR was directed to defer proceeding with the distribution of lands already covered
by CARL and petitioner was granted the opportunity to present proof that the lands are qualified
for exemption or conversion; and (5) MBC’s request for DAR clearance in October 1997 to sell
its landholdings placed under CARL coverage, which included the subject property.
Indeed, records bear out that CCFI through counsel wrote the DAR Regional Director to request
the lifting of the Notice of Acquisition.6 Said letter dated May 7, 1996 reads:
_______________
5 Rollo, pp. 336-352.
6 DAR Records, folder #1 of 3, pp. 525-526.
36
In behalf of our client, CAPITOL CITIFARMS, INC., we wish to request for the lifting of
the Notice of Acquisition on their property situated in Barangay Munting-ilog, Silang,
Cavite covered by Transfer Certificate of Title No. 128672 issued by the Register of Deeds
of the Province of Cavite.
The subject property has been reclassified by the Municipal Council of Silang, Cavite from
agricultural to residential, commercial and industrial area, a certified true copy of the said
Municipal Resolution is hereto attached.
The subject property is not serviced by the National Irrigation Administration, a xerox
copy of the Certification is hereto attached. The Philippine Coconut Authority has certified
that the area is not planted to coconut trees, a xerox copy of the said certification is hereto
attached. The Department of Agriculture based on these certifications and the ocular
inspection conducted by the Technical Group certified that the subject property is eligible
for land conversion, a xerox copy of this certification is hereto attached.
The subject property is not tenanted although there are occupants in the property. These
occupants has executed a Waiver of Rights and an endorsement for the lifting of the Notice
of Acquisition after they have been paid their disturbance compensation. Copies of these
individual Waivers are hereto attached.
We are also enclosing herewith a certified true copy of Transfer Certificate of Title No.
128672, Tax Declaration No. 6800 and a parcellary map of the property showed actual
occupancy by Farmers/Occupants.
We trust that you will give this request your kind consideration.
Very truly yours,
(Sgd.)
ELADIO S. PASAMBA
37
VOL. 780, JANUARY 12, 2016 37
Under Indorsement7 dated February 25, 1997, DAR Assistant Regional Director for Operations
Renato B. Alano referred CCFI’s request for the lifting of Notice of Acquisition to Atty. Ibra D.
Omar, Al Haj., Chief of the Legal Division, DAR Region IV, for the latter’s appropriate action.
Acting on the said request, Atty. Victor B. Baguilat set the matter for hearing and sent a letter8 to
Atty. Pasamba inviting him to appear at DAR Provincial Office, Legal Division, Capitol
Compound, Trece Martires City on March 25, 1997 and further instructing him to bring pertinent
documents in support of CCFI’s claim. However, in his letter-reply9 dated March 24, 1997, Atty.
Pasamba informed Atty. Baguilat that he will not be able to attend the scheduled hearing and
requested for a resetting on April 7 or 8, 1997. Apart from these communications, there seems to
be no further action taken by DAR on CCFI’s request for the lifting of the Notice of Acquisition.
What appears from the records is the transmittal10 dated May 23, 1997 sent by Regional
Director Eugenio B. Bernardo in compliance with a memorandum order issued by DAR, which
was addressed to the Head, CLUPPI-2 Secretariat forwarding the Case Folder pertaining to the
subject land labelled as “Protest on Coverage (A.O. No. 09, Series of 1994)” by applicant CCFI.
It may be recalled that CCFI’s request for the lifting of the Notice of Acquisition was made
following the denial by Secretary Ernesto Garilao of BSP’s (statutory receiver of MBC) request
for a DAR order exempting the subject lands from the coverage of CARP, under letters dated
February 14, 1995 and June 13, 1995.11 While said orders were appealed to the OP, CCFI, under
the Deed of Absolute Sale with ALI, remained duty-bound to fulfill the condition precedent to
the direct
_______________
7 Id., at p. 523.
8 Id., at p. 522.
9 Id., at p. 519.
10 Id., at p. 517.
11 Rollo, pp. 326-331.
38

payment of down payment to MBC (equivalent to payment of down payment due to CCFI under
the contract of sale), that is, to obtain an order of exemption or land conversion from DAR. In
other words, prior to the filing of an application for conversion, CCFI first sought the lifting of
the Notice of Acquisition after it failed to secure from Secretary Garilao an order of exemption
from CARP coverage. There was clearly no dispute as to the existence of the said Notice of
Acquisition. In fact, by resorting to various legal remedies, petitioners succeeded in delaying the
implementation by the DAR of the subject landholding under the Compulsory Acquisition
scheme.
Even prior to the aforesaid requests for exemption and lifting of the Notice of Acquisition, MBC
filed a motion for the issuance of an order granting it a period of five years within which to seek
conversion of its landholdings to nonagricultural use. On October 11, 1996, then Executive
Secretary Ruben D. Torres ordered the remand of the case to the DAR for the purpose of
receiving evidence on the question of which among the parcels of land, are exempt from the
coverage of the CARL, which lands may be converted into nonagricultural uses, and which may
be subjected to compulsory coverage.12 DAR moved for reconsideration but the OP denied it.13
Notwithstanding the favorable ruling of Executive Secretary Torres, MBC still sought DAR
clearance to sell all its foreclosed assets which have been placed under CARP coverage. This
further confirms that the subject lands have already been subjected to compulsory acquisition
under R.A. No. 6657. Secretary Garilao in his Order14 dated October 3, 1997 clarified that
despite the sale to be effected by MBC, which is allowed under Section 73-A of R.A. No. 6657,
as amended by R.A. No. 7881, the subject lands remain subject
_______________
12 DAR Records, folder #3 of 3, pp. 1481-1490.
13 Id., at pp. 1491-1493.
14 Id., at pp. 1494-1497.
39
VOL. 780, JANUARY 12, 2016 39

to compulsory transfer pursuant to Section 71 of said law, and also directed that only those
parcels not yet covered by Certificate of Land Ownership Awards or Emancipation Patents may
be sold or conveyed by MBC. Apparently, MBC and CCFI did not disclose that the subject lands
have already been sold by CCFI to ALI as early as December 1995. While Secretary Garilao
acknowledged the fact that a cease and desist order was issued by the OP, he nevertheless
maintained that the landholdings remained subject to the provisions on acquisition under CARL
although the acquisition of petitioners’ properties was thereby suspended. The clearance to sell
requested by MBC was thus granted simply because the sale and/or transfer of agricultural land
in case such sale, transfer or conveyance is made necessary as a result of a bank’s foreclosure of
the mortgaged land, is permitted under Section 73-A, R.A. No. 6657, as amended by R.A. No.
7881. But such clearance was granted to enable MBC, the foreclosing mortgagee bank, to sell the
subject lands as a consequence of foreclosure under the law and not for their disposition by
CCFI. Indeed, conveyance or sale by the original landowner is subject to restrictions or
limitations under the CARL.
In view of the circumstances, we hold that CCFI’s May 1996 request for the lifting of Notice of
Acquisition constitutes an admission against interest of the fact that such notice had been issued
following the earlier issuance of Notice of Coverage over its landholdings. Admissions against
interest are those made by a party to a litigation or by one in privity with or identified in legal
interest with such party, and are admissible whether or not the declarant is available as a
witness.15 An admission against interest is the best evidence that affords the greatest certainty of
the facts in dispute, based on the presumption that no man would declare anything against
himself
_______________
15 Lazaro v. Agustin, G.R. No. 152364, April 15, 2010, 618 SCRA 298, 308, citing Unchuan v.
Lozada, G.R. No. 172671, April 16, 2009, 585 SCRA 421, 435.
40
unless such declaration is true.16 ALI being the successor-in-interest of CCFI was therefore
bound by such admission and may not be allowed at this stage to dispute the issuance of the
Notices of Coverage and Acquisition.
It may be that respondents in their appeal to the OP raised a new argument in support of their
position that the Conversion Order was validly revoked by Secretary Morales when they
contended that since Notices of Coverage and Acquisition have already been issued, the DAR
erred in granting CCFI’s application for conversion, citing as basis AO No. 12, Series of 1994,
VI(E), which provides:
E. No application for conversion shall be given due course if 1) the DAR has issued a
Notice of Acquisition under the compulsory acquisition (CA) process; 2) Voluntary Offer
to Sell (VOS), or an application for stock distribution covering the subject property has
been received by DAR; or 3) there is already a perfected agreement between the
landowner and the beneficiaries under Voluntary Land Transfer (VLT). (Emphasis
supplied)
However, jurisprudence has laid down certain exceptions to the general rule that points of law,
theories, issues, and arguments not brought to the attention of the trial court ought not to be
considered by a reviewing court, as these cannot be raised for the first time on appeal. Though
not raised below, the following issues may be considered by the reviewing court: lack of
jurisdiction over the subject matter, as this issue may be raised at any stage; plain error;
jurisprudential developments affecting the issues; or the raising of a matter of public
_______________
16 Taghoy v. Tigol, Jr., G.R. No. 159665, August 3, 2010, 626 SCRA 341, 350, citing Heirs of
Miguel Franco v. Court of Appeals, 463 Phil. 417, 425; 418 SCRA 60, 67 (2003); Yuliongsiu v.
PNB, 130 Phil. 575, 580; 22 SCRA 585, 591 (1968); Republic v. Bautista, G.R. No. 169801,
September 11, 2007, 532 SCRA 598, 609; and Bon v. People, 464 Phil. 125, 138; 419 SCRA 101,
111 (2004).
41
VOL. 780, JANUARY 12, 2016 41

policy.17 We have also held that in the interest of justice and within the sound discretion of the
appellate court, a party may change his legal theory on appeal only when the factual bases
thereof would not require presentation of any further evidence by the adverse party in order to
enable it to properly meet the issue raised in the new theory.18
In this case, the CA found merit in the argument raised by respondents pertaining to the violation
of AO No. 12, Series of 1994, VI(E) and considered the matter of issuance of Notices of
Coverage and Acquisition sufficiently established in the DAR records. Finding such ground to be
crucial in resolving the issue of whether or not the OP erred in sustaining the Braganza and
Pagdanganan orders which reversed the Morales Order revoking the conversion order issued in
favor of CCFI, the CA ruled that the OP committed a reversible error in upholding a conversion
order that permits the circumvention of agrarian laws because CCFI’s application should not
have been entertained in the first place.
Assuming therefore, that the issue was raised by respondents only before the OP, the CA’s
findings and conclusion on the validity of the revocation of the conversion order cannot be
assailed as serious error or grave abuse of discretion.
DAR violated AO No. 12,

Series of 1994 when it is-
sued the Conversion Order
In the Decision, the Court declared that DAR AO 12, Series of 1994, paragraph VI(E) is a “mere
principle” which cannot be interpreted as an absolute proscription on conversion. The
_______________
17 Villaranda v. Villaranda, G.R. No. 153447, February 23, 2004, 423 SCRA 571, 589-580.
18 Ramos v. Philippine National Bank, G.R. No. 178218, December 14, 2011, 662 SCRA 479,
496, citing Lianga Lumber Company v. Lianga Timber Co., Inc., 166 Phil. 661, 687; 76 SCRA
197, 223 (1977).
42

CA was faulted for “favoring a principle over the DAR’s own factual determination of the
propriety of conversion.”19 It was further noted that while the CA agreed with the OP that land
use conversion may be allowed when it is by reason of changes in the predominant use brought
about by urban development, said court nevertheless set aside the OP Decision.
The Decision was emphatic in saying that Paragraphs E and B(3) were set merely as guidelines
in issues of conversion as evidently the intent of DAR AO 12, Series of 1994 is to make the DAR
the principal agency in deciding questions on conversion, vesting the said agency with exclusive
authority to approve or disapprove applications for conversion of agricultural lands for
residential, commercial, industrial, and other land uses. And in the implementation of CARL,
DAR shall thus take into account current land use as governed by the needs and political will of
the local government and its people. The Court further said:
However, under the same heading VI, on Guiding Principles, is paragraph B(3), which
reads:
“If at the time of the application, the land still falls within the agricultural zone,
conversion shall be allowed only on the following instances:
a) When the land has ceased to be economically feasible and sound for agricultural
purposes, as certified by the Regional Director of the Department of Agriculture
(DA); or
b) When the locality has become highly urbanized and the land will have a greater
economic value for residential, commercial and industrial purposes, as certified by
the local government unit.”
_______________
43
VOL. 780, JANUARY 12, 2016 43

The thrust of this provision, which DAR Secretary Garilao rightly took into account in
issuing the Conversion Order, is that even if the land has not yet been reclassified, if its
use has changed towards the modernization of the community, conversion is still allowed.
As DAR Secretary, Garilao had full authority to balance the guiding principle in
paragraph E against that in paragraph B(3) and to find for conversion. Note that the same
guiding principle which includes the general proscription against conversion was scrapped
from the new rules on conversion, DAR A.O. 1, Series of 2002, or the “Comprehensive
Rules on Land Use Conversion.” It must be emphasized that the policy allowing
conversion, on the other hand, was retained. This is a complex case in which there can be
no simplistic or mechanical solution. The Comprehensive Agrarian Reform Law is not
intractable, nor does it condemn a piece of land to a single use forever. With the same
conviction that the state promotes rural development, it also “recognizes the indispensable
role of the private sector, encourages private enterprise, and provides incentives to needed
investments.”20 (Italics supplied)
The above pronouncement failed to consider that those landholdings which have already been
placed under CARP through compulsory acquisition or Voluntary Offer to Sell (VOS) were
expressly excluded from conversion such that DAR officials were explicitly directed not to give
due course to applications for conversion over these lands. There was no ambiguity in the
terminology used in paragraph VI(E) of AO No. 12, Series 1994. Paragraph B(3)(b) applies only
if the lands were not yet subjected to CARP under either compulsory acquisition or VOS process.
This is evident from the opening statement of paragraph B setting forth certain criteria as bases
for approving applications for conversion.
_______________
20 Id., at pp. 160-161.
44

B. DAR acknowledges the need of society for other uses of land, but likewise recognizes
the need for prudence in the exercise of its authority to approve conversions and hereby
adopts the following criteria as bases for the approval of applications for conversion:
1. Agricultural lands classified or zonified for non-agricultural uses by LGUs and

approved by the HLURB before June 15, 1988, shall be governed by DAR
Administrative Order No. 6, Series of 1994.
2. Conversion may be allowed if at the time of the application, the lands are
reclassified as commercial, industrial and residential in the new or revised town
plans promulgated by the local government unit (LGU) and approved by the
Housing and Land Use Regulatory Board (HLURB) or by the Sangguniang
Panlalawigan (SP) after June 15, 1988 in accordance with Section 20 of R.A. No.
7160, as implemented by M.C. No. 54, and Executive Order No. 72, Series of 1993
of the Office of the President.
3. If at the time of the application, the land still falls within the agricultural zone,
conversion shall be allowed only on the following instances
a) when the land has ceased to be economically feasible and sound for
agricultural purposes, as certified by the Regional Director of the Department
of Agricultural (DA); or
b) when the locality has become highly urbanized and the land will have a
greater economic value for residential, commercial or industrial purposes, as
certified by the local government unit.
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VOL. 780, JANUARY 12, 2016 45
4. If the city/municipality does not have a comprehensive development plan and

zoning ordinance duly approved by HLURB/SP but the dominant use of the area
surrounding the land subject of the application for conversion is no longer
agricultural, or if the proposed use is similar to, or compatible with the dominant use
of the surrounding areas as determined by the DAR, conversion may be possible.
5. In all cases, conversion shall be allowed only if DENR issues a certification that
the conversion is ecologically sound.
Paragraph VI(E) is a separate provision mandating the exclusion of all landholdings already
subjected to CARP under compulsory acquisition or VOS from the exercise of administrative
power to approve conversion applications. Hence, the statement that Secretary Garilao had
authority to “balance the guiding principle in paragraph E against that in paragraph B(3) and to
find for conversion”21 undermines the true intent of AO No. 12, Series of 1994 considering that,
as a matter of policy, the government already exempted those landholdings from the Secretary’s
approving authority. This interpretation is more consistent with paragraph A under the same
Policies and Guiding Principles stating that “DAR’s primary mandate is to acquire and distribute
agricultural lands to as many qualified beneficiaries as possible.”
From another perspective, the pronouncement in the Decision could set an undesirable precedent
as it provides landowners engaged in protracted litigation with farmer-beneficiaries with yet
another legal weapon to derail the process of land distribution by invoking the exercise of
administrative discretion and permit conversion even on landholdings already subjected to
CARP. In the face of competing interests between the foreclosing creditors of landowners and
the marginalized farmers, the implementors of CARL are called upon
_______________
21 Id., at p. 161.
46
to give meaning to the policy enshrined in our Constitution22 that “[t]he welfare of the landless
farmers will receive the highest consideration to promote social justice and to move the nation
toward sound agricultural development and industrialization.”
The Petition for Cancellation/
Revocation of Conversion Order
is not time-barred
Section 34 of DAR AO No. 1, Series of 1999 states:
Article VII
Cancellation or Withdrawal of Conversion Orders
SEC. 34. Filing of Petition.—A petition for cancellation or withdrawal of the conversion

order may be filed at the instance of DAR or any aggrieved party before the approving
authority within ninety (90) days from discovery of facts which would warrant such
cancellation but not more than one (1) year from issuance of the order: Provided, that
where the ground refers to any of those enumerated in Sec. 35(b), (e), and (f), the petition
may be filed within ninety (90) days from discovery of such facts but not beyond the
period for development stipulated in the order of conversion: Provided, further, That
where the ground is lack of jurisdiction, the petition shall be filed with the Secretary and
the period prescribed herein shall not apply. (Emphasis supplied)
In the Decision, the Court ruled that respondents may no longer question the Conversion Order
which had attained finality considering that the action for its cancellation was filed almost three
years after the said order had been in force and effect. This is based on the one-year prescriptive
period laid down in Section 34 of DAR AO No. 1, Series of 1999.
_______________
22 Art. XIII, Sec. 1, 1987 Constitution; Sec. 2, RA 6657.
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VOL. 780, JANUARY 12, 2016 47

However, the same provision allows the filing of a petition for cancellation/withdrawal of
conversion order within the period of development provided in the order of conversion if the
ground refers to any of those mentioned in Section 35(b), (e) and (f):
xxxx
(b) Noncompliance with the conditions of the conversion order;
xxxx
(e) Conversion to a use other than that authorized in the conversion order; and/or
(f) Any other violation of relevant rules and regulations of DAR. (Emphasis supplied)
The October 31, 1997 Conversion Order likewise contained the following condition:
4. The DAR reserves the right to cancel or withdraw this order for misrepresentation of
facts integral to its issuance and for violation of the rules and regulation on land use
conversion.23
Respondents raised as main grounds for the revocation or cancellation of the conversion order
the noncompliance with the condition of developing the area within five years, the illegal sale
transaction made by CCFI to evade coverage under CARL, and CCFI’s gross misrepresentation
before the DAR that the land subject of conversion had already been reclassified to
nonagricultural uses when in fact the Municipality of Silang does not have an approved town
plan/zoning ordinance as of October 24, 1997 and what was passed was a mere resolution and
not an ordinance, and the pressure exerted on the tenant-farmers left them with no alternative but
to accept partial payments and sign waivers. Such misrepresentation of facts and violation of the
rules and regulations on
_______________
23 CA Rollo, p. 40.
48
land conversion were legally sufficient for the filing of a petition to revoke or cancel the October
31, 1997 Conversion Order, and to exempt the same from the one-year prescriptive period laid
down in DAR AO No. 1, Series of 1999. Hence, the petition was timely filed in May 2000, well
within the five-year development period provided in the Conversion Order.
Mortgaged agricultural lands

foreclosed by banks remain
under CARP Coverage
The closing statement of the Decision expressed the majority’s view that its ruling on this case
simply adhered to the government’s policy decisions insofar as the buy-out transaction between
CCFI, MBC and ALI.
CARL cannot be used to stultify modernization. It is not the role of the Supreme Court to
apply the missing notice of acquisition in perpetuity. This is not a case wherein a feudal
landowner is unjustly enriched by the plantings of a long-suffering tenant. ALI is in the
precarious position of having been that third party buyer who offered the terms and
conditions most helpful to CCFI, MBC, and effectively, the BSP, considering the 85%
portion of the total debt of MBC that BSP owns. What this Court can do positively is to
contribute to policy stability by binding the government to its clear policy decisions borne
over a long period of time.24
The foregoing confirms that the majority ruling on the main issue of whether the CA erred in
sustaining the revocation of the Conversion Order tenaciously hinged on the supposed absence of
a Notice of Acquisition. After scrutinizing anew the entire records of the DAR, such claim was
plainly revealed as an afterthought on the part of petitioners to defeat respondents’ cause. As
earlier discussed, it was not the
_______________
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VOL. 780, JANUARY 12, 2016 49
intent of DAR AO 12, Series of 1994 to grant unbridled discretion to the DAR Secretary in cases
where lands applied for conversion have already been placed under CARP. Thus, Secretary
Garilao, who made a complete turnaround from his earlier denial of BSP/MBC’s request for
exemption from CARP coverage when he eventually issued the Conversion Order, cannot violate
DAR’s own rules and disregard the declared policy in Paragraph VI(E).
As to the Decision’s perceived “contribution to policy stability by binding the government to its
clear policy decisions borne over a long period of time,” particularly with respect to the buy-out
arrangement between CCFI, MBC and ALI, with the concurrence of the Receiver, BSP, we find
that the scheme actually runs counter to DAR’s established policy on the matter.
We recall that the OP remanded the case to the DAR for further proceedings in order to give the
petitioners opportunity to prove that their landholdings are qualified for exemption and/or
conversion, as a matter of due process highlighted by the public interest involved (i.e.,
rehabilitation of financially distressed MBC). The OP underscored the need to “balance the
interest between the petitioner bank (under receivership by the BSP), its creditors [including the
BSP to which MBC was indebted in the total amount of P8,771,893,000 representing 85% of its
total indebtedness] and the general public on one hand, and the faithful implementation of
agrarian reform program on the other, with the view of harmonizing them and ensuring that the
objectives of the CARP are met and satisfied.” Nonetheless, such pronouncement did not serve
as imprimatur for disregarding the rules on land conversion promulgated by DAR. As far as the
DAR is concerned, its decisions are primarily guided by its constitutional mandate as it declared
that: “[S]ince RA. No. 6657 is a social welfare legislation, the rules on exemptions, exclusions
and/or conversions must be interpreted restrictively and any doubt as
50
to the applicability of the law should be resolved in favor of inclusion.”25
Accordingly, in those instances where the mortgaged agricultural lands are foreclosed, the
defaulting landowner alone should bear the loss in case of deficiency because the foreclosure
buyer is merely substituted to the landowner entitled only to just compensation pursuant to R.A.
No. 6657 and its implementing rules.26 While Sec. 73-A of the law was amended by R.A. No.
7881 to permit the sale of mortgaged agricultural lands made necessary as a result of a bank’s
foreclosure, it did not exempt the land sold from the operation of CARP.
DAR Opinion No. 09, Series of 200827 states this unchanged policy with respect to mortgaged
agricultural lands foreclosed by a bank, which applies even if the latter is under
receivership/liquidation:
FORECLOSURE BY PRIVATE BANK PLACED UNDER

RECEIVERSHIP/LIQUIDATION STILL UNDER ACQUISITION AND
DISTRIBUTION TO QUALIFIED BENEFICIARIES
 Private bank’s foreclosed assets, regardless of the area, are subject to existing laws on
their compulsory transfer under the General Banking Act as a consequence of foreclosure
and acquisition under Section 16 of R.A. No. 6657. As long as the subject property is
agricultural, the same shall still be subjected to acquisition and distribution to qualified
beneficiaries pursuant to the provisions of the CARL. Private bank may sell to third
parties their foreclosed asset, as a consequence of foreclosure, but still subject to
acquisition under CARP.
_______________
25 See DAR Opinion No. 18, S. 2003, September 17, 2003.
26 See DAR Administrative Order No. 1, Series of 2000 entitled “Revised Rules and
Regulations on the Acquisition of Agricultural Lands Subject of Mortgage or Foreclosure.”
27 Dated April 14, 2008.

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VOL. 780, JANUARY 12, 2016 51
 Even if the subject foreclosed property was placed under receivership or liquidation by
the BSP, the same shall still be subjected to acquisition under CARL. In case said
foreclosed property was sold or will be sold as a consequence of liquidation or
receivership by the BSP, the same will still be subjected to acquisition and eventual
distribution to agrarian reform beneficiaries pursuant to CARL. (Emphasis supplied)
In this case, MBC sought authority from this Court to sell its acquired assets in G.R. No. 85960
in view of the injunction issued enjoining the BSP from liquidating MBC pending the outcome
of Civil Case No. 87-40659 pending in the RTC of Manila, Branch 23. The Court authorized the
intended sale “under the best terms and conditions” to enable the MBC to settle its obligations to
BSP. Records fail to show that MBC at that time disclosed to this Court that among those assets
requested to be sold are agricultural lands already covered by CARP.
Summarizing, the Court holds that the CA correctly sustained the Morales Order cancelling the
Conversion Order issued to CCFI as it contravened the directive in DAR AO 12, Series of 1994,
VI(E) that lands already issued a Notice of Acquisition shall not be given due course.
CCFI as landowner may not stall the acquisition proceedings started as early as 1989, dragging it
for several years and later seek exemption on the ground that the land had already ceased to be
economically feasible for agricultural purposes. Precisely, the CARL had envisioned the advent
of urbanization that would affect lands awarded to the farmers.
Section 65 of RA 6657 thus provides:
SEC. 65. Conversion of Lands.—After the lapse of five (5) years from its award, when
the land ceases to be economically feasible and sound for agricultural purposes, or the
locality has become urbanized and the
52
land will have a greater economic value for residential, commercial or industrial purposes,
the DAR upon application of the beneficiary or the landowner, with due notice to the
affected parties and subject to existing laws, may authorize the reclassification or
conversion of the land and its disposition: Provided, That the beneficiary shall have fully
paid his obligation. (Emphasis supplied)
Here, however, the CARP was never given the chance to be implemented as a result of the
landowner’s legal maneuvers until conditions of the land had so changed with the lapse of time.
The unabated land-use conversion from agricultural to industrial, commercial, residential or
tourist purposes has been aptly described as “systematically reversing land reform in a way that
was never foreseen by the framers of CARL.”28
With the FOREGOING, I therefore VOTE —
1. To GRANT the motion for reconsideration of respondents SIMEONA CASTILLO, et al.;
2. To SET ASIDE the Decision promulgated by the then Third Division of this Court on June 15,
2011; and
3. That a new judgment be entered AFFIRMING the Decision dated January 31, 2007 of the
Court of Appeals in C.A.-G.R. S.P. No. 86321.
Motion for Reconsideration denied with finality.
Notes.—That persons employ tactics to precipitously convert their lands from agricultural use to
industrial livestock is not unheard of — they even exploit the creation of a new corporate vehicle
to operate the livestock business to substantiate
_______________
28 Nieva, Antonio Ma., “Agrarian ‘Reform,’ Ramos Style” based on a Series of articles
published by the Philippine Daily Inquirer, source:
http://www.multinationalmonitor.org/hyper/issues/1994/01/nieva.html.
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VOL. 780, JANUARY 12, 2016 53
the deceitful conversion in the hopes of evading Comprehensive Agrarian Reform Program
(CARP) coverage. (Republic vs. Salvador N. Lopez Agri-Business Corp., 639 SCRA 49 [2011])
A tenancy relationship, once established, entitles the tenant to a security of tenure who can be
ejected from the agricultural landholding only on grounds provided by law. (Galope vs. Bugarin,
664 SCRA 733 [2012])
——o0o——
G.R. No. 211140. January 12, 2016.*
LORD ALLAN JAY Q. VELASCO, petitioner, vs. HON. SPEAKER FELICIANO R.

BELMONTE, JR., SECRETARY GENERAL MARILYN1 B. BARUA-YAP and REGINA
ONGSIAKO REYES, respondents.
Remedial Law; Special Civil Actions; Quo Warranto; Words and Phrases; A petition for quo
warranto is a proceeding to determine the right of a person to the use or exercise of a franchise
or office and to oust the holder from its enjoyment, if his claim is not well-founded, or if he has
forfeited his right to enjoy the privilege.—A petition for quo warranto is a proceeding to
determine the right of a person to the use or exercise of a franchise or office and to oust the
holder from its enjoyment, if his claim is not well-founded, or if he has forfeited his right to
enjoy the privilege. Where the action is filed by a private person, he must prove that he is entitled
to the controverted position; otherwise, respondent has a right to the undisturbed possession of
the office. In this case, given the present factual milieu, i.e., (i) the final and executory
resolutions of this Court in G.R. No. 207264; (ii) the final and executory resolutions of the
COMELEC in SPA No. 13-053 (DC) cancelling Reyes’s Certificate of Candidacy; and (iii) the
final and executory resolution of the COMELEC in SPC No. 13-010 declaring null and void the
proclamation of Reyes and proclaiming Velasco as the winning candidate for the position of
Representative for the Lone District of the Province of Marinduque — it cannot be claimed that
the present petition is one for the determination of the right of Velasco to the claimed office. To
be sure, what is prayed for herein is merely the enforcement of clear legal duties and not to try
disputed title. That the respondents make it appear so will not convert this petition to one for quo
warranto.
Same; Same; Mandamus; A petition for mandamus will prosper if it is shown that the subject
thereof is a ministerial act or duty, and not purely discretionary on the part of the board, officer
or person, and that the petitioner has a well-defined, clear and certain right
_______________
* EN BANC.
1 Originally cited as “Emilia.”

82
Velasco vs. Belmonte, Jr.
to warrant the grant thereof.—Section 3, Rule 65 of the Rules of Court, as amended, provides
that any person may file a verified petition for mandamus “when any tribunal, corporation,
board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from
the use and enjoyment of a right or office to which such other is entitled, and there is no other
plain, speedy and adequate remedy in the ordinary course of law.” A petition for mandamus will
prosper if it is shown that the subject thereof is a ministerial act or duty, and not purely
discretionary on the part of the board, officer or person, and that the petitioner has a well-
defined, clear and certain right to warrant the grant thereof.
Same; Same; Same; “Ministerial Act” and “Discretionary Act,” Distinguished.—The difference
between a ministerial and discretionary act has long been established. A purely ministerial act or
duty is one which an officer or tribunal performs in a given state of facts, in a prescribed manner,
in obedience to the mandate of a legal authority, without regard to or the exercise of his own
judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a
public officer and gives him the right to decide how or when the duty shall be performed, such
duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the
same requires neither the exercise of official discretion or judgment.
BRION, J., Dissenting Opinion:
Remedial Law; Special Civil Actions; Mandamus; View that the writ of mandamus is an
extraordinary remedy issued only in cases of extreme necessity where the ordinary course of
procedure is powerless to afford an adequate and speedy relief to one who has a clear legal right
to the performance of the act to be compelled.—Mandamus is a command issuing from a court
of law of competent jurisdiction, in the name of the state or sovereign, directed to some inferior
court, tribunal, or board, or to some corporation or person, requiring the performance of a
particular duty therein specified, which duty results from the official station of the party to whom
the writ is directed, or from operation of law. The writ of mandamus is an extraordinary remedy
issued only in cases of extreme necessity where the ordinary course of procedure is powerless to
afford an adequate and speedy relief to one who has a clear legal right to the perform-
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VOL. 780, JANUARY 12, 2016 83
ance of the act to be compelled. As a peremptory writ, mandamus must be issued with utmost
circumspection, and should always take into consideration existing laws, rules and jurisprudence
on the matter, particularly the principles underlying our Constitution. Moreover, the remedy of
mandamus is employed to compel the performance of a ministerial duty after performance of the
duty has been refused. As a rule, it cannot be used to direct the exercise of judgment or
discretion; if at all, the obligated official carrying the duty can only be directed by mandamus to
act, but not to act in a particular way. The courts can only interfere when the refusal to act
already constitutes inaction amounting to grave abuse of discretion, manifest injustice, palpable
excess of authority, or other causes affecting jurisdiction.
Same; Same; Same; View that the person aggrieved by the unlawful neglect or unlawful
exclusion of the tribunal, corporation, board, officer, or person may file the petition for
mandamus with the proper court.—In this jurisdiction, the remedy of mandamus is governed by
Section 3, Rule 65 of the Rules of Court. Under Section 3, mandamus is the remedy available
when “a tribunal, corporation, board, officer or person unlawfully neglects the performance of
an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes another from the use and enjoyment of a right or office to which such other
is entitled, [and], there is no other plain, speedy, and adequate remedy in the ordinary course of
law.” The person aggrieved by the unlawful neglect or unlawful exclusion of the tribunal,
corporation, board, officer, or person may file the petition for mandamus with the proper court.
Election Law; House of Representatives Electoral Tribunal; Jurisdiction; View that the majority
in Reyes v. COMELEC, 699 SCRA 522 (2013), required the concurrence of all three (3) events —
proclamation, oath, and assumption to office — to trigger the jurisdiction of the House of
Representatives Electoral Tribunal (HRET) over election contests relating to the winning
candidate’s election, returns, and qualifications. All 3 events duly took place in the case of
respondent Reyes, such that the HRET at this point should have jurisdiction over questions
relating to respondent Reyes’ election, even on the basis of the majority’s own standards.—If
only for emphasis, I call attention again to the fact that as of June 30, 2013, Reyes had been
proclaimed, had taken her oath, and assumed office as the elected and
84
proclaimed Representative of Marinduque. Section 17, Article VI of the Constitution provides

that the Electoral Tribunal of the HOR shall be the “sole judge of all contests relating to the
election, returns, and qualifications of [its] Members.” I highlight, too, that in Reyes v.
COMELEC, 699 SCRA 522 (2013), the majority declared that a winning candidate becomes
subject to the jurisdiction of the HRET only after he or she becomes a member of the HOR. The
majority stressed that a candidate becomes a member of the HOR only after he or she has been
proclaimed, taken his or her oath, and assumed the office. In other words, the majority in
Reyes v. COMELEC, required the concurrence of all three events — proclamation, oath, and
assumption to office — to trigger the jurisdiction of the HRET over election contests relating to
the winning candidate’s election, returns, and qualifications. All three events duly took place in
the case of respondent Reyes, such that the HRET at this point should have jurisdiction over
questions relating to respondent Reyes’ election, even on the basis of the majority’s own
standards.
Same; Commission on Elections; Jurisdiction; View that the Commission on Elections

(COMELEC), by express constitutional mandate, has no jurisdiction over the election, returns,
and qualifications of members of the House of Representatives (HOR) (or of the Senate) as
Article VI vests this jurisdiction with the House of Representatives Electoral Tribunal (HRET)
(or the Senate Electoral Tribunal [SET]).—Under Section 2(2), Article IX-C of the Constitution,
the COMELEC has the “exclusive jurisdiction over all contests relating to the election, returns,
and qualifications of all elective regional, provincial, and city officials x x x.” In other words,
the Constitution vests the COMELEC this exclusive jurisdiction only with respect to elective
regional, provincial, and city officials. The COMELEC, by express constitutional mandate,
has no jurisdiction over the election, returns, and qualifications of members of the HOR (or
of the Senate) as Article VI vests this jurisdiction with the HRET (or the SET). The validity
of the proclamation of respondent Reyes who became a member of the HOR on June 30, 2013,
and the right of either respondent Reyes or Velasco to hold the contested congressional seat are
election contests relating to a Member’s election, returns, and qualifications. By Reyes v.
COMELEC’s own defined standard, the jurisdiction over these election
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VOL. 780, JANUARY 12, 2016 85
contests affecting respondent Reyes already rested with the HRET beginning June 30, 2013.
Same; House of Representatives Electoral Tribunal; View that any other legal significance which
these rulings may have on the right of either Reyes or Velasco to the congressional seat must
now be left to the judgment and discretion of the House of Representatives Electoral Tribunal
(HRET) which must appreciate them in a properly filed action.—Any other legal significance
which these rulings may have on the right of either Reyes or Velasco to the congressional seat
must now be left to the judgment and discretion of the HRET which must appreciate them in a
properly filed action. Additionally and finally on this point, the HRET now has jurisdiction to
rule upon all questions relating to respondent Reyes’ election, returns, and qualifications that
may still be fit and proper for its resolution in accordance with existing laws and its own rules of
procedure. This Court itself cannot assume jurisdiction over any aspect of HRET jurisdiction
unless it relates to a matter filed or pending with us on a properly filed petition, taking into
account the clear conferment and delineation of the Court’s jurisdiction and those of the HRET
under the Constitution.
Same; Salaries; View that the right to receive the salaries, allowances, bonuses, and emoluments
that pertain to an office must be received by one who actually perform the duties called for by
the office; Velasco may be qualified for the office. His right to hold the congressional seat,
however, is at most substantially doubtful or in substantial dispute; worse, he has not performed
the duties of the office. In short, Reyes’ receipt of the salaries, etc. that pertain to the
congressional seat obviously could not have worked injustice to and seriously prejudiced him.—I
find tenuous Velasco’s claim that Reyes’ continued holding of the contested Congressional seat
has “worked injustice and serious prejudice to [him] in that she has already received the
salaries, allowances, bonuses and emoluments that pertain to the [office] since June 30, 2013 up
to the present x x x.” This argument clearly forgets that public office is a public trust. Public
service and public duty are and must be the primary and utmost consideration in entering the
public service. Any remuneration, salaries, and benefits that a public officer or employee
receives in return must be a consideration merely secondary to public service. Accordingly, any
salary, allowance, bonus, and emoluments pertaining to an office
86
must be received by one who is not only qualified for the office, but by one whose right to the
office is clearly and unmistakably without doubt and beyond dispute. In the case of an elective
public office, this right is, at the very least, established by the mandate of the majority of the
electorate. More importantly, of course, the right to receive the salaries, allowances, bonuses, and
emoluments that pertain to an office must be received by one who actually perform the duties
called for by the office. Here, Velasco may be qualified for the office. His right to hold the
congressional seat, however, is at most substantially doubtful or in substantial dispute; worse, he
has not performed the duties of the office. In short, Reyes’ receipt of the salaries, etc. that pertain
to the congressional seat obviously could not have worked injustice to and seriously prejudiced
him.
Same; Mandamus; View that petitioner Velasco failed to show that the respondents have the
clear and specific legal duty to allow a second-placer candidate like him whose right to the
contested congressional seat is substantially doubtful, to assume the office until such time that
all doubts are resolved in his favor. Thus, in the absence of any law specifically requiring
Speaker Belmonte and Sec. Gen. Barua-Yap to act, and to act in a particularly clear manner, the
Supreme Court (SC) cannot compel these respondents to undertake the action that Velasco prays
for via a writ of mandamus.—I submit that Velasco likewise failed to show that Speaker
Belmonte and Sec. Gen. Barua-Yap have the clear and specific duty, founded in law, to
administer the required oath, to allow Velasco to assume the duties of the office, and to register
his name in the Roll of Members as the duly elected Representative of Marinduque. He also
failed to show that the respondents unlawfully refused or neglected to admit him as member. At
the very least, he failed to show that the respondents have the clear and specific legal duty to
allow a second-placer candidate like him whose right to the contested congressional seat is
substantially doubtful, to assume the office until such time that all doubts are resolved in his
favor. Thus, in the absence of any law specifically requiring Speaker Belmonte and Sec. Gen.
Barua-Yap to act, and to act in a particularly clear manner, the Court cannot compel these
respondents to undertake the action that Velasco prays for via a writ of mandamus. Additionally,
the HOR in this case simply acted pursuant to law and jurisprudence when it admitted
respondent Reyes as the duly elected Representative of Marinduque. After this admission, the
HOR and its officers cannot be compelled to
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VOL. 780, JANUARY 12, 2016 87
remove her without an order from the tribunal having the exclusive jurisdiction to resolve all
contests affecting HOR members, of which Reyes has become one. This tribunal, of course, is
the HOR’s own HRET.
Same; House of Representatives Electoral Tribunal; Jurisdiction; View that since Reyes is a
member of the House of Representatives (HOR), any challenge against her right to hold the
congressional seat or which may have the effect of removing her from the office — whether
pertaining to her election, returns or qualifications — now rests with the House of
Representatives Electoral Tribunal (HRET).—Since Reyes is a member of the HOR, any
challenge against her right to hold the congressional seat or which may have the effect of
removing her from the office — whether pertaining to her election, returns or qualifications —
now rests with the HRET. Viewed by itself and in relation to the surrounding cited cases and
circumstances, Velasco’s present petition cannot but be a challenge against respondent Reyes’
election, returns, and qualifications, hiding behind the cloak of a petition for mandamus. In other
words, although presented as a petition that simply seeks to enforce a final Court ruling, the
petition is an original one that ultimately seeks to oust Reyes from the congressional seat. The
relationships between and among the cited cases and the present case, read in relation with the
relevant developments, all point to this conclusion. Thus, rather than recognize this roundabout
manner of contesting respondent Reyes’ seat, the Court should recognize this kind of challenge
for what it really is — a challenge that properly belongs to the domain of the HRET and one that
should be raised before that tribunal through the proper action. The Court, in other words, should
acknowledge that it has no jurisdiction to act on the present petition.
Same; Same; Same; View that the admission of a member and his or her exclusion is primarily
an internal affair that the House of Representatives (HOR) should first resolve before this Court
should step in through the coercive power of a writ of mandamus.—To state the obvious, the
admission of a member and his or her exclusion is primarily an internal affair that the HOR
should first resolve before this Court should step in through the coercive power of a writ of
mandamus. The principles of separation of powers and judicial noninterference demand that the
Court respect and give due recognition to the HOR in its internal affairs. By granting the petition
and
88
issuing a writ of mandamus, the Court, not only disrespects the HOR, but sows confusion as well
into the HRET’s jurisdiction — a jurisprudential minefield in the coming elections.
Political Law; Separation of Powers; View that underlying the principle of separation of powers
is the general scheme that each department is supreme within their respective spheres of
influence, and the exercise of their powers to the full extent cannot be questioned by another
department.—The Constitution does not specifically provide for the principle of separation of
powers. Instead of a distinct express provision, the Constitution divides the governmental powers
among the three branches — the legislative, the executive, and the judiciary. Under this
framework, the Constitution confers on the Legislature the duty to make the law, on the
Executive the duty to execute the law, and on the Judiciary the duty to construe and apply the
law. Underlying the principle of separation of powers is the general scheme that each department
is supreme within their respective spheres of influence, and the exercise of their powers to the
full extent cannot be questioned by another department. Outside of these spheres, neither of the
great governmental departments has any power; and neither may any of them validly exercise
any of the powers conferred upon the others. Thus, as a fundamental principle, the separation of
powers provides that each of the three departments of our government is distinct and not directly
subject to the control of another department. The power to control is the power to abrogate; and
the power to abrogate is the power to usurp. In short, for one branch to control the other is to
usurp its power. In this situation, the exercise of control by one department over another would
clearly violate the principle of separation of powers.
Remedial Law; Special Civil Actions; Mandamus; View that as a general rule, mandamus will
not lie against a coordinate branch.—As a general rule, mandamus will not lie against a
coordinate branch. The rule proceeds from the obvious reason that none of
the three departments is inferior to the others; by its very nature, the writ of mandamus is
available against an inferior court, tribunal, body, corporation, or person. With respect to a
coordinate andcoequal branch, the issuance can be justified only under the Court’s expanded
jurisdiction under Article VIII, Section 1 of the Constitution and under the most compelling
circumstances and equitable reasons. I submit that no grave abuse of discretion intervened
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in the present case to justify resort to the Court’s expanded jurisdiction. Neither are there
compelling and equitable reasons to justify a grant as there is a remedy in law that was
available to petitioner Velasco (for reasons of his own, he has failed to pursue the remedy before
the HRET to its full fruition) and that is available now — to present the final rulings in the cited
HRET cases to the HOR for its own action on an internal matter it zealously guards.
Same; Same; Same; Election Law; View that the exclusion of sitting members and the admission
of replacement members — are not ministerial acts for which mandamus will lie.—Notably,
under the attendant facts, significantly altered by the intervening factual developments and the
consequent legal considerations, the acts sought to be performed — the exclusion of sitting
members and the admission of replacement members — are not ministerial acts for which
mandamus will lie. That much is implied, if not directly held, as early as Angara v. Electoral
Commission, 63 Phil. 139 (1936), and many other cases relating to this situation followed. Their
common thread is that Congress takes the admission (or exclusion) of its members as a very
serious concern that is reserved for itself to decide, save only when a superior law or ruling
with undoubted validity intervenes. Such freedom from doubt, however, is not apparent in the
present petition.
Same; Same; Same; View that in situations where the constitutional separation-of-powers
principle is involved, mandamus, as a rule, will not lie against a coequal branch
notwithstanding the petitioner’s compliance with the requirements necessary for its grant, as
discussed above.—In any case, mandamus is, by its nature, a discretionary remedy that can be
denied when no compelling equitable grounds exist. In particular, in situations where the
constitutional separation-of-powers principle is involved, mandamus, as a rule, will not lie
against a coequal branch notwithstanding the petitioner’s compliance with the requirements
necessary for its grant, as discussed above. To justify the issuance of the writ, the petitioner must
not only comply with the requirements; the petitioner must, more importantly, show that
mandamus is demanded by the most compelling reasons or circumstances and by the demands
of equity. These exception-inducing factors, as discussed above, are simply not present in this
case.
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PEREZ, J., Concurring Opinion:
Remedial Law; Special Civil Actions; Mandamus; View that the present petition seeks the
“enforcement of clear legal duties” as it does not seek to try disputed title. It no longer puts in
issue the validity of Reyes’s claim to office — a question that has long been resolved by the
Supreme Court (SC) in its twin Resolutions in the antecedent case of Reyes v. COMELEC, 699
SCRA 522; 708 SCRA 197 (2013).—While quo warranto and mandamus are often concurrent
remedies, there exists a clear distinction between the two. The authorities are agreed that quo
warranto is the remedy to try the right to an office or franchise and to oust the holder from its
enjoyment, while mandamus only lies to enforce clear legal duties. In the case at bench, I concur
with the ponencia that the present petition seeks the “enforcement of clear legal duties” as it does
not seek to try disputed title. It no longer puts in issue the validity of Reyes’s claim to office — a
question that has long been resolved by the Court in its twin Resolutions in the antecedent case
of Reyes v. COMELEC, 699 SCRA 522; 708 SCRA 197 (2013), docketed as G.R. No. 207264,
wherein the Court sustained the polling commission’s cancellation of respondent Reyes’
Certificate of Candidacy (CoC) on the ground that she does not possess the necessary eligibility
to hold elective office as a member of Congress.
Same; Same; Same; View that it is a fundamental precept in remedial law that for the
extraordinary writ of mandamus to be issued, it is essential that the petitioner has a clear legal
right to the thing demanded and it must be the imperative duty of the respondent to perform the
act required.—It is a fundamental precept in remedial law that for the extraordinary writ of
mandamus to be issued, it is essential that the petitioner has a clear legal right to the thing
demanded and it must be the imperative duty of the respondent to perform the act required.
As will be demonstrated, it is beyond cavil that the dual elements for the mandamus petition to
prosper evidently obtain in the case at bar.
Election Law; View that upon resolving with finality that Reyes is ineligible to run for Congress
and that her Certificate of Candidacy (CoC) is a nullity, the only logical consequence is to
declare Velasco, Reyes’ only political rival in the congressional race, as the victor in the polling
exercise.—Upon resolving with finality that Reyes is
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ineligible to run for Congress and that her CoC is a nullity, the only logical consequence is to
declare Velasco, Reyes’ only political rival in the congressional race, as the victor in the polling
exercise. This finds basis in the seminal case of Aratea v. COMELEC, 683 SCRA 105 (2012),
wherein it was held that a void CoC cannot give rise to a valid candidacy, and much less to valid
votes. Hence, as concluded in Aratea: Lonzanida’s certificate of candidacy was cancelled,
because he was ineligible or not qualified to run for Mayor. Whether his certificate of candidacy
is cancelled before or after the elections is immaterial because the cancellation on such ground
means he was never a candidate from the very beginning, his certificate of candidacy being void
ab initio. There was only one qualified candidate for Mayor in the May 2010 elections —
Antipolo, who therefore received the highest number of votes. Thus, notwithstanding the margin
of votes Reyes garnered over Velasco, the votes cast in her favor are considered strays since she
is not eligible for the congressional post, a noncandidate in the bid for the coveted seat of
Representative for the Lone District of Marinduque. Following the doctrinal teaching in Aratea,
Velasco, as the only remaining qualified candidate in the congressional race, is, for all intents and
purposes, the rightful member of the lower house.
Same; Considering that Reyes’ Certificate of Candidacy (CoC) was cancelled and was deemed
void ab initio by virtue of the final and executory decisions rendered by the Commission on
Elections (COMELEC) and this Court, Velasco is a not second-placer as claimed by the Dissent;
rather, Velasco is the only placer and the winner during the May elections and thus, for all
intents and purposes, Velasco has a clear legal right to office as Representative of the Lone
District of Marinduque.—Considering that Reyes’ CoC was cancelled and was deemed void ab
initio by virtue of the final and executory decisions rendered by the COMELEC and this Court,
Velasco is a not second-placer as claimed by the Dissent; rather, Velasco is the only placer and
the winner during the May elections and thus, for all intents and purposes, Velasco has a clear
legal right to office as Representative of the Lone District of Marinduque.
Same; View that by lodging a petition for denial or cancellation of Certificate of Candidacy
(CoC), a voter seeks to ensure that the candidate who purports to be qualified to represent his or
her constituents is indeed eligible to do so.—By lodging a petition for denial
92

or cancellation of CoC, a voter seeks to ensure that the candidate who purports to be qualified to
represent his or her constituents is indeed eligible to do so. Such petition, therefore, is for and in
benefit of the electorate, and not for one’s personal advantage. This is in clear consonance with
the aforequoted rule, which never required the petition to be filed by a candidate’s political rival.
Otherwise stated, it is not required for petitioner Tan in SPA No. 13-053 to have a claim to the
contested electoral post to be permitted by law to challenge the validity of Reyes’ CoC. At the
same time, petitioner Velasco herein is not under any legal obligation to intervene in SPA No. 13-
053 and G.R. No. 207264 before he could benefit directly or indirectly from the ruling. Unlike
civil cases which only involve private rights, petitions to deny or cancel certificates of candidacy
are so imbued with public interest that they cannot be deemed binding only to the parties thereto.
Indeed, it would be an absurd situation, after all, to declare Reyes ineligible only insofar as Tan
is concerned, and presumed eligible as to the rest of the Marinduqueños, including Velasco.
Same; Mandamus; View that contrary to the opinion espoused in the Dissent, Sec. 3, Rule 65
merely requires the applicant to establish a clear legal right to the ministerial function to be
performed, without distinction on whether this right emanates from a final judgment in a prior
case or not.—For a petition for mandamus to prosper, Sec. 3, Rule 65 of the Rules of Court
provides: Section 3. Petition for mandamus.—When any tribunal, corporation, board, officer or
person unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy
and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that judgment
be rendered commanding the respondent, immediately or at some other time to be specified by
the court, to do the act required to be done to protect the rights of the petitioner, and to pay the
damages sustained by the petitioner by reason of the wrongful acts of the respondent. Apparently,
there is nothing in foregoing provision which requires that the person applying for a writ of
mandamus should establish that he or she was the prevailing party-litigant to a prior case (i.e., a
petitioner, respondent or an intervenor) to be entitled to
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the writ’s issuance. Contrary to the opinion espoused in the Dissent, Sec. 3, Rule 65 merely
requires the applicant to establish a clear legal right to the ministerial function to be performed,
without distinction on whether this right emanates from a final judgment in a prior case or not.
Thus, there is no basis to the opinion that Velasco should have been a party in Reyes in order for
this Court to grant of a writ of mandamus in his favor.
Same; Same; View that petitioner herein seeks the performance of a ministerial act, without
which he is unjustly deprived of the enjoyment of an office that he is clearly entitled to.—Anent
the second element for mandamus to lie, it is critical that the duty the performance of which is to
be compelled be ministerial in nature, rather than discretionary. A purely ministerial act or duty is
one that an officer or tribunal performs in a given state of facts, in a prescribed manner, in
obedience to the mandate of a legal authority, without regard to or the exercise of its own
judgment upon the propriety or impropriety of the act done. The writ neither confers powers nor
imposes duties. It is simply a command to exercise a power already possessed and to perform a
duty already imposed. Without a doubt, petitioner herein seeks the performance of a ministerial
act, without which he is unjustly deprived of the enjoyment of an office that he is clearly entitled
to, as earlier discussed. It must be borne in mind that this petition was brought to fore because,
despite repeated demands from petitioner and their receipt of the “Certificate of Canvass of Votes
and Proclamation of Winning Candidate for the position of Member of House of Representatives
for the Lone District of Marinduque,” respondents Belmonte and Barua-Yap refused to allow
Velasco to sit in the Lower House as Marinduque Representative. The nondiscretionary function
of respondents Belmonte and Barua-Yap is underscored in Codilla, Sr. v. De Venecia, 393 SCRA
639 (2002),
wherein the Court held that the House Speaker and the Secretary General of the Lower House are
duty-bound to recognize the legally elected district representatives as members of the House of
Representatives.
Remedial Law; Civil Procedure; Judgments; Immutability of Final Judgments; View that under
the doctrine of immutability of final judgments, a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of
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fact and law, and whether it be made by the court that rendered it or by the Highest Court of the
land. Any act which violates this principle must immediately be struck down.—As in Codilla, the
fact of Reyes’ disqualification can no longer be disputed herein, in view of the consecutive
rulings of the COMELEC and the Court in SPA No. 13-053, G.R. No. 207624, and SPA No. 13-
010. Reyes’ ineligibility and Velasco’s consequent membership in the Lower House is then
beyond the discretion of respondents Belmonte and Barua-Yap, and the rulings upholding the
same must therefore be recognized and respected. To hold otherwise — that the Court is not
precluded from entertaining questions on Reyes’ eligibility to occupy Marinduque’s
congressional seat — would mean substantially altering, if not effectively vacating, Our ruling in
Reyes that has long attained finality, a blatant violation of the immutability of judgments. Under
the doctrine, a decision that has acquired finality becomes immutable and unalterable, and may
no longer be modified in any respect, even if the modification is meant to correct erroneous
conclusions of fact and law, and whether it be made by the court that rendered it or by the
Highest Court of the land. Any act which violates this principle must immediately be struck
down. Justice Leonen, however, urges this Court to revisit, nay relitigate, Reyes two (2) years
after the date of its finality and abandon the same, in clear contravention of the doctrine of
immutability and finality of Supreme Court decisions.
Election Law; Second Placer Rule; Mandamus; View that synthesizing Aratea v. COMELEC,
683 SCRA 105 (2012), with Codilla, Sr. v. De Venecia, 393 SCRA 639 (2002), petitioner Velasco
may now successfully invoke the qualified second-placer rule to prove the certainty of his claim
to office, and compel the respondent Speaker and Secretary General to administer his oath and
include his name in the Roll of Members of the House of Representatives.—That the second-
placer rule was not yet abandoned when Codilla was decided is inconsequential in this case. As
earlier discussed, what is of significance in Codilla is the certainty on who the rightful holder of
the elective post is. It may be that when Codilla was decided, plurality of votes and successional
rights, in disqualifications cases, may have been the key considerations, but as jurisprudence has
been enriched by Aratea and by the subsequent cases that followed, the qualified second-placer
rule was added to the enumeration. Synthesizing Aratea with Codilla, petitioner Velasco may
now successfully invoke the qualified second-placer rule to prove the certainty of his claim to
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office, and compel the respondent Speaker and Secretary General to administer his oath and
include his name in the Roll of Members of the House of Representatives. With the presence of
the twin requirements, the extraordinary writ of mandamus must be issued in the case at bar.
Same; Commission on Elections; View that the Commission on Elections (COMELEC) is the
proper entity that can legally and validly nullify the acts of the Provincial Board of Canvassers
(PBOC).—The Dissent also claims that when respondent Reyes was proclaimed by the PBOC as
the duly elected Representative of the Lone District of Marinduque of May 18, 2013, petitioner
Velasco should have continued his election protest via a quo warranto petition before the HRET.
This suggestion is legally flawed considering that the HRET is without authority to review,
modify, more so annul, the illegal acts of PBOC. On the contrary, this authority is lodged with
the COMELEC and is incidental to its power of “direct control and supervision over the Board of
Canvassers.” Therefore, the COMELEC is the proper entity that can legally and validly nullify
the acts of the PBOC.
Same; View that it is of no moment that there are two (2) quo warranto cases currently pending
before the House of Representatives Electoral Tribunal (HRET) that seek to disqualify Reyes
from holding the congressional office. These cases cannot oust the Commission on Elections
(COMELEC) and the Supreme Court (SC) of their jurisdiction over the issue on Reyes’
eligibility, which they have already validly acquired and exercised in SPA No. 13-053 and Reyes.
—It is of no moment that there are two quo warranto cases currently pending before the HRET
that seek to disqualify Reyes from holding the congressional office. These cases cannot oust the
COMELEC and the Court of their jurisdiction over the issue on Reyes’ eligibility, which they
have already validly acquired and exercised in SPA No. 13-053 and Reyes. The petitioners in the
quo warranto cases themselves recognize the enforceability of the COMELEC and the Court’s
ruling in SPA No. 13-053 and Reyes, and even invoked the rulings therein to support their
respective petitions. They seek not a trial de novo for the determination of whether or not Reyes
is eligible to hold office as Representative, but seek the implementation of the final and
executory decisions of the COMELEC and of the High Court. Interestingly, Reyes merely prayed
for the dismissal of these cases, but never asked the HRET for any affirmative relief to counter
the
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executory rulings in SPA No. 13-053, G.R. No. 207264, and SPA No. 13-010.
LEONEN, J., Concurring Opinion:
Election Law; Election Contests; View that an election contest, whether an election protest or
petition for quo warranto, is a remedy “to dislodge the winning candidate from office” and “to
establish who is the actual winner in the election.”—The power to be the “sole judge” of all
these contests is vested by our Constitution itself in the House of Representatives Electoral
Tribunal to the exclusion of all others. The Constitution clearly provides: SECTION 17. The
Senate and the House of Representatives shall each have an Electoral Tribunal which shall be the
sole judge of all contests relating to the election, returns, and qualifications of their respective
Members. Each Electoral Tribunal shall be composed of nine Members, three of whom shall be
Justices of the Supreme Court to be designated by the Chief Justice, and the remaining six shall
be Members of the Senate or the House of Representatives, as the case may be, who shall be
chosen on the basis of proportional representation from the political parties and the parties or
organizations registered under the party-list system represented therein. The senior Justice in the
Electoral Tribunal shall be its Chairman. An election contest, whether an election protest or
petition for quo warranto, is a remedy “to dislodge the winning candidate from office” and “to
establish who is the actual winner in the election.” The action puts in issue the validity of the
incumbent’s claim to the office.
Same; Same; View that while the petitions for quo warranto were pending before the House of
Representatives Electoral Tribunal (HRET), the Supreme Court (SC) did not have the
jurisdiction to rule on this Petition for Mandamus.—A contest contemplated by the Constitution
settles disputes as to who is rightfully entitled to a position. It is not this court but the House of
Representatives Electoral Tribunal that has sole jurisdiction of contests involving Members of
the House of Representatives. This can be filed through (a) an election protest under Rule 16 of
the 2011 Rules of the House of Representatives Electoral Tribunal; and (b) quo warranto under
Rule 17 of the 2011 Rules of the House of Representatives Electoral Tribunal. Thus, while the
petitions for quo warranto were pending before the House of Representatives Electoral Tribunal,
this court
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did not have the jurisdiction to rule on this Petition for Mandamus. A grant of the writ of
mandamus would have openly defied the Constitution and, in all likelihood, would muddle the
administration of justice as it would have rendered the quo warranto cases properly pending
before the House of Representatives Electoral Tribunal moot and academic. We would have
arrogated upon ourselves the resolution of then pending House of Representatives Electoral
Tribunal cases.
Same; House of Representatives Electoral Tribunal; Jurisdiction; View that any alleged
invalidity of the proclamation of a Member of the House of Representatives (HOR) does not
divest the House of Representatives Electoral Tribunal (HRET) of jurisdiction.—When Reyes
was proclaimed by the Provincial Board of Canvassers as the duly elected Representative of the
Lone District of Marinduque on May 18, 2013, Velasco should have continued his election
protest or filed a quo warranto Petition before the House of Representatives Electoral Tribunal.
Instead, Velasco filed a Petition to annul the proceedings of the Provincial Board of Canvassers
and the proclamation of Reyes on May 20, 2013 before the Commission on Elections. At that
time, the Commission on Elections no longer had jurisdiction over the Petition that was filed
after Reyes’ proclamation. Any alleged invalidity of the proclamation of a Member of the House
of Representatives does not divest the House of Representatives Electoral Tribunal of
jurisdiction.
Same; Same; Same; View that the House of Representatives Electoral Tribunal (HRET) is the
sole judge of contests involving Members of the House of Representatives (HOR).—The House
of Representatives Electoral Tribunal is the sole judge of contests involving Members of the
House of Representatives. This is a power conferred by the sovereign through our Constitution.
Again, as in my dissent in Reyes v. Commission on Elections, 708 SCRA 197 (2013): This Court
may obtain jurisdiction over questions regarding the validity of the proclamation of a candidate
vying for a seat in Congress without encroaching upon the jurisdiction of a constitutional body,
the electoral tribunal. “[The remedies of] certiorari and prohibition will not lie in this case [to
annul the proclamation of a candidate] considering that there is an available and adequate
remedy in the ordinary course of law; [that is, the filing of an electoral protest before the
electoral tribunals].” These remedies, however, may lie
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only after a ruling by the House of Representatives Electoral Tribunal or the Senate Electoral
Tribunal.
Same; Second-Placer Rule; View that if the Certificate of Candidacy (CoC) of the candidate
receiving the highest number of votes was void ab initio, the votes of the candidate should be
considered stray and not counted. This would entitle the candidate receiving the next highest
number of votes to the position.—Aratea v. Commission on Elections, 683 SCRA 105 (2012),
qualified the second-placer rule. The candidate receiving the next highest number of votes would
be entitled to the position if the Certificate of Candidacy of the candidate receiving the highest
number of votes had been initially declared valid at the time of filing but had to be subsequently
cancelled. Additionally, if the Certificate of Candidacy of the candidate receiving the highest
number of votes was void ab initio, the votes of the candidate should be considered stray and not
counted. This would entitle the candidate receiving the next highest number of votes to the
position.
SPECIAL CIVIL ACTION in the Supreme Court. Mandamus.
Marcelino Michael I. Atanante IV for petitioner.
Roger R. Rayel for respondent Regina Ongsiako Reyes.
In the same manner that this Court is cautioned to be circumspect because one party is the son of
a sitting Justice of this Court, so too must we avoid abjuring what ought to be done as dictated by
law and justice solely for that reason.
Before this Court is a Petition for Mandamus filed under Rule 65 of the Rules of Court, as
amended, by Lord Allan Jay Q. Velasco (Velasco) against Hon. Feliciano R. Belmonte, Jr.
(Speaker Belmonte, Jr.), Speaker, House of Representatives, Hon. Marilyn B. Barua-Yap (Sec.
Gen. Barua-Yap), Secretary General, House of Representatives, and Hon. Regina Ongsiako
Reyes (Reyes), Representative, Lone District of the Province of Marinduque.
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Velasco principally alleges that he is the “legal and rightful winner during the May 13, 2013
elections in accordance with final and executory resolutions of the Commission on Elections
(COMELEC) and [this] Honorable Court”;2 thus, he seeks the following reliefs:
a. that a WRIT OF MANDAMUS against the HON. SPEAKER FELICIANO

BELMONTE, JR. be issued ordering said respondent to administer the proper OATH in
favor of petitioner Lord Allan Jay Q. Velasco for the position of Representative for the
Lone District of Marinduque; and allow petitioner to assume the position of representative
for Marinduque and exercise the powers and prerogatives of said position of Marinduque
representative;
b. that a WRIT OF MANDAMUS against SECRETARY-GENERAL [MARILYN]

BARUA-YAP be issued ordering said respondent to REMOVE the name of Regina O.
Reyes in the Roll of Members of the House of Representatives and to REGISTER the
name of petitioner Lord Allan Jay Q. Velasco, herein petitioner, in her stead; and
c. that a TEMPORARY RESTRAINING ORDER be issued to RESTRAIN, PREVENT

and PROHIBIT respondent REGINA ONGSIAKO REYES from usurping the position of
Member of the House of Representatives for the Lone District of Marinduque and from
further exercising the prerogatives of said position and performing the duties pertaining
thereto, and DIRECTING her to IMMEDIATELY VACATE said position.3
The pertinent facts leading to the filing of the present petition are:
_______________
2 Rollo (G.R. No. 201140), pp. 3-4.
3 Id., at pp. 25-26.

100
On October 10, 2012, one Joseph Socorro Tan (Tan), a registered voter and resident of the
Municipality of Torrijos, Marinduque, filed with the Commission on Elections (COMELEC) a
petition4 to deny due course or cancel the Certificate of Candidacy (CoC) of Reyes as candidate
for the position of Representative of the Lone District of the Province of Marinduque. In his
petition, Tan alleged that Reyes made several material misrepresentations in her CoC, i.e.,
“(i) that she is a resident of Brgy. Lupac, Boac, Marinduque; (ii) that she is a natural-born
Filipino citizen; (iii) that she is not a permanent resident of, or an immigrant to, a foreign
country; (iv) that her date of birth is July 3, 1964; (v) that her civil status is single; and finally (vi)
that she is eligible for the office she seeks to be elected to.”5 The case was docketed as SPA No.
13-053 (DC), entitled “Joseph Socorro B. Tan v. Atty. Regina Ongsiako Reyes.”
On March 27, 2013, the COMELEC First Division resolved to grant the petition; hence, Reyes’s
CoC was accordingly cancelled. The dispositive part of said resolution reads:
WHEREFORE, in view of the foregoing, the instant Petition is GRANTED.

Accordingly, the Certificate of Candidacy of respondent REGINA ONGSIAKO REYES is
hereby CANCELLED.6
Aggrieved, Reyes filed a motion for reconsideration thereto.
But while said motion was pending resolution, the synchronized local and national elections
were held on May 13, 2013.
The day after, or on May 14, 2013, the COMELEC En Banc affirmed the resolution of the
COMELEC First Division, to wit:
_______________
4 Docketed as SPA No. 13-053 (DC).
5 Rollo (G.R. No. 201140), pp. 31-32.

6 Id., at p. 42.
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WHEREFORE, premises considered, the Motion for Reconsideration is hereby DENIED

for lack of merit. The March 27, 2013 Resolution of the Commission (First Division) is
hereby AFFIRMED.7
A copy of the foregoing resolution was received by the Provincial Election Supervisor of
Marinduque, through Executive Assistant Rossini M. Oscadin, on May 15, 2013.
Likewise, Reyes’s counsel, Atty. Nelia S. Aureus, received a copy of the same on May 16, 2013.
On May 18, 2013, despite its receipt of the May 14, 2013 COMELEC Resolution, the
Marinduque Provincial Board of Canvassers (PBOC) proclaimed Reyes as the winner of the May
13, 2013 elections for the position of Representative of the Lone District of Marinduque.
On May 31, 2013, Velasco filed an Election Protest Ad Cautelam against Reyes in the House of
Representatives Electoral Tribunal (HRET) docketed as HRET Case No. 13-028, entitled “Lord
Allan Jay Q. Velasco v. Regina Ongsiako Reyes.”
Also on the same date, a Petition for Quo Warranto Ad Cautelam was also filed against Reyes in
the HRET docketed as HRET Case No. 13-027, entitled “Christopher P. Matienzo v. Regina
Ongsiako Reyes.”
On June 5, 2013, the COMELEC En Banc issued a Certificate of Finality8 in SPA No. 13-053
(DC), which provides:
NOW, THEREFORE, considering that more than twenty-one (21) days have lapsed since
the date of the promulgation with no Order issued by the Supreme Court restraining its
execution, the Resolution of the Commission En Banc promulgated on May 14, 2013 is
hereby declared FINAL and EXECUTORY.9
_______________
7 Id., at p. 47.
8 Id., at pp. 65-67.
9 Id., at p. 67. Section 13, Rule 18 of the 1993 COMELEC Rules of Procedure in relation to
paragraph 2, Section 8 of Resolution No.
102
On June 7, 2013, Speaker Belmonte, Jr. administered the oath of office to Reyes.
On June 10, 2013, Reyes filed before this Court a Petition for Certiorari docketed as G.R. No.
207264, entitled “Regina Ongsiako Reyes v. Commission on Elections and Joseph Socorro Tan,”
assailing (i) the May 14, 2013 Resolution of the COMELEC En Banc, which denied her motion
for reconsideration of the March 27, 2013 Resolution of the COMELEC First Division
cancelling her Certificate of Candidacy (for material misrepresentations made therein); and (ii)
the June 5, 2013 Certificate of Finality.
In the meantime, it appears that Velasco filed a Petition for Certiorari before the COMELEC
docketed as SPC No. 13-010, entitled “Rep. Lord Allan Jay Q. Velasco vs. New Members/Old
Members of the Provincial Board of Canvassers (PBOC) of the Lone District of Marinduque and
Regina Ongsiako Reyes,” assailing the proceedings of the PBOC and the proclamation of
Reyes as null and void.
On June 19, 2013, however, the COMELEC denied the aforementioned petition in SPC No. 13-
010.
On June 25, 2013, in G.R. No. 207264, this Court promulgated a Resolution dismissing Reyes’s
petition, viz.:
IN VIEW OF THE FOREGOING, the instant petition is DISMISSED, finding no grave
abuse of discretion on the part of the Commission on Elections. The 14 May 2013
Resolution of the COMELEC En Banc affirm-
_______________
9523, provides that a decision or resolution of the COMELEC En Banc in special actions and
special cases shall become final and executory five (5) days after its promulgation unless a
restraining order is issued by the Supreme Court. Section 3, Rule 37, Part VII also provides that
decisions in petitions to deny due course to or cancel certificates of candidacy, to declare a
candidate as nuisance candidate or to disqualify a candidate, shall become final and executory
after the lapse of five (5) days from promulgation, unless restrained by the Supreme Court.
103
VOL. 780, JANUARY 12, 2016 103
ing the 27 March 2013 Resolution of the COMELEC First Division is upheld.10
Significantly, this Court held that Reyes cannot assert that it is the HRET which has jurisdiction
over her since she is not yet considered a Member of the House of Representatives. This Court
explained that to be considered a Member of the House of Representatives, there must be a
concurrence of the following requisites: (i) a valid proclamation, (ii) a proper oath, and (iii)
assumption of office.11
On June 28, 2013, Tan filed a Motion for Execution (of the March 27, 2013 Resolution of the
COMELEC First Division and the May 14, 2013 Resolution of the COMELEC En Banc) in SPA
No. 13-053 (DC), wherein he prayed that:
[A]n Order be issued granting the instant motion; and cause the immediate EXECUTION
of this Honorable Commission’s Resolutions dated March 27, 2013 and May 14, 2013;
CAUSE the PROCLAMATION of LORD ALLAN JAY Q. VELASCO as the duly elected
Member of the House of Representatives for the Lone District of Marinduque, during the
May 2013 National and Local Elections.12
At noon of June 30, 2013, it would appear that Reyes assumed office and started discharging the
functions of a Member of the House of Representatives.
On July 9, 2013, in SPC No. 13-010, acting on the motion for reconsideration of Velasco, the
COMELEC En Banc reversed the June 19, 2013 denial of Velasco’s petition and declared null
and void and without legal effect the proclamation of Reyes. The dispositive part reads:
_______________
10 Id., at p. 82.
11 Id., at p. 74.
12 Id., at p. 106.
104
WHEREFORE, in view of the foregoing, the instant motion for reconsideration is hereby
GRANTED. The assailed June 19, 2013 Resolution of the First Division is REVERSED
and SET ASIDE.
Corollary thereto, the May 18, 2013 proclamation of respondent REGINA ONGSIAKO
REYES is declared NULL and VOID and without any legal force and effect. Petitioner
LORD ALLAN JAY Q. VELASCO is hereby proclaimed the winning candidate for
the position of representative in the House of Representatives for the province of
Marinduque.13 (Emphasis supplied)
Significantly, the aforequoted Resolution has not been challenged in this Court.
On July 10, 2013, in SPA No. 13-053 (DC), the COMELEC En Banc, issued an Order (i)
granting Tan’s motion for execution (of the May 14, 2013 Resolution); and (ii) directing the
reconstitution of a new PBOC of Marinduque, as well as the proclamation by said new Board of
Velasco as the duly elected Representative of the Lone District of Marinduque. The fallo of
which states:
IN VIEW OF THE FOREGOING, the Commission hereby GRANTS the instant Motion.
Accordingly, a new composition of the Provincial Board of Canvassers of Marinduque is
hereby constituted to be composed of the following:
1. Atty. Ma. Josefina E. Dela Cruz - Chairman
2. Atty. Abigail Justine
Cuaresma-Lilagan - Vice Chairman
3. Dir. Ester Villaflor-Roxas - Member
4. Three (3) Support Staffs
For this purpose, the Commission hereby directs, after due notice to the parties, the
convening of the New Provincial Board of Canvassers of Marinduque on July
_______________
13 Id., at p. 267.
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VOL. 780, JANUARY 12, 2016 105
16, 2013 (Tuesday) at 2:00 p.m., at the COMELEC Session Hall, 8th Floor, PDG
Intramuros, Manila and to PROCLAIM LORD ALLAN JAY Q. VELASCO as the duly
elected Member of the House of Representatives for the Lone District of Marinduque in
the May 13, 2013 National and Local Elections.
Further, Director Ester Villaflor-Roxas is directed to submit before the New Provincial
Board of Canvassers (NPBOC) a certified true copy of the votes of congressional
candidate Lord Allan Jay Q. Velasco in the 2013 National and Local Elections.
Finally, the NPBOC of the Province of Marinduque is likewise directed to furnish copy of
the Certificate of Proclamation to the Department of Interior and Local Government
(DILG) and the House of Representatives.14
On July 16, 2013, the newly constituted PBOC of Marinduque proclaimed herein petitioner
Velasco as the duly elected Member of the House of Representatives for the Lone District of
Marinduque with 48,396 votes obtained from 245 clustered precincts.15
On July 22, 2013, the 16th Congress of the Republic of the Philippines formally convened in a
joint session. On the same day, Reyes, as the recognized elected Representative for the Lone
District of Marinduque, along with the rest of the Members of the House of Representatives,
took their oaths in open session before Speaker Belmonte, Jr.
On July 23, 2013, Reyes filed a Manifestation and Notice of Withdrawal of Petition “without
waiver of her arguments, positions, defenses/causes of action as will be articulated in the HRET
which is now the proper forum.”16
_______________
14 Id., at p. 107.
15 Id., at p. 109. Certificate of Canvass of Votes and Proclamation of Winning Candidate for the
Position of Member of House of Representatives for the Lone District of Marinduque.
16 Rollo (G.R. No. 207264), pp. 409-412.
106

On October 22, 2013, Reyes’s motion for reconsideration17 (of this Court’s June 25, 2013
Resolution in G.R. No. 207264) filed on July 15, 2013, was denied by this Court, viz.:
WHEREFORE, The Motion for Reconsideration is DENIED. The dismissal of the

petition is affirmed. Entry of Judgment is ordered.18
On November 27, 2013, Reyes filed a Motion for Leave of Court to File and Admit Motion for
Reconsideration in G.R. No. 207264.
On December 3, 2013, said motion was treated as a second motion for reconsideration and was
denied by this Court.
On December 5, 2013 and January 20, 2014, respectively, Velasco sent two letters to Reyes
essentially demanding that she vacate the office of Representative of the Lone District of
Marinduque and to relinquish the same in his favor.
On December 10, 2013, Velasco wrote a letter to Speaker Belmonte, Jr. requesting, among
others, that he be allowed to assume the position of Representative of the Lone District of
Marinduque.
On December 11, 2013, in SPC No. 13-010, acting on the Motion for Issuance of a Writ of
Execution filed by Velasco on November 29, 2013, praying that:
WHEREFORE, it is respectfully prayed that a writ of execution be ISSUED to implement

and enforce the May 14, 2013 Resolution in SPA No. 13-053, the July 9, 2013 Resolution
in SPC No. 13-010 and the July 16, 2013 Certificate of Proclamation of Petitioner Lord
Allan Jay Q. Velasco as Representative of Marinduque. It is further prayed that a certified
true copy of the writ of execution be personally served and delivered by the Commission’s
bailiff to Speaker Feliciano Belmonte for the latter’s im-
_______________
17 Id., at pp. 308-376.
18 Rollo (G.R. No. 201140), p. 122.

107
VOL. 780, JANUARY 12, 2016 107
plementation and enforcement of the aforementioned May 14, 2013 Resolution and July 9,
2013 Resolution and the July 16, 2013 Certificate of Proclamation issued by the Special
Board of Canvassers of the Honorable Commission.19
the COMELEC issued an Order20 dated December 11, 2013 directing, inter alia, that all copies
of its Resolutions in SPA No. 13-053 (DC) and SPC No. 13-010, the Certificate of Finality dated
June 5, 2013, the Order dated July 10, 2013, and the Certificate of Proclamation dated July 16,
2013 be forwarded and furnished to Speaker Belmonte, Jr. for the latter’s information and
guidance.
On February 4, 2014, Velasco wrote another letter to Speaker Belmonte, Jr. reiterating the above
mentioned request but to no avail.
On February 6, 2014, Velasco also wrote a letter to Sec. Gen. Barua-Yap reiterating his earlier
requests (July 12 and 18, 2013) to delete the name of Reyes from the Roll of Members and
register his name in her place as the duly elected Representative of the Lone District of
Marinduque.
However, Velasco relates that his efforts proved futile. He alleges that despite all the letters and
requests to Speaker Belmonte, Jr. and Sec. Gen. Barua-Yap, they refused to recognize him as the
duly elected Representative of the Lone District of Marinduque. Likewise, in the face of
numerous written demands for Reyes to vacate the position and office of the Representative of
the Lone District of Marinduque, she continues to discharge the duties of said position.
Hence, the instant Petition for Mandamus with prayer for issuance of a temporary restraining
order and/or injunction anchored on the following issues:
_______________
19 Id., at p. 269.
20 Id., at pp. 269-272.

108
A. Whether or not Speaker Belmonte, Jr. can be COMPELLED, DIRECTED and

ORDERED by a Writ of Mandamus to administer the oath in favor of petitioner as duly
elected Marinduque Representative and allow him to assume said position and exercise the
prerogatives of said office.
B. Whether or not respondent SG Barua-Yap can be COMPELLED, DIRECTED and

ORDERED by a Writ of Mandamus to delete the name of respondent Reyes from the Roll
of Members of the House and include the name of the Petitioner in the Roll of Members of
the House of Representatives.
C. Whether or not a TEMPORARY RESTRAINING ORDER (TRO) and a Writ of

PERMANENT INJUNCTION can be issued to prevent, restrain and prohibit respondent
Reyes from exercising the prerogatives and performing the functions as Marinduque
Representative, and to order her to VACATE the said office.21
As to the first and second issues, Velasco contends that he “has a well-defined and clear legal
right and basis to warrant the grant of the writ of mandamus.”22 He insists that the final and
executory decisions of the COMELEC in SPA No. 13-053 (DC), and this Court in G.R. No.
207264, as well as the nullification of respondent Reyes’s proclamation and his subsequent
proclamation as the duly elected Representative of the Lone District of Marinduque, collectively
give him the legal right to claim the congressional seat.
Thus, he contends that it is the ministerial duty of (i) respondent Speaker Belmonte, Jr. “to
administer the oath to [him] and to allow him to assume and exercise the prerogatives of the
congressional seat for Marinduque representative”;23 and (ii) respondent Sec. Gen. Barua-Yap
“to register [his] name x x x as the duly elected member of the House and
_______________
21 Id., at pp. 12-13.
22 Id., at p. 14.
23 Id., at pp. 16-17.
109
VOL. 780, JANUARY 12, 2016 109
delete the name of respondent Reyes from the Roll of Members.”24 Velasco anchors his position
on Codilla, Sr. v. De Venecia,25 citing a statement of this Court to the effect that the Speaker of
the House of Representatives has the ministerial duty to recognize the petitioner therein (Codilla)
as the duly elected Representative of the Fourth District of Leyte.
Despite the foregoing, Velasco asserts that both respondents Speaker Belmonte, Jr. and Sec. Gen.
Barua-Yap are unlawfully neglecting the performance of their alleged ministerial duties; thus,
illegally excluding him (Velasco) from the enjoyment of his right as the duly elected
Representative of the Lone District of Marinduque.26
With respect to the third issue, Velasco posits that the “continued usurpation and unlawful
holding of such position by respondent Reyes has worked injustice and serious prejudice to
[him] in that she has already received the salaries, allowances, bonuses and emoluments that
pertain to the position of Marinduque Representative since June 30, 2013 up to the present in the
amount of around several hundreds of thousands of pesos.” Therefore, he prays for the issuance
of a temporary restraining order and a writ of permanent injunction against respondent Reyes to
“restrain, prevent and prohibit [her] from usurping the position.”27
In her Comment, Reyes contends that the petition is actually one for quo warranto and not
mandamus given that it essentially seeks a declaration that she usurped the subject office; and the
installation of Velasco in her place by Speaker Belmonte, Jr. when the latter administers his oath
of office and enters his name in the Roll of Members. She argues that, being a collateral attack
on a title to public office, the petition
_______________
24 Id., at p. 20.
25 442 Phil. 135, 189-190; 393 SCRA 639, 658 (2002).
26 Rollo (G.R. No. 201140), p. 21.
27 Id., at pp. 24-25.
110
must be dismissed as enunciated by the Court in several cases.28
As to the issues presented for resolution, Reyes questions the jurisdiction of the Court over Quo
Warranto cases involving Members of the House of Representatives. She posits that “even if the
Petition for Mandamus be treated as one of Quo Warranto, it is still dismissible for lack of
jurisdiction and absence of a clear legal right on the part of [Velasco].”29 She argues that
numerous jurisprudence have already ruled that it is the House of Representatives Electoral
Tribunal that has the sole and exclusive jurisdiction over all contests relating to the election,
returns and qualifications of Members of the House of Representatives. Moreover, she insists
that there is also an abundance of case law that categorically states that the COMELEC is
divested of jurisdiction upon her proclamation as the winning candidate, as, in fact, the HRET
had already assumed jurisdiction over quo warranto cases30 filed against Reyes by several
individuals.
Given the foregoing, Reyes concludes that this Court is “devoid of original jurisdiction to annul
[her] proclamation.”31 But she hastens to point out that (i) “[e]ven granting for the sake of
argument that the proclamation was validly nullified, [Velasco] as second-placer cannot be
declared the winner x x x” as he was not the choice of the people of the Province of Marinduque;
and (ii) Velasco is estopped from asserting the
_______________
28 Nacionalista Party v. De Vera, 85 Phil. 126 (1949); Pilar v. Secretary of the Department of
Public Works and Communications, 125 Phil. 766; 19 SCRA 358 (1967); Gonzales v.
Commission on Elections, 129 Phil. 7; 21 SCRA 774 (1967); Topacio v. Ong, 595 Phil. 491; 574
SCRA 817 (2008); Señeres v. Commission on Elections, 603 Phil. 552; 585 SCRA 557 (2009).
29 Rollo (G.R. No. 201140), p. 314.
30 HRET Case Nos. 13-036 to 37, entitled “Noeme Mayores Tan and Jeasseca L. Mapacpac v.
Regina Ongsiako Reyes” and “Eric Del Mundo Junio v. Regina Ongsiako Reyes,” respectively.
31 Rollo (G.R. No. 201140), p. 344.
111
VOL. 780, JANUARY 12, 2016 111
jurisdiction of this Court over her (Reyes) election because he (Velasco) filed an Election Protest
Ad Cautelam in the HRET on May 31, 2014.
The Office of the Solicitor General (OSG), arguing for Speaker Belmonte, Jr. and Sec. Gen.
Barua-Yap, opposed Velasco’s petition on the following grounds:
I.
UPON RESPONDENT REYES’ PROCLAMATION ON MAY 18, 2013, EXCLUSIVE

JURISDICTION TO RESOLVE ELECTION CONTESTS INVOLVING RESPONDENT
REYES, INCLUDING THE VALIDITY OF HER PROCLAMATION AND HER
ELIGIBILITY FOR OFFICE, VESTED IN THE HRET.
Hence, until and unless the HRET grants any quo warranto petition or election protest
filed against respondent Reyes, and such HRET resolution or resolutions become final and
executory, respondent Reyes may not be restrained from exercising the prerogatives of
Marinduque Representative, and respondent Sec. Gen. Barua-Yap may not be compelled
by mandamus to remove respondent Reyes’s name from the Roll of Members of the House.
II.
CODILLA v. COMELEC IS NOT APPLICABLE TO THIS CASE, GIVEN THAT

PETITIONER, BEING MERELY THE SECOND-PLACER IN THE MAY 13, 2013
ELECTIONS, CANNOT VALIDLY ASSUME THE POST OF MARINDUQUE
REPRESENTATIVE.
Hence, respondents Speaker Belmonte and Sec. Gen. Barua-Yap may not be compelled by
mandamus to, respectively, administer the proper oath to petitioner and register the
latter’s name in the Roll of Members of the House.
III.
PETITIONER IS NOT ENTITLED TO THE INJUNCTIVE RELIEFS PRAYED FOR.32
_______________
32 Id., at pp. 385-386.
112
The OSG presents the foregoing arguments on the premise that there is a need for this Court to
revisit its twin Resolutions dated June 25, 2013 and October 22, 2013 both in G.R. No. 207264,
given that (i) this Court was “divided” when it issued the same; and (ii) there were strong
dissents to the majority opinion. It argues that this Court has in the past revisited decisions
already final and executory; there is no hindrance for this Court to do the same in G.R. No.
207264.
Moreover, the OSG contends that:
Despite the finality of the June 25, 2013 Resolution and the October 22, 2013 Resolution,
upholding the cancellation of respondent Reyes’s CoC, there has been no compelling
reason for the House to withdraw its recognition of respondent Reyes as Marinduque
Representative, in the absence of any specific order or directive to the House. To be sure,
there was nothing in the Honorable Court’s disposition in Reyes v. COMELEC that
required any action from the House. Again, it bears emphasis that neither petitioner nor
respondents Speaker Belmonte and Sec. Gen. Barua-Yap were parties in Reyes v.
COMELEC.
Further, records with the HRET show that the following cases have been filed against
respondent Reyes:
(i) Case No. 13-036 (Quo Warranto), entitled Noeme Mayores Tan & Jeasseca L.
Mapacpac v. Regina Ongsiako Reyes;
(ii) Case No. 13-037 (Quo Warranto), entitled Eric D. Junio v. Regina Ongsiako
Reyes;
(iii) Case No. 13-027 (Quo Warranto), entitled Christopher Matienzo v. Regina
Ongsiako Reyes; and
(iv) Case No. 13-028 (Election Protest), entitled Lord Allan Jay Velasco v. Regina
Ongsiako Reyes.33
And in view of the cases filed in the HRET, the OSG insists that:
_______________
33 Id., at pp. 398-399.
113
VOL. 780, JANUARY 12, 2016 113
If the jurisdiction of the COMELEC were to be retained until the assumption of office of
the winner, at noon on the thirtieth day of June next following the election, then there
would obviously be a clash of jurisdiction between the HRET and the COMELEC, given
that the 2011 HRET Rules provide that the appropriate cases should be filed before it
within 15 days from the date of proclamation of the winner. If, as the June 25, 2013
Resolution provides, the HRET’s jurisdiction begins only after assumption of office, at
noon of June 30 following the election, then quo warranto petitions and election protests
filed on or after said date would be dismissed outright by the HRET under its own rules for
having been filed out of time, where the winners have already been proclaimed within the
period after the May elections and up to June 14.34
In recent development, however, the HRET promulgated a Resolution on December 14, 2015
dismissing HRET Case Nos. 13-036 and 13-037,35 the twin petitions for quo warranto filed
against Reyes, to wit:
WHEREFORE, in view of the foregoing, the September 23, 2014 Motion for
Reconsideration of Victor Vela Sioco is hereby GRANTED. The September 11, 2014
Resolution of [the] Tribunal is hereby REVERSED and SET ASIDE. Accordingly, the
present Petitions for Quo Warranto are hereby DISMISSED for lack of jurisdiction.36
In the said Resolution, the HRET held that “the final Supreme Court ruling in G.R. No. 207264
is the COGENT REASON to set aside the September 11, 2014 Resolution.”37
_______________
34 Id., at p. 397.
35 Petitioner Velasco’s Manifestation dated January 6, 2016, with attachments.
36 Id., Annex “D,” p. 5.
37 Id., at p. 2.
114
To make clear, the September 11, 2014 Resolution of the HRET ordered the dismissal of a
Petition-in-Intervention filed by one Victor Vela Sioco (Sioco) in the twin petitions for quo
warranto, for “lack of merit.” Further, the HRET directed “the hearing and reception of evidence
of the two Petitions for Quo Warranto against x x x Respondent [Reyes] to proceed.”38 Sioco,
however, moved for the reconsideration of the said September 11, 2014 HRET Resolution based
on the argument that the latter was contrary to law and jurisprudence given the Supreme Court
ruling in G.R. No. 207264.
Subsequently, the December 14, 2015 Resolution of the HRET held that —
The Tribunal’s Jurisdiction
It is necessary to clarify the Tribunal’s jurisdiction over the present petitions for quo
warranto, considering the parties’ divergent postures on how the Tribunal should resolve
the same vis-à-vis the Supreme Court ruling in G.R. No. 207264.
The petitioners believe that the Tribunal has jurisdiction over their petitions. They pray
that “after due proceedings,” the Tribunal “declare Respondent REGINA ONGSIAKO
REYES DISQUALIFIED/INELIGIBLE to sit as Member of the House of Representatives,
representing the Province of Marinduque.” In addition, the petitioner Eric Del Mundo
Junio urges the Tribunal to follow the Supreme Court pronouncement in G.R. No. 207264.
On the other hand, Victor Vela Sioco, in his Petition-in-Intervention, pleads for the
outright dismissal of the present petitions considering the Supreme Court final ruling in
G.R. No. 207264. For her part, respondent Regina Reyes prays too for the dismissal of the
present petitions, albeit after reception of evidence by the contending parties.
_______________
38 Id., at p. 1.
115
VOL. 780, JANUARY 12, 2016 115
The constitutional mandate of the Tribunal is clear: It is “the sole judge of all contests
relating to the election, returns, and qualifications of [House] Members.” Such power or
authority of the Tribunal is echoed in its 2011 Rules of the House of Representatives
Electoral Tribunal: “The Tribunal is the sole judge of all contests relating to the elections,
returns, and qualifications of the Members of the House of Representatives.”
xxxx
In the present cases, before respondent Regina Reyes was proclaimed on May 18, 2013,
the COMELEC En Banc, in its Resolution of May 14, 2013 in SPA No. 13-053 (DC), had
already resolved that the COMELEC First Division correctly cancelled her CoC on the
ground that she lacked the Filipino citizenship and residency requirements. Thus, the
COMELEC nullified her proclamation. When Regina Reyes challenged the COMELEC
actions, the Supreme Court En Banc, in its Resolution of June 25, 2013 in G.R. No.
207246, upheld the same.
With the COMELEC’s cancellation of respondent Regina Reyes’ CoC, resulting in the
nullification of her proclamation, the Tribunal, much as we would want to, cannot assume
jurisdiction over the present petitions. The jurisdiction of the HRET begins only after the
candidate is considered a Member of the House of Representatives. And to be considered a
Member of the House of Representatives, there must be a concurrence of the following
requisites: (1) a valid proclamation, (2) a proper oath, and (3) assumption of office, so the
Supreme Court pronounced in its Resolution of June 25, 2013 in G.R. No. 207264, thus:
x x x, the jurisdiction of the HRET begins only after the candidate is considered a
Member of the House of Representatives, as stated in Section 17, Article VI of the
1987 Constitution:
xxxx
As held in Marcos v. COMELEC, the HRET does not have jurisdiction over a can-
116
didate who is not a member of the House of Representatives x x x.
xxxx
The next inquiry, then, is when is a candidate considered a Member of the House of
Representatives?
In Vinzons-Chato v. COMELEC, citing Aggabao v. COMELEC and Guerrero v.

COMELEC, the Court ruled that:
The Court has invariably held that once a winning candidate has been
proclaimed, taken his oath, and assumed office as a Member of the House of
Representatives, the COMELEC’s jurisdiction over election contests relating
to his election, returns, and qualifications ends, and the HRET’s own
jurisdiction begins. x x x
From the foregoing, it is then clear that to be considered a Member of the House
of Representatives, there must be a concurrence of the following requisites: (1) a
valid proclamation, (2) a proper oath, and (3) assumption of office x x x.
Based on the above quoted ruling of the Supreme Court, a valid proclamation is the first
essential element before a candidate can be considered a Member of the House of
Representatives over which the Tribunal could assume jurisdiction. Such element is
obviously absent in the present cases as Regina Reyes’ proclamation was nullified by the
COMELEC, which nullification was upheld by the Supreme Court. On this ground alone,
the Tribunal is without power to assume jurisdiction over the present petitions since
Regina Reyes “cannot be considered a Member of the House of Representatives,” as
declared by the Supreme Court En Banc in G.R. No. 207264. It further stresses:
117
VOL. 780, JANUARY 12, 2016 117
“x x x there was no basis for the proclamation of petitioner [Regina Reyes] on 18

May 2013. Without the proclamation, the petitioner’s oath of office is likewise
baseless, and without a precedent oath of office, there can be no valid and effective
assumption of office.”
The Supreme Court has spoken. Its pronouncements must be respected. Being the ultimate
guardian of the Constitution, and by constitutional design, the Supreme Court is “supreme
in its task of adjudication; x x x. As a rule, all decisions and determinations in the exercise
of judicial power ultimately go to and stop at the Supreme Court whose judgment is final.”
This Tribunal, as all other courts, must take their bearings from the decisions and rulings
of the Supreme Court.39
Incidentally, it appears that an Information against Reyes for violation of Article 177 (Usurpation
of Official Functions) of the Revised Penal Code, dated August 3, 2015, has been filed in
court,40 entitled “People of the Philippines v. Regina Ongsiako Reyes.”41
The Issue
The issue for this Court’s resolution boils down to the propriety of issuing a writ of mandamus to
compel Speaker Belmonte, Jr. and Sec. Gen. Barua-Yap to perform the specific acts sought by
Velasco in this petition.
The Ruling
The petition has merit.
_______________
39 Id., at pp. 3-5.
40 Metropolitan Trial Court, Branch 41, Quezon City.
41 Petitioner Velasco’s Manifestation dated January 6, 2016, with attachments, Annex “B.”
118
At the outset, this Court observes that the respondents have taken advantage of this petition to
relitigate what has been settled in G.R. No. 207264. Respondents are reminded to respect the
Entry of Judgment that has been issued therein on October 22, 2013.
After a painstaking evaluation of the allegations in this petition, it is readily apparent that this
special civil action is really one for mandamus and not a quo warranto case, contrary to the
asseverations of the respondents.
A petition for quo warranto is a proceeding to determine the right of a person to the use or
exercise of a franchise or office and to oust the holder from its enjoyment, if his claim is not
well-founded, or if he has forfeited his right to enjoy the privilege. Where the action is filed by a
private person, he must prove that he is entitled to the controverted position; otherwise,
respondent has a right to the undisturbed possession of the office.42 In this case, given the
present factual milieu, i.e., (i) the final and executory resolutions of this Court in G.R. No.
207264; (ii) the final and executory resolutions of the COMELEC in SPA No. 13-053 (DC)
cancelling Reyes’s Certificate of Candidacy; and (iii) the final and executory resolution of the
COMELEC in SPC No. 13-010 declaring null and void the proclamation of Reyes and
proclaiming Velasco as the winning candidate for the position of Representative for the Lone
District of the Province of Marinduque — it cannot be claimed that the present petition is one for
the determination of the right of Velasco to the claimed office.
To be sure, what is prayed for herein is merely the enforcement of clear legal duties and not to
try disputed title. That the respondents make it appear so will not convert this petition to one for
quo warranto.
_______________
42 Austria v. Amante, 79 Phil. 780, 783 (1948); Caraan-Medina v. Quizon, 124 Phil. 1171, 1178;
18 SCRA 562, 569 (1966); Castro v. Del Rosario, 125 Phil. 611, 615-616; 19 SCRA 196, 200
(1967).
119
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Section 3, Rule 65 of the Rules of Court, as amended, provides that any person may file a
verified petition for mandamus “when any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy
and adequate remedy in the ordinary course of law.” A petition for mandamus will prosper if it is
shown that the subject thereof is a ministerial act or duty, and not purely discretionary on the part
of the board, officer or person, and that the petitioner has a well-defined, clear and certain right
to warrant the grant thereof.43
The difference between a ministerial and discretionary act has long been established. A purely
ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to the mandate of a legal authority, without regard to or the
exercise of his own judgment upon the propriety or impropriety of the act done. If the law
imposes a duty upon a public officer and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary and not ministerial. The duty is ministerial only
when the discharge of the same requires neither the exercise of official discretion or judgment.44
As the facts stand in this case, Speaker Belmonte, Jr. and Sec. Gen. Barua-Yap have no discretion
whether or not to administer the oath of office to Velasco and to register the latter’s name in the
Roll of Members of the House of Representatives, respectively. It is beyond cavil that there is in
existence final and executory resolutions of this Court in G.R. No. 207264 affirming the final
and executory resolutions of the COMELEC in SPA No. 13-053 (DC) cancelling Reyes’s
_______________
43 Codilla, Sr. v. De Venecia, supra note 25 at p. 189; pp. 680-681.
44 Nazareno v. City of Dumaguete, 607 Phil. 768, 801; 590 SCRA 110, 139 (2009), citing
Codilla, Sr. v. De Venecia, id.
120

Certificate of Candidacy. There is likewise a final and executory resolution of the COMELEC in
SPC No. 13-010 declaring null and void the proclamation of Reyes, and proclaiming Velasco as
the winning candidate for the position of Representative for the Lone District of the Province of
Marinduque.
The foregoing state of affairs collectively lead this Court to consider the facts as settled and
beyond dispute — Velasco is the proclaimed winning candidate for the Representative of the
Lone District of the Province of Marinduque.
Reyes argues in essence that this Court is devoid of original jurisdiction to annul her
proclamation. Instead, it is the HRET that is constitutionally mandated to resolve any questions
regarding her election, the returns of such election, and her qualifications as a Member of the
House of Representatives especially so that she has already been proclaimed, taken her oath, and
started to discharge her duties as a Member of the House of Representatives representing the
Lone District of the Province of Marinduque. But the confluence of the three acts in this case —
her proclamation, oath and assumption of office — has not altered the legal situation between
Velasco and Reyes.
The important point of reference should be the date the COMELEC finally decided to cancel the
Certificate of Candidacy (CoC) of Reyes which was on May 14, 2013. The most crucial time is
when Reyes’s CoC was cancelled due to her non-eligibility to run as Representative of the Lone
District of the Province of Marinduque — for without a valid CoC, Reyes could not be treated
as a candidate in the election and much less as a duly proclaimed winner. That particular
decision of the COMELEC was promulgated even before Reyes’s proclamation, and which was
affirmed by this Court’s final and executory Resolutions dated June 25, 2013 and October 22,
2013.
This Court will not give premium to the illegal actions of a subordinate entity of the COMELEC,
the PBOC who, despite
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knowledge of the May 14, 2013 resolution of the COMELEC En Banc cancelling Reyes CoC,
still proclaimed her as the winning candidate on May 18, 2013. Note must also be made that as
early as May 16, 2013, a couple of days before she was proclaimed, Reyes had already received
the said decision cancelling her CoC. These points clearly show that the much argued
proclamation was made in clear defiance of the said COMELEC En Banc Resolution.
That Velasco now has a well-defined, clear and certain right to warrant the grant of the present
petition for mandamus is supported by the following undisputed facts that should be taken into
consideration:
First. At the time of Reyes’s proclamation, her CoC was already cancelled by the COMELEC En
Banc in its final finding in its resolution dated May 14, 2013, the effectivity of which was not
enjoined by this Court, as Reyes did not avail of the prescribed remedy which is to seek a
restraining order within a period of five (5) days as required by Section 13(b), Rule 18 of
COMELEC Rules. Since no restraining order was forthcoming, the PBOC should have refrained
from proclaiming Reyes.
Second. This Court upheld the COMELEC decision cancelling respondent Reyes’s CoC in its
Resolutions of June 25, 2013 and October 22, 2013 and these Resolutions are already final and
executory.
Third. As a consequence of the above events, the COMELEC in SPC No. 13-010 cancelled
respondent Reyes’s proclamation and, in turn, proclaimed Velasco as the duly elected Member of
the House of Representatives in representation of the Lone District of the Province of
Marinduque. The said proclamation has not been challenged or questioned by Reyes in any
proceeding.
Fourth. When Reyes took her oath of office before respondent Speaker Belmonte, Jr. in open
session, Reyes had NO valid CoC NOR a valid proclamation.
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Thus, to consider Reyes’s proclamation and treating it as a material fact in deciding this case will
paradoxically alter the well-established legal milieu between her and Velasco.
Fifth. In view of the foregoing, Reyes HAS ABSOLUTELY NO LEGAL BASIS to serve as a
Member of the House of Representatives for the Lone District of the Province of Marinduque,
and therefore, she HAS NO LEGAL PERSONALITY to be recognized as a party-respondent at
a quo warranto proceeding before the HRET.
And this is precisely the basis for the HRET’s December 14, 2015 Resolution acknowledging
and ruling that it has no jurisdiction over the twin petitions for quo warranto filed against Reyes.
Its finding was based on the existence of a final and executory ruling of this Court in G.R. No.
207264 that Reyes is not a bona fide member of the House of Representatives for lack of a valid
proclamation. To reiterate this Court’s pronouncement in its Resolution, entitled Reyes v.
Commission on Elections45 —
The averred proclamation is the critical pointer to the correctness of petitioner’s

submission. The crucial question is whether or not petitioner [Reyes] could be proclaimed
on 18 May 2013. Differently stated, was there basis for the proclamation of petitioner on
18 May 2013?
Dates and events indicate that there was no basis for the proclamation of petitioner on 18
May 2013. Without the proclamation, the petitioner’s oath of office is likewise baseless,
and without a precedent oath of office, there can be no valid and effective assumption of
office.
xxxx
“More importantly, we cannot disregard a fact basic in this controversy — that

before the proclamation of petitioner on 18 May 2013, the COMELEC En Banc had
al-
_______________
45 G.R. No. 207264, October 22, 2013, 708 SCRA 197, 219.
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ready finally disposed of the issue of petitioner’s [Reyes] lack of Filipino citizenship
and residency via its Resolution dated 14 May 2013. After 14 May 2013, there was,
before the COMELEC, no longer any pending case on petitioner’s qualifications to
run for the position of Member of the House of Representatives. x x x.”
As the point has obviously been missed by the petitioner [Reyes] who continues to argue
on the basis of her “due proclamation,” the instant motion gives us the opportunity to
highlight the undeniable fact we here repeat that the proclamation which petitioner
secured on 18 May 2013 was WITHOUT ANY BASIS.” (Emphasis supplied)
Put in another way, contrary to the view that the resort to the jurisdiction of the HRET is a plain,
speedy and adequate remedy, such recourse is not a legally available remedy to any party,
specially to Velasco, who should be the sitting Member of the House of Representatives if it were
not for the disregard by the leadership of the latter of the binding decisions of a constitutional
body, the COMELEC, and the Supreme Court.
Though the earlier existence of the twin quo warranto petitions filed against Reyes before the
HRET had actually no bearing on the status of finality of the decision of the COMELEC in SPC
No. 13-010. Nonetheless, their dismissal pursuant to the HRET’s December 14, 2015 Resolution
sustained Velasco’s well-defined, clear and certain right to the subject office.
The present Petition for Mandamus seeks the issuance of a writ of mandamus to compel
respondents Speaker Belmonte, Jr. and Sec. Gen. Barua-Yap to acknowledge and recognize the
final and executory Decisions and Resolution of this Court and of the COMELEC by
administering the oath of office to Velasco and entering the latter’s name in the Roll of Members
of the House of Representatives. In other words, the Court is
124

called upon to determine whether or not the prayed for acts, i.e., (i) the administration of the oath
of office to Velasco; and (ii) the inclusion of his name in the Roll of Members, are ministerial in
character vis-à-vis the factual and legal milieu of this case. As we have previously stated, the
administration of oath and the registration of Velasco in the Roll of Members of the House of
Representatives for the Lone District of the Province of Marinduque are no longer a matter of
discretion or judgment on the part of Speaker Belmonte, Jr. and Sec. Gen. Barua-Yap. They are
legally duty-bound to recognize Velasco as the duly elected Member of the House of
Representatives for the Lone District of Marinduque in view of the ruling rendered by this Court
and the COMELEC’s compliance with the said ruling, now both final and executory.
It will not be the first time that the Court will grant Mandamus to compel the Speaker of the
House of Representatives to administer the oath to the rightful Representative of a legislative
district and the Secretary-General to enter said Representative’s name in the Roll of Members of
the House of Representatives. In Codilla, Sr. v. De Venecia,46 the Court decreed:
Under Rule 65, Section 3 of the 1997 Rules of Civil Procedure, any person may file a
verified petition for mandamus “when any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law.” For a petition for mandamus
to prosper, it must be shown that the subject of the petition for mandamus is a ministerial
act or duty, and not purely discretionary on the part of the board, officer or person, and that
the peti-
_______________
46 Codilla, Sr. v. De Venecia, supra note 25 at pp. 188-190; pp. 680-682.
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VOL. 780, JANUARY 12, 2016 125
tioner has a well-defined, clear and certain right to warrant the grant thereof.
The distinction between a ministerial and discretionary act is well delineated. A purely
ministerial act or duty is one which an officer or tribunal performs in a given state of facts,
in a prescribed manner, in obedience to the mandate of a legal authority, without regard to
or the exercise of his own judgment upon the propriety or impropriety of the act done. If
the law imposes a duty upon a public officer and gives him the right to decide how or
when the duty shall be performed, such duty is discretionary and not ministerial. The duty
is ministerial only when the discharge of the same requires neither the exercise of official
discretion or judgment.
In the case at bar, the administration of oath and the registration of the petitioner in the
Roll of Members of the House of Representatives representing the 4th legislative district
of Leyte is no longer a matter of discretion on the part of the public respondents. The facts
are settled and beyond dispute: petitioner garnered 71,350 votes as against respondent
Locsin who only got 53,447 votes in the May 14, 2001 elections. The COMELEC Second
Division initially ordered the proclamation of respondent Locsin; on Motion for
Reconsideration the COMELEC En Banc set aside the order of its Second Division and
ordered the proclamation of the petitioner. The Decision of the COMELEC En Banc has
not been challenged before this Court by respondent Locsin and said Decision has become
final and executory.
In sum, the issue of who is the rightful Representative of the 4th legislative district of
Leyte has been finally settled by the COMELEC En Banc, the constitutional body with
jurisdiction on the matter. The rule of law demands that its Decision be obeyed by all
officials of the land. There is no alternative to the rule of law except the reign of chaos and
confusion.
IN VIEW WHEREOF, the Petition for Mandamus is granted. Public Speaker of the
House of Representatives shall administer the oath of petitioner EUFRO-
126
CINO M. CODILLA, SR., as the duly-elected Representative of the 4th legislative district
of Leyte. Public respondent Secretary-General shall likewise register the name of the
petitioner in the Roll of Members of the House of Representatives after he has taken his
oath of office. This decision shall be immediately executory. (Citations omitted)
Similarly, in this case, by virtue of (i) COMELEC En Banc Resolution dated May 14, 2013 in
SPA No. 13-053 (DC); (ii) Certificate of Finality dated June 5, 2013 in SPA No. 13-053 (DC);
(iii) COMELEC En Banc Resolution dated June 19, 2013 in SPC No. 13-010; (iv) COMELEC
En Banc Resolution dated July 10, 2013 in SPA No. 13-053 (DC); and (v) Velasco’s Certificate
of Proclamation dated July 16, 2013, Velasco is the rightful Representative of the Lone
District of the Province of Marinduque; hence, entitled to a writ of mandamus.
As to the view of Reyes and the OSG that since Velasco, Speaker Belmonte, Jr. and Sec. Gen.
Barua-Yap are not parties to G.R. No. 207264, Velasco can neither ask for the enforcement of the
Decision rendered therein nor argue that the doctrine of res judicata by conclusiveness of
judgment applies to him and the public respondents, this Court maintains that such contention is
incorrect. Velasco, along with public respondents Speaker Belmonte, Jr. and Sec. Gen. Barua-
Yap, are all legally bound by this Court’s judgment in G.R. No. 207264, i.e., essentially, that the
COMELEC correctly cancelled Reyes’s CoC for Member of the House of Representatives for
the Lone District of the Province of Marinduque on the ground that the latter was ineligible for
the subject position due to her failure to prove her Filipino citizenship and the requisite one-year
residency in the Province of Marinduque. A contrary view would have our dockets unnecessarily
clogged with petitions to be filed in every direction by any and all registered voters not a party to
a case to question the final decision of this Court. Such restricted interpretation of res
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judicata is intolerable for it will defeat this Court’s ruling in G.R. No. 207264. To be sure,
Velasco who was duly proclaimed by COMELEC is a proper party to invoke the Court’s final
judgment that Reyes was ineligible for the subject position.47
It is well past the time for everyone concerned to accept what has been adjudicated and take
judicial notice of the fact that Reyes’s ineligibility to run for and be elected to the subject
position had already been long affirmed by this Court. Any ruling deviating from such
established ruling will be contrary to the Rule of Law and should not be countenanced.
In view of finality of the rulings in G.R. No. 207264, SPA No. 13-053 (DC) and SPC No. 13-
010, there is no longer any issue as to who is the rightful Representative of the Lone District of
the Province of Marinduque; therefore, to borrow the pronouncement of this Court, speaking
through then Associate Justice Reynato S. Puno, in Codilla, Sr. v. De Venecia,48 “[t]he rule of
law demands that its Decision be obeyed by all officials of the land. There is no alternative to the
rule of law except the reign of chaos and confusion.”
WHEREFORE, the Petition for Mandamus is GRANTED. Public respondent Hon. Feliciano
R. Belmonte, Jr., Speaker, House of Representatives, shall administer the oath of office of
petitioner Lord Allan Jay Q. Velasco as the duly-elected Representative of the Lone District of
the Province of Marinduque. And public respondent Hon. Marilyn B. Barua-Yap, Secretary
General, House of Representatives, shall register the name of petitioner Lord Allan Jay Q.
Velasco in the Roll of Members of the House of Representatives after he has taken his oath of
office. This Decision shall be IMMEDIATELY EXECUTORY.
SO ORDERED.
_______________
47 Cañero v. University of the Philippines, 481 Phil. 249, 270; 437 SCRA 630, 646 (2004).
48 Codilla, Sr. v. De Venecia, supra note 25 at p. 190; p. 681.
128
Sereno (CJ.), Bersamin, Villarama, Jr. and Reyes, JJ., concur.
Carpio, J., I join the Concurring Opinion of J. Leonen.
Velasco, Jr., Peralta, Del Castillo, Mendoza, Perlas-Bernabe and Jardeleza, JJ., No part.
Brion, J., See: Dissenting Opinion.
Perez, J., I concur and submit a Concurring Opinion.
Leonen, J., See Separate Concurring Opinion.

DISSENTING OPINION
BRION, J.:
Before the Court is the petition for mandamus1 filed by Lord Allan Jay Q. Velasco2 (Velasco)
against Hon. Feliciano R. Belmonte, Jr. (as Speaker of the House of Representatives, Speaker
Belmonte), Secretary General Marilyn B. Barua-Yap (Sec. Gen. Barua-Yap), and Representative
Regina Ongsiako-Reyes (Reyes).
I. The Petition
The petition seeks to compel: Speaker Belmonte to administer the proper oath in favor of Velasco
and allow him to assume office as Representative for Marinduque and exercise the powers and
prerogatives attached to the office; and Sec. Gen. Barua-Yap to remove the name of Reyes, and
register his name in her place, in the Roll of Members of the House of Representatives (HOR). It
also seeks to restrain Reyes from
_______________
1 Rollo, pp. 3-26.
2 Petitioner Velasco is the son of incumbent Supreme Court Justice Presbitero J. Velasco, Jr.
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VOL. 780, JANUARY 12, 2016 129
further exercising the powers and prerogatives attached to the position and to direct her to
immediately vacate it.
Velasco asserts that “he has a well-defined and clear legal right and basis to warrant the grant
of the writ of mandamus.” He argues that the final and executory resolutions of the Commission
on Elections (“COMELEC”) in SPA No. 13-053 and SPC No. 13-010 and of the Court in G.R.
No. 207264, with his proclamation as Representative of Marinduque, grant him this clear legal
right to claim and assume the congressional seat.
Because of this clear legal right, Velasco reasons out that Speaker Belmonte has the ministerial
duty to “administer the oath to [him] and allow him to assume and exercise the prerogatives
of the congressional seat, x x x.” Sec. Gen. Barua-Yap, on the hand, has the ministerial duty
to “register [his] name x x x as the duly elected member of the [HOR] and delete the name of
respondent Reyes from the Roll of Members.” Velasco cites Codilla, Sr. v. De Venecia3 to
support his claim.
He claims that Speaker Belmonte and Sec. Gen. Barua-Yap are unlawfully neglecting the
performance of these ministerial duties, thus, illegally excluding him from the enjoyment of his
right as the duly elected Marinduque Representative.
As regards Reyes, Velasco asserts that the “continued usurpation and unlawful holding of such
position by respondent Reyes has worked injustice and serious prejudice to [him] in that she
has already received the salaries, allowances, bonuses and emoluments that pertain to the
[office] since June 30, 2013 up to the present x x x.”
For these reasons, he argues that a writ of mandamus should be issued to compel Speaker
Belmonte and Sec. Gen. Barua-Yap to perform their ministerial duties; and that a
_______________
3 442 Phil. 139; 393 SCRA 639 (2002).
130
TRO and a writ of permanent injunction should also be issued to restrain, prevent, and prohibit
Reyes from usurping the position that rightfully belongs to him.
II. The Ponencia’s Ruling

The ponencia grants the petition; it views the petition merely as a plea to the Court for the
enforcement of what it perceives as clear legal duties on the part of the respondents.
To the ponencia, any issue on who is the rightful Representative of the Lone District of
Marinduque has been settled with the finality of the rulings in G.R. No. 207264, SPA No. 13-
035, and SPC No. 13-010.
Recognizing it settled that Velasco is the proclaimed winning candidate for the Marinduque
Representative position, the ponencia concludes that the administration of oath and the
registration of Velasco in the Roll of Members of the HOR are no longer matters of discretion on
the part of Speaker Belmonte and Sec. Gen. Barua-Yap. Hence, the writ of mandamus must
issue.
III. My Dissent
I submit this Dissenting Opinion to object to the ponencia’s GRANT of the petition, as I
disagree with the ponencia’s premises and conclusion that Velasco is entitled to the issuance of a
writ of mandamus. I likewise believe that Velasco’s petition should be dismissed because:
(1) he failed to satisfy the requirements for the issuance of the writ of mandamus; and
(2) the grant of the writ is a patent violation of the principle of the separation of powers that
will disturb, not only the Court’s relations with the HOR, a coequal branch of government. As
well, it will result in upsetting the established lines
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VOL. 780, JANUARY 12, 2016 131
of jurisdiction among the COMELEC, the House of Representatives Electoral Tribunal (HRET),
and the Court.
Needless to state, the HOR may very well have its own views about the admission of its
Members and can conceivably prefer its own views to those of the Court on matters that it
believes are within its competence and jurisdiction to decide as an equal and separate branch of
government.
Additionally, as I reminded the Court in my writings on the cases affecting Velasco, the Court
should be keenly aware of the sensitivity involved in handling the case. Velasco is the son of a
colleague, Associate Justice Presbitero Velasco, who is also the Chair of the HRET. Thus, we
should be very clear and certain if we are to issue the writ in order to avoid any charge that the
Court favors its own.
IV. Discussion
IV.A. Mandamus:
Nature and Concept
Mandamus is a command issuing from a court of law of competent jurisdiction, in the name of
the state or sovereign, directed to some inferior court, tribunal, or board, or to some corporation
or person, requiring the performance of a particular duty therein specified, which duty results
from the official station of the party to whom the writ is directed, or from operation of law.4
The writ of mandamus is an extraordinary remedy issued only in cases of extreme necessity
where the ordinary course of procedure is powerless to afford an adequate and
_______________
4 Feria & Noche, Civil Procedure Annotated, p. 486 (2001), citing 34 Am. Jur. Mandamus, S. 2.
132

speedy relief to one who has a clear legal right to the performance of the act to be compelled.5
As a peremptory writ, mandamus must be issued with utmost circumspection, and should always
take into consideration existing laws, rules and jurisprudence on the matter, particularly the
principles underlying our Constitution.
Moreover, the remedy of mandamus is employed to compel the performance of a ministerial

duty after performance of the duty has been refused. As a rule, it cannot be used to direct the
exercise of judgment or discretion; if at all, the obligated official carrying the duty can only be
directed by mandamus to act, but not to act in a particular way. The courts can only interfere
when the refusal to act already constitutes inaction amounting to grave abuse of discretion,
manifest injustice, palpable excess of authority, or other causes affecting jurisdiction.6
IV.A.1. Mandamus as a remedy under
Rule 65 of the Rules of Court
In this jurisdiction, the remedy of mandamus is governed by Section 3, Rule 65 of the Rules of
Court. Under Section 3, mandamus is the remedy available when “a tribunal, corporation,
board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from
the use and enjoyment of a right or office to which such other is entitled, [and], there is no other
plain, speedy, and adequate remedy in the ordinary course of law.”
The person aggrieved by the unlawful neglect or unlawful exclusion of the tribunal, corporation,
board, officer, or person may file the petition for mandamus with the proper court.
_______________
5 See Dacudao v. Gonzales, G.R. No. 188056, January 8, 2013, 688 SCRA 109.
6 Feria & Noche, supra note 4.
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IV.A.2. Ministerial v. Dis-
cretionary acts
“Discretion,” when applied to public functionaries, means the power or right conferred upon
them by law of acting officially, under certain circumstances, uncontrolled by the judgment or
sense of propriety of others. If the law imposes a duty upon a public officer and gives him the
right to decide how and when the duty shall be performed, such duty is discretionary and not
ministerial.7
In contrast, a purely ministerial act or duty is one which an officer or tribunal performs under a
given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority,
without regard to or the exercise of his own judgment on the propriety or impropriety of the act
done.8 The duty is ministerial only when the discharge of the same requires neither the exercise
of official discretion or judgment.9
A ministerial act is one as to which nothing is left to the discretion of the person who must
perform. It is a simple, definite duty arising under conditions admitted or proved to exist
and imposed by law. It is a precise act accurately marked out, enjoined upon particular officers
for a particular purpose.10
IV.B. Requirements for the issuance
of the writ of mandamus
In the light of its nature, the writ of mandamus will issue only if the following requirements are
complied with:
_______________
7 Id., at p. 487 (citation omitted).
8 See Nazareno v. City of Dumaguete, 607 Phil. 768; 590 SCRA 110 (2009).
9 Id.
10 See Feria & Noche, supra note 4 at p. 488 (citation omitted).

134
First, the petitioner has a clear and unmistakable legal right to the act demanded.
The clear and unmistakable right that the writ of mandamus requires pertains to those rights that
are well-defined, clear and certain. The writ contemplates only those rights which are founded
in law, are specific, certain, clear, established, complete, undisputed or unquestioned, and
are without any semblance or color of doubt.11
In situations where the right claimed, or the petitioner’s entitlement to it, is unclear, the writ of
mandamus will not lie. The writ of mandamus will not issue to establish a right or to compel an
official to give to the applicant anything to which he is not clearly entitled. Mandamus never
issues in doubtful cases, or to enforce a right which is in substantial dispute or to which
substantial doubt exists.12
Second, it must be the duty of the respondent to perform the act because it is mandated by law.
The act must be clearly and peremptorily enjoined by law or by reason of the respondent’s
official station. It must be the imperative duty of the respondent to perform the act required.13
Third, the respondent unlawfully neglects the performance of the duty enjoined by law or
unlawfully excludes the petitioner from the use or enjoyment of the right or office.
Fourth, the act to be performed is ministerial, not discretionary.
_______________
11 Nazareno v. City of Dumaguete, supra note 8; Asia’s Emerging Dragon Corporation v.

Department of Transportation and Communications, 602 Phil. 722; 552 SCRA 59, 102 (2008).
See also Feria & Noche, id., at p. 488 (citation omitted).
12 See Metropolitan Bank and Trust Company v. S.F. Naguiat Enterprises, Inc., G.R. No.
178407, March 18, 2015, 753 SCRA 474; and Nazareno v. City of Dumaguete, id.
13 See Nazareno v. City of Dumaguete, id.

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Fifth and last, there is no other plain, speedy, and adequate remedy in the ordinary course of
law.
IV.C. Velasco’s petition and the
requirements for the issu-
ance of the writ of man-
damus
Velasco failed to comply with all five requirements for the issuance of a writ of mandamus.
IV.C.1. No showing of any clear and unmistakable right
Velasco failed to show that he has a clear, established, and unmistakable right to the position of
Representative of Marinduque. Any right that Velasco may claim to hold is, at most, substantially
doubtful or is in substantial dispute; in either case, the existence of doubt renders the Court
unjustified in issuing a writ in Velasco’s favor.
Velasco’s cited legal grounds for the issuance of the writ of mandamus in his favor are the final
rulings in the following cases: SPA No. 13-053 and Reyes v. COMELEC, and SPC No. 13-010.
Thus, a look into what these cases really are and what they say is in order.
IV.C.1.a. SPA No. 13-053 (Socorro
B. Tan v. Regina Ongsiako-
Reyes) and Reyes v. COME-

LEC, G.R. No. 207264
SPA No. 13-053 involved the petition filed by Socorro B. Tan before the COMELEC to deny
due course to or cancel Reyes’ CoC on the ground of the alleged material
misrepresentations Reyes made. Velasco was not a party to this case.
136
The COMELEC cancelled Reyes’ CoC in its May 14, 2013 resolution (in SPA No. 13-053).
Note should be taken of the fact that this May 14, 2013 COMELEC ruling became final
and executory only on May 19, 2013 or “five (5) days after its promulgation” per Section 13,
Rule 18 of the 1993 COMELEC Rules of Procedure, in relation with Paragraph 2, Section 8
of Resolution No. 9523; and that the COMELEC itself did not enjoin Reyes’ proclamation.
As a result, the COMELEC, itself, proclaimed Reyes on May 18, 2013.
I point out that in the June 25, 2013 resolution in Reyes v. COMELEC, this Court expressly
characterized SPA No. 13-053 to be summary in nature.14
Reyes assailed the COMELEC rulings in SPA No. 13-053 before this Court via a petition
for certiorari, docketed as G.R. No. 207264 (Reyes v. COMELEC or “Reyes”). The Court’s
majority, in this June 25, 2013 resolution, dismissed respondent Reyes’ petition outright
based solely on the face of the petition and its annexes.
Reyes carries several features that the Court should be aware of:
First. Reyes was a petition that respondent Reyes filed to question the COMELEC’s
cancellation of her CoC in SPA No. 13-053. Respondent Reyes cited the violation of her
right to due process and the COMELEC’s grave abuse of discretion as grounds for her
petition.
Second. Only Tan (the petitioner before the COMELEC) was the party-respondent before
the Court in Reyes; Velasco was not a party to the case as he was not a party to the
challenged COMELEC ruling.
Third. The Court did not see it fit to hear the respondent Tan (let alone Velasco who was not
a party) before issuing its outright dismissal, although the Court subsequently heard
_______________
14 See Reyes v. COMELEC, G.R. No. 207264, June 25, 2013, 699 SCRA 522, 538-539.
137
VOL. 780, JANUARY 12, 2016 137
Tan’s arguments in her comment to herein respondent Reyes’ motion for reconsideration
(compelled perhaps by the vigorous dissent issued against the outright dismissal).15
Under the circumstances of the outright dismissal of the petition, the belated attempt at
hearing Tan on the motion for reconsideration, however, does not change the character of
the Court’s rulings and proceedings as summary.
Fourth. In dismissing the petition outright, the Court only considered the Reyes petition
itself, the assailed COMELEC rulings (SPA No. 13-053), and the petition’s other annexes.
The outright dismissal was made despite the plea from the Dissent that the case be fully
heard because it would benefit the son of a sitting Justice of the Court.
Fifth. The Court’s majority also chose not to hear anymore the HRET, the COMELEC, or
the Office of the Solicitor General on petitioner Reyes’ positions and arguments,
particularly on the issue of the delineation of jurisdiction between the HRET and the
COMELEC.
Sixth. The Court’s rulings — both in the June 25, 2013 outright dismissal of the Reyes
petition and the October 22, 2013 resolution on the motion for reconsideration — never
declared nor recognized Velasco as the duly elected Representative of Marinduque.
Seventh. The rulings in SPA No. 13-053 and Reyes v. COMELEC did not consider and rule
on any matter other than the material misrepresentation she allegedly committed.
Thus, any legal effect that these rulings carry should not be extended to matters outside of
the issues and matters specifically addressed by these rulings, as these extraneous rulings
are obiter dicta.
_______________
15 See Dissenting Opinion of J. Brion, joined in by Senior Associate Justice Antonio T.

Carpio, and Associate Justices Martin S. Villarama, Jr. and Marvic Mario Victor F.
Leonen.
138
Specifically, these rulings and their legal effects cannot extend to Reyes’ election, returns,
and qualification as Marinduque Representative. Nor should these rulings vest in Velasco
the title to hold the position, even assuming that petitioner Reyes’ CoC was properly
cancelled.
In resolving the present mandamus petition, the Court must appreciate that Velasco’s cited
rulings are simply summary determinations of the alleged material misrepresentation
committed by Reyes in her CoC, and cannot be used as basis for the requested issuance of
the writ.
Eighth. In the outright dismissal of Reyes’ certiorari petition, the Court’s majority declared
that the COMELEC retained its jurisdiction over respondent Reyes and the CoC
cancellation proceeding against her because respondent Reyes was not a member of the
HOR over whom the HRET can exercise its jurisdiction.
The majority reasoned out that a candidate is considered a Member of the HOR only after
the candidate has been proclaimed, has taken the proper oath, and has assumed office.
This declaration is noteworthy because of the intervening factual developments that

significantly altered the consequent legal effects of: (1) the COMELEC’s rulings in SPC No.
13-053 and of the Court’s rulings in Reyes v. COMELEC; and (2) the subsequent
COMELEC actions and rulings affecting respondent Reyes’ right to hold her congressional
seat.
These intervening factual developments, more fully discussed below, is another reason why
the Court cannot issue the writ of mandamus for the reason alone that the rulings in SPC
No. 13-053 and in Reyes v. COMELEC had become final and executory.
Lastly, the Court should sit up and take notice because of the Reyes’ pronouncement on the
jurisdictional divide between the HRET and the COMELEC, a matter more extensively
discussed below.
139
VOL. 780, JANUARY 12, 2016 139
IV.C.1.b. SPC No. 13-010 (Rep. Lord
Allan Jay Q. Velasco v. New
Members/Old Members of the
Provincial Board of Canvass-
ers [PBOC] of the Lone Dis-
trict of Marinduque and Re-
gina Ongsiako-Reyes)
SPC No. 13-010 was the petition that Velasco filed before the COMELEC on May 20, 2013,
to declare respondent Reyes’ May 18, 2013 proclamation void.
The COMELEC dismissed SPC No. 13-010 on June 19, 2013.
On July 9, 2013, however, the COMELEC issued a resolution reversing its June 19, 2013
resolution; this reversal declared void and without legal effect respondent Reyes’
proclamation.
In between these dates — i.e., from May 20, 2013, when Velasco initiated SPC No. 13-010
before the COMELEC, and the COMELEC’s July 9, 2013 resolution — respondent Reyes
had already taken her oath (on June 7, 2013) and had assumed office on June 30, 2013.
Significantly, as of June 30, 2013, when respondent Reyes assumed office, the challenge to
respondent Reyes’ proclamation stood dismissed by the COMELEC and was entered in its
records.
Thus, as of June 30, 2013, respondent Reyes was the candidate the COMELEC recognized
as the duly proclaimed winner of the Marinduque congressional seat. She was proclaimed
pursuant to the electorate’s mandate through the majority of the votes cast in Marinduque.
More importantly, at the time Reyes assumed the office on June 30, 2013 — after she had
been proclaimed and had taken her oath — there was no standing challenge against her
proclamation.
140
Significantly, the records of Reyes show that soon after assumption to office on June 30,
2013, she started discharging the functions of her office by filing bills with the HOR.
These developments and dates are pointed out because of their critical significance. In
resolving the present petition, the Court cannot simply undertake a mechanistic reading of
the cited rulings and on this basis rely on the finality doctrine. The Court must appreciate
that at the time respondent Reyes assumed office on June 30, 2013, the COMELEC had
cast aside the challenge to her proclamation and her oath was properly taken.
To be sure, the COMELEC eventually declared respondent Reyes’ proclamation void, but
this reversal happened only on July 9, 2013, and only after Reyes had taken her oath and
assumed office based on a standing proclamation. The proclamation, oath, and assumption
effectively altered the legal situation as respondent Reyes — instead of being a mere
candidate waiting for proclamation — had already become a Member of the HOR whose
election, returns, and qualification are subject to the jurisdiction of the HRET.
This altered legal situation cannot but affect how the petition for mandamus should be
resolved.
IV.C.1.c. The intervening factual
developments; Reyes v.
COMELEC versus the
present petition
Another critical point the Court should not fail to consider in determining whether Velasco
has a clear legal right to a writ of mandamus are the various factual developments that
intervened (from the COMELEC’s rulings in SPA No. 13-053 and the Court’s ruling in
Reyes v. COMELEC, to the filing of the present petition) that substantially and
substantively differentiate the present mandamus case from Reyes v. COMELEC.
141
VOL. 780, JANUARY 12, 2016 141
These factual developments are:
First, while respondent Reyes took her oath and assumed the office of Representative of
Marinduque after the COMELEC cancelled her CoC in SPA No. 13-053, she did not simply
accept the cancellation and forthwith proceeded to question it before this Court through a
petition for certiorari entitled Reyes v. COMELEC. This petition was still pending at the
time respondent Reyes took her oath and assumed office (on June 30, 2013); by then the
case was pending based on the motion for reconsideration that respondent Reyes filed
against the Court’s June 25, 2013 Resolution. As a result, Reyes had already assumed office
even before Reyes v. COMELEC became final and executory.
It must be noted, too, that respondent Reyes’ oath and assumption to office also occurred
before the COMELEC (in SPC No. 13-010 filed by Velasco) declared void respondent
Reyes’ proclamation as Marinduque Representative. The COMELEC ruling only came on
July 9, 2013. As discussed above, respondent Reyes took her oath and assumed office (on
June 30, 2013) when the standing COMELEC ruling in SPC No. 13-010 (to cancel
respondent Reyes’ proclamation) was the June 19, 2013 dismissal of the Velasco petition.
Thus, as of June 30, 2013, Reyes had taken her oath and had assumed office based on a
subsisting proclamation. The COMELEC declared her proclamation void only on July 9,
2013; prior to this declaration, there was no pending legal challenge that could have
impeded her oath and assumption of office.
Second, the COMELEC granted Tan’s motion for execution, in SPA No. 13-053, and
directed the proclamation of Velasco as the duly elected Representative of Marinduque,
only on July 10, 2013. Velasco was proclaimed by the new PBOC much later — on July 16,
2013.
These dates are stressed because when the COMELEC took actions to enforce SPA No. 13-
053 and to proclaim
142
Velasco as the duly elected Representative of Marinduque, Reyes was already a member of
the HOR — she had by then been proclaimed, taken her oath, and assumed office.
Significantly, these developments were not considered in Reyes v. COMELEC; neither were
they considered in SPC No. 13-010. In these lights, I submit that this mandamus petition is
not a continuation of Reyes v. COMELEC and should not be resolved on the basis of the
bare finality of SPA No. 13-053 and Reyes v. COMELEC, and of SPC No. 13-010.
Since the present case substantially and substantively differs from Reyes v. COMELEC, the
latter’s finality (as well as the finality of the COMELEC rulings in SPA No. 13-053 that
Reyes v. COMELEC passed upon) should not control the resolution of the present petition
and must not be determinative of Velasco’s right to the issuance of a writ of mandamus.
Moreover, as I stated above, these intervening factual developments significantly altered

the consequent legal effects of the COMELEC’s rulings in SPC No. 13-053 and of this
Court’s rulings in Reyes v. COMELEC, the COMELEC’s ruling in SPC No. 13-010, and the
subsequent COMELEC actions and rulings affecting respondent Reyes’ right to hold her
congressional seat.
IV.C.1.d. The proper appreciation
of SPA No. 13-053, Reyes
v. COMELEC and SPC
No. 13-010 vis-à-vis the in-
tervening factual devel-
opments in the context of
the present petition
If only for emphasis, I call attention again to the fact that as of June 30, 2013, Reyes had
been proclaimed, had taken her oath, and assumed office as the elected and proclaimed
Representative of Marinduque.
143
VOL. 780, JANUARY 12, 2016 143
Section 17, Article VI of the Constitution provides that the Electoral Tribunal of the HOR
shall be the “sole judge of all contests relating to the election, returns, and qualifications of
[its] Members.”16
I highlight, too, that in Reyes v. COMELEC, the majority declared that a winning candidate
becomes subject to the jurisdiction of the HRET only after he or she becomes a member of
the HOR. The majority stressed that a candidate becomes a member of the HOR only after
he or she has been proclaimed, taken his or her oath, and assumed the office.
In other words, the majority in Reyes v. COMELEC required the concurrence of all three
events — proclamation, oath, and assumption to office — to trigger the jurisdiction of the
HRET over election contests relating to the winning candidate’s election, returns, and
qualifications. All three events duly took place in the case of respondent Reyes, such that
the HRET at this point should have jurisdiction over questions relating to respondent
Reyes’ election, even on the basis of the majority’s own standards.
Note in this regard that in my Dissent in Reyes v. COMELEC, I considered this majority
action a “major retrogressive jurisprudential development that can emasculate the HRET.”
I still maintain that the proclamation of the winning candidate — the last operative act in
the election process that is subject to COMELEC jurisdiction — triggers and opens the
way for the HRET’s own jurisdiction.
This was the position I took, backed up by jurisprudence,17 in my Dissent in Reyes v.

COMELEC. I said:
_______________
16 See also Rule 14 of the 2011 Rules of the House of Representatives Electoral Tribunal.
17 See Limkaichong v. Commission on Elections, 601 Phil. 751; 583 SCRA 1 (2009);
Jalosjos, Jr. v. Commission on Elections, G.R.
144
[T]he proclamation of the winning candidate is the operative fact that triggers the
jurisdiction of the HRET over election contests relating to the winning candidate’s
election, returns and qualifications x x x the proclamation of the winning candidate
divests the COMELEC of its jurisdiction over matters pending before it at the time of
the proclamation and the party questioning the qualifications of the winning candidate
should now present his or her case in a proper proceeding [i.e., quo warranto] before
the HRET, who, by constitutional mandate, has the sole jurisdiction to hear and decide
cases involving the election, returns and qualifications of members of the [HOR].
Thus, even by the Court majority’s own standard18 as defined in Reyes v. COMELEC,
respondent Reyes became a member of the HOR as of June 30, 2013. To reiterate,
respondent Reyes was proclaimed on May 16, 2013. She then took her oath on June 7, 2013,
and assumed office on June 30, 2013, pursuant to a subsisting proclamation. The
COMELEC ruling that declared respondent Reyes’ proclamation void came only after she
had already fully complied with Reyes v. COMELEC’s defined standard.
In these lights, the COMELEC had already been divested of jurisdiction over any issue that
may have affected respondent Reyes’ proclamation (including all consequent legal effects
her proclamation carries) at the time the COMELEC declared her proclamation void on
July 9, 2013. As well, the COMELEC was already without jurisdiction when it granted
Tan’s motion for execution on July 10, 2013, and proclaimed
_______________
Nos. 192474, 192704, 193566, June 26, 2012, 674 SCRA 530; and Perez v. COMELEC, 317
SCRA 641 (1999). See also Guerrero v. Commission on Elections, 391 Phil. 344; 336 SCRA
458 (2000); Vinzons-Chato v. Commission on Elections, 548 Phil. 712; 520 SCRA 166 (2007);
and Aggabao v. Commission on Elections, 449 SCRA 400 (2005).
18 See J. Brion’s Dissenting Opinion in Reyes v. COMELEC, supra note 14.
145
VOL. 780, JANUARY 12, 2016 145
Velasco (through the new PBOC) as the duly elected Marinduque Representative on July
16, 2013.19
_______________
19 Id. Pertinent are the following discussions:
The ponencia’s holding on

the COMELEC’s jurisdiction
vis-à-vis the HRET is incon-
sistent with the HRET Rules
The view that the proclamation of the winning candidate is the operative fact that triggers
the jurisdiction of the HRET is also supported by the HRET Rules. They state:
RULE 14. Jurisdiction.—The Tribunal is the sole judge of all contests relating to

the election, returns, and qualifications of the Members of the House of
Representatives.
RULE 15. How Initiated.—An election contest is initiated by the filing of a verified

petition of protest or a verified petition for quo warranto against a Member of the
House of Representatives. An election protest shall not include a petition for quo
warranto. Neither shall a petition for quo warranto include an election protest.
RULE 16. Election Protest.—A verified petition contesting the election or returns of

any Member of the House of Representatives shall be filed by any candidate who has
duly filed a certificate of candidacy and has been voted for the same office, within
fifteen (15) days after the proclamation of the winner. The party filing the protest
shall be designated as the protestant while the adverse party shall be known as the
protestee. x x x
RULE 17. Quo Warranto.—A verified petition for quo warranto contesting the

election of a Member of the House of Representatives on the ground of ineligibility or
of disloyalty to the Republic of the Philippines shall be filed by any registered voter of
the district concerned within fifteen (15) days from the date of the proclamation of
the winner. The party filing the petition shall be
146
Under Section 2(2), Article IX-C of the Constitution, the COMELEC has the “exclusive
jurisdiction over all contests relating to the election, returns, and qualifications of all elective
regional, provincial, and city officials x x x.” In other words, the Constitution vests the
COMELEC this exclusive jurisdiction only with respect to elective regional, provincial, and
city officials. The COMELEC, by express constitutional mandate, has no jurisdiction over
the election, returns, and qualifications of members of the HOR (or of the Senate) as Article
VI vests this jurisdiction with the HRET (or the SET).
The validity of the proclamation of respondent Reyes who became a member of the HOR
on June 30, 2013, and the right of either respondent Reyes or Velasco to hold the contested
congressional seat are election contests relating to a Member’s election, returns, and
qualifications. By Reyes v. COMELEC’s own defined standard, the jurisdiction over these
election contests affecting respondent Reyes already rested with the HRET beginning June
30, 2013.
_______________
designated as the petitioner while the adverse party shall be known as the
respondent[.]
Based on the above Rules, it appears clear that as far as the HRET is concerned, the
proclamation of the winner in the congressional elections serves as the reckoning point as
well as the trigger that brings any contests relating to his or her election, return and
qualifications within its sole and exclusive jurisdiction.
In the context of the present case, by holding that the COMELEC retained jurisdiction
(because Reyes, although a proclaimed winner, has not yet assumed office), the majority
effectively emasculates the HRET of its jurisdiction as it allows the filing of an election
protest or a petition for quo warranto only after the assumption to office by the candidate
(i.e., on June 30 in the usual case). To illustrate using the dates of the present case, any
election protest or a petition for quo warranto filed after June 30 or more than fifteen (15)
days from Reyes’ proclamation on May 18, 2013, shall certainly be dismissed outright by
the HRET for having been filed out of time under the HRET rules.
147
VOL. 780, JANUARY 12, 2016 147

To be sure, the validity of this COMELEC resolution in SPC No. 13-010 was never
challenged before this Court such that the ruling lapsed to finality. Under existing legal
principles, the Court cannot pass upon the validity of this COMELEC ruling without
violating the doctrine of finality of judgments and the principle of separation of powers
with the principle of judicial noninterference that it carries.
Nonetheless, the Court also cannot and should not simply rely on this COMELEC ruling to
grant Velasco’s present mandamus petition and compel the HOR to admit him as its
member. The fact that these COMELEC rulings and actions all occurred after Reyes had
fully complied with the restrictive Reyes v. COMELEC standard creates substantial doubt
on their validity and efficacy. In view of these substantial doubts, the Court should consider
them with utmost caution.
In this respect, I submit that any legal significance the Court may accord to the
COMELEC’s ruling in SPC No. 13-010 (as well as its July 10, 2013 execution order) in
considering Velasco’s present move to compel, via mandamus, the HOR to admit him as its
member must be limited to:
one, the fact of their issuance;
two, the fact that the COMELEC declared void Reyes’ proclamation on July 9, 2013; and
three, the fact that Velasco was proclaimed on July 16, 2013,
without prejudice to whatever ruling that the HRET and this Court may render in the
future on the validity or invalidity of the COMELEC rulings that were made after HOR
jurisdiction had vested.
Any other legal significance which these rulings may have on the right of either Reyes or
Velasco to the congressional seat must now be left to the judgment and discretion of the
HRET which must appreciate them in a properly filed action.
148

Additionally and finally on this point, the HRET now has jurisdiction to rule upon all
questions relating to respondent Reyes’ election, returns, and qualifications that may still
be fit and proper for its resolution in accordance with existing laws and its own rules of
procedure. This Court itself cannot assume jurisdiction over any aspect of HRET
jurisdiction unless it relates to a matter filed or pending with us on a properly filed petition,
taking into account the clear conferment and delineation of the Court’s jurisdiction and
those of the HRET under the Constitution.
In sum, the COMELEC’s rulings in SPA No. 13-053 and SPC No. 13-010, and the Court’s
rulings in Reyes v. COMELEC did not establish a clear and unmistakable right in Velasco’s
favor to the position of the Representative of Marinduque.
At most, Velasco’s right to hold the congressional seat based on these rulings is
substantially doubtful. Unless this substantial doubt is settled, Velasco cannot claim as of
right any entitlement, and cannot also compel the respondents to admit him, to HOR
membership through the Court’s issuance of a writ of mandamus.
In the absence of any other clear and unmistakable legal source for his claimed right to the
contested congressional seat, Velasco’s petition must necessarily fail.
IV.C.1.e. Reyes’ holding of the office
could not have worked injus-
tice and seriously prejudiced
Velasco with her receipt of
the salaries, allowances, bo-
nuses, and emoluments that
pertain to the office
Finally, I find tenuous Velasco’s claim that Reyes’ continued holding of the contested
Congressional seat has “worked injustice and serious prejudice to [him] in that she has
already
149
VOL. 780, JANUARY 12, 2016 149
received the salaries, allowances, bonuses and emoluments that pertain to the [office] since
June 30, 2013 up to the present x x x.”
This argument clearly forgets that public office is a public trust.20 Public service and
public duty are and must be the primary and utmost consideration in entering the public
service. Any remuneration, salaries, and benefits that a public officer or employee receives
in return must be a consideration merely secondary to public service.
Accordingly, any salary, allowance, bonus, and emoluments pertaining to an office must be
received by one who is not only qualified for the office, but by one whose right to the office
is clearly and unmistakably without doubt and beyond dispute. In the case of an elective
public office, this right is, at the very least, established by the mandate of the majority of
the electorate. More importantly, of course, the right to receive the salaries, allowances,
bonuses, and emoluments that pertain to an office must be received by one who actually
perform the duties called for by the office.
Here, Velasco may be qualified for the office. His right to hold the congressional seat,
however, is at most substantially doubtful or in substantial dispute; worse, he has not
performed the duties of the office. In short, Reyes’ receipt of the salaries, etc. that pertain
to the congressional seat obviously could not have worked injustice to and seriously
prejudiced him.
IV.C.2. Clear, established, and
specific legal duty and
unlawful neglect in the
performance of ministe-
rial acts
_______________
20 See Article XI, Section 1 of the Constitution.

150
For the same factual and legal reasons discussed above, I submit that Velasco likewise
failed to show that Speaker Belmonte and Sec. Gen. Barua-Yap have the clear and specific
duty, founded in law, to administer the required oath, to allow Velasco to assume the duties
of the office, and to register his name in the Roll of Members as the duly elected
Representative of Marinduque. He also failed to show that the respondents unlawfully
refused or neglected to admit him as member.
At the very least, he failed to show that the respondents have the clear and specific legal
duty to allow a second-placer candidate like him whose right to the contested congressional
seat is substantially doubtful, to assume the office until such time that all doubts are
resolved in his favor.
Thus, in the absence of any law specifically requiring Speaker Belmonte and Sec. Gen.
Barua-Yap to act, and to act in a particularly clear manner, the Court cannot compel these
respondents to undertake the action that Velasco prays for via a writ of mandamus.
Additionally, the HOR in this case simply acted pursuant to law and jurisprudence when it
admitted respondent Reyes as the duly elected Representative of Marinduque. After this
admission, the HOR and its officers cannot be compelled to remove her without an order
from the tribunal having the exclusive jurisdiction to resolve all contests affecting HOR
members, of which Reyes has become one. This tribunal, of course, is the HOR’s own
HRET.
IV.C.3. Absence of any other
plain, speedy and
adequate remedy
Lastly, I submit that Velasco failed to show that there is no other plain, speedy, and
adequate remedy available in the ordinary course of law to secure to him the congressional
seat.
151
VOL. 780, JANUARY 12, 2016 151
I reiterate and emphasize once more that respondent Reyes became a Member of the HOR
on June 30, 2013, after her proclamation, oath, and assumption to office. Whether the
Court views these circumstances under the restrictive standard of Reyes v. COMELEC to be
the legally correct standard or simply the applicable one21 under the circumstances of the
petition, respondent Reyes undoubtedly has complied with the conditions for HOR
membership that Reyes v. COMELEC laid down.
Since Reyes is a member of the HOR, any challenge against her right to hold the
congressional seat or which may have the effect of removing her from the office — whether
pertaining to her election, returns or qualifications — now rests with the HRET.
Viewed by itself and in relation to the surrounding cited cases and circumstances, Velasco’s
present petition cannot but be a challenge against respondent Reyes’ election, returns, and
qualifications, hiding behind the cloak of a petition for mandamus. In other words,
although presented as a petition that simply seeks to enforce a final Court ruling, the
petition is an original one that ultimately seeks to oust Reyes from the congressional seat.
The relationships between and among the cited cases and the present case, read in relation
with the relevant developments, all point to this conclusion.
Thus, rather than recognize this roundabout manner of contesting respondent Reyes’ seat,
the Court should recognize this kind of challenge for what it really is — a challenge that
properly belongs to the domain of the HRET and one that
_______________
21 As I discussed in my Dissenting Opinion to the June 25, 2013 Resolution in Reyes v.

COMELEC, supra note 14, this reasonable standard is the proclamation of the winning
candidate. There, I said that: “[t]he proclamation of the winning candidate is the operative
fact that triggers the jurisdiction of the HRET over election contests relating to the winning
candidate’s election, returns and qualifications.”
152
should be raised before that tribunal through the proper action. The Court, in other words,
should acknowledge that it has no jurisdiction to act on the present petition.
Under the 2011 Rules of the HRET,22 the proper actions in coming before the HRET are:
(1) a verified petition of protest (election protest) to contest the election or returns of the
member; or (2) a verified petition for quo warranto to contest the election of a member on
the ground of ineligibility or disloyalty to the Republic of the Philippines.23 Both petitions
should be filed within fifteen (15) days after the proclamation of the winner,24 save in the
case of a petition for quo warranto on the ground of citizenship which may be filed at any
time during the member’s tenure.25 The failure to file the appropriate petition before the
HRET within the prescribed periods will bar the contest.26 These are the rules that must
guide Velasco in his quest for a remedy.
To be sure, though, this remedy has been within Velasco’s knowledge and contemplation as
on May 31, 2013,27 he filed
_______________
22 Issued pursuant to the HRET’s rule-making that necessarily flows from the general
power granted to it by the Constitution as the sole judge of all contests relating to the
election, returns, and qualifications of its members (see Angara v. Electoral Commission, 63
Phil. 139 [1936]).
23 See Rules 16 and 17 of the 2011 Rules of the House of Representatives Electoral
Tribunal.
24 See Rule 16, paragraph 1, and Rule 17, paragraph 1 of the 2011 Rules of the House of
Representatives Electoral Tribunal.
25 See Rule 17, paragraph 2 of the 2011 Rules of the House of Representatives Electoral
Tribunal.
26 See Rule 19 of the 2011 Rules of the House of Representatives Electoral Tribunal. It
reads:
RULE 19. Periods Non-Extendible.—The period for the filing of the appropriate
petition, as prescribed in Rules 16 and 17, is jurisdictional and cannot be extended.
27 In fact, also on May 31, 2013, a quo warranto petition was filed by a certain Matienzo
before the HRET against Reyes; this was docketed as HRET Case No. 13-027.
153
VOL. 780, JANUARY 12, 2016 153
an election protest before the HRET, docketed as HRET Case No. 13-028.28 Very
obviously, he recognized that, as early as May 31, 2013, any challenge against respondent
Reyes’s election, returns, or qualifications should be raised before the HRET — the sole
judge of all contests relating to the election, returns, and qualifications of HOR members.
Why he now appears to have glossed over this legal reality in the present petition
(especially since Reyes is now a clearly recognized member of the HOR after satisfying the
restrictive Reyes v. COMELEC standard) is a question I would not dare speculate on; only
the attendant facts and the legal realities can perhaps sufficiently provide the answer.29
_______________
28 See Rollo, p. 399. As of April 1, 2014, the HRET Records show that Matienzo v. Reyes
and Velasco v. Reyes have been withdrawn.
29 A possible answer may be drawn from these facts: first, the two quo warranto petitions
— HRET Case No. 13-036 entitled “Noeme Mayores Tan and Jeasseca L. Mapacpac v.
Regina Ongsiako Reyes” (filed on July 13, 2013) and HRET No. 13-037 entitled “Eric Del
Mundo v. Regina Ongsiako Reyes” (filed on December 13, 2013) — filed against Reyes have
been pending before the HRET, of which a Member of this Court, Associate Justice
Presbitero Velasco, is petitioner Velasco’s father, for more or less two years without any
action by the HRET. The only action the HRET has taken so far in these cases was in
relation with the petition-for-intervention filed by Victor Vela Sioco seeking the dismissal of
the quo warranto petitions for lack of jurisdiction where it required (via Resolution No. 14-
081) Reyes to comment thereon.
Second, the HRET has recently revised its Rules of Procedure incorporating the restrictive
Reyes v. COMELEC standards that requires the concurrence of proclamation, oath, and
assumption of office before the elected candidate is considered a member of the HOR over
whom the HRET can exercise jurisdiction. The 2015 HRET Rules of Procedure was
published in the Philippine Star on November 1, 2015, and took effect fifteen days
thereafter. Rule 80 of the 2015 HRET Rules provides for its application to all pending
actions save “when substantive rights are affected as may be determined by the Tribunal.”
154
In reality, two other cases — both of them quo warranto petitions — were subsequently
filed against Reyes. The first is HRET Case No. 13-036 entitled “Noeme Mayores Tan and
Jeasseca L. Mapacpac v. Regina Ongsiako Reyes.” The second is HRET No. 13-037 entitled
“Eric Del Mundo v. Regina Ongsiako Reyes.”
On March 14, 2014, the HRET issued a resolution in HRET Case No. 13-036 and HRET
No. 13-037 stating that “the proclamation of Representative Reyes as the winning candidate
for the position of Representative of the Lone District of Marinduque is and remains valid and
subsisting until annulled by HRET.”
In a modified ponencia circulated on January 11, 2016 (for deliberation on January 12,
2016), it was alleged that the HRET promulgated a Resolution on December 14, 2015,
dismissing HRET Case Nos. 13-036 and 13-037 — the twin petitions for quo warranto filed
against Reyes.
Allegedly, the HRET held that “the final Supreme Court ruling in G.R. No. 207264 is the
COGENT REASON to set aside the September 11, 2014 Resolution.” The HRET ruling
allegedly reversed its own ruling of September 11, 2014 that ordered the dismissal of the
petition of Victor Vela Sioco in the twin petitions for quo warranto for “lack of merit,” and
for the hearings in the petitions against Reyes to proceed.
_______________
Third, per the November 5, 2015 letter-petition — Urgent Follow-Up on the Petition for
Recall of the Designation of Justice Presbitero J. Velasco, Jr. to the HRET — to the Court
En Banc by Reyes’ counsel Roque and Butuyan Law Offices (letter signed by H. Harry L.
Roque, Jr., Joel Ruiz Butuyan, and Roger R. Rayel), the HRET has deferred action on its
February 3, 2015 manifestation/motion that from thereon it shall act as Reyes’ lead counsel
and been refusing to furnish it copies, at their expense, of all documents, pleadings, etc.
pertaining to the two quo warranto cases.
155
VOL. 780, JANUARY 12, 2016 155
Under these attendant facts, the circumstances surrounding the Reyes-Velasco dispute
becomes more confused and all the more should this Court refrain from acting on the
present petition.
If indeed there is already a HRET ruling as alleged, then the proper remedy now is for the
HRET to present this ruling, certified as a final and executory one, to the HOR for that
body’s action in light of its own Tribunal’s decision.
To state the obvious, the admission of a member and his or her exclusion is primarily an
internal affair that the HOR should first resolve before this Court should step in through
the coercive power of a writ of mandamus. The principles of separation of powers and
judicial noninterference demand that the Court respect and give due recognition to the
HOR in its internal affairs.
By granting the petition and issuing a writ of mandamus, the Court, not only disrespects
the HOR, but sows confusion as well into the HRET’s jurisdiction — a jurisprudential
minefield in the coming elections.
IV.D. The Separation of Powers
Principle Demands the
Dismissal of the Present
Petition
IV.D.1. The principle of sepa-
ration of power
An issue that the Court cannot but recognize in the present case is whether it can, under
the circumstances of this case, compel a House of Congress — a coequal branch — to act.
The resolution of this issue calls for the consideration of several principles, foremost of
which is the principle of separation of powers that underlie our governmental structure.
The Constitution does not specifically provide for the principle of separation of powers.
Instead of a distinct express
156
provision, the Constitution divides the governmental powers among the three branches —
the legislative, the executive, and the judiciary. Under this framework, the Constitution
confers on the Legislature the duty to make the law, on the Executive the duty to execute
the law, and on the Judiciary the duty to construe and apply the law.30
Underlying the principle of separation of powers is the general scheme that each
department is supreme within their respective spheres of influence, and the exercise of their
powers to the full extent cannot be questioned by another department. Outside of these
spheres, neither of the great governmental departments has any power; and neither may
any of them validly exercise any of the powers conferred upon the others.31
Thus, as a fundamental principle, the separation of powers provides that each of the three
departments of our government is distinct and not directly subject to the control of another
department. The power to control is the power to abrogate; and the power to abrogate is
the power to usurp.32 In short, for one branch to control the other is to usurp its power. In
this situation, the exercise of control by one department over another would clearly violate
the principle of separation of powers.
_______________
30 See Defensor-Santiago, Constitutional Law, citing U.S. v. Ang Tang Ho, 43 Phil. 1 (1922).
31 Id.
32 See Alejandrino v. Quezon, 46 Phil. 83 (1924).
In this light, the question that we ask next is: whether the Court can compel Speaker
Belmonte and Sec. Gen. Barua-Yap — who are admittedly officers of the HOR — to
perform the acts specifically prayed for by Velasco via mandamus. To properly answer this
question, we must hark back to our earlier discussion of mandamus, and consider it in the
context of the principle of separation of powers.
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VOL. 780, JANUARY 12, 2016 157
IV.D.2. Mandamus against
a coequal branch
Over and above the usual requirements of mandamus earlier discussed, it must be
appreciated that the remedy of mandamus is essentially a discretionary remedy that is
contingent upon compelling equitable grounds for its grant. As a peremptory writ, a
presumption exists strongly against its grant; it will and must issue only in the most
extraordinary of circumstances and always with great caution.
In the context of the separation of powers principle, I submit that the Court must proceed
with greater caution before issuing the writ against a coequal branch, notwithstanding the
concurrence of the requirements.
As a general rule, mandamus will not lie against a coordinate branch.33 The rule proceeds
from the obvious reason that none of the three departments is inferior to the others; by its
very nature, the writ of mandamus is available against an inferior court, tribunal, body,
corporation, or person. With respect to a coordinate and coequal branch, the issuance can
be justified only under the Court’s expanded jurisdiction under Article VIII, Section 1 of
the Constitution34 and under the most compelling circumstances and equitable reasons.35
_______________
33 Id.
34 Section 1, Article VIII of the Constitution reads in full:
SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law. Judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the Government.
35 Supra note 32.
158
I submit that no grave abuse of discretion intervened in the present case to justify resort to
the Court’s expanded jurisdiction. Neither are there compelling and equitable reasons to
justify a grant as there is a remedy in law that was available to petitioner Velasco (for reasons
of his own, he has failed to pursue the remedy before the HRET to its full fruition) and that
is available now — to present the final rulings in the cited HRET cases to the HOR for its
own action on an internal matter it zealously guards.
The COMELEC petition to contest respondent Reyes’ proclamation was filed by Velasco,
but this was a case solely addressing respondent Reyes’ proclamation and voiding it.
Beyond this, the ruling made no other directive. But even given all these, there is
indisputably the live question of whether the COMELEC still had jurisdiction when it
issued its rulings as Reyes had by then become a member of the HOR. At the very least, this
complication leaves the continued validity of the COMELEC ruling in doubt.
Another point to consider is the filing and withdrawal by Velasco of an election protest case
with the HRET against respondent Reyes. By doing this and despite the withdrawal of his
petition, Velasco recognized the jurisdiction of the HRET. Can he now turn around and
simply say that the COMELEC and the Court are, after all, correct in its rulings and that
he would now avail of these rulings although he was never a party to them? I provide no
answers but again this development effectively brings the propriety of Velasco’s use of
mandamus within the realm of doubt.
A further point to consider is that Speaker Belmonte and Sec. Gen. Barua-Yap are officers
of the HOR chosen by its members.36 As HOR officers, their acts made in the perform-
_______________
36 See Section 16(1), Article VI of the Constitution. It reads:
SECTION 16. (1) The Senate shall elect its President and the House of Representatives
its Speaker, by a majority vote of all its respective Members. Each House shall
159
VOL. 780, JANUARY 12, 2016 159
ance of their duties and functions are acts of the HOR. The acts Velasco wants this Court to
compel Speaker Belmonte and Sec. Gen. Barua-Yap to perform pertain to their official
positions. Hence, any mandamus that will be issued against them is a mandamus issued
against the HOR. As I have stated before, mandamus does not and will not lie against a
coordinate branch.
Notably, under the attendant facts, significantly altered by the intervening factual
developments and the consequent legal considerations, the acts sought to be performed —
the exclusion of sitting members and the admission of replacement members — are not
ministerial acts for which mandamus will lie. That much is implied, if not directly held, as
early as Angara v. Electoral Commission,37 and many other cases relating to this situation
followed.38 Their common thread is that Congress takes the admission (or exclusion) of its
members as a very serious concern that is reserved for itself to decide, save only when a
superior law or ruling with undoubted validity intervenes. Such freedom from doubt,
however, is not apparent in the present petition.
Appeal to “compelling and equitable circumstances” that call for the application of the
equitable remedy of mandamus is, at best, a murky proposition in light of the circum-
_______________
choose such other officers as it may deem necessary. [emphases supplied]
37 Supra note 22.
38 See Suanes v. The Chief Accountant, Accounting Division, Senate, 81 Phil. 818 (1948); Co
v. Electoral Tribunal of the House of Representatives, 276 Phil. 758; 199 SCRA 692 (1991);
Lazatin v. House Electoral Tribunal, 250 Phil. 390; 168 SCRA 391 (1988); Vilando v. House
of Representatives Electoral Tribunal, 671 Phil. 524; 656 SCRA 17 (2011); Dueñas, Jr. v.
House of Representatives Electoral Tribunal, 619 Phil. 730; 593 SCRA 316 (2009), to name a
few.
159
VOL. 780, JANUARY 12, 2016 159
stances surrounding the May 2013 Marinduque election situation as a whole.
It should not be forgotten that Reyes won by a convincing margin over Velasco, but the
latter chose to fight his electoral battle in the COMELEC, bypassing thereby the verdict
against him of the people of Marinduque. The merits of the COMELEC ruling is likewise
not beyond doubt from the point of view of the imputed due process violations, as the
Dissent in Reyes and the close vote in Court showed.
In any case, mandamus is, by its nature, a discretionary remedy that can be denied when no
compelling equitable grounds exist. In particular, in situations where the constitutional
separation of powers principle is involved, mandamus, as a rule, will not lie against a
coequal branch notwithstanding the petitioner’s compliance with the requirements
necessary for its grant, as discussed above. To justify the issuance of the writ, the petitioner
must not only comply with the requirements; the petitioner must, more importantly, show
that mandamus is demanded by the most compelling reasons or circumstances and by the
demands of equity. These exception-inducing factors, as discussed above, are simply not
present in this case.
Thus, the Court cannot dictate action under the present petition without committing gross
usurpation of power. The risk for the Court in ruling under these circumstances is to be
accused of ruling under a situation of doubt and uncertainty in favor of the son of a
colleague. In a worse scenario, Congress — even if it does not frontally rebuff the Court —
may raise issues that would effectively disregard the writ issued by the Court. While no
constitutional crisis may result, the Court would have tested the limits of its constitutional
powers and failed. The situation does not bode well for the Court’s integrity, reputation,
and credibility — the essential attributes that allow it to occupy the moral high ground in
undertaking its functions within the Constitution’s tripartite system.
161
VOL. 780, JANUARY 12, 2016 161
The better view, under the circumstances and as posited above, is to allow internal matters
within the HOR to take their natural course. This position best addresses the confused
situation that is the Marinduque May 2013 elections, while respecting the interests of all
concerned parties, including those of the Court’s.
V. Conclusion
In sum, the present petition for mandamus must be dismissed as petitioner Velasco failed to
comply with all five requirements for the issuance of the writ of mandamus. Most
importantly, the petitioner’s speedy remedy to address his situation lies with the HRET and
the HOR, not with the Court. In any case, the remedy of mandamus does not lie against the
HOR, a coequal branch, under the circumstances of the case and would be an unwarranted
intrusion and impermissible usurpation by this Court of the authority and functions of the
HOR and of the HRET.
For these reasons, I vote to dismiss the petition.

CONCURRING OPINION
PEREZ, J.:
The ponencia, upon which this concurrence hinges, postulates that the administration of
oath and the registration of petitioner Lord Allan Jay Velasco (Velasco) in the Roll of
Members of the House of Representatives for the Lone District of the Province of
Marinduque is no longer a matter of discretion on the part of respondents House Speaker
Feliciano R. Belmonte, Jr. (Belmonte) and Secretary General Marilyn B. Barua-Yap
(Barua-Yap).1 Hence, the petition for mandamus must be granted.
_______________
1 Ponencia, p. 119.
162
I join the ponencia in the vote to grant the instant petition.
Preliminarily, the theory of respondent Regina Ongsiako Reyes (Reyes) — that the instant
petition is in actuality an election contest, a veiled action for quo warranto — is rejected.
While quo warranto and mandamus are often concurrent remedies, there exists a clear
distinction between the two. The authorities are agreed that quo warranto is the remedy to
try the right to an office or franchise and to oust the holder from its enjoyment, while
mandamus only lies to enforce clear legal duties.2 In the case at bench, I concur with the
ponencia that the present petition seeks the “enforcement of clear legal duties” as it does
not seek to try disputed title.3 It no longer puts in issue the validity of Reyes’s claim to
office — a question that has long been resolved by the Court in its twin Resolutions in the
antecedent case of Reyes v. COMELEC (Reyes),4 docketed as G.R. No. 207264, wherein the
Court sustained the polling commission’s cancellation of respondent Reyes’ Certificate of
Candidacy (CoC) on the ground that she does not possess the necessary eligibility to hold
elective office as a member of Congress. In Reyes, the Court pronounced in no less than
categorical terms that:5
As to the issue of whether the petitioner failed to prove her Filipino citizenship, as well as
her one-year residency in Marinduque, suffice it to say that the COMELEC committed no
grave abuse of discretion in
_______________
2 Lota v. Court of Appeals, No. L-14803, June 30, 1961, 2 SCRA 715, 718.
3 Ponencia, p. 118.
4 G.R. No. 207264, June 25, 2013, 699 SCRA 522, 538; G.R. No. 207264, October 22, 2013,
708 SCRA 197.
5 Id.
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VOL. 780, JANUARY 12, 2016 163
finding her ineligible for the position of Member of the House of Representatives.
Our edict became final and executory, as a matter of course, upon denial of Reyes’ motion
for reconsideration on October 22, 2013. There is, consequently, no “disputed title” to
speak of which ought to be resolved through a quo warranto proceeding.
Instead, the primordial issue, in this case for mandamus, is whether or not respondents
Belmonte and Barua-Yap can and should be compelled (1) to swear in petitioner as the duly
elected Representative of the lone legislative district of Marinduque, and (2) to include
petitioner’s name and delete that of Reyes’ in the Roll of Members of the House of
Representatives, respectively. Petitioner asserts that in the aftermath of Reyes, his clear and
enforceable legal right to assume office must be recognized.
The claim is meritorious.
It is a fundamental precept in remedial law that for the extraordinary writ of mandamus to
be issued, it is essential that the petitioner has a clear legal right to the thing demanded and
it must be the imperative duty of the respondent to perform the act required.6 As will be
demonstrated, it is beyond cavil that the dual elements for the mandamus petition to
prosper evidently obtain in the case at bar.
a. Petitioner’s clear legal right
Well-settled is that the legal right of the petitioner to the performance of the particular act
which is sought to be compelled by mandamus must be clear and complete. A clear legal
right within the meaning of this rule means a right
_______________
6 Philippine Coconut Authority v. Primex Coco Products, Inc., G.R. No. 163088, July 20,
2006, 495 SCRA 763, 777.
164
clearly founded in, or granted by law; a right which is inferable as a matter of law.7
Here, petitioner indubitably established his right to be acknowledged as a member of the
House of Representatives. To elucidate, there were only two (2) candidates in the 2013
congressional race for the Lone District of Marinduque: petitioner Velasco and respondent
Reyes. In the initial canvassing results, Reyes garnered more votes than Velasco.8 Before
she could be proclaimed the winner, however, the COMELEC First Division, acting on the
Petition to Deny Due Course or Cancel the Certificate of Candidacy9 filed by one Joseph
Socorro Tan and docketed as SPA No. 13-053,10 by Resolution dated March 27, 2013,
cancelled Reyes’ CoC.11 Borrowing the words of the Court in Reyes:
The COMELEC First Division found that, contrary to the declarations that she made
in her CoC, [Reyes] is not a citizen of the Philippines because of her failure to comply
with the requirements of Republic Act (R.A.) No. 9225 or the Citizenship Retention
and Reacquisition Act of 2003, namely: (1) to take an oath of allegiance to the
Republic of the Philippines; and (2) to make a personal and sworn renunciation of
her American citizenship before any public officer authorized to administer an oath.
In addition, the COMELEC First Division ruled that she did not have the one-year
residency requirement under Section 6, Article VI of the 1987 Constitution. Thus, she
is ineligible to run for the position of Representative for the lone district of
Marinduque. (Emphasis and words in brackets added)
_______________
7 Palileo v. Ruiz Castro, No. L-3261, December 29, 1949, 85 Phil. 272, 275.
8 J. Leonen, Dissenting Opinion, p. 340.
9 Filed on October 10, 2012.
10 Petition for Cancellation of Certificate of Candidacy, entitled Joseph Socorro Tan v.

Regina Ongsiako Reyes.
11 See Reyes v. COMELEC, supra note 4 at p. 529.
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VOL. 780, JANUARY 12, 2016 165

The division ruling, in no time, was elevated to the COMELEC En Banc, only to be
affirmed on May 14, 2013.12 Reyes would receive a copy of the En Banc Resolution two (2)
days later on May 16, 2013. Nevertheless, she would only assail the ruling via petition for
certiorari with the Court on June 7, 2013. Needless to say, no injunctive writ was issued by
the Court in the interim. There was, effectively, no restraint against the enforcement of
Reyes’ disqualification, a legal bar to a valid proclamation. As held in Reyes:13
It is error to argue that the five days should pass before the petitioner is barred from
being proclaimed. Petitioner lost in the COMELEC as respondent. Her certificate of
candidacy has been ordered cancelled. She could not be proclaimed because there
was a final finding against her by the COMELEC. She needed a restraining order
from the Supreme Court to avoid the final finding.
_______________
12 Id., at p. 530.
13 Footnote No. 3 of the October 22, 2013 Resolution distinguished between a final
judgment and one that is final and executory in the following wise: “The concept of ‘final’
judgment, as distinguished from one which has ‘become final’ (or ‘executory’ as of right
[final and executory]), is definite and settled. A ‘final’ judgment or order is one that finally
disposes of a case, leaving nothing more to be done by the Court in respect thereto, e.g., an
adjudication on the merits which, on the basis of the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are and which party is
in the right; or a judgment or order that dismisses an action on the ground, for instance, of
res adjudicata or prescription. Once rendered, the task of the Court is ended, as far as
deciding the controversy or determining the rights and liabilities of the litigants is
concerned. Nothing more remains to be done by the Court except to await the parties’ next
move (which among others, may consist of the filing of a motion for new trial or
reconsideration, or the taking of an appeal) and ultimately, of course, to cause the execution
of the judgment once it becomes ‘final’ or, to use the established and more distinctive term,
‘final and executory.’ See Investments, Inc v. Court of Appeals, 231 Phil. 302, 307; 147 SCRA
334, 339-340 (1987).”
166
After the five days when the decision adverse to her became executory, the need for
Supreme Court intervention became even more imperative. She would have to base
her recourse on the position that the COMELEC committed grave abuse of discretion
in cancelling her certificate of candidacy and that a restraining order, which would
allow her proclamation, will have to be based on irreparable injury and
demonstrated possibility of grave abuse of discretion on the part of the COMELEC.
In this case, before and after the 18 May 2013 proclamation, there was not even an
attempt at the legal remedy, clearly available to her, to permit her proclamation.
What petitioner did was to “take the law into her hands” and secure a proclamation
in complete disregard of the COMELEC En Banc decision that was final on 14 May
2013 and final and executory five days thereafter.
SPA No. 13-053 eventually made its way to this Court (the Reyes case), docketed as G.R.
No. 207264, but We dismissed Reyes’ petition and subsequent motion for reconsideration
questioning the findings of the COMELEC for lack of merit on June 25, 2013 and October
22, 2013, respectively.14 Undeterred, Reyes, on November 27, 2013, filed a Motion for
Leave of Court to File and Admit Motion for Reconsideration, which was treated as a
second motion for reconsideration, a prohibited pleading. Unavoidably, the motion was
denied on December 3, 2013, serving as the final nail in the coffin, laying the highly-
contested issue regarding Reyes’ eligibility to rest.15
Upon resolving with finality that Reyes is ineligible to run for Congress and that her CoC is
a nullity, the only logical consequence is to declare Velasco, Reyes’ only political rival in the
congressional race, as the victor in the polling exercise. This finds basis in the seminal case
of Aratea v. COMELEC
_______________
14 Reyes v. COMELEC, supra note 4.
15 Ponencia, p. 106.
167
VOL. 780, JANUARY 12, 2016 167
(Aratea),16 wherein it was held that a void CoC cannot give rise to a valid candidacy, and
much less to valid votes.17 Hence, as concluded in Aratea:18
Lonzanida’s certificate of candidacy was cancelled, because he was ineligible or not

qualified to run for Mayor. Whether his certificate of candidacy is cancelled before or
after the elections is immaterial because the cancellation on such ground means he
was never a candidate from the very beginning, his certificate of candidacy being
void ab initio. There was only one qualified candidate for Mayor in the May 2010
elections — Antipolo, who therefore received the highest number of votes.
Thus, notwithstanding the margin of votes Reyes garnered over Velasco, the votes cast in
her favor are considered strays since she is not eligible for the congressional post, a
noncandidate in the bid for the coveted seat of Representative for the Lone District of
Marinduque. Following the doctrinal teaching in Aratea, Velasco, as the only remaining
qualified candidate in the congressional race, is, for all intents and purposes, the rightful
member of the lower house.
Associate Justice Marvic M.V.F. Leonen (Justice Leonen), however, echoing the position of
the OSG and that of the respondents, asserts in his Dissent that Velasco is a second-placer
during the elections who is not entitled to hold the subject position. The honorable Justice
suggests that petitioner cannot seek refuge under the Court’s pronouncements in Aratea
and the subsequent cases of Jalosjos, Jr. v. COMELEC19
_______________
16 Aratea v. COMELEC, G.R. No. 195229, October 9, 2012, 683 SCRA 105.
17 See also Hayudini v. COMELEC, G.R. No. 207900, April 22, 2014, 723 SCRA 223.
18 Aratea v. COMELEC, supra.
19 Jalosjos, Jr. v. COMELEC, G.R. No. 193237, October 9, 2012, 683 SCRA 1.
168
and Maquiling v. COMELEC20 because the positions involved in the said cases were not for
members of Congress.21
What the Dissent failed to take into account though is the most significant similarity of the
present petition to the above mentioned cases — that there exists a final and executory
decision of the COMELEC ordering the cancellation of the CoC of the candidate who
committed false material representations therein and declaring them ineligible to hold
public office. In all these cases, and as it should likewise be in this case, the Court ruled that
the CoC was deemed void ab initio and as such:
“If the certificate of candidacy is void ab initio, then legally the person who filed such
void certificate of candidacy was never a candidate in the elections at any time. All
votes for such noncandidate are stray votes and should not be counted. Thus, such
noncandidate can never be a first-placer in the elections. If a certificate of candidacy
void ab initio is cancelled on the day, or before the day, of the election, prevailing
jurisprudence holds that all votes for that candidate are stray votes. If a certificate of
candidacy void ab initio is cancelled one day or more after the elections, all votes for
such candidate should also be stray votes because the certificate of candidacy is void
from the very beginning. x x x”22
In Maquiling, this Court also said:
Thus, the votes cast in favor of the ineligible candidate are not considered at all in
determining the winner of an election.
Even when the votes for the ineligible candidate are disregarded, the will of the
electorate is still respected, and even more so. The votes cast in favor of an
_______________
20 G.R. No. 195649, April 16, 2013, 696 SCRA 420.
22 Jalosjos, Jr. v. COMELEC, supra note 19 at p. 32.
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VOL. 780, JANUARY 12, 2016 169
ineligible candidate do not constitute the sole and total expression of the sovereign
voice. The votes cast in favor of eligible and legitimate candidates form part of that
voice and must also be respected.
As in any contest, elections are governed by rules that determine the qualifications
and disqualifications of those who are allowed to participate as players. When there
are participants who turn out to be ineligible, their victory is voided and the laurel is
awarded to the next in rank who does not possess any of the disqualifications nor
lacks any of the qualifications set in the rules to be eligible as candidates.
xxx
The electorate’s awareness of the candidate’s disqualification is not a prerequisite for

the disqualification to attach to the candidate. The very existence of a disqualifying
circumstance makes the candidate ineligible. Knowledge by the electorate of a
candidate’s disqualification is not necessary before a qualified candidate who placed
second to a disqualified one can be proclaimed as the winner. The second-placer in
the vote count is actually the first-placer among the qualified candidates.
That the disqualified candidate has already been proclaimed and has assumed office
is of no moment. The subsequent disqualification based on a substantive ground that
existed prior to the filing of the certificate of candidacy voids not only the CoC but
also the proclamation.23
In Velasco v. COMELEC, this Court further expounded:
x x x. Section 78 may likewise be emasculated as mere delay in the resolution of the

petition to cancel or deny due course to a CoC can render a Section 78 petition useless
if a candidate with false CoC data wins. To state the obvious, candidates may risk
falsifying their CoC qualifications if they know that an election victory will
_______________
23 Maquiling v. COMELEC, supra note 20 at pp. 462-463.
170
cure any defect that their CoCs may have. Election victory then becomes a magic
formula to bypass election eligibility requirements.
In the process, the rule of law suffers; the clear and unequivocal legal command,
framed by a Congress representing the national will, is rendered inutile because the
people of a given locality has decided to vote a candidate into office despite his or her
lack of the qualifications Congress has determined to be necessary.
In the present case, Velasco is not only going around the law by his claim that he is
registered voter when he is not, as has been determined by a court in a final
judgment. Equally important is that he has made a material misrepresentation under
oath in his CoC regarding his qualification. For these violations, he must pay the
ultimate price — the nullification of his election victory. He may also have to account
in a criminal court for making a false statement under oath, but this is a matter for
the proper authorities to decide upon.
We distinguish our ruling in this case from others that we have made in the past by
the clarification that CoC defects beyond matters of form and that involve material
misrepresentations cannot avail of the benefit of our ruling that CoC mandatory
requirements before elections are considered merely directory after the people shall
have spoken. A mandatory and material election law requirement involves more than
the will of the people in any given locality. Where a material CoC misrepresentation
under oath is made, thereby violating both our election and criminal laws, we are
faced as well with an assault on the will of the people of the Philippines as expressed
in our laws. In a choice between provisions on material qualifications of elected
officials, on the one hand, and the will of the electorate in any given locality, on the
other, we believe and so hold that we cannot choose the electorate will. The balance
must always tilt
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in favor of upholding and enforcing the law. To rule otherwise is to slowly gnaw at the
rule of law.24
Therefore, considering that Reyes’ CoC was cancelled and was deemed void ab initio by
virtue of the final and executory decisions rendered by the COMELEC and this Court,
Velasco is a not second-placer as claimed by the Dissent; rather, Velasco is the only placer
and the winner during the May elections and thus, for all intents and purposes, Velasco has
a clear legal right to office as Representative of the Lone District of Marinduque.
Unconvinced, Justice Leonen would protest in his Dissent that petitioner Velasco, a
nonparty to SPC No. 13-053 and G.R. No. 207264, is a stranger to the case and cannot be
bound by Our factual findings and rulings therein.25
The proposition is devoid of merit.
Sec. 1, Rule 23 of the COMELEC Rules of Procedure, as amended, pertinently reads:
Section 1. Ground for Denial or Cancellation of Certificate of Candidacy.—A

verified Petition to Deny Due Course to or Cancel a Certificate of Candidacy for any
elective office may be filed by any registered voter or a duly registered political party,
organization, or coalition of political parties on the exclusive ground that any
material representation contained therein as required by law is false. x x x (emphasis
added)
By lodging a petition for denial or cancellation of CoC, a voter seeks to ensure that the
candidate who purports to be qualified to represent his or her constituents is indeed eligible
to do so. Such petition, therefore, is for and in benefit of the electorate, and not for one’s
personal advantage. This is in
_______________
24 Velasco v. COMELEC, G.R. No. 180051, December 24, 2008, 575 SCRA 590, 614-615.
25 J. Leonen, Dissenting Opinion, pp. 335-336.
172
clear consonance with the aforequoted rule, which never required the petition to be filed by
a candidate’s political rival. Otherwise stated, it is not required for petitioner Tan in SPA
No. 13-053 to have a claim to the contested electoral post to be permitted by law to
challenge the validity of Reyes’ CoC. At the same time, petitioner Velasco herein is not
under any legal obligation to intervene in SPA No. 13-053 and G.R. No. 207264 before he
could benefit directly or indirectly from the ruling. Unlike civil cases which only involve
private rights, petitions to deny or cancel certificates of candidacy are so imbued with
public interest that they cannot be deemed binding only to the parties thereto. Indeed, it
would be an absurd situation, after all, to declare Reyes ineligible only insofar as Tan is
concerned, and presumed eligible as to the rest of the Marinduqueños, including Velasco.
Furthermore, for a petition for mandamus to prosper, Sec. 3, Rule 65 of the Rules of Court
provides:
Section 3. Petition for mandamus.—When any tribunal, corporation, board, officer

or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes
another from the use and enjoyment of a right or office to which such other is
entitled, and there is no other plain, speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered
commanding the respondent, immediately or at some other time to be specified by the
court, to do the act required to be done to protect the rights of the petitioner, and to
pay the damages sustained by the petitioner by reason of the wrongful acts of the
respondent.
Apparently, there is nothing in foregoing provision which requires that the person applying
for a writ of mandamus should establish that he or she was the prevailing party-
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litigant to a prior case (i.e., a petitioner, respondent or an intervenor) to be entitled to the

writ’s issuance. Contrary to the opinion espoused in the Dissent, Sec. 3, Rule 65 merely
requires the applicant to establish a clear legal right to the ministerial function to be
performed, without distinction on whether this right emanates from a final judgment in a
prior case or not. Thus, there is no basis to the opinion that Velasco should have been a
party in Reyes in order for this Court to grant a writ of mandamus in his favor.
b. Respondent Belmonte
and Barua-Yap’s min-
isterial duties
Anent the second element for mandamus to lie, it is critical that the duty the performance
of which is to be compelled be ministerial in nature, rather than discretionary. A purely
ministerial act or duty is one that an officer or tribunal performs in a given state of facts, in
a prescribed manner, in obedience to the mandate of a legal authority, without regard to or
the exercise of its own judgment upon the propriety or impropriety of the act done.26 The
writ neither confers powers nor imposes duties. It is simply a command to exercise a power
already possessed and to perform a duty already imposed.27
Without a doubt, petitioner herein seeks the performance of a ministerial act, without
which he is unjustly deprived of the enjoyment of an office that he is clearly entitled to, as
earlier discussed. It must be borne in mind that this petition was brought to fore because,
despite repeated demands from petitioner and their receipt of the “Certificate of Canvass of
Votes and Proclamation of Winning Candidate for the position of Member of House of
Representatives for the Lone District of
_______________
26 Special People, Inc. Foundation v. Canda, G.R. No. 160932, January 14, 2013, 688 SCRA
403, 424.
27 Supra note 6.
174
Marinduque,” respondents Belmonte and Barua-Yap refused to allow Velasco to sit in the
Lower House as Marinduque Representative.
The nondiscretionary function of respondents Belmonte and Barua-Yap is underscored in

Codilla, Sr. v. De Venecia (Codilla),28 wherein the Court held that the House Speaker and
the Secretary General of the Lower House are duty-bound to recognize the legally elected
district representatives as members of the House of Representatives. In the concluding
statements of Codilla, the Court, speaking through retired Chief Justice Reynato Puno,
instructs that:
In the case at bar, the administration of oath and the registration of the petitioner in
the Roll of Members of the House of Representatives representing the 4th legislative
district of Leyte is no longer a matter of discretion on the part of the public
respondents. The facts are settled and beyond dispute: petitioner garnered 71,350
votes as against respondent Locsin who only got 53,447 votes in the May 14, 2001
elections. The COMELEC Second Division initially ordered the proclamation of
respondent Locsin; on Motion for Reconsideration the COMELEC En Banc set aside
the order of its Second Division and ordered the proclamation of the petitioner. The
Decision of the COMELEC En Banc has not been challenged before this Court by
respondent Locsin and said Decision has become final and executory.
In sum, the issue of who is the rightful Representative of the 4th legislative district of
Leyte has been finally settled by the COMELEC En Banc, the constitutional body
with jurisdiction on the matter. The rule of law demands that its Decision be obeyed
by all officials of the land. There is no alternative to the rule of law except the reign of
chaos and confusion.29 (Emphasis in the original)
_______________
28 G.R. No. 150605, December 10, 2002, 393 SCRA 639, 681.
29 Id.
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VOL. 780, JANUARY 12, 2016 175
As in Codilla, the fact of Reyes’ disqualification can no longer be disputed herein, in view of
the consecutive rulings of the COMELEC and the Court in SPA No. 13-053, G.R. No.
207624, and SPA No. 13-010. Reyes’ ineligibility and Velasco’s consequent membership in
the Lower House is then beyond the discretion of respondents Belmonte and Barua-Yap,
and the rulings upholding the same must therefore be recognized and respected. To hold
otherwise — that the Court is not precluded from entertaining questions on Reyes’
eligibility to occupy Marinduque’s congressional seat — would mean substantially altering,
if not effectively vacating, Our ruling in Reyes that has long attained finality, a blatant
violation of the immutability of judgments. Under the doctrine, a decision that has acquired
finality becomes immutable and unalterable, and may no longer be modified in any respect,
even if the modification is meant to correct erroneous conclusions of fact and law, and
whether it be made by the court that rendered it or by the Highest Court of the land. Any
act which violates this principle must immediately be struck down.30 Justice Leonen,
however, urges this Court to revisit, nay relitigate, Reyes two (2) years after the date of its
finality and abandon the same, in clear contravention of the doctrine of immutability and
finality of Supreme Court decisions.
It matters not that respondents Belmonte and Barua-Yap are nonparties to Reyes. It is
erroneous to claim that Our final ruling therein is not binding against Belmonte and
Barua-Yap on ground that that they were neither petitioners nor respondents in the said
case,31 and that they were not given the opportunity to be heard on the issues raised
therein.32 Again, SPA No. 13-053, G.R. No. 207264, and SPA No. 13-010 are not civil cases
and do not involve purely private rights which requires notice and full participation of
respondents
_______________
30 FGU Insurance Corporation v. Regional Trial Court of Makati City, Br. 66, G.R. No.
161282, February 23, 2011, 644 SCRA 50, 56.
31 Memorandum for the OSG in behalf of public respondents, p. 9.
32 Id., at p. 12.
176
Belmonte and Barua-Yap. It must also be noted that the said case originated as petition to
deny or cancel Reyes’ CoC, which does not require the participation of the Speaker and
Secretary General of the House of Representatives. In fact, there is nothing in BP 881, the
COMELEC Rules of Procedure, nor in Rule 64, in relation to Rule 65 of the Rules of
Court, which requires that the Speaker and Secretary General to be included either in the
original petition for cancellation of CoC or when the case is elevated to this Court via
petition for certiorari. In any event, the fact that they were not made parties in Reyes does
not mean that the public respondents are not bound by the said decision considering that
the same already form part of the legal system of the Philippines.33
The Dissent endeavors to divert our attention to the peculiarities of Codilla that allegedly
preclude the Court from applying its doctrine in the case at bar. It was noted that (i) the
petitioner in Codilla acquired the plurality of votes, which according to the dissent is the
primary reason for the grant of the petition;34 (ii) that respondent Reyes’ proclamation
was never nullified in SPA 13-053;35 and (iii) that the second-placer rule was not yet
abandoned when Codilla was promulgated.36
With all due respect, the arguments are bereft of merit. Their rehashed version fails to
persuade now as they did before in Reyes.
First, the ruling on Codilla was not primarily hinged on the plurality of votes acquired by
petitioner therein, but on the certainty as to who the lawfully elected candidate was. To
reiterate the holding in Codilla: “the issue of who is the rightful Representative x x x has
been finally settled by the COMELEC En Banc, the constitutional body with jurisdiction on
the matter.” (Emphasis added) Hence, it became ministe-
_______________
33 Article 8, Civil Code of the Philippines.
35 Id., at p. 341.
36 Id., at p. 344.
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VOL. 780, JANUARY 12, 2016 177
rial on the part of then House Speaker Jose de Venecia and then Secretary General Roberto
P. Nazareno of the House of Representatives to swear in and include the name of petitioner
Eufrocino Codilla (Codilla) in the Roll of Members.
Acquiring the plurality of votes may be one way of asserting one’s claim to office, but the
cancellation of the CoC of the candidate who garnered the highest number of votes is
likewise a viable alternative in light of Aratea. Thus, in spite of the initial determination
that Velasco failed to obtain the plurality of votes, he could still validly claim that his right
to be seated as Marinduque’s Representative in Congress has been settled by virtue of
Reyes’ disqualification.
Second, the ruling in Reyes may have been silent as to the validity of her proclamation, but
the Dissent failed to take into account the developments in SPC No. 13-010, wherein
Velasco assailed the proceedings of the Provincial Board of Canvassers (PBOC) and prayed
before the COMELEC that the May 18, 2013 proclamation of Reyes be declared null and
void.37
On June 19, 2013, the COMELEC would deny Velasco’s petition. But on reconsideration,
the COMELEC En Banc, on July 9, 2013, made a reversal and declared null and void and
without legal effect the proclamation of Reyes, and, in the very issuance, declared petitioner
Velasco as the winning candidate.38 And so it was that on July 16, 2013, Velasco would be
proclaimed by a newly constituted PBOC as the duly elected member of the House of
Representatives for the Lone District of Marinduque, in congruence with the COMELEC’s
rulings in SPA No. 13-053 and SPC No. 13-010.39 This proclamation was never questioned
by Reyes before any judicial or quasi-judicial forum.
_______________
38 Id., at p. 102.
39 Id., at p. 104.
178
This sequence of events bears striking resemblance with the factual milieu of Codilla
wherein Codilla, on June 20, 2001, seasonably moved for reconsideration of the June 14,
2001 order for his disqualification and additionally questioned therein the validity of the
proclamation of Ma. Victoria Locsin (Locsin). On the next day, he would lodge a separate
petition challenging the validity of Locsin’s proclamation anew. The petition, however,
would suffer the same fate of being initially decided against his favor. It will not be until
August 29, 2001 when the COMELEC En Banc, by a 4-3 vote, would reverse the rulings
that disqualified Codilla and upheld the validity of Locsin’s proclamation. Notably, Locsin
did not appeal from this Resolution annulling her proclamation and so the COMELEC En
Banc’s ruling then became final and executory.
Thereafter, on September 6, 2001, the COMELEC En Banc reconstituted the PBOC of

Leyte to implement its August 29, 2001 Resolution, and to proclaim the candidate who
obtained the highest number of votes in the district as the duly elected Representative of
the 4th Legislative District of Leyte. So it was that on September 12, 2001, petitioner
Codilla was proclaimed winner of the congressional race.
With the finality of the COMELEC ruling disqualifying Locsin and nullifying her
proclamation, and the consequent proclamation of Codilla as the lawfully elected
Representative of the 4th District of Leyte, the Court saw no legal obstacle in directing then
House Speaker Jose de Venecia and then Secretary General Roberto Nazareno of the House
of Representatives to swear in and include petitioner Codilla’s name in the Roll of
Members of the House of Representatives. This very same outcome in Codilla should be
observed in the present case.
Third, that the second-placer rule was not yet abandoned when Codilla was decided is
inconsequential in this case. As earlier discussed, what is of significance in Codilla is the
certainty on who the rightful holder of the elective post is. It may be that when Codilla was
decided, plurality of votes and
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successional rights, in disqualifications cases, may have been the key considerations, but as
jurisprudence has been enriched by Aratea and by the subsequent cases that followed,40
the qualified second-placer rule was added to the enumeration. Synthesizing Aratea with
Codilla, petitioner Velasco may now successfully invoke the qualified second-placer rule to
prove the certainty of his claim to office, and compel the respondent Speaker and Secretary
General to administer his oath and include his name in the Roll of Members of the House
of Representatives.
With the presence of the twin requirements, the extraordinary writ of mandamus must be
issued in the case at bar.
II
We now discuss the collateral issues raised.
The Dissent cites the cases of Tañada v. COMELEC (Tañada), Limkaichong v. COMELEC
(Limkaichong), and Vinzons-Chato v. COMELEC (Vinzons-Chato), to persuade Us to revisit
the ruling in Reyes v. COMELEC, and divest the COMELEC of its jurisdiction over the
issue of Reyes’ qualification in favor of the House of Representatives Electoral Tribunal
(HRET). Similarly, respondents raised the issue of jurisdiction arguing that the
proclamation alone of the winning candidate is the operative act that triggers the
commencement of HRET’s exclusive jurisdiction,41 and insisted that to rule otherwise
would result in the clash of jurisdiction between the HRET and the COMELEC.42
On the outset, I express my strong reservations on revisiting herein the issue on the
HRET’s jurisdiction, which has already been settled with finality in Reyes, for it is not at
_______________
40 Jalosjos Jr. v. COMELEC, supra note 19; Maquiling v. COMELEC, supra note 20.
41 Memorandum of the OSG, p. 16.
42 Id., at p. 24.
180
issue in this petition for mandamus. I SHARE THE OBSERVATION BY THE PONENCIA
THAT RESPONDENTS ARE TAKING ADVANTAGE OF THIS PETITION TO RELI-
TIGATE WHAT HAS BEEN SETTLED IN REYES AND DOES NOT SEEM TO
RESPECT THE ENTRY OF JUDGMENT THAT HAS BEEN ISSUED THEREIN ON
OCTOBER 22, 2013. Nevertheless, assuming in arguendo that there is no impropriety in
taking a second look at the issue in this case, I see no irreconcilability between Reyes, on the
one hand, and the cases cited in the Dissent, on the other.
As a review, the doctrine in Reyes is that the HRET only has jurisdiction over Members of
the House of Representatives. To be considered a Member of the House of Representatives,
the following requisites must concur: (1) a valid proclamation, (2) a proper oath, and (3)
assumption of office.43
Our ruling in Reyes does not run in conflict with Tañada, which was decided by the Court
En Banc by a unanimous vote, as our esteemed colleague pointed out. As held in Tañada:
In the foregoing light, considering that Angelina had already been proclaimed as
Member of the House of Representatives for the 4th District of Quezon Province on
May 16, 2013, as she has in fact taken her oath and assumed office past noon time of
June 30, 2013, the Court is now without jurisdiction to resolve the case at bar. As they
stand, the issues concerning the conduct of the canvass and the resulting
proclamation of Angelina as herein discussed are matters which fall under the scope
of the terms “election” and “returns” as above stated and hence, properly fall under
the HRET’s sole jurisdiction. (Emphasis added)
Hence, the Court’s ruling in Tañada, disclaiming jurisdiction in favor of the HRET, is
premised on the concurrence of the three (3) requirements laid down in Reyes. In any case,
_______________
43 Reyes v. COMELEC, supra note 4 at p. 535.
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Tañada is a Minute Resolution not intended to amend or abandon Reyes, as was made
evident by the subsequent case Bandara v. COMELEC,44 to wit:
It is a well-settled rule that once a winning candidate has been proclaimed, taken his
oath, and assumed office as a Member of the House of representatives, the
jurisdiction of the Commission on Elections (COMELEC) over election contests
relating to his/her election, returns, and qualification ends, and the HRET’s own
jurisdiction begins. Consequently, the instant petitions for certiorari are not the
proper remedies for the petitioners in both cases to question the propriety of the
National Board of Canvassers’ proclamation, and the events leading thereto.
Limkaichong is even more blunt as the Court decided the case with the following opening
statement:45
Once a winning candidate has been proclaimed, taken his oath, and assumed office as
a Member of the House of Representatives, the jurisdiction of the House of
Representatives Electoral Tribunal begins. x x x. (Emphasis in the original)
And in Vinzons-Chato v. COMELEC:46
x x x [I]n an electoral contest where the validity of the proclamation of a winning

candidate who has taken his oath of office and assumed his post as Congressman is
raised, that issue is best addressed to the HRET. The reason for this ruling is self-
evident, for it avoids duplicity of proceedings and a clash of jurisdiction
_______________
44 G.R. Nos. 207144 and 208141, February 3, 2015.
45 Limkaichong v. COMELEC, G.R. Nos. 178831-32 and 179120, 179132-33, 179240-41,

April 1, 2009, 583 SCRA 1, 8-9.
46 G.R. No. 172131, April 2, 2007, 520 SCRA 166, 180, citing Pangilinan v. Commission on
Elections, G.R. No. 105278, November 18, 1993, 228 SCRA 36, 43.
182
between constitutional bodies, with due regard to the people’s mandate. (Emphasis
added)
Verily, Reyes delineated the blurred lines between the jurisdictions of the COMELEC and
the HRET, explicitly ruling where one ends and the other begins. Our ruling therein was
not wanting in jurisprudential basis and is in fact supported by cases cited by in the Dissent
no less.
Certainly, the principle in Reyes does not offend Art. VI, Sec. 17 of the Constitution nor
does it undermine the adjudicatory powers of the HRET. On the contrary, it strictly
adheres to the textual tenor of the constitutional provision, to wit:
Section 17. The Senate and the House of Representatives shall each have an

Electoral Tribunal which shall be the sole judge of all contests relating to the election,
returns, and qualifications of their respective Members. Each Electoral Tribunal
shall be composed of nine Members, three of whom shall be Justices of the Supreme
Court to be designated by the Chief Justice, and the remaining six shall be Members
of the Senate or the House of Representatives, as the case may be, who shall be
chosen on the basis of proportional representation from the political parties and the
parties or organizations registered under the party-list system represented therein.
The senior Justice in the Electoral Tribunal shall be its Chairman. (Emphasis added)
It has to be emphasized that the Court, in deciding Reyes, did not divest the Senate and
House of Representative Electoral Tribunals of their jurisdiction over their respective
members, but merely set the parameters on who these “Members” are. The jurisprudence
earlier reviewed are in unison in holding that to be considered a “Member” within the
purview of the constitutional provision, the three indispensable elements must concur.
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VOL. 780, JANUARY 12, 2016 183
As to the alleged clash of jurisdiction, the Court, in its October 22, 2013 Resolution in
Reyes, explained:
“11. It may need pointing out that there is no conflict between the COMELEC and
the HRET insofar as the petitioner’s being a Representative of Marinduque is
concerned. The COMELEC covers the matter of petitioner’s certificate of candidacy,
and its due course or its cancellation, which are the pivotal conclusions that
determines who can be legally proclaimed. The matter can go to the Supreme Court
but not as a continuation of the proceedings in the COMELEC, which has in fact
ended, but on an original action before the Court grounded on more than mere error
of judgment but on error of jurisdiction for grave abuse of discretion. At and after
the COMELEC En Banc decision, there is no longer any certificate cancellation
matter than can go to the HRET. In that sense, the HRET’s constitutional authority
opens, over the qualification of its MEMBER, who becomes so only upon a duly and
legally based proclamation, the first and unavoidable step towards such membership.
The HRET jurisdiction over the qualification of the Member of the House of
Representatives is original and exclusive, and as such, proceeds de novo unhampered
by the proceedings in the COMELEC which, as just stated has been terminated. The
HRET proceedings is a regular, not summary, proceeding. It will determine who
should be the Member of the House. It must be made clear though, at the risk of
repetitiveness, that no hiatus occurs in the representation of Marinduque in the
House because there is such a representative who shall sit as the HRET proceedings
are had till termination. Such representative is the duly proclaimed winner resulting
from the terminated case of cancellation of certificate of candidacy of petitioner. The
petitioner [Reyes] is not, cannot, be that representative. And this, all in all, is the crux
of the dispute between the parties: who shall sit in the House in representation of
Marinduque, while there is
184
yet no HRET decision on the qualifications of the Member.47 (Emphasis and words
in brackets added)
It thus appears that there is no conflict of jurisdiction, and that if a quo warranto case
should be filed before HRET as espoused by the respondents and in the Dissent, it cannot
be one against Reyes who never became a member of the House of Representatives over
whom the HRET could exercise jurisdiction.
III
The Dissent also claims that when respondent Reyes was proclaimed by the PBOC as the
duly elected Representative of the Lone District of Marinduque of May 18, 2013, petitioner
Velasco should have continued his election protest via a quo warranto petition before the
HRET.48
This suggestion is legally flawed considering that the HRET is without authority to review,
modify, more so annul, the illegal acts of PBOC. On the contrary, this authority is lodged
with the COMELEC and is incidental to its power of “direct control and supervision over
the Board of Canvassers.”49 Therefore, the COMELEC is the proper entity that can legally
and validly nullify the acts of the PBOC. As held by this Court held in Mastura v.
COMELEC:50
“Pursuant to its administrative functions, the COMELEC exercises direct

supervision and control over
_______________
47 Supra note 4 at pp. 231-232.

49 Section 227, Omnibus Election Code:
Section 227. Supervision and control over board of canvassers.—The Commission shall

have direct control and supervision over the board of canvassers.
50 G.R. No. 124521, January 29, 1998, 285 SCRA 493, 499-500.
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VOL. 780, JANUARY 12, 2016 185
the proceedings before the Board of Canvassers. In Aratuc v. Commission on Elections51 we

held —
“While nominally, the procedure of bringing to the Commission objections to the

actuations of boards of canvassers has been quite loosely referred to in certain
quarters, even by the Commission and by this Court . . . as an appeal, the fact of the
matter is that the authority of the Commission in reviewing such actuations does not
spring from any appellate jurisdiction conferred by any specific provision of law, for
there is none such provision anywhere in the Election Code, but from the plenary
prerogative of direct control and supervision endowed to it by the above quoted
provisions of Section 168. And in administrative law, it is a too well settled postulate
to need any supporting citation here, that a superior body or office having
supervision and control over another may do directly what the latter is supposed to
do or ought to have done. x x x x”
Furthermore, the illegal proclamation of the PBOC cannot operate to automatically oust
the COMELEC of its supervisory authority over the PBOC. As clearly explained in Reyes:
“More importantly, we cannot disregard a fact basic in this controversy — that
before the proclamation of petitioner on 18 May 2013, the COMELEC En Banc had
already finally disposed of the issue of petitioner’s lack of Filipino citizenship and
residency via its Resolution dated 14 May 2013. After 14 May 2013, there was, before
the COMELEC, no longer any pending case on petitioner’s qualifications to run for
the position of Member of the House of Representative. We will inexcusably
disregard this fact if we accept the argument of the petitioner that the COMELEC
was ousted of jurisdiction when she was proclaimed, which was four days after the
COMELEC En Banc decision. The Board of Can-
_______________
51 Nos. L-49705-09 and L-49717-21, February 8, 1979, 88 SCRA 251.
186
vasser which proclaimed petitioner cannot by such act be allowed to render nugatory
a decision of the COMELEC En Banc which affirmed a decision of the COMELEC
First Division.”52 (Emphasis supplied)
It must likewise be noted that the COMELEC En Banc’s May 14, 2013 Decision in SPA No.
13-053 was already final as “there was, before the COMELEC, no longer any pending case
on petitioner’s qualifications to run for the position of Member of the House of
Representative,” and in the absence of a restraining order from this Court, it became
executory. Thus, as held in Reyes, it was an error for the PBOC to proclaim Reyes, a
noncandidate, on May 18, 2013. As aptly observed by Chief Justice Sereno in her
Concurring Opinion in the said case:53
“On 14 May 2013, the COMELEC En Banc had already resolved the Amended
Petition to Deny Due Course or to Cancel the Certificate of Candidacy filed against
Reyes. Based on Sec. 3, Rule 37 of the COMELEC Rules of Procedure, this
Resolution was already final and should have become executory five days after its
promulgation. But despite this unrestrained ruling of the COMELEC En Banc the
PBOC still proclaimed Reyes as the winning candidate on 18 May 2013.
On 16 May 2013, petitioner had already received the judgment cancelling her
Certificate of Candidacy. As mentioned, two days thereafter, the PBOC still
proclaimed her as the winner. Obviously, the proclamation took place
notwithstanding that petitioner herself already knew of the COMELEC En Banc
Resolution.
It must also be pointed out that even the PBOC already knew of the cancellation of
the Certificate of Can-
_______________
52 Reyes v. COMELEC, supra note 4 at p. 537.
53 Chief Justice Sereno, Concurring Opinion, supra note 4 at pp. 243-248, dated October
22, 2013.
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didacy of petitioner when it proclaimed her. The COMELEC En Banc Resolution

dated 9 July 2013 and submitted to this Court through the Manifestation of private
respondent, quoted the averments in the Verified Petition of petitioner therein as
follows:
x x x While the proceedings of the PBOC is suspended or in recess, the process

server of this Honorable Commission, who identified himself as PEDRO P.
STA. ROSA II (‘Sta. Rosa,’ for brevity), arrived at the session hall of the
Sangguniang Panlalawigan of Marinduque where the provincial canvassing is
being held.
x x x The process server, Sta. Rosa, was in possession of certified true copies of the
Resolution promulgated by the Commission on Elections En Banc on 14 May 2013 in
SPA No. 13-053 (DC) entitled ‘Joseph Socorro B. Tan v. Atty. Regina Ongsiako Reyes’
and an Order dated 15 May 2013 to deliver the same to the Provincial Election
Supervisor of Marinduque. The said Order was signed by no less than the Chairman
of the Commission on Elections, the Honorable Sixto S. Brillantes, Jr.
x x x Process Server Pedro Sta. Rosa II immediately approached Atty. Edwin Villa,
the Provincial Election Supervisor (PES) of Marinduque, upon his arrival to serve a
copy of the aforementioned Resolution dated 14 May 2013 in SPA No. 13-053 (DC).
Despite his proper identification that he is a process server from the COMELEC
Main Office, the PES totally ignored Process Server Pedro Sta. Rosa II.
x x x Interestingly, the PES likewise refused to receive the copy of the Commission on
Elections En Banc Resolution dated 14 May 2013 in SPA No. 13-053 (DC) despite
several attempts to do so.
x x x Instead, the PES immediately declared the resumption of the proceedings of the
PBOC and instructed the Board Secretary to immediately read its Order proclaiming
Regina Ongsiako Reyes as winner for the position of Congressman for the Lone
District of Marinduque.
188
This narration of the events shows that the proclamation was in contravention of a
COMELEC En Banc Resolution cancelling the candidate’s Certificate of Candidacy.
The PBOC, a subordinate body under the direct control and supervision of the
COMELEC, cannot simply disregard a COMELEC En Banc Resolution brought
before its attention and hastily proceed with the proclamation by reasoning that it
has not officially received the resolution or order.
x x x x x x
The PBOC denied the motion to proclaim candidate Velasco on the ground that
neither the counsel of petitioner nor the PBOC was duly furnished or served an
official copy of the COMELEC En Banc Resolution dated 14 May 2013 and forthwith
proceeded with the proclamation of herein petitioner, whose Certificate of Candidacy
has already been cancelled, bespeaks mala fide on its part.
As early as 27 March 2013, when the COMELEC First Division cancelled petitioner’s
Certificate of Candidacy, the people of Marinduque, including the COMELEC
officials in the province, were already aware of the impending disqualification of
herein petitioner upon the finality of the cancellation of her Certificate of Candidacy.
When the COMELEC En Banc affirmed the cancellation of the certificate of
candidacy on the day of the elections, but before the proclamation of the winner, it
had the effect of declaring that herein petitioner was not a candidate.
Thus, when the PBOC proclaimed herein petitioner, it proclaimed not a winner but a
noncandidate.
The proclamation of a noncandidate cannot take away the power vested in the
COMELEC to enforce and execute its decisions. It is a power that enjoys precedence
over that emanating from any
189
VOL. 780, JANUARY 12, 2016 189
other authority, except the Supreme Court, x x x.” (Emphasis supplied)
Hence, at that moment, the COMELEC is not only bestowed with the authority, but more
so, duty-bound to rectify the PBOC’s mistake. Consequently, the COMELEC En Banc, in
its July 9, 2013 Resolution in SPC No. 13-010, nullified the proclamation of Reyes,
proceeded to constitute a special PBOC and on July 9, 2013, proclaimed Velasco as the
winning Representative for the Lone District of Marinduque for the 2013-2016 term. As
emphasized in the ponencia, this proclamation of Velasco was never questioned before this
Court and likewise became final and executory.54
The Dissent makes much of the cases questioning Reyes’ eligibility that are pending before
the HRET, and argues that the Court should deny the instant petition and defer to the
action of the electoral tribunal.55
The argument is specious.
It is of no moment that there are two quo warranto cases currently pending before the
HRET that seek to disqualify Reyes from holding the congressional office.56 These cases
cannot oust the COMELEC and the Court of their jurisdiction over the issue on Reyes’
eligibility, which they have already validly acquired and exercised in SPA No. 13-053 and
Reyes. The petitioners in the quo warranto cases themselves recognize the enforceability of
the COMELEC and the Court’s ruling in SPA No. 13-053 and Reyes, and even invoked the
rulings therein to support their respective petitions. They seek not a trial de novo for the
determination of whether or not Reyes is eligible to hold office as Representative, but seek
_______________
56 HRET Case No. 13-036, entitled “Noeme Mayores Lim and Jeasseca L. Mapacpac v.
Regina Ongsiako Reyes,” and HRET Case No. 13-037, entitled “Eric D. Junio v. Regina
Ongsiako Reyes.”
190
the implementation of the final and executory decisions of the COMELEC and of the High
Court. Interestingly, Reyes merely prayed for the dismissal of these cases, but never asked
the HRET for any affirmative relief to counter the executory rulings in SPA No. 13-053,
G.R. No. 207264, and SPA No. 13-010.
IV
All told, We cannot turn a blind eye to the undisputed fact that the Court’s
pronouncements in Reyes and the pertinent resolutions of the COMELEC have established
that the title and clear right to the contested office belongs to petitioner. In reinforcing this
conclusion, the ponencia aptly observed that:57
x x x In this case, given the present factual milieu, i.e., the final and executory
resolutions of this Court in G.R. No. 207264, the final and executory resolutions of
the COMELEC in SPA No. 13-053 (DC) cancelling Reyes’ Certificate of Candidacy,
and the final and executory resolution of the COMELEC in SPA No. 13-010 declaring
null and void the proclamation of Reyes and proclaiming Velasco as the winning
candidate for the position of Representative for the Lone District of the Province of
Marinduque, it cannot be claimed that the present petition is one for the
determination of the right of Velasco to the claimed office.
It has thus been conclusively proven that Velasco is the winning candidate for the position
of Representative for the Lone District of Marinduque during the May 2013 Elections. As a
consequence, when respondents Belmonte and Barua-Yap received the “Certificate of
Canvass of Votes and Proclamation of Winning Candidate for the position of Member of
House of Representatives for the Lone District of Marinduque” issued by the COMELEC in
favor of the herein petitioner,
_______________
191
VOL. 780, JANUARY 12, 2016 191
they should have, without delay, abide by their respective ministerial duties to administer
the oath in favor of the petitioner and to register his name in Roll of Members of the House
of Representatives for the 2013-2016 term. Upon their unlawful refusal to do so despite
repeated demands from petitioner, the extraordinary writ of mandamus ought to lie.
In the end, Reyes has no legal basis whatsoever to continue exercising the rights and
prerogatives as the Lone District Representative of Marinduque as there is at present no
pending action or petition which was instituted by her either before the HRET or the Court
challenging petitioner Velasco’s proclamation. Respondents Belmonte and Barua-Yap must
thus honor the rights of petitioner and execute the final COMELEC and Supreme Court
Resolutions in accordance with and furtherance of the rule of law.
May I just be permitted one last word.
In what was in all ill designed as a master stroke, Reyes, after all have been said and done
by this Court in the petition, she herself filed, submitted a motion to withdraw that
petition, G.R. No. 207264, Regina Ongsiako Reyes v. COMELEC and Tan.58 I had the
opportunity to say, in the Court’s denial of her motion to reconsider the dismissal of her
petition, that:
xxx
The motion to withdraw petition filed AFTER the Court has acted thereon, is noted.
It may well be in order to remind petitioner that jurisdiction, once acquired, is not
lost upon the instance of the parties, but continues until the case is terminated. When
petitioner filed her Petition for Certiorari, jurisdiction vested in the Court and, in
fact, the Court exercised such jurisdiction when it acted on the petition. Such
jurisdiction cannot be lost by the unilateral withdrawal of the petition by petitioner.
_______________
192
More importantly, the Resolution dated 25 June 2013, being a valid court issuance,
undoubtedly has legal consequences. Petitioner cannot, by the mere expediency of
withdrawing the petition, negative and nullify the Court’s Resolution and its legal effects.
At this point, we counsel petitioner against trifling with court processes. Having sought the
jurisdiction of the Supreme Court, petitioner cannot withdraw her petition to erase the
ruling adverse to her interests. Obviously, she cannot, as she designed below, subject to her
predilections the supremacy of the law.
I cannot be moved one bit away from the conclusion, then as now, that parties to cases
cannot trifle with our Court processes. If we deny the petition at hand, we will ourselves do
for Reyes what we said in judgment cannot be done by her.
WHEREFORE, premises considered, I register my vote to GRANT the petition.
CONCURRING OPINION
LEONEN, J.:
I concur in the result.
The quo warranto cases1 filed before the House of Representatives Electoral Tribunal have
been dismissed in the Resolution2 dated December 14, 2015. The proper constitutional
body, the House of Representatives Electoral Tribunal, has already ruled on the basis of
Lord Allan Jay Velasco’s (Velasco) claim to a seat in Congress. There is thus no pending
proceeding nor matter that bars this court from issuing the writ of mandamus in favor of
Velasco.
_______________
1 Rollo, p. 788, Regina Ongsiako Reyes’ Memorandum. These cases were docketed as
HRET Case Nos. 13-036 and 13-037.
2 Petitioner’s Manifestation dated January 6, 2016, Annex D.
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VOL. 780, JANUARY 12, 2016 193

Under the situation attendant in this case, I therefore concur in the grant of the Petition for
Mandamus.
Election contests assailing Regina Ongsiako Reyes’ (Reyes) title as a member of the House
of Representatives were filed. Velasco filed an electoral protest before the House of
Representatives Electoral Tribunal.3 For reasons only he understood, he opted to withdraw
his case against Reyes before the House of Representatives Electoral Tribunal and, instead,
after Reyes had taken her oath and proceeded to represent the Lone District of
Marinduque, filed the present Petition for Mandamus.
However, three quo warranto cases were also filed against Reyes before the House of
Representatives Electoral Tribunal.4
When Velasco filed this Petition for Mandamus, the House of Representatives Electoral
Tribunal had yet to rule on Velasco’s title to a seat in Congress. The quo warranto cases
were still pending before the House of Representatives Electoral Tribunal.
While election contests were pending before the House of Representatives Electoral
Tribunal, this Petition for Mandamus was, in effect, an election contest.5 It was a
procedural vehicle to raise “contests relating to the election, returns, and qualifications”6
of a Member of the House of Representatives. This action set up the title of Velasco to a
public office.
_______________
3 Rollo, p. 630, Hon. Speaker Feliciano R. Belmonte and Secretary General Marilyn B.
Barua-Yap’s Memorandum. The case was docketed as HRET Case No. 13-028.
4 Id., at pp. 629-630.
5 HRET Rules, Rule 15. The action filed may be an election protest or quo warranto under
the HRET Rules.
6 Const., Art. VI, Sec. 17.
194
Velasco claims a clear and better legal right as against the occupant. An election contest is a
suit that can be filed by a candidate to question the title of an incumbent to a public office.7
The power to be the “sole judge”8 of all these contests is vested by our Constitution itself in
the House of Representatives Electoral Tribunal to the exclusion of all others.9
The Constitution clearly provides:
SECTION 17. The Senate and the House of Representatives shall each have an

Electoral Tribunal which shall be the sole judge of all contests relating to the election,
returns, and qualifications of their respective Members. Each Electoral Tribunal
shall be composed of nine Members, three of whom shall be Justices of the Supreme
Court to be designated by the Chief Justice, and the remaining six shall be Members
of the Senate or the House of Representatives, as the case may be, who shall be
chosen on the basis of proportional representation from the political parties and the
parties or organizations registered under the party-list system represented therein.
The senior Justice in the Electoral Tribunal shall be its Chairman.10
An election contest, whether an election protest11 or petition for quo warranto,12 is a

remedy “to dislodge the winning
_______________
7 HRET Rules, Rules 15-17.

9 Id. See also Angara v. Electoral Commission, 63 Phil. 139 (1936) [Per J. Laurel, En Banc].
10 Id.
11 HRET Rules, Rule 16 provides:
RULE 16. Election Protest.—A verified petition contesting the election or returns of any

Member of the House of Representatives shall be filed by any candidate who has duly filed
a certificate of candidacy and has been voted for the same office, within fifteen (15) days
after the proclamation of the winner.
195
VOL. 780, JANUARY 12, 2016 195
_______________
The party filing the protest shall be designated as the protestant while the adverse party
shall be known as the protestee.
No joint election protest shall be admitted, but the Tribunal, for good and sufficient
reasons, may consolidate individual protests and hear and decide them jointly. Thus, where
there are two or more protests involving the same protestee and common principal causes
of action, the subsequent protests shall be consolidated with the earlier case to avoid
unnecessary costs or delay. In case of objection to the consolidation, the Tribunal shall
resolve the same. An order resolving a motion for or objection to the consolidation shall be
unappealable.
The protest is verified by an affidavit that the affiant has read it and that the allegations
therein are true and correct of his knowledge and belief or based on verifiable information
or authentic records. A verification based on “information and belief,” or upon
“knowledge, information and belief,” is not a sufficient verification.
An unverified election protest shall not suspend the running of the reglementary period to
file the protest.
An election protest shall state:

1. The date of proclamation of the winner and the number of votes obtained by the
parties per proclamation;
2. The total number of contested individual and clustered precincts per municipality or
city;
3. The individual and clustered precinct numbers and location of the contested precincts;
and
4. The specific acts or omissions complained of constituting the electoral frauds,

anomalies or irregularities in the contested precincts.
12 HRET Rules, Rule 17 provides:
RULE 17. Quo Warranto.—A verified petition for quo warranto contesting the election of
a Member of the House of Representatives on the ground of ineligibility or of disloyalty to
the Republic of the Philippines shall be filed by any registered voter of the district
concerned within fifteen (15) days from the date of the proclamation of the winner. The
party filing the petition shall be designated as the petitioner while the adverse party shall
be known as the respondent.
The provisions of the preceding paragraph to the contrary notwithstanding, a petition for
quo warranto may be filed by any
196
candidate from office”13 and “to establish who is the actual winner in the election.”14 The
action puts in issue the validity of the incumbent’s claim to the office.
A contest contemplated by the Constitution settles disputes as to who is rightfully entitled

to a position.15 It is not this court but the House of Representatives Electoral Tribunal that
has sole jurisdiction of contests involving Members of the House of Representatives. This
can be filed through (a) an election protest under Rule 16 of the 2011 Rules of the House of
Representatives Electoral Tribunal; and (b) quo warranto under Rule 17 of the 2011 Rules
of the House of Representatives Electoral Tribunal.
Thus, while the petitions for quo warranto were pending before the House of
Representatives Electoral Tribunal, this court did not have the jurisdiction to rule on this
Petition for Mandamus. A grant of the writ of mandamus would have openly defied the
Constitution and, in all likelihood, would muddle the administration of justice as it would
have rendered the quo warranto cases properly pending before the House of
Representatives Electoral Tribunal moot and academic. We would have arrogated upon
ourselves the resolution of then pending House of Representatives Electoral Tribunal cases.
_______________
registered voter of the district concerned against a member of the House of
Representatives, on the ground of citizenship, at any time during his tenure.
The rule on verification and consolidation provided in Section 16 hereof shall apply to
petitions for quo warranto.
13 Tecson v. Commission on Elections, 468 Phil. 421, 461; 424 SCRA 277, 325 (2004) [Per J.
Vitug, En Banc].
14 Lerias v. House of Representatives Electoral Tribunal, 279 Phil. 877, 898; 202 SCRA 808,
825 (1991) [Per J. Paras, En Banc].
197
VOL. 780, JANUARY 12, 2016 197
II
Notwithstanding the pendency of the quo warranto cases before the House of
Representatives Electoral Tribunal, Velasco relies on the Decision in Reyes v. Commission
on Elections16 upholding the jurisdiction of the Commission on Elections and affirming the
Resolution of the Commission on Elections cancelling Reyes’ Certificate of Candidacy for
the grant of the writ of mandamus.
The Resolution on the Motion for Reconsideration in Reyes v. Commission on Elections17
was denied by a divided court.18 Five justices19 voted to deny the Motion for
Reconsideration filed by Reyes, and four justices20 voted to grant the Motion for
Reconsideration.
On the same day that the Resolution was promulgated, this court En Banc decided Tañada,
Jr. v. Commission on Elections21 by a unanimous vote.22 In Tañada, this court once again
upheld the jurisdiction of the House of Representatives Electoral Tribunal “over disputes
relating to the election, returns, and qualifications of the proclaimed representa-
_______________
16 G.R. No. 207264, June 25, 2013, 699 SCRA 522 [Per J. Perez, En Banc].
17 G.R. No. 207264, October 22, 2013, 708 SCRA 197 [Per J. Perez, En Banc].
18 Id., at p. 234.
19 The five justices were Chief Justice Maria Lourdes P. A. Sereno and Associate Justices
Teresita J. Leonardo-De Castro, Roberto A. Abad, Jose P. Perez, and Bienvenido L. Reyes.
20 The four justices were Associate Justices Antonio T. Carpio, Arturo D. Brion, Martin S.
Villarama, Jr., and Marvic Mario Victor F. Leonen.
21 G.R. Nos. 207199-200, October 22, 2013, 708 SCRA 188 [Per J. Perlas-Bernabe, En
Banc].
22 Id., at p. 196.
198
tive[.]”23 The issue on the validity of the proclamation of a Member of Congress is included
in the term “returns.” We said:
Case law states that the proclamation of a congressional candidate following the
election divests the COMELEC of jurisdiction over disputes relating to the election,
returns, and qualifications of the proclaimed representative in favor of the HRET.
The phrase “election, returns, and qualifications” refers to all matters affecting the
validity of the contestee’s title. In particular, the term “election” refers to the conduct
of the polls, including the listing of voters, the holding of the electoral campaign, and
the casting and counting of the votes; “returns” refers to the canvass of the returns
and the proclamation of the winners, including questions concerning the composition
of the board of canvassers and the authenticity of the election returns; and
“qualifications” refers to matters that could be raised in a quo warranto proceeding
against the proclaimed winner, such as his disloyalty or ineligibility or the inadequacy
of his CoC.24 (Citation omitted)
In Limkaichong v. Commission on Elections, et al.:25
Petitioners (in G.R. Nos. 179120, 179132-33, and 179240-41) steadfastly maintained
that Limkaichong’s proclamation was tainted with irregularity, which will effectively
prevent the HRET from acquiring jurisdiction.
The fact that the proclamation of the winning candidate, as in this case, was alleged
to have been tainted with irregularity does not divest the HRET of its jurisdiction.
The Court has shed light on this in the case of Vinzons-Chato, to the effect that:
In the present case, it is not disputed that respondent Unico has already been
proclaimed and taken his oath of office as a Member of the House of
Representatives
_______________
23 Id., at p. 195.
24 Id., at pp. 195-196.
25 601 Phil. 751; 583 SCRA 1 (2009) [Per J. Peralta, En Banc].
199
VOL. 780, JANUARY 12, 2016 199
(Thirteenth Congress); hence, the COMELEC correctly ruled that it had

already lost jurisdiction over petitioner Chato’s petition. The issues raised by
petitioner Chato essentially relate to the canvassing of returns and alleged
invalidity of respondent Unico’s proclamation. These are matters that are best
addressed to the sound judgment and discretion of the HRET. Significantly, the
allegation that respondent Unico’s proclamation is null and void does not divest
the HRET of its jurisdiction:
x x x [I]n an electoral contest where the validity of the proclamation of a

winning candidate who has taken his oath of office and assumed his post
as congressman is raised, that issue is best addressed to the HRET. The
reason for this ruling is self-evident, for it avoids duplicity of proceedings
and a clash of jurisdiction between constitutional bodies, with due regard
to the people’s mandate.
Further, for the Court to take cognizance of petitioner Chato’s election protest
against respondent Unico would be to usurp the constitutionally mandated
functions of the HRET.
In fine, any allegations as to the invalidity of the proclamation will not prevent the
HRET from assuming jurisdiction over all matters essential to a member’s
qualification to sit in the House of Representatives.
....
Accordingly, after the proclamation of the winning candidate in the congressional

elections, the remedy of those who may assail one’s
eligibility/ineligibility/qualification/disqualification is to file before the HRET a
petition for an election protest, or a
200

petition for quo warranto, within the period provided by the HRET Rules. In
Pangilinan v. Commission on Elections, we ruled that where the candidate has already
been proclaimed winner in the congressional elections, the remedy of petitioner is to
file an electoral protest with the Electoral Tribunal of the House of
Representatives.26 (Emphasis in the original, citations omitted)
In Vinzons-Chato v. Commission on Elections,27 this court ruled that:
once a winning candidate has been proclaimed, taken his oath, and assumed office as
a Member of the House of Representatives, the COMELEC’s jurisdiction over
election contests relating to his election, returns, and qualifications ends, and the
HRET’s own jurisdiction begins. Stated in another manner, where the candidate has
already been proclaimed winner in the congressional elections, the remedy of the
petitioner is to file an electoral protest with the HRET.28 (Emphasis supplied, citations
omitted)
When Reyes was proclaimed by the Provincial Board of Canvassers as the duly elected
Representative of the Lone District of Marinduque on May 18, 2013, Velasco should have
continued his election protest or filed a quo warranto Petition before the House of
Representatives Electoral Tribunal.29 Instead, Velasco filed a Petition to annul the
proceedings of the Provincial Board of Canvassers and the proclamation of Reyes on May
20, 2013 before the Commission on Elections.30 At that time, the Commission on Elections
no longer had jurisdiction over the Petition that was filed after Reyes’ proclamation.
_______________
26 Id., at pp. 782-783; p. 37.
27 548 Phil. 712; 520 SCRA 166 (2007) [Per J. Callejo, Sr., En Banc].
28 Id., at pp. 725-726; p. 179.
29 HRET Rules, Rules 16-17.

30 Rollo, p. 574, Lord Allan Jay Q. Velasco’s Consolidated Reply. The Petition was
docketed as SPC No. 13-010.
201
VOL. 780, JANUARY 12, 2016 201
Any alleged invalidity of the proclamation of a Member of the House of Representatives

does not divest the House of Representatives Electoral Tribunal of jurisdiction.31
Should there have been pending cases at the House of Representatives Electoral Tribunal,
we should have deferred to the action of the constitutional body given the competence to
act initially on the matter. Thus, in the Dissenting Opinion in Reyes v. Commission on
Elections:
In case of doubt, there are fundamental reasons for this Court to be cautious in
exercising its jurisdiction to determine who the members are of the House of
Representatives. We should maintain our consistent doctrine that proclamation is the
operative act that removes jurisdiction from this Court or the Commission on
Elections and vests it on the House of Representatives Electoral Tribunal (HRET).
The first reason is that the Constitution unequivocably grants this discretion to
another constitutional body called the House of Representative Electoral Tribunal
(HRET). This is a separate organ from the Judiciary.
....
The second fundamental reason for us to exercise caution in determining the

composition of the House of Representatives is that this is required for a better
administration of justice. Matters relating to factual findings on election, returns, and
qualifications must first be vetted in the appropriate electoral tribunal before these
are raised in the Supreme Court.32
The House of Representatives Electoral Tribunal is the sole judge of contests involving
Members of the House of Repre-
_______________
31 Gonzalez v. Commission on Elections, 660 Phil. 225, 267; 644 SCRA 761, 799 (2011) [Per
J. Villarama, Jr., En Banc].
32 Reyes v. Commission on Elections, supra note 17 at pp. 327-344 [Per J. Perez, En Banc].
202
sentatives.33 This is a power conferred by the sovereign through our Constitution.
Again, as in my dissent in Reyes v. Commission on Elections:34
This Court may obtain jurisdiction over questions regarding the validity of the
proclamation of a candidate vying for a seat in Congress without encroaching upon
the jurisdiction of a constitutional body, the electoral tribunal. “[The remedies of]
certiorari and prohibition will not lie in this case [to annul the proclamation of a
candidate] considering that there is an available and adequate remedy in the
ordinary course of law; [that is, the filing of an electoral protest before the electoral
tribunals].” These remedies, however, may lie only after a ruling by the House of
Representatives Electoral Tribunal or the Senate Electoral Tribunal.35 (Emphasis
supplied)
However, the House of Representatives Electoral Tribunal already ruled on the two quo
warranto cases against Reyes that were consolidated.36 The House of Representatives
Electoral Tribunal held that it had no jurisdiction to resolve the petitions for quo warranto
relying on this court’s Decision in Reyes v. Commission on Elections.37 In their Resolution,
the House of Representatives pronounced:
Such element is obviously absent in the present cases as Regina Reyes’ proclamation
was nullified by the COMELEC, which nullification was upheld by the Supreme
Court. On this ground alone, the Tribunal is without power to assume jurisdiction
over the present peti-
_______________
34 Reyes v. Commission on Elections, supra note 17.
35 Id., at p. 342, quoting Barbers v. Commission on Elections, 499 Phil. 570, 585; 460 SCRA
569, 583 (2005) [Per J. Carpio, En Banc].
36 Rollo, p. 788, Regina Ongsiako Reyes’ Memorandum. HRET Case No. 13-036 was
entitled Noeme Mayores Tan & Jeasseca L. Mapacpac v. Regina Ongsiako Reyes. HRET
Case No. 13-037 was entitled Eric D. Junio v. Regina Ongsiako Reyes.
37 Reyes v. Commission on Elections, supra note 16.
203
VOL. 780, JANUARY 12, 2016 203
tions since Regina Reyes “cannot be considered a Member of the House of

Representatives,” as declared by the Supreme Court En Banc in G.R. No. 207264.38
(Emphasis in the original, citation omitted)
The tribunal dismissed the quo warranto cases holding that the Commission on Elections’
cancellation of Reyes’ certificate of candidacy resulted in the nullification of her
proclamation.39 Thus:
WHEREFORE, in view of the foregoing, the September 23, 2014 Motion for
Reconsideration of Victor Vela Sioco is hereby GRANTED. The September 11, 2014
Resolution of Tribunal is hereby REVERSED and SET ASIDE. Accordingly, the
present Petitions for Quo Warranto are hereby DISMISSED for lack of jurisdiction.40
In effect, the decision by the sole judge of all electoral contests acknowledges Reyes’ lack of
qualifications. While maintaining my dissent in Reyes v. Commission on Elections, I now
acknowledge that there is no other remedy in law or equity to enforce a final decision of
this court except through mandamus.
Applying Codilla, Sr. v. Hon. De Venecia,41 this Petition for Mandamus should be granted.
_______________
38 Petitioner’s Manifestation dated January 6, 2016, Annex D, p. 4. Annex D refers to

HRET Resolution in HRET Case Nos. 13-036 and 13-037.
39 Id., at p. 3.
40 Id., at p. 5.
41 442 Phil. 139; 393 SCRA 639 (2002) [Per J. Puno, En Banc].
204
III
Aratea v. Commission on Elections42 qualified the second-placer rule. The candidate
receiving the next highest number of votes would be entitled to the position if the
Certificate of Candidacy of the candidate receiving the highest number of votes had been
initially declared valid at the time of filing but had to be subsequently cancelled.43
Additionally, if the Certificate of Candidacy of the candidate receiving the highest number
of votes was void ab initio, the votes of the candidate should be considered stray and not
counted.44 This would entitle the candidate receiving the next highest number of votes to
the position.45 Thus:
Decisions of this Court holding that the second-placer cannot be proclaimed winner if
the first-placer is disqualified or declared ineligible should be limited to situations
where the certificate of candidacy of the first-placer was valid at the time of filing but
subsequently had to be cancelled because of a violation of law that took place, or a
legal impediment that took effect, after the filing of the certificate of candidacy. If the
certificate of candidacy is void ab initio, then legally the person who filed such void
certificate of candidacy was never a candidate in the elections at any time. All votes
for such noncandidate are stray votes and should not be counted. Thus, such
noncandidate can never be a first-placer in the elections. If a certificate of candidacy
void ab initio is cancelled on the day, or before the day, of the election, prevailing
jurisprudence holds that all votes for that candidate are stray votes. If a certificate of
candidacy void ab initio is cancelled one day or more after the elections, all votes for
such candidate should also be stray votes because the certificate of candidacy is void
from the begin-
_______________
42 G.R. No. 195229, October 9, 2012, 683 SCRA 105 [Per J. Carpio, En Banc].
43 Id., at p. 146.
44 Id.
45 Id.
205
VOL. 780, JANUARY 12, 2016 205

ning. This is the more equitable and logical approach on the effect of the cancellation
of a certificate of candidacy that is void ab initio. Otherwise, a certificate of candidacy
void ab initio can operate to defeat one or more valid certificates of candidacy for the
same position.46 (Emphasis in the original, citations omitted)
The Decision in Aratea was subsequently reiterated in Jalosjos, Jr. v. Commission on

Elections47 and Maquiling v. Commission on Elections.48
ACCORDINGLY, I vote to GRANT the Petition for Mandamus.
Petition granted.
Notes.—A petition for quo warranto is a proceeding to determine the right of a person to
use or exercise a franchise or an office and to oust the holder from the enjoyment, thereof,
if the claim is not well-founded, or if his right to enjoy the privilege has been forfeited. (De
Castro vs. Carlos, 696 SCRA 400 [2013])
In a quo warranto proceeding, the person suing must show that he has a clear right to the
office allegedly held unlawfully by another. Absent a showing of that right, the lack of
qualification or eligibility of the supposed usurper is immaterial. (Id.)
——o0o——
_______________
G.R. No. 201614. January 12, 2016.*
SHERYL M. MENDEZ, petitioner, vs. Shari’a District Court, 5th Shari’a District, Cotabato City,
Rasad G. Balindong (Acting Presiding Judge); 1st Shari’a Circuit Court, 5th Shari’a District,
Cotabato City, Montano K. Kalimpo (Presiding Judge); and DR. JOHN O. MALIGA,
respondents.
Remedial Law; Civil Procedure; Courts; Shari’a Appellate Court; Pending the organization of
the Shari’a Appellate Court, appeals or petitions from final orders or decisions of the Shari’a
District Court (ShDC) shall be filed with the Court of Appeals (CA) and referred to a Special
Division to be organized in any of the CA stations preferably to be composed of Muslim CA
Justices.—It has been recognized that decades after the 1989 enactment of the law creating the
Shari’a Appellate Court and after the Court authorized its creation in 1999, it has yet to be
organized. Pending the organization of the Shari’a Appellate Court, appeals or petitions from
final orders or decisions of the ShDC shall be filed with the Court of Appeals (CA) and referred
to a Special Division to be organized in any of the CA stations preferably to be composed of
Muslim CA Justices. For cases where only errors or questions of law are raised or in-
_______________
* EN BANC.
54
Mendez vs. Shari'a District Court, 5th Shari'a District, Cotabato City
volved, the appeal shall be to this Court via a petition for review on certiorari under Rule 45 of
the Rules of Court pursuant to Article VIII, Section 5 of the Constitution and Section 2 of Rule
41 of the Rules. As the present petition involves only questions of law, it has been properly filed
before this Court.
Same; Same; Same; Jurisdiction; Words and Phrases; Jurisdiction is the power and authority of
a court to hear, try and decide a case.—Jurisdiction is the power and authority of a court to hear,
try and decide a case. In order for the court to have authority to dispose of a case on the merits, it
must acquire jurisdiction over the subject matter and the parties. The Congress has the power to
define, prescribe and apportion the jurisdiction of various courts, and courts are without authority
to act where jurisdiction has not been conferred by law. Jurisdiction is conferred only by the
Constitution or the law. It cannot be acquired through a waiver or enlarged by the omission of the
parties or conferred by the acquiescence of the court, and may be raised at any stage of the
proceedings, even for the first time on appeal.
Same; Same; Same; Same; Shari’a Circuit Courts; The Shari’a Circuit Court (ShCC) has
exclusive original jurisdiction over civil actions between parties who have been married in
accordance with the Muslim law, involving disputes relating to divorce under Presidential
Decree (PD) No. 1083.—It is clear that the ShCC has exclusive original jurisdiction over civil
actions between parties who have been married in accordance with the Muslim law, involving
disputes relating to divorce under P.D. No. 1083. There is, therefore, no doubt that the ShCC had
jurisdiction to confirm the talaq between Mendez and Maliga.
Civil Law; Child Custody; Divorce; Article 78 of Presidential Decree (PD) No. 1083 states that
the care and custody of children below seven (7) whose parents are divorced shall belong to the
mother, and the minor above 7 but below the age of puberty may choose the parent with whom
he/she wants to stay.—Though Article 54 does not directly confer jurisdiction to the ShCC to
rule on the issue of custody, the Court, nevertheless grants the ShCC ancillary jurisdiction to
resolve issues related to divorce. The above quoted provision states categorically that as a
consequent effect of divorce, the custody of children shall be determined in accordance with
Article 78 of the
55
VOL. 780, JANUARY 12, 2016 55
Code. In turn, Article 78 states that the care and custody of children below seven whose parents
are divorced shall belong to the mother, and the minor above seven but below the age of
puberty may choose the parent with whom he/she wants to stay.
Remedial Law; Civil Procedure; Courts; Jurisdiction; Shari’a Circuit Courts; The Shari’a
Circuit Court (ShCC), in cases involving divorce, possesses the power to resolve the issue of
custody, it being a related issue to the main cause of action.—To rule that the ShCC is without
jurisdiction to resolve issues on custody after it had decided on the issue of divorce, simply
because it appears to contravene Article 143 of P.D. No. 1083, would be antithetical to the
doctrine of ancillary jurisdiction. “While a court may be expressly granted the incidental powers
necessary to effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive
legislation, implies the necessary and usual incidental powers essential to effectuate it, and,
subject to existing laws and constitutional provisions, every regularly constituted court has
power to do all things that are reasonably necessary for the administration of justice within the
scope of its jurisdiction and for the enforcement of its judgments and mandates. Hence, demands,
matters or questions ancillary or incidental to, or growing out of, the main action, and coming
within the above principles, may be taken cognizance of by the court and determined, since such
jurisdiction is in aid of its authority over the principal matter, even though the court may thus be
called on to consider and decide matters which, as original causes of action, would not be within
its cognizance.” Following the doctrine, the ShCC, in cases involving divorce, possesses the
power to resolve the issue of custody, it being a related issue to the main cause of action.
Same; Same; Same; Same; A distinction must be made between a case for divorce wherein the
issue of custody is an ancillary issue and a case where custody is the main issue.—A distinction
must be made between a case for divorce wherein the issue of custody is an ancillary issue and a
case where custody is the main issue. Jurisdiction in the former, as discussed above, lies with the
ShCC, as the main cause of action is divorce. The latter on the other hand, where the main cause
of action is one of custody, the same must be filed with the ShDC, pursuant to Article 143 of P.D.
No. 1083.
56
Same; Same; Motions; Every written motion is required to be heard and the notice of hearing
shall be served in such manner as to insure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause sets the hearing on shorter notice.—
The Court, nonetheless, agrees with Mendez that the urgent motion lacked the requisite notice of
hearing. It is immediately evident from the face of the motion that it did not contain the notice of
hearing required by the Rules of Court which has suppletory application to the present case.
Section 4 of Rule 15 provides that every written motion shall be set for hearing by the applicant.
Every written motion is required to be heard and the notice of hearing shall be served in such
manner as to insure its receipt by the other party at least three (3) days before the date of hearing,
unless the court for good cause sets the hearing on shorter notice. The notice of hearing is
intended to prevent surprise and to afford the adverse party a chance to be heard before the
motion is resolved by the court. A seasonable service of a copy of the motion on the adverse
party with a notice of hearing indicating the time and place of hearing is a mandatory
requirement that cannot be dispensed with as this is the minimum requirement of procedural due
process. A motion that does not contain a notice of hearing is a mere scrap of paper and presents
no question which merits the attention and consideration of the court. It is not even a motion for
it does not comply with the rules, and, hence, even the clerk has no right to receive it.
Same; Same; Judgments; Section 14, Article VIII of the 1987 Constitution mandates that
decisions must clearly and distinctly state the facts and the law on which they are based.—
Although the ShCC stated that, in deciding on the custody case, it scrutinized the evidence on
hand, it was remiss in its duty to state the precise factual and legal basis on which its ruling
awarding custody to Maliga was based. Section 14, Article VIII of the 1987 Constitution
mandates that decisions must clearly and distinctly state the facts and the law on which they are
based. The decisions of courts must be able to address the issues raised by the parties through the
presentation of a comprehensive analysis or account of factual and legal findings of the court. It
is evident that the ShCC failed to comply with these requirements. It merely stated that it was in
Princess Fatima’s “best interest in all aspects of life, economically, socially and religiously” that
custody be awarded to her father. There was no express finding that Mendez was unfit in any
way, or a hint of an
57
VOL. 780, JANUARY 12, 2016 57

explanation as to why Maliga was in a better position to take custody of Princess Fatima.
PETITION for review on certiorari of a decision of the Shari’a District Court, 5th Shari’a
District, Cotabato City.
Paisal S. Abdul for petitioner.
Lincoln B. Bagundang for private respondent.
MENDOZA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the March 30, 2012 Decision1 of the Shari’a District Court, 5th Shari’a District,
Cotabato City (ShDC), in ShDC Appealed Case No. 2011-19. The assailed decision affirmed the
August 19, 2011 Order2 of the 1st Shari’a Circuit Court, Cotabato City (ShCC), in ShCC Civil
Case No. 2010-559, confirming the talaq3 (divorce) between petitioner Sheryl M. Mendez
(Mendez) and
_______________
1 Rollo, pp. 108-109; penned by Acting Presiding Judge Rasad G. Balindong.
2 Id., at pp. 61-66; penned by Presiding Judge Montano K. Kalimpo.
3 Art. 45. Definition and forms.—Divorce is the formal dissolution of the marriage bond in

accordance with this Code to be granted only after the exhaustion of all possible means of
reconciliation between the spouses. It may be effected by:
(a) Repudiation of the wife by the husband (talaq);
(b) Vow of continence by the husband (ila);
(c) Injurious assanilation of the wife by the husband (zihar);
(d) Acts of imprecation (li’an);

(e) Redemption by the wife (khul’);
(f) Exercise by the wife of the delegated right to repudiate (tafwld); or
(g) Judicial decree (faskh). [Presidential Decree No. 1083 (1977), Book Two, Title II, Chapter
III, Sec. 1]
58
private respondent Dr. John O. Maliga (Maliga); awarding the custody of their minor child to
Maliga; and ordering him to give a mut’a (consolatory gift) to Mendez.
The Facts
From the records, it appears that on April 9, 2008, Mendez and Maliga were married under
Muslim rites. Prior to their marriage, the couple was already blessed with a daughter, Princess
Fatima M. Maliga (Princess Fatima). Their marriage, however, soured shortly after their
wedding.
On November 2, 2010, Maliga filed with the ShCC a petition4 for the judicial confirmation of
talaq from Mendez, with a prayer for the grant of probational custody of their minor child
pending the resolution of the case. According to Maliga, Mendez was a Roman Catholic and she
only embraced the Islamic faith on the date of their marriage. Shortly after being married, he
claimed that he started to doubt the sincerity of his wife’s submission to Islam, having noticed no
changes in her moral attitude and social lifestyle despite his guidance. Maliga added that despite
his pleas for her to remain faithful to the ways of Islam, she remained defiant. He alleged that
sometime in December 2008, Mendez reverted to Christianity. Maliga went on to add that she
went to Manila a few days after their wedding and brought Princess Fatima with her without his
knowledge and consent. In Manila, she taught their daughter how to practice Christianity by
enrolling her in a Catholic school. Maliga, thus, prayed for probational custody considering the
unsafe religious growth and values repugnant to Islam.
Before Mendez could file her answer, Maliga filed his urgent motion5 reiterating his plea to be
awarded temporary
_______________
4 Rollo, pp. 45-46.
5 Urgent Motion for Issuance of Temporary Custody of Minor Princess Fatima, Pending Answer
or Resolution to the above entitled case, id., at p. 35.
59
VOL. 780, JANUARY 12, 2016 59
custody of Princess Fatima. He claimed that considering such factors as moral values, social
upliftment, behavioral growth, and religious consideration, he should have custody of their child.
On November 12, 2010, the ShCC issued the order6 granting Maliga’s urgent motion. The ShCC
deemed it proper for Princess Fatima to stay with her father because of his social, financial and
religious standing, and considering that she was then under his custody; that he raised her as a
good Muslim daughter as evidenced by her appearance; and that her parents were married under
Islamic rites.
On November 18, 2010, Mendez filed her Answer.7 She alleged that she followed the religion of
her Muslim grandfather, and denied Maliga’s allegations that she was not sincere in her practice
of Islam. She averred that she became pregnant before she married Maliga and had been raising
their daughter on her own since her birth and that he had been totally remiss in his material and
moral obligations to support her and their child. She opposed his prayer for custody, arguing that
she had been raising Princess Fatima since she was born; that Maliga had several wives and three
other children and was very busy with his profession as a physician; and that the custody of
children below seven years old should belong to the mother.
Mendez added that on October 21, 2010, she left their daughter in Maliga’s custody for a visit,
with the understanding that he would bring her back the following day. On October 22, 2010, she
went with her cousin to fetch her daughter but Maliga threatened to kill them and displayed his
bodyguards clad in police uniforms and firearms. This prompted her to file a complaint-affidavit
for kidnapping and failure to return a minor with the National Bureau of Investigation.8
_______________
6 Id., at pp. 36-37.
7 Id., at pp. 48-50.
8 Id., at pp. 31-32.
60
On November 22, 2010, Mendez filed her opposition9 to Maliga’s urgent motion for issuance of
temporary custody. She argued that the motion did not contain the requisite notice of hearing and
was, therefore, a mere scrap of paper. She pointed out that the motion was filed on October 9,
2010, prior to the filing of the main case on November 2, 2010. She contended that she never
received the summons in connection with the urgent motion and, furthermore, she never received
a copy of the November 12, 2010 Order granting temporary custody to Maliga, which she had
only picked up from the court herself on November 18, 2010, the day she filed her answer.
In its Order,10 dated December 3, 2010, the ShCC partially reconsidered its initial order
awarding temporary custody to Maliga by granting the right of visitation to Mendez, as follows:
WHEREFORE, in the light of the foregoing, PRINCESS FATIMA, daughter of the herein
parties is hereby ordered be placed under the CARE and CUSTODY of the Petitioner, DR.
JOHN O. MALIGA, pending the resolution of the above entitled case, effective
immediately, WITH THE RIGHT OF VISITATION BY THE RESPONDENT, SHERYL
M. MENDEZ TO HER DAUGHTER PRINCESS FATIMA M. MALIGA, ANY
REASONABLE TIME OF THE DAY AND NIGHT, AND/OR BORROW HER
(PRINCESS FATIMA M. MALIGA) PROVIDED THAT IT MUST BE ONLY WITHIN
THE VICINITY OF COTABATO CITY AND THEREAFTER, RETURN HER TO THE
PETITIONER, DR. JOHN O. MALIGA, UPON PROPER COORDINATION AND
ARRANGEMENT FROM THE ABOVE NAMED PETITIONER OR HIS DULY
AUTHORIZED REPRESENTATIVE.
SO ORDERED.11
_______________
9 Id., at pp. 38-39.
10 Id., at pp. 43-44.
11 Id., at p. 44.
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VOL. 780, JANUARY 12, 2016 61
Mendez filed a motion for reconsideration of the December 3, 2010 order, arguing that the
question of custody was within the exclusive original jurisdiction of the ShDC, and not the
ShCC, and praying that the said order be declared null and void.12
On January 19, 2011, the ShCC constituted an Agama Arbitration Council13 which, after its own
hearing and meeting, submitted the case for hearing on the merits because the parties failed to
arrive at an amicable settlement and because “the [d]ivorce was moot and academic.”14
The Ruling of the Shari’a Circuit Court
On August 19, 2011, the ShCC issued the order15 confirming the talaq pronounced by Maliga
against Mendez and awarded to him the care and custody of Princess Fatima. In the same order,
the ShCC granted visitation rights to Mendez and ordered Maliga to give her a mut’a
(consolatory gift) in the amount of P24,000.00. Thus:
WHEREFORE, in the light of the foregoing, it is hereby ORDERED, that:

1. The pronounced Talaq (Divorce) by herein Petitioner DR. JOHN O. MALIGA
against respondent SHERYL M. MENDEZ is hereby CONFIRMED and considering
that the Iddah (cooling-off/waiting period) had long been lapsed, she may now be
allowed to use her former maiden name in all personal and official transactions;
_______________
12 Records, pp. 22-23.
13 Id., at p. 9.
14 Id., at p. 29.
15 Rollo, pp. 61-66.
62
2. The care and custody of the PARTIES’ minor daughter PRINCESS FATIMA shall
remain with Petitioner DR. JOHN O. MALIGA with a right of visitation by
respondent SHERYL M. MENDEZ any reasonable time of the day and night and/or
borrow her and thereafter, return her (PRINCESS FATIMA) to petitioner DR. JOHN
O. MALIGA, provided it is only within the vicinity of Cotabato City and provided
further that there should be a proper coordination with the above named Petitioner,
and the petitioner is hereby ordered to observe such rights of visitation and/or
borrow of by the respondent SHERYL M. MENDEZ; and
3. Petitioner DR. JOHN O. MALIGA is hereby ordered upon receipt hereof, to give
consolatory gift (mut’a) to respondent SHERYL M. MENDEZ in the amount of
TWENTY-FOUR THOUSAND PESOS (Php24,000.00) as provided by law as
contained in the petitioner’s prayer which amounts of money must be
coursed/consigned to this Court.
Let the copy of this Order be furnished to the Office of the Shari’a Circuit Registrar of this
Court for record and registration purposes, and/or ANNOTATION of the PARTIES’
marriage contract as DIVORCED.
SO ORDERED.16
In its ruling, the ShCC noted that Mendez never questioned the validity of the talaq and found
that it was caused by the irreconcilable religious differences between the spouses as to the
upbringing of their daughter. For said reason, it ruled that, in the best interest of the child in all
aspects of life
_______________
16 Id., at pp. 65-66.
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VOL. 780, JANUARY 12, 2016 63
— economic, social and religious, the care and custody of Princess Fatima should remain with
Maliga.17
The Ruling of the Shari’a District Court
Mendez appealed the ShCC order to the ShDC only with respect to the ruling on custody. In her
memorandum18 before the ShDC, Mendez argued that the order of the ShCC was null and void
for its failure to state the facts and law on which its findings were based in accordance with
Section 1, Rule 36 of the Rules of Court. She reiterated that the urgent motion filed by Maliga
did not contain the requisite notice of hearing, and that the mother had the right of custody if the
child was under seven years of age. She asserted that the question of custody was within the
exclusive original jurisdiction of the ShDC only, and that an order of a court not vested with
jurisdiction was null and void.19
On March 30, 2012, the ShDC issued the assailed decision,20 affirming the August 19, 2011
Order of the ShCC. Giving credence to Maliga’s allegation that Mendez had reverted to
Christianity, the ShDC ruled that in Shari’a Law, a mother might be legally disentitled to the
custody of her child if she turned apostate, and disqualified until she returned to the Islamic faith;
and that the father, as a Muslim, was in a better position to take care of the child’s well-being and
raise her as a Muslim. Affirming the ShCC ruling, the ShDC found that Princess Fatima should
remain with her father for her best interest in all aspects of life, economically, socially and
religiously.
Hence, this petition where Mendez argues the following:
_______________
17 Id., at pp. 63-65.
18 Memorandum Brief for [Defendant-Appellant], id., at pp. 71-82.
19 Id., at pp. 74-86.
20 Id., at pp. 108-109.
64
Assignment of Errors
A. THE HONORABLE PRESIDING JUDGE OF 1ST SHARI’A CIRCUIT,

COTABATO CITY, 5TH SHARIA [DISTRICT], MONTANO K. KALIMPO,
GRAVELY AND SERIOUSLY ERRED IN DECIDING IN FAVOR OF THE
PETITIONER-APPELLEE IN SHCC CIVIL CASE NO. 2010-559, DR. JOHN O.
MALIGA FOR CARE AND CUSTODY [OF] MINOR CHILD AGAINST HEREIN
RESPONDENT-APPELLANT AS THE HONORABLE JUDGE, GRAVELY
ABUSES HIS AUTHORITY AMOUNTED TO LACK OF JURISDICTION OVER
THE CASE.
B. WHERE THE ORDER OF THE HONORABLE PRESIDING JUDGE

MONTANO K. KALIMPO OF 1ST SHARI’A CIRCUIT COURT, COTABATO
CITY DATED NOVEMBER 12, 2010 AND DECEMBER 03, 2010 AWARDED THE
CARE AND CUSTODY IN FAVOR OF PETITIONER-APPELLEE SHCC CIVIL
CASE NO. 2010-559 FOR BEING UNREASONABLE, IN VIOLATION OF RULE
15, SECTIONS 4, 5, 6 REVISED RULES OF CIVIL PROCEDURE 1997, ARTICLE
143, PAR. 1, SECTION a OF THE P.D. 1083, ARTICLE 78, P.D. 1083 AS WELL AS
JURISDICTION.
C. WHERE THE DECISION OF THE HONORABLE SHARI’A DISTRICT

COURT, 5TH SHARI’A DISTRICT COTABATO CITY, PROMULGATED ON
MARCH 30, 2011, AFFIRMED ASSAILED ORDER DATED AUGUST 19, 2011 OF
THE SHARI’A CIRCUIT COTABATO CITY, FOR BEING UNREASONABLE.21
Mendez argues that the ShCC acted in excess of jurisdiction when it ruled on Maliga’s urgent
motion for issuance of
_______________
21 Id., at pp. 16-17.
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VOL. 780, JANUARY 12, 2016 65
temporary custody, considering that the motion was a mere scrap of paper for lack of notice of
hearing. She reiterates that she never received any summons in connection with the urgent
motion. She never received a copy of the ShCC order granting the said motion either.22
Mendez goes on to contend that the ShCC had no jurisdiction to hear, try and decide the issue of
Princess Fatima’s custody, considering that under Article 143(1)(a) of Presidential Decree (P.D.)
No. 1083,23 it is the ShDC which has the exclusive original jurisdiction over all cases involving
custody. She argues the rule that any decision rendered without jurisdiction is a total nullity and
may be struck down at any time, even on appeal.24
Finally, she asserts that she should have been awarded custody under Article 78 of P.D. No.
1083, as Princess Fatima was not above seven years old at the time the ShCC order was
promulgated. As to Maliga’s claim that she was disqualified to have custody over Princess
Fatima for becoming apostate to the Islamic faith, Mendez argues that while the same may be a
ground for disinheritance under the Muslim Law, the same law does not provide that being
apostate is a ground to be denied of the care and custody of her minor child.25 Besides, she
professes that she is still a Muslim.
In the July 9, 2012 Resolution,26 the Court initially denied the subject petition for various
procedural defects.
On November 12, 2012, acting on the motion for reconsideration filed by Mendez, the Court
reinstated the petition.27
_______________
22 Id., at pp. 17-18.
23 Otherwise known as the Code of Muslim Personal Laws of the Philippines.
24 Id., at pp. 20-22.
25 Id., at pp. 22-23.
26 Id., at pp. 93-94.
27 Id., at p. 117.
66
Thereafter, Maliga and Mendez filed their respective pleadings.
In his Comment,28 dated January 17, 2013, Maliga countered that a mother may be deprived of
the custody of her child below seven years of age for compelling reasons. He alleged that
Mendez was unemployed and was financially dependent on him for all the needs of Princess
Fatima since her conception. He reiterated that a Muslim mother may be legally disentitled to the
custody of her minor child if she turned apostate and should remain disqualified until she return
to the Islamic faith. Maliga noted that although the Family Code would now apply to Mendez,
who was no longer a Muslim, the application of the Family Code would defeat the purpose of the
Muslim law on disqualification to inheritance by virtue of apostasy. Finally, he claimed that he
was fit and qualified to have custody of his child as he was a prominent medical practitioner with
resources to meet all her needs. He pointed out that, under his care, Princess Fatima’s academic
performance dramatically improved from the lowest ranking to the top six in her 3rd grade class.
In her Reply,29 dated April 26, 2013, Mendez countered that Maliga only filed his petition for
talaq when he discovered that she had filed a complaint-affidavit against him for kidnapping and
failure to return a minor;30 that he had been totally remiss in his material and moral obligations
to his daughter;31 that he was unfit to take care of Princess Fatima as his numerous wives had
been confusing the child;32 and that she was not unemployed as she was a registered nurse who
could provide for all the needs of her child and who, in fact, had cared for her from birth until
she was six (6) years
_______________
28 Id., at pp. 118-122.
29 Id., at pp. 136-138.
30 Id., at pp. 136-137.
31 Id., at p. 137.
32 Id.
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VOL. 780, JANUARY 12, 2016 67
old and sent her to an exclusive school, all without the assistance of Maliga.33
Issues
As can be gleaned from the pleadings, the issues at hand are the following:
1. Whether or not the ShCC erred in acting on Maliga’s urgent motion for issuance of
temporary custody;
2. Whether or not the ShCC and the ShDC had jurisdiction to rule on the issue of
custody; and
3. Whether or not custody was properly granted to Maliga.
Opinion of Amicus Curiae
On March 11, 2014, the Court appointed Secretary-CEO Mehol K. Sadain (Secretary Sadain) of
the National Commission on Muslim Filipinos (NCMF) and Dr. Hamid A. Barra of the King
Faisal Center for Islamic, Arabic and Asian Studies, as amici curiae, and directed them to submit
their respective opinions on the matter of jurisdiction with respect to the issue of custody,34 in
view of the fact that the exclusive original jurisdiction over divorce and custody pertains to two
separate courts, namely, the ShCC and the ShDC, respectively.
In compliance, Secretary Sadain submitted his opinion,35 calling on the Court to apply the
darurah-oriented principle of liberal construction in order to promote the objective of securing a
just, speedy and inexpensive disposition of every action
_______________
33 Id.
34 Id., at p. 160.
35 Id., at pp. 166-169.
68

and proceeding, in accordance with the Rules of Court, which applies to P.D. No. 1083 in a
suppletory manner. He explained that Islamic law subscribes to the same objective of dispensing
speedy and equitable justice, as well as its own darurah-oriented liberal construction for the sake
of promoting equitable or weighty public interests. He elucidated that under the doctrine of
darurah (necessity), prohibited actions may be allowed or restrictive rules may be relaxed if such
would serve a greater and more primordial interest, such as the preservation of life and property,
or the higher pursuit of justice. He cited as an example the prohibition on the eating of pork by a
Muslim which could be temporarily set aside if he was faced with the choice of starving to death
or eating pork to survive. Another example given was the allowance of the internal use of
alcohol-based products if ingested in the form of life-preserving medicine.
In consonance with the above principles, Secretary Sadain was of the view that strict procedural
requirements could be relaxed if such would result in a speedy, fair and beneficial disposition of
a pending legal question. He noted that determining the custody of a child was an ancillary
matter, which unavoidably would arise in divorce proceedings, and would usually involve
delving into matters of child welfare and interest, as well as the fitness of the person/s seeking
custody. He noted that the speedy resolution of divorce and custody proceedings had an effect on
the general welfare of the child and was in the child’s best interest. He cited that the Islamic legal
jurisdiction in Pakistan had ruled that, in guardianship proceedings, the Court exercised parental
jurisdiction, and technicalities of pleadings or strict formalities need not be enforced because the
State took charge of the rights of the child to safeguard their welfare by deciding the question of
custody as expeditiously as possible.
Secretary Sadain, thus, opined that the rule on jurisdiction under P.D. No. 1083 may be relaxed
considering that the issue of custody arose as an ancillary matter in the divorce
69
VOL. 780, JANUARY 12, 2016 69
proceedings, which must be addressed in the same court in order to protect the welfare, rights
and interest of the child as expeditiously as possible. He also pointed out that allowing the ShCC
to decide on the matter of custody would avoid multiplicity of suits and delay in the judicial
proceedings. Lastly, he noted that because the ShDC had passed judgment on the case appealed
from the ShCC, the need for a separate case had been moot and the jurisdictional and procedural
defects had been cured.
Dr. Hamid Barra, despite repeated requests, did not submit an opinion.36
The Ruling of the Court
Appellate Jurisdiction of the

Court in Shari’a Cases
At the outset, the Court notes that this petition has been correctly instituted with this Court. It has
been recognized that decades after the 1989 enactment of the law37 creating the Shari’a
Appellate Court and after the Court authorized its creation in 1999,38 it has yet to be organized.
Pending the organization of the Shari’a Appellate Court, appeals or petitions from final orders or
decisions of the ShDC shall be filed with the Court of Appeals (CA) and referred to a Special
Division to be organized in any of the CA stations preferably to be composed of Muslim CA
Justices. For cases where only errors or questions of law are raised or involved, the appeal shall
be to this Court via a petition for review on certiorari under Rule
_______________
36 Atty. Eric Ismael P. Sakkam, Court Attorney VI in the office of the member-in-charge,
reported that he was able to get in touch with Dr. Hamid Barra, who claimed that he was already
based in Malaysia and would no longer submit any opinion.
37 Autonomous Region in Muslim Mindanao Organic Law (R.A. No. 6734), as amended.
38 A.M. No. 99-4-66.
70
45 of the Rules of Court pursuant to Article VIII, Section 5 of the Constitution and Section 2 of
Rule 41 of the Rules.39 As the present petition involves only questions of law, it has been
properly filed before this Court.
Jurisdiction of Shari’a Courts
Jurisdiction is the power and authority of a court to hear, try and decide a case.40 In order for the
court to have authority to dispose of a case on the merits, it must acquire jurisdiction over the
subject matter and the parties.41 The Congress has the power to define, prescribe and apportion
the jurisdiction of various courts,42 and courts are without authority to act where jurisdiction has
not been conferred by law.43 Jurisdiction is conferred only by the Constitution or the law. It
cannot be acquired through a waiver or enlarged by the omission of the parties or conferred by
the acquiescence of the court, and may be raised at any stage of the proceedings, even for the
first time on appeal.44
The law which confers jurisdiction on the Shari’a courts is P.D. No. 1083. The pertinent articles
of the law as to the original jurisdiction of the Shari’a courts are as follows:
Art. 143. Original jurisdiction.—
(1) The Shari’a District Court shall have exclusive original jurisdiction over:
_______________
39 Tomawis v. Balindong, 628 Phil. 252, 258-259; 614 SCRA 354, 361 (2010).
40 Century Insurance Co., Inc. v. Fuentes, 112 Phil. 1065, 1072; 2 SCRA 1168, 1174 (1961).
41 Paramount Insurance Corporation v. Japzon, G.R. No. 68037, July 29, 1992, 211 SCRA 879,
885.
42 Sec. 2, Article VIII, 1987 Constitution.
43 Municipality of Sogod v. Rosal, 278 Phil. 642, 648; 201 SCRA 632, 637 (1991).
44 Republic v. Bantigue Point Development Corporation, 684 Phil. 192, 199; 668 SCRA 158,
164 (2012).
71
VOL. 780, JANUARY 12, 2016 71
(a) All cases involving custody, guardianship, legitimacy, paternity and filiation
arising under this Code;
(b) All cases involving disposition, distribution and settlement of the estate of
deceased Muslims, probate of wills, issuance of letters of administration or
appointment of administrators or executors regardless of the nature or the aggregate
value of the property;
(c) Petitions for the declaration of absence and death and for the cancellation or
correction of entries in the Muslim Registries mentioned in Title VI of Book Two of
this Code;
(d) All actions arising from customary contracts in which the parties are Muslims, if
they have not specified which law shall govern their relations; and
(e) All petitions for mandamus, prohibition, injunction, certiorari, habeas corpus,
and all other auxiliary writs and processes in aid of its appellate jurisdiction.
(2) Concurrently with existing civil courts, the Shari’a District Court shall have original
jurisdiction over:
(a) Petitions by Muslims for the constitution of a family home, change of name and
commitment of an insane person to an asylum;
(b) All other personal and real actions not mentioned in paragraph 1(d) wherein the
parties involved are Muslims except those for forcible entry and unlawful detainer,
which shall fall under the exclusive original jurisdiction of the Municipal Circuit
Court; and
(c) All special civil actions for interpleader or declaratory relief wherein the parties
are Muslims or the property involved belongs exclusively to Muslims.
xxxx
72
Art. 155. Jurisdiction.—The Shari’a Circuit Courts shall have exclusive original

jurisdiction over:
(1) All cases involving offenses defined and punished under this Code.
(2) All civil actions and proceedings between parties who are Muslims or have been
married in accordance with Article 13 involving disputes relating to:
(a) Marriage;
(b) Divorce recognized under this Code;
(c) Betrothal or breach of contract to marry;
(d) Customary dower (mahr);
(e) Disposition and distribution of property upon divorce;
(f) Maintenance and support, and consolatory gifts (mut’a); and
(g) Restitution of marital rights.
(3) All cases involving disputes relative to communal properties.
[Emphases and underscoring supplied]
It is clear that the ShCC has exclusive original jurisdiction over civil actions between parties who
have been married in accordance with the Muslim law, involving disputes relating to divorce
under P.D. No. 1083. There is, therefore, no doubt that the ShCC had jurisdiction to confirm the
talaq between Mendez and Maliga.
Jurisdiction in Custody Case
Article 143 above, however, clearly provides that the ShDC has exclusive original jurisdiction
over all cases involving custody under P.D. No. 1083. Exclusive jurisdiction is the power of
the court to take cognizance of and
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VOL. 780, JANUARY 12, 2016 73
decide certain cases to the exclusion of any other courts.45 Original jurisdiction is the power of
the court to take judicial cognizance of a case instituted for judicial action for the first time under
conditions provided by law.
On the other hand, appellate jurisdiction is the authority of a court higher in rank to reexamine
the final order of judgment of a lower court which tried the case now elevated for judicial
review.46 Since the two jurisdictions are exclusive of each other, each must be expressly
conferred by law. One does not flow from, nor is inferred from the other.47
Implication of Article 54
As opined by Secretary Sadain,48 the ShCC does seem to have ancillary jurisdiction over
custody issues as they relate to a divorce decree. Under Article 155, it is provided that the ShCC
shall have exclusive original jurisdiction over all civil actions and proceedings involving disputes
relating to divorce. To quote once more:
Article 155. Jurisdiction.—The Shari’a Circuit Court shall have exclusive original
jurisdiction over:
(1) All cases involving offenses defined and punished under this Code.
(2) All civil actions and proceedings between parties who are Muslims or have been
married in accordance with Article 13 involving disputes relating to:
_______________
45 Arabani, Sr., Bensaudi I., Philippine Shari’a Courts Procedure, First edition, p. 18 (Quezon
City, Philippines: Rex Book Store, Inc., 2000).
46 Herrera, Oscar M., Remedial Law, Volume I, p. 59 (Quezon City, Philippines: Rex Book
Store, Inc., 2000).
47 Garcia v. De Jesus, G.R. No. 88158, March 4, 1992, 206 SCRA 779, 786.
48 And also pointed out by Associate Justice Presbitero J. Velasco, Jr.
74
(a) x x x.
(b) Divorce recognized under this Code.
xxxx
Clearly, the provision above clothes the ShCC with power to hear and decide civil actions
relating to a talaq or divorce. It cannot be denied that the issue of custody is a necessary
consequence of a divorce proceeding. As Article 54 of P.D. No. 1083 provides:
Article 54. Effects of irrevocable talaq or faskh.—A talaq or faskh, as soon as it
becomes irrevocable, shall have the following effects:
(a) The marriage bond shall be severed and the spouses may contract another
marriage in accordance with this Code;
(b) The spouses shall lose their mutual rights of inheritance;
(c) The custody of children shall be determined in accordance with Article 78 of

this Code;
(d) The wife shall be entitled to recover from the husband her whole dower in case
the talaq has been effected after the consummation of the marriage, or one-half
thereof if effected before its consummation;
(e) The husband shall not be discharged from his obligation to give support in
accordance with Article 67; and
(f) The conjugal partnership, if stipulated in the marriage settlements, shall be

dissolved and liquidated.
Though Article 54 does not directly confer jurisdiction to the ShCC to rule on the issue of
custody, the Court, nevertheless grants the ShCC ancillary jurisdiction to resolve issues
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VOL. 780, JANUARY 12, 2016 75
related to divorce. The above quoted provision states categorically that as a consequent effect of
divorce, the custody of children shall be determined in accordance with Article 78 of the Code.
In turn, Article 78 states that the care and custody of children below seven whose parents are
divorced shall belong to the mother, and the minor above seven but below the age of puberty
may choose the parent with whom he/she wants to stay.49
To rule that the ShCC is without jurisdiction to resolve issues on custody after it had decided on
the issue of divorce, simply because it appears to contravene Article 143 of P.D. No. 1083, would
be antithetical to the doctrine of ancillary jurisdiction. “While a court may be expressly granted
the incidental powers necessary to effectuate its jurisdiction, a grant of jurisdiction, in the
absence of prohibitive legislation, implies the necessary and usual incidental powers essential to
effectuate it, and, subject to existing laws and constitutional provisions, every regularly
constituted court has power to do all things that are reasonably necessary for the administration
of justice within the scope of its jurisdiction and for the enforcement of its judgments and
mandates. Hence, demands, matters or questions ancillary or incidental to, or growing out of, the
main action, and coming within the above principles, may be taken cognizance of by the court
and determined, since such jurisdiction is in aid of its authority over the principal matter, even
though the court may thus be called on to
_______________
49 Art. 78. Care and custody.—(1) The care and custody of children below seven years of
age whose parents are divorced shall belong to the mother or, in her absence, to the maternal
grandmother, the paternal grandmother, the sister and aunts. In their default, it shall devolve
upon the father and the nearest paternal relatives. The minor above seven years of age but below
the age of puberty may choose the parent with whom he wants to stay.
(2) The unmarried daughter who has reached the age of puberty shall stay with the father; the
son, under the same circumstances, shall stay with the mother.
76
consider and decide matters which, as original causes of action, would not be within its
cognizance.”50
Following the doctrine, the ShCC, in cases involving divorce, possesses the power to resolve the
issue of custody, it being a related issue to the main cause of action.
At this juncture, the question must be asked: By recognizing the power of the ShCC to rule on
the issue of custody, would this effectively render Article 143 of P.D. No. 1083 meaningless,
considering that the same is unequivocal in providing that the ShDC has the exclusive original
jurisdiction to decide on all cases involving custody?
The Court rules in the negative.
A distinction must be made between a case for divorce wherein the issue of custody is an
ancillary issue and a case where custody is the main issue. Jurisdiction in the former, as
discussed above, lies with the ShCC, as the main cause of action is divorce. The latter on the
other hand, where the main cause of action is one of custody, the same must be filed with the
ShDC, pursuant to Article 143 of P.D. No. 1083.
Violation of Due Process;

No Notice of Hearing; and
Absence of Hearing
Notwithstanding the foregoing, the award of custody to Maliga by the ShCC was void as it was
rendered in violation of the constitutional right of Mendez to due process.
Mendez pointed out that Maliga’s urgent motion for issuance of temporary custody was filed on
October 9, 2010, even before the main petition for talaq was filed on November 2, 2010, and that
she never received a summons pertaining to the urgent motion. Indeed, a review of the records
reveals
_______________
50 City of Manila v. Grecia-Cuerdo, G.R. No. 175723, February 4, 2014, 715 SCRA 182, 206.
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that the date of filing was handwritten on the said motion as “October 9, 2010.” The motion itself
and the registry receipt attached thereto, however, were dated “November 9, 2010.” The Court is,
thus, of the view that the month “October” was mistakenly written by the receiving clerk instead
of “November,” and that the motion was filed subsequent to the main petition for talaq as an
ancillary matter.
The Court, nonetheless, agrees with Mendez that the urgent motion lacked the requisite notice of
hearing. It is immediately evident from the face of the motion that it did not contain the notice of
hearing required by the Rules of Court which has suppletory application to the present case.
Section 4 of Rule 15 provides that every written motion shall be set for hearing by the applicant.
Every written motion is required to be heard and the notice of hearing shall be served in such
manner as to insure its receipt by the other party at least three (3) days before the date of hearing,
unless the court for good cause sets the hearing on shorter notice.51 The notice of hearing is
intended to prevent surprise and to afford the adverse party a chance to be heard before the
motion is resolved by the court. A seasonable service of a copy of the motion on the adverse
party with a notice of hearing indicating the time and place of hearing is a mandatory
requirement that cannot be dispensed with as this is the minimum requirement of procedural due
process.52
A motion that does not contain a notice of hearing is a mere scrap of paper and presents no
question which merits the attention and consideration of the court. It is not even a motion for it
does not comply with the rules, and, hence, even the clerk has no right to receive it.53
_______________
51 Bank of the Philippine Islands v. Far East Molasses Corporation, G.R. No. 89125, July 2,
1991, 198 SCRA 689, 698.
52 Leobrera v. Court of Appeals, 252 Phil. 737, 743; 170 SCRA 711, 718 (1989).
53 Bank of the Philippine Islands v. Far East Molasses Corporation, supra.
78
Award of Custody; No Basis
Not only was the award of custody violative of the constitutional right of Mendez to due process,
but also both the orders of the ShCC and the ShDC awarding custody of Princess Fatima to
Maliga were without evidentiary basis because no hearing was actually conducted prior to the
issuance of the order granting the urgent motion. Moreover, there was no explanation given as to
why the motion was resolved without notice to, or the participation of, Mendez.
In awarding custody to Maliga, the ShCC merely wrote:
On the issue of CARE AND CUSTODY of the PARTIES’ minor daughter PRINCESS
FATIMA, this Court after closely scrutinizing the evidence on hand, deemed it just and
proper and/or is convinced that it should be under status quo, remains (sic) with Petitioner
DR. JOHN O. MALIGA, for her (PRINCESS FATIMA) best interest in all aspects of life,
economically, socially and religiously etc. WITHOUT prejudice of the rights of visitation
of respondent SHERYL M. MENDEZ any reasonable time of the day and right (sic), and
borrow her (PRINCESS FATIMA) provided that it is only within the vicinity of Cotabato
City and thereafter, return her, with proper coordination with Petitioner DR. JOHN O.
MALIGA, and the latter (DR. JOHN O. MALIGA) is hereby ordered to observe such
rights afforded to respondent SHERYL M. MENDEZ.54
Although the ShCC stated that, in deciding on the custody case, it scrutinized the evidence on
hand, it was remiss in its duty to state the precise factual and legal basis on which its ruling
awarding custody to Maliga was based. Section 14, Article VIII of the 1987 Constitution
mandates that decisions must clearly and distinctly state the facts and the law on which they are
based. The decisions of courts must be able to
_______________
54 Records, pp. 59-60.
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VOL. 780, JANUARY 12, 2016 79
address the issues raised by the parties through the presentation of a comprehensive analysis or
account of factual and legal findings of the court.55 It is evident that the ShCC failed to comply
with these requirements. It merely stated that it was in Princess Fatima’s “best interest in all
aspects of life, economically, socially and religiously” that custody be awarded to her father.
There was no express finding that Mendez was unfit in any way, or a hint of an explanation as to
why Maliga was in a better position to take custody of Princess Fatima.
The ShDC, on the other hand, in affirming the findings of the ShCC, stated that Mendez was
disentitled to custody because she had turned apostate, and held that she would remain
disqualified until she return to the Islamic faith in accordance with the Muslim Law. It appears,
however, that disqualification due to apostasy under the Muslim Code pertains to disinheritance
under Article 93 of the Muslim Code,56 and not to the custody of children.
WHEREFORE, the petition is PARTIALLY GRANTED. The following are declared NULL
and VOID:
1. the November 12, 2010 and December 3, 2010 Orders of the Shari’a Circuit Court in ShCC
Civil Case No. 2010-559, insofar as the ruling on custody and visitation is concerned;
2. the August 19, 2011 Order of the Shari’a Circuit Court in ShCC Civil Case No. 2010-559,
insofar as the ruling on custody is concerned; and
3. the March 30, 2012 Decision of the Shari’a District Court in SDC Appealed Case No. 2011-
19, insofar as the ruling on custody is concerned.
_______________
55 Office of the President v. Cataquiz, 673 Phil. 318, 334; 657 SCRA 681, 696 (2011).
56 Rasul, Jainal D. and Ghazali, Ibrahim, Commentaries and Jurisprudence on the Muslim
Code of the Philippines, p. 260 (Quezon City, Philippines: Central Lawbook Publishing Co., Inc.,
1984).
80
In the August 19, 2011 Order of the Shari’a Circuit Court in ShCC Civil Case No. 2010-559,
confirming the pronouncement of Talaq (Divorce) by petitioner Dr. John O. Maliga against
respondent Sheryl M. Mendez and the giving of consolatory gift (mut’a) to her in the amount of
P24,000.00 is maintained.
The records of the case are hereby ordered REMANDED to the Shari’a Circuit Court for
appropriate proceedings on the motion of Dr. John O. Maliga for the determination of custody of
Princess Fatima M. Maliga.
SO ORDERED.
Sereno (CJ.), Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo,
Villarama, Jr., Perez, Reyes, Perlas-Bernabe, Leonen and Jardeleza, JJ., concur.
Petition partially granted.
Notes.—The relevant Philippine law on child custody for spouses separated in fact or in law is
that no child under seven years of age shall be separated from the mother. (Dacasin vs. Dacasin,
611 SCRA 657 [2010])
Since it is extant from the pleadings filed that what is involved is the issue of child custody and
the exercise of parental rights over a child, who, for all intents and purposes, has been legally
considered a ward of the State, the Amparo Rule cannot be properly applied. (Caram vs. Segui,
732 SCRA 86 [2015])
——o0o——
G.R. No. 215847. January 12, 2016.*
GOV. EXEQUIEL B. JAVIER, petitioner, vs. COMMISSION ON ELECTIONS, CORNELIO P.

ALDON, and RAYMUNDO T. ROQUERO, respondents.
Election Law; Election Period; The Commission is not precluded from fixing the length and the
starting date of the election period to ensure free, orderly, honest, peaceful, and credible
elections.—No less than the Constitution authorizes the Commission to fix the dates of the
election period. Article IX-C, Section 9 provides: Section 9. Unless otherwise fixed by the
Commission in special cases, the election period shall commence ninety days before the day of
election and shall end thirty days thereafter. Congress, through the Election Code, explicitly
recognizes this authority: Sec. 3. Election and campaign periods.—Unless otherwise fixed in
special cases by the Commission on Elections, which hereinafter shall be referred to as the
Commission, the election period shall commence ninety days before the day of the election and
shall end thirty days thereafter. (emphases supplied) Evidently, the 120-day period is merely the
default election period. The Commission is not precluded from fixing the length and the starting
date of the election period to ensure free, orderly, honest, peaceful, and credible elections. This is
not merely a statutory but a constitutionally granted power of the Commission.
Administrative Proceedings; Due Process; Formal Hearing; A formal hearing is not always
necessary and the observance of technical rules of procedure is not strictly applied in
administrative proceedings.—Administrative due process cannot be fully equated with due
process in its strict judicial sense. A formal hearing is not always necessary and the observance
of technical rules of procedure is not strictly applied in administrative proceedings. The essence
of administrative due process is the right to be heard and to be given an opportunity to explain
one’s side. Where the Commission hears both sides and considers their contentions, the
requirements of administrative due process are complied with.
_______________
* EN BANC.
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VOL. 780, JANUARY 12, 2016 207
Javier vs. Commission on Elections
Commission on Elections Rules of Procedure; The Commission on Elections (COMELEC) Rules

specifically authorize the Commission to suspend the strict application of its rules in the interest
of justice and the speedy disposition of cases.—The COMELEC Rules specifically authorize the
Commission to suspend the strict application of its rules in the interest of justice and the speedy
disposition of cases. In this case, the Commission suspended Rule 18, Section 1. The
Commission, as a body, dispensed with the preparation of another ponencia and opted to vote on
the legal positions of Commissioners Yusoph and Guia. Nevertheless, the decision was evidently
reached through consultation. Then Chairman Sixto Brillantes, Jr., Commissioner Lucenito
Tagle, and Commissioner Arthur Lim concurred with Commissioner Yusoph. Commissioner
Christian Robert Lim joined Commissioner Guia’s dissent. Chairman Brillantes, Jr. and
Commissioner Arthur Lim also wrote separate concurring opinions. The Court does not see any
arbitrariness or infirmity in this internal arrangement that would have deprived the petitioner of
due process.
Administrative Law; Judges; Judges and other quasi-judicial officers cannot sit back, relax, and
refuse to do their work just because they are nearing retirement or are near the end of their term.
—The Commission resorted to this arrangement because, as the petitioner pointed out, three
Commissioners were retiring soon. There was a need to resolve the cases because the impending
vacancies would have resulted in further delay. Contrary to the petitioner’s insinuations,
“midnight decisions” are not illegal. Judges and other quasi-judicial officers cannot sit back,
relax, and refuse to do their work just because they are nearing retirement or are near the end of
their term. As civil servants, they are expected to diligently carry out their duties until their
separation from service. Thus, the Commission’s suspension of its rules and use of an internal
arrangement to expedite its internal proceedings is not at all unusual in collegial bodies. We note
that the vote was divided and dissents were filed, thereby indicating the absence of any malicious
departure from the usual procedures in arriving at the Commission’s ruling on the case.
Remedial Law; Civil Procedure; Judgments; Promulgation of Judgments; Words and Phrases;
Promulgation is the process by which a decision is published, officially announced, made known
to the public, or delivered to the clerk of court for filing, coupled with notice to the parties or
their counsel.—With respect to the absence of
208
a promulgation date on the first page of the assailed order, this Court directs the petitioner’s
attention to the last page stating that the Order was “Given this 12th day of January 2015,
Manila, Philippines.” Promulgation is the process by which a decision is published, officially
announced, made known to the public, or delivered to the clerk of court for filing, coupled with
notice to the parties or their counsel. The order was evidently promulgated on January 12, 2015.
Same; Same; Same; “Error of Judgment” and “Error of Jurisdiction,” Distinguished.—No less
than the Constitution empowers the Commission to decide all questions affecting elections
except those involving the right to vote. It is the sole arbiter of all issues involving elections.
Hence, unless tainted with grave abuse of discretion, simple errors of judgment committed by
COMELEC cannot be reviewed even by this Court. An error of judgment is one that the court
may commit in the exercise of its jurisdiction; they only involve errors in the court or tribunal’s
appreciation of the facts and the law. An error of jurisdiction is one where the act complained of
was issued by the court without or in excess of its jurisdiction, or with grave abuse of discretion
tantamount to lack or excess of jurisdiction.
Statutes; Repeal of Statutes; In the absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist
in the terms of the new and the old laws.—A repeal may be express or implied. An express repeal
is one wherein a statute declares, usually in its repealing clause, that a particular and specific law,
identified by its number or title, is repealed. An implied repeal, on the other hand, transpires
when a substantial conflict exists between the new and the prior laws. In the absence of an
express repeal, a subsequent law cannot be construed as repealing a prior law unless an
irreconcilable inconsistency and repugnancy exist in the terms of the new and the old laws.
Same; Same; A law that has been expressly repealed ceases to exist and becomes inoperative
from the moment the repealing law becomes effective.—A law that has been expressly repealed
ceases to exist and becomes inoperative from the moment the repealing law becomes effective.
The discussion on implied repeals by the Yusoph resolution, (and the concurring opinion of
Chairman Brillantes, Jr.), including the concomitant discussions on the absence of irreconcil-
209
VOL. 780, JANUARY 12, 2016 209

able provisions between the two laws, were thus misplaced. The harmonization of laws can only
be had when the repeal is implied, not when it is express, as in this case.
Administrative Agencies; Commission on Elections; Jurisdiction; Preliminary Investigation;

Pursuant to Sections 265 and 268 of the Omnibus Election Code (OEC), the power of the
Commission on Elections (COMELEC) is confined to the conduct of preliminary investigation on
the alleged election offenses for the purpose of prosecuting the alleged offenders before the
regular courts of justice.—With the express repeal of Section 261(d), the basis for disqualifying
Javier no longer existed. As we held in Jalosjos, Jr. v. Commission on Elections, 683 SCRA 1
(2012), [t]he jurisdiction of the COMELEC to disqualify candidates is limited to those
enumerated in Section 68 of the Omnibus Election Code. All other election offenses are beyond
the ambit of COMELEC jurisdiction. They are criminal and not administrative in nature.
Pursuant to Sections 265 and 268 of the Omnibus Election Code, the power of the COMELEC is
confined to the conduct of preliminary investigation on the alleged election offenses for the
purpose of prosecuting the alleged offenders before the regular courts of justice.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
Maria Bernadette R. Carrasco for petitioner.
Robin P. Rubinos and Guillermo M. Alcantara collaborating counsels for petitioner.
Victoriano V. Orocio for private respondents.
Rolly O. Pedriña for intervenor Rhodora Cadiao.
BRION, J.:
This is a petition for certiorari under Rule 65 in relation to Rule 64 of the Rules of Court, filed to
challenge the January 12, 2015 per curiam order of the Commission on Elections
(COMELEC/The Commission) En Banc in SPA No. 13-254
210
(DC).1 The Commission granted the petition to disqualify the petitioner Exequiel Javier and to
annul his proclamation as the duly elected governor of Antique.
The Antecedents
On December 3, 1985, the Batasang Pambansa enacted the Omnibus Election Code (Election
Code).2 Section 261(d) and (e) of this Code prescribe the following elements of coercion as an
election offense:

xxx
(d) Coercion of subordinates. —
(1) Any public officer, or any officer of any public or private corporation or

association, or any head, superior, or administrator of any religious organization, or
any employer or landowner who coerces or intimidates or compels, or in any
manner influence, directly or indirectly, any of his subordinates or members or
parishioners or employees or house helpers, tenants, overseers, farm helpers, tillers,
or lease holders to aid, campaign or vote for or against any candidate or any
aspirant for the nomination or selection of candidates.
(2) Any public officer or any officer of any commercial, industrial, agricultural,

economic or social enterprise or public or private corporation or association, or any
head, superior or administrator of any religious organization, or any employer or
landowner who dismisses or threatens to dismiss, punishes or threatens to
punish by reducing his salary, wage or compensation, or by demotion, transfer,
suspension, separation, excommunication, ejectment, or causing him annoyance
_______________
1 Rollo, pp. 10-42, 51-55, 63-82.
2 Batas Pambansa (B.P.) Blg. 881 (1985).
211
VOL. 780, JANUARY 12, 2016 211
in the performance of his job or in his membership, any subordinate member or

affiliate, parishioner, employee or house helper, tenant, overseer, farm helper, tiller,
or lease holder, for disobeying or not complying with any of the acts ordered by the
former to aid, campaign or vote for or against any candidate, or any aspirant
for the nomination or selection of candidates.
(e) Threats, intimidation, terrorism, use of fraudulent device or other forms of coercion.

— Any person who, directly or indirectly, threatens, intimidates or actually causes, inflicts
or produces any violence, injury, punishment, damage, loss or disadvantage upon any
person or persons or that of the immediate members of his family, his honor or property, or
uses any fraudulent device or scheme to compel or induce the registration or refraining
from registration of any voter, or the participation in a campaign or refraining or desistance
from any campaign, or the casting of any vote or omission to vote, or any promise of such
registration, campaign, vote, or omission therefrom. (emphases supplied)
Coercion, as an election offense, is punishable by imprisonment of not less than one year but not
more than six years.3 Notably, Section 68 of the Election Code provides that the Commission
may administratively disqualify a candidate who violates Section 261(d) or (e).
On February 20, 1995, Congress enacted Republic Act No. 7890 amending the definition of
Grave Coercion under the Revised Penal Code.4 It increased the penalty for coercion committed
in violation of a person’s right to suffrage to prisión mayor. Further, Section 3 of R.A. 7890
expressly repealed Section 26, paragraphs (d)(1) and (2) of the Election Code.
_______________
3 Sec. 264, Election Code.

4 An Act Amending Article 286, Section Three, Chapter Two, Title Nine of Act No. 3815, as
Amended, Otherwise Known as the Revised Penal Code.
212
On April 3, 2012, COMELEC issued Resolution No. 93855 fixing the calendar of activities for
the May 2013 elections. The resolution set the election period from January 13, 2013 until June
12, 2013.
On September 3, 2012, Valderrama Municipal Vice Mayor Christopher B. Maguad filed an

administrative complaint for Gross Misconduct/Dereliction of Duty and Abuse of Authority
against Valderrama Mayor Mary Joyce U. Roquero (Mayor Roquero). This complaint was
docketed as Administrative Case No. 05-2012.
On November 9, 2012, the Sangguniang Panlalawigan (SP) issued Resolution No. 291-2012
recommending to Antique Governor Exequiel Javier (Gov. Javier) the preventive suspension of
Mayor Roquero.
On November 21, 2012, Mayor Roquero filed a petition for certiorari and prohibition with
prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial Court
(RTC), Branch 12, Antique, against Gov. Javier and the members of the SP to restrain them from
proceeding with Administrative Case No. 05-2012. The petition was docketed as Special Civil
Action No. 12-11-86.
The case was re-raffled to the RTC, Branch 11 which issued a writ of preliminary injunction.
Gov. Javier, Vice Governor Dimamay, and the members of the SP filed a petition for certiorari
with urgent prayer for TRO and preliminary injunction before the CA, docketed as C.A.-G.R.
S.P.-07307.
On December 18, 2012, COMELEC issued Resolution No. 95816 prohibiting any public official
from suspending any
_______________
5 Calendar of Activities and Periods of Certain Prohibited Acts in Connection with the May 13,
2013 National and Local Elections.
6 In the Matter of Enforcing the Prohibitions Against Appointment or Hiring of New

Employees, Creating or Filling of New Positions, Giving Any Salary Increase or Transferring or
Detailing Any
213
VOL. 780, JANUARY 12, 2016 213
elective provincial, city, municipal, or barangay officer during the election period for the May
13, 2013 elections. This resolution implements Section 261(x)7 of the Election Code.
On January 15, 2013, the CA issued a TRO in C.A.-G.R. S.P.-07307.
On January 16, 2013, the RTC, Branch 11 promulgated its judgment granting certiorari and
prohibition. It ordered the SP to cease and desist from further proceeding with Administrative
Case No. 05-2012. It likewise ordered Gov. Javier to refrain from implementing SP Resolution
No. 291-2012 and from preventively suspending Mayor Roquero.
On January 23, 2013, Gov. Javier issued Executive Order No. 003, S. 2013, preventively
suspending Mayor Roquero for thirty (30) days.
On February 7, 2013, the SP of Antique issued a decision finding Mayor Roquero guilty of
Grave Misconduct in relation with Section 3(e) of R.A. 3019, the Anti-Graft and Corrupt
Practices Act, and Grave Abuse of Authority in relation with Section 5(e) of R.A. No. 6713.
The SP suspended her for four (4) months.
_______________
Officer or Employee in the Civil Service and Suspension of Elective Local Officials, in
Connection with the May 13, 2013 Automated Synchronized National, Local and ARMM
Regional Elections.
7 Section 261. Prohibited Acts.—The following shall be guilty of an election offense:

xxx
(x) Suspension of elective provincial, city, municipal or barangay officer. — The provisions of

law to the contrary notwithstanding during the election period, any public official who suspends,
without prior approval of the Commission, any elective provincial, city, municipal or barangay
officer, unless said suspension be for purposes of applying the Anti-Graft and Corrupt Practices
Act in relation to the suspension and removal of elective officials; in which case the provision of
this section shall be inapplicable.
214
Mayor Roquero filed an Election Offense complaint against Gov. Javier for violating Section
261(x) of the Election Code. The case was filed before the COMELEC Law Department and
docketed as Election Offense Case (EOC) No. 13-025.
Meanwhile (or on March 15, 2013), the CA granted the writ of preliminary injunction filed by
Gov. Javier, et al., in C.A.-G.R. S.P.-07307. It enjoined Judge Nery Duremdes of the RTC,
Branch 11 from conducting further proceedings in SPL Civil Action No. 12-11-86.
On March 22, 2013, private respondents Cornelio P. Aldon (Aldon) and Raymundo T. Roquero
(Roquero) also filed a petition for disqualification before the Commission against Gov. Javier,
Vice Governor Rosie A. Dimamay, and the other members of the SP. The case was docketed as
COMELEC Special Action (SPA) No. 13-254 (DC).
Aldon and Roquero sought to disqualify Gov. Javier and the other incumbent officials from
running in the 2013 elections on the ground that the latter committed the election offenses of
Coercion of Subordinates [Sec. 261(d)] and Threats, Intimidation, Terrorism x x x or Other
Forms of Coercion [Sec. 261(e)] by suspending Mayor Roquero. They alleged that the
suspension was political harassment calculated to intimidate the Roqueros into backing out of the
2013 elections.8
On April 29, 2013, the Clerk of the Commission conducted a conference hearing between the
parties.
_______________
8 Aldon and Roquero were members of the United Nationalist Alliance (UNA) Coalition while
Gov. Javier and the SP members belonged to the Liberal Party. Aldon was the candidate for
governor running against Gov. Javier. On the other hand, Roquero, the husband of suspended
Mayor Roquero, was running against Congressman Paolo Everardo S. Javier, the son of Gov.
Javier, for a seat in the House of Representatives.
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VOL. 780, JANUARY 12, 2016 215
On April 30, 2013, Gov. Javier (together with the SP Members) filed a motion to dismiss with
answer ex abundante ad cautelam.
After the May 13, 2013 Elections, only Gov. Javier and SP Members Tobias M. Javier, Edgar D.
Denosta, Teopisto C. Estaris, Jr., and Victor R. Condez were proclaimed winners. Hence, the
Commission considered the disqualification cases against the losing candidates moot.
On October 3, 2014, the COMELEC Second Division issued a resolution in SPA No. 13-254
(DC) disqualifying Gov. Javier and annulling his proclamation as the Governor of Antique. The
resolution was penned by Commissioner Elias R. Yusoph.
The COMELEC held that the preventive suspension of Mayor Roquero under Executive Order
No. 003 violated the election period ban because it was not for the purpose of applying the Anti-
Graft and Corrupt Practices Act. It also considered the Commission’s findings in EOC No. 13-
025 that there was substantial evidence showing that Gov. Javier acted in bad faith when he
suspended Mayor Roquero as a form of punishment for opposing him.9
The COMELEC ruled that Gov. Javier’s act of preventively suspending Mayor Roquero during
the election period ban fell within the contemplation of Section 261(d) of the Election Code,
which is a ground for disqualification under Section 68. It held that while Section 261(d) of the
Election Code was repealed by Republic Act No. 7890, it did not remove coercion “as a ground
per se for disqualification under [Section] 68.” In fact, R.A. 7890 made Coercion (an election
offense) a felony with a higher penalty.10 The COMELEC added that the general repealing
clause of R.A. No. 7890 cannot impliedly repeal
_______________
9 Rollo, pp. 79-80.
10 Id., at p. 80.
216
Section 68 because the latter was “not absolutely and irreconcilably incompatible with Article
286.”11
Commissioner Luie Tito F. Guia dissented from the resolution. Commissioner Guia reasoned that
the legal basis to dismiss Gov. Javier no longer exists because Section 3 of Republic Act No.
7890 had repealed Section 261(d) of the Election Code. Commissioner Arthur D. Lim took no
part in the vote because he did not participate in the deliberations.
With the votes tied at 1-1-1 (one voted to grant, one dissenting, and one not participating), the
case failed to obtain the necessary majority. Consequently on October 14, 2014, the COMELEC
Second Division issued an order elevating the case to the En Banc for its disposition.12
The Commission En Banc agreed, as a matter of internal arrangement, to submit their respective
opinions explaining their respective votes or their concurrence with either Commissioner Yusoph
or Commissioner Guia.
Three (3) Commissioners concurred with Commissioner Yusoph: Chairman Sixto Brillantes, Jr.,
Commissioner Lucenito Tagle, and Commissioner Arthur Lim. Commissioner Christian Robert
Lim joined Commissioner Guia’s dissent. Commissioner Al A. Parreño did not participate in the
vote as he was away on official business. Thus, the vote was 4-2-1 in favor of disqualification; in
a per curiam order promulgated on January 12, 2015, the Commission En Banc disqualified Gov.
Javier and annulled his proclamation as the governor of Antique.
On January 20, 2015, Gov. Javier filed the present petition for certiorari under Rule 65 in
relation with Rule 64 of the Rules of Court.
_______________
11 Id., at p. 81.
12 Pursuant to COMELEC Resolution No. 9711 promulgated on May 28, 2013, in relation to
COMELEC Resolution No. 9145.
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VOL. 780, JANUARY 12, 2016 217
The Petition
The petitioner argues that the Commission En Banc committed grave abuse of discretion
because: (1) its January 12, 2015 order was arrived at on the basis of an “internal arrangement;
and (2) the order did not obtain a majority vote because Commissioner Arthur Lim should not
have been allowed to participate.
The petitioner also asserts that the Commission erred in ruling that R.A. 7890 did not remove
Section 261(d) of the Election Code as a ground for administrative disqualification. Finally, the
petitioner maintains that the Commission unconstitutionally set the Election Period for the May
13, 2013 elections in violation of Article IX-C, Section 9 of the Constitution, Sec. 62(c) of the
Local Government Code, and Section 8 of Republic Act No. 7056.13
In its comment on the petition, COMELEC, through the Office of the Solicitor General (OSG),
counters that it did not abuse its discretion in issuing the January 12, 2015 order disqualifying
Gov. Javier. The Commission insists that the procedure observed during the proceedings was not
infirm and that there was no legal impediment for Commissioner Arthur Lim to participate in the
En Banc vote.
On the alleged errors of law, the Commission insists that there was legal basis to disqualify Gov.
Javier under both Sections 261(d) and (e) of the Election Code; the repeal of Section 261(d) by
R.A. 7890 did not ipso facto remove coercion as a ground for disqualification under Section 68
of the Election Code. It added that Section 261(e), on the other hand, has not been repealed,
either expressly or impliedly.
_______________
13 An Act Providing for the National and Local Elections in 1992, Paving the Way for
Synchronized and Simultaneous Elections Beginning 1995, and Authorizing Appropriations
Therefor (1991).
218
Finally, the Commission asserts that COMELEC Resolution No. 9581 fixing the date of the
election period is expressly authorized by Article IX, Section 9 of the Constitution and Section 8
of Republic Act No. 7056.
Based on these submissions, the following issues now confront the Court:
I.
Whether the Commission gravely abused its discretion when it issued Resolution No. 9581
fixing the 2013 election period from January 13, 2013 until June 12, 2013, for the purpose of
determining administrative and criminal liability for election offenses.
II.
Whether the Commission erred in ruling that R.A. No. 7890 did not remove coercion as a ground
for disqualification under Section 68 of the Election Code.
III.
Whether the Commission En Banc committed grave abuse of discretion in issuing its Order dated
January 12, 2015, disqualifying Gov. Javier and annulling his proclamation as the governor of
Antique.
Our Ruling
After due consideration, we resolve to grant the petition.

The COMELEC is expressly
authorized to fix a different
date of the election period.
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VOL. 780, JANUARY 12, 2016 219
The petitioner contends that the election period for the reckoning of administrative and criminal
liabilities under election laws should always be the same — 90 days before and 30 days after an
election — fixed in Article IX-C, Section 9 of the Constitution and Section 8 of Republic Act
No. 7056.14 He argues that the Commission’s authority to fix the preelection period refers only
to the period needed to properly administer and conduct orderly elections. The petitioner argues
that by extending the period for incurring criminal liability beyond the 90-day period, the
Commission encroached on the legislature’s prerogative to impute criminal and administrative
liability on mala prohibita acts. Therefore, COMELEC Resolution Nos. 9385 and 9581 were
issued ultra vires.
We do not find this argument meritorious.
No less than the Constitution authorizes the Commission to fix the dates of the election period.
Article IX-C, Section 9 provides:
Section 9. Unless otherwise fixed by the Commission in special cases, the election

period shall commence ninety days before the day of election and shall end thirty days
thereafter.15
Congress, through the Election Code, explicitly recognizes this authority:

Sec. 3. Election and campaign periods.—Unless otherwise fixed in special cases by
the Commission on Elections, which hereinafter shall be referred to as the Commission,
the election period shall commence ninety days before the day of the election and shall end
thirty days thereafter.16 (emphases supplied)
_______________
14 Rollo, p. 41.
15 Art. IX-C, Section 9, Phil. Const.
16 This provision would be subsequently reproduced in Republic Act No. 7056 (1991).
220
Evidently, the 120-day period is merely the default election period. The Commission is not
precluded from fixing the length and the starting date of the election period to ensure free,
orderly, honest, peaceful, and credible elections. This is not merely a statutory but a
constitutionally granted power of the Commission.
Contrary to the petitioner’s contention, the Commission’s act of fixing the election period does
not amount to an encroachment on legislative prerogative. The Commission did not prescribe or
define the elements of election offenses. Congress already defined them through the Omnibus
Election Code, the Fair Elections Act, and other pertinent election laws.
As defined by Congress, some election offenses and prohibited acts can only be committed
during the election period. An element of these offenses (i.e., that it be committed during the
election period) is variable, as election periods are not affixed to a specific and permanent date.
Nevertheless, the definition of the offense is already complete. By fixing the date of the election
period, the Commission did not change what the offense is or how it is committed. There is thus
no intrusion into the legislative sphere.
There is also no merit in the petitioner’s argument that the extended election period only applies
to preelection activities other than the determination of administrative or criminal liability for
violating election laws. Neither the law nor the Constitution authorizes the use of two distinct
election periods for the same election. The law does not distinguish between election offenses
and other preelection activities in terms of the applicable election period. Where the law does not
distinguish, neither should this Court.
The Alleged Lack

of Due Process
We find the petitioner’s claim — that the Commission committed grave abuse of discretion since
there was no prelimi-
221
VOL. 780, JANUARY 12, 2016 221
nary investigation as required under Section 265 of the Omnibus Election Code — to be
misplaced.17
SPA No. 13-254 was an administrative proceeding for disqualification and not a criminal
prosecution of an election offense. The due process requirements and the procedures for these are
not the same. Section 265 of the Election Code only applies to criminal prosecutions.
Disqualification cases are summary in nature and governed by Rule 25 of the COMELEC Rules
of Procedure.
There is likewise no merit in the petitioner’s allegation that he was denied due process because
the Commission adjudicated the issue without conducting any subsequent hearings and without
requiring the submission of position papers or memoranda, notarized witness affidavits, or other
documentary evidence aside from the annexes included in the petition and the answer.
Administrative due process cannot be fully equated with due process in its strict judicial sense.18
A formal hearing is not always necessary and the observance of technical rules of procedure is
not strictly applied in administrative proceedings.19 The essence of administrative due process is
the right to be heard and to be given an opportunity to explain one’s
_______________
17 Sec. 265. Prosecution.—The Commission shall, through its duly authorized legal officers,
have the exclusive power to conduct preliminary investigation of all election offenses punishable
under this Code, and to prosecute the same. The Commission may avail of the assistance of other
prosecuting arms of the government: Provided, however, That in the event that the Commission
fails to act on any complaint within four months from filing, the complainant may file the
complaint with the office of the fiscal or with the Ministry of Justice for proper investigation and
prosecution, if warranted.
18 Vivo v. PAGCOR, G.R. No. 187854, November 12, 2013, 709 SCRA 276, 281.
19 Id., citing Imperial, Jr. v. GSIS, G.R. No. 191224, October 4, 2011, 658 SCRA 497, 505.
222
side.20 Where the Commission hears both sides and considers their contentions, the
requirements of administrative due process are complied with.
As we held in Lanot v. Commission on Elections:21
The electoral aspect of a disqualification case determines whether the offender should be
disqualified from being a candidate or from holding office. Proceedings are summary in
character and require only clear preponderance of evidence. An erring candidate may be
disqualified even without prior determination of probable cause in a preliminary
investigation. The electoral aspect may proceed independently of the criminal aspect, and
vice versa.
The criminal aspect of a disqualification case determines whether there is probable cause
to charge a candidate for an election offense. The prosecutor is the COMELEC, through its
Law Department, which determines whether probable cause exists. If there is probable
cause, the COMELEC, through its Law Department, files the criminal information before
the proper court. Proceedings before the proper court demand a full-blown hearing and
require proof beyond reasonable doubt to convict. A criminal conviction shall result in the
disqualification of the offender, which may even include disqualification from holding a
future public office.
Commissioner Arthur Lim’s

Participation in the En Banc
Voting
The petitioner further argues that the Commission committed grave abuse of discretion by
allowing Commissioner Arthur D. Lim to participate in the proceedings before the
_______________
20 Office of the Ombudsman v. Reyes, G.R. No. 170512, October 5, 2011, 658 SCRA 626, 640.
21 537 Phil. 332, 359-360; 507 SCRA 114, 139-140 (2006).
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VOL. 780, JANUARY 12, 2016 223
Commission En Banc. The petitioner maintains that because Commissioner Arthur Lim took no
part in the proceedings before the COMELEC Second Division, then he should have inhibited
from the En Banc proceedings pursuant to the ruling in Estrella v. COMELEC.22 If we disregard
Commissioner Arthur Lim’s vote, then the Commission would have failed to attain the necessary
majority vote of all the members of the Commission.
The petitioner’s reliance on Estrella is misplaced because the facts of this case are different from
those of the present case. Estrella involved two related election cases between the same parties:
an election protest and an action for certiorari. One party moved for Commissioner Lantion’s
inhibition which the Commission denied. However, Commissioner Lantion later inhibited
himself from the certiorari proceeding and was substituted by another Commissioner.23 The
substitution order was also adopted in the election protest case. When the election protest was
elevated to the COMELEC En Banc, Commissioner Lantion participated in the deliberations and
voted despite his prior inhibition. This Court granted certiorari and held that Commissioner
Lantion’s piecemeal voluntary inhibition was illegal and unethical.
In the present case, Commissioner Arthur Lim did not inhibit from the proceedings. If the
Commissioner had inhibited, there would have been a need to replace him pursuant to Rule 3,
Section 6 of the COMELEC Rules of Procedure24 (as
_______________
22 G.R. No. 160465, April 28, 2004, 428 SCRA 315, 320.
23 Commissioner Ressureccion Borra was designated in place of Commissioner Ralph Lantion

via an Order dated August 25, 2002.
24 Rules Governing Pleadings, Practice and Procedure Before it or Any of its Offices (1993).
Sec. 6. Change in Composition; Substitution.—The composition of a Division may be

changed by the Chairman of the Commission whenever necessary, Provided, that no change shall
be made more than once every three (3) months; Provided, Moreover, that notice thereof in
writing shall be furnished the parties in cases pend-
224
what happened in Estrella where there was an issuance of an order designating Commissioner
Borra as Commissioner Lantion’s substitute). Commissioner Arthur Lim only abstained from
voting; he did not participate in the deliberations. When the Commission En Banc, as a matter of
internal arrangement, agreed among themselves to submit their own opinion explaining their
respective vote or merely their concurrence with either Commissioner Elias R. Yusoph or
Commissioner Luie Tito F. Guia’s position on the matter, no legal or ethical impediment existed
preventing him (Commissioner Arthur Lim) from subsequently participating in the deliberations
and from casting his vote.
COMELEC’s Internal
Arrangement
The petitioner also maintains that the Commission gravely abused its discretion when it set aside
its own rules and resolved the case through an “internal arrangement.” He submits that the
Commission should have waited for the assigned ponente to write an opinion before agreeing to
vote based on the positions of Commissioner Yusoph and Commissioner Guia. The petitioner
also claims that the assailed Order is a “midnight decision” and cites the absence of a
promulgation date on the front page and of a certification signed by the Chairman as procedural
infirmities.
The petitioner clearly refers to Rule 18 of the COMELEC Rules of Procedure which states:
_______________
ing before the Division concerned. Whenever there is a vacancy in a Division because a
member inhibits himself, is absent, or is disqualified from sitting in a case, or when a division
has only two (2) regular members, the Chairman may appoint a substitute Commissioner, or the
Chairman himself may sit as substitute or third member, and in that event he shall preside.
225
VOL. 780, JANUARY 12, 2016 225
Part IV
Rule 18 – Decisions
Sec. 1. Procedure in Making Decisions.—The conclusions of the Commission in any

case submitted to it for decision En Banc or in Division shall be reached in consultation
before the case is assigned by raffle to a Member for the writing of the opinion of the
Commission or the Division and a certification to this effect signed by the Chairman or the
Presiding Commissioner, as the case may be, shall be incorporated in the decision. Any
member who took no part, dissented, or abstained from a decision or resolution must state
the reason therefor.
Every decision shall express therein clearly and distinctly the facts and the law on
which it is based. (emphasis supplied)
To our mind, the essence of this provision is: (1) that decisions of the Commission, whether in
Division or En Banc, must be reached in consultation; and (2) that the decisions must state their
factual and legal bases. Moreover, Rule 18, Section 1 must be read together with the other
provisions of the COMELEC Rules of Procedure, particularly the following related portions:
Rule 1 – Introductory Provisions
Sec. 3. Construction.—These rules shall be liberally construed in order to promote the

effective and efficient implementation of the objectives of ensuring the holding of free,
orderly, honest, peaceful and credible elections and to achieve just, expeditious and
inexpensive determination and disposition of every action and proceeding brought before
the Commission.
Sec. 4. Suspension of the Rules.—In the interest of justice and in order to obtain

speedy disposition of all matters pending before the Commission, these rules or any
portion thereof may be suspended by the Commission.
226
The COMELEC Rules specifically authorize the Commission to suspend the strict application of
its rules in the interest of justice and the speedy disposition of cases. In this case, the
Commission suspended Rule 18, Section 1. The Commission, as a body, dispensed with the
preparation of another ponencia and opted to vote on the legal positions of Commissioners
Yusoph and Guia. Nevertheless, the decision was evidently reached through consultation. Then
Chairman Sixto Brillantes, Jr., Commissioner Lucenito Tagle, and Commissioner Arthur Lim
concurred with Commissioner Yusoph. Commissioner Christian Robert Lim joined
Commissioner Guia’s dissent. Chairman Brillantes, Jr. and Commissioner Arthur Lim also wrote
separate concurring opinions. The Court does not see any arbitrariness or infirmity in this
internal arrangement that would have deprived the petitioner of due process.
Moreover, the Commission resorted to this arrangement because, as the petitioner pointed out,
three Commissioners were retiring soon. There was a need to resolve the cases because the
impending vacancies would have resulted in further delay. Contrary to the petitioner’s
insinuations, “midnight decisions” are not illegal. Judges and other quasi-judicial officers cannot
sit back, relax, and refuse to do their work just because they are nearing retirement or are near
the end of their term. As civil servants, they are expected to diligently carry out their duties until
their separation from service. Thus, the Commission’s suspension of its rules and use of an
internal arrangement to expedite its internal proceedings is not at all unusual in collegial bodies.
We note that the vote was divided and dissents were filed, thereby indicating the absence of any
malicious departure from the usual procedures in arriving at the Commission’s ruling on the
case.
Absence of a Promulgated
Date and Failure to Serve
Advance Copy
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VOL. 780, JANUARY 12, 2016 227
With respect to the absence of a promulgation date on the first page of the assailed order, this
Court directs the petitioner’s attention to the last page stating that the Order was “Given this 12th
day of January 2015, Manila, Philippines.”25 Promulgation is the process by which a decision is
published, officially announced, made known to the public, or delivered to the clerk of court for
filing, coupled with notice to the parties or their counsel.26 The order was evidently promulgated
on January 12, 2015.
The Commission does not deny that it failed to serve an advance copy of the order to the
petitioner as required under Rule 18, Section 527 of its Rules. But as we previously held in the
cases of Lindo v. COMELEC28 and Pimping v. COMELEC,29 this kind of procedural lapse does
not affect the validity of the order and is insufficient to warrant the grant of a writ of certiorari in
the absence of any grave abuse of discretion prejudicing the rights of the parties.
No less than the Constitution empowers the Commission to decide all questions affecting
elections except those involving the right to vote.30 It is the sole arbiter of all issues involving
_______________
25 Rollo, p. 55.
26 Lindo v. COMELEC, 271 Phil. 844, 851; 194 SCRA 25, 32 (1991), citing Neria v.
Commissioner of Immigration, 132 Phil. 276, 284; 23 SCRA 806, 812 (1968).
27 Sec. 5. Promulgation.—The promulgation of a decision or resolution of the Commission

or a Division shall be made on a date previously fixed, of which notice shall be served in
advance upon the parties or their attorneys personally or by registered mail or by telegram.
28 Lindo v. COMELEC, supra.
29 224 Phil. 326, 359; 140 SCRA 192, 223 (1985).
Repeal of Section 261(d) of Batas Pambansa Blg. 881 by Republic Act No. 7890
30 Article IX-C, §2(3), Philippine Constitution.
228
elections. Hence, unless tainted with grave abuse of discretion, simple errors of judgment
committed by COMELEC cannot be reviewed even by this Court.31
An error of judgment is one that the court may commit in the exercise of its jurisdiction;32 they
only involve errors in the court or tribunal’s appreciation of the facts and the law.33 An error of
jurisdiction is one where the act complained of was issued by the court without or in excess of its
jurisdiction, or with grave abuse of discretion tantamount to lack or excess of jurisdiction.34
A review of the October 3, 2014 COMELEC Second Division resolution (penned by

Commissioner Yusoph), however, showed that the main thrust of this resolution — to which four
Commissioners concurred in when the case was elevated to the En Banc — is faulty.35 It
considered the repeal of Section 261(d) by R.A. No. 7890 to be an implied one, which is contrary
to the wordings of R.A. 7890.
For clarity, we reproduce the pertinent provisions of R.A. No. 7890, thus:
SECTION 1. Article 286, Section Three, Chapter Two, Title Nine of Act No. 3815, as
amended, is hereby further amended to read as follows:
_______________
31 See this Court’s En Banc ruling involving the review of Commission on Audit cases in
Reblora v. Armed Forces of the Philippines, G.R. No. 195842, June 18, 2013, 698 SCRA 727,
735.
32 Fernando v. Vasquez, No. L-26417, January 30, 1970, 31 SCRA 288, 292.
33 Villareal v. Aliga, G.R. No. 166995, January 13, 2014, 713 SCRA 52, 73, citing People v.
Tria-Tirona, 502 Phil. 31, 39; 463 SCRA 462, 470 (2005).
34 Id.
35 The COMELEC En Banc’s January 12, 2015 order essentially summarized the positions and
votes of the Chairman and the Commissioners en route to granting the petition for
disqualification.
229
VOL. 780, JANUARY 12, 2016 229
“ART. 286. Grave Coercions.—The penalty of prisión correccional and a fine not

exceeding Six thousand pesos shall be imposed upon any person who, without any
authority of law, shall, by means of violence, threats or intimidation, prevent another from
doing something not prohibited by law, or compel him to do something against his will,
whether it be right or wrong.
“If the coercion be committed in violation of the exercise of the right of suffrage, or for the
purpose of compelling another to perform any religious act, to prevent him from exercising
such right or from so doing such act, the penalty next higher in degree shall be imposed.”
SEC. 2. Section 261, Paragraphs (d)(1) and (2), Article XXII of Batas Pambansa
Blg. 881 is hereby repealed.
SEC. 3. All other election laws, decrees, executive orders rules and regulations, or parts
thereof inconsistent with the provisions of this Act are hereby repealed.
xxxx
A repeal may be express or implied.36 An express repeal is one wherein a statute declares,
usually in its repealing clause, that a particular and specific law, identified by its number or title,
is repealed.37 An implied repeal, on the other hand, transpires when a substantial conflict exists
between the new and the prior laws. In the absence of an express repeal, a subsequent law cannot
be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist
in the terms of the new and the old laws.38
_______________
36 See Commissioner of Internal Revenue v. Solidbank Corp., 462 Phil. 96, 119; 416 SCRA 436,
450 (2003).
37 Penera v. Commission on Elections, G.R. No. 181613, September 11, 2009, 599 SCRA 609,
639-640.
38 See Bank of Commerce v. Planters Development Bank, G.R. Nos. 154470-71, September 24,
2012, 681 SCRA 521, 545.
230
In the present case, it is clear that R.A. No. 7890 expressly repealed Section 261, paragraphs (d)
(1) and (2) of the Omnibus Election Code. The COMELEC Second Division’s October 3, 2014
resolution, however, treated this repeal as merely an implied one. Commissioner Yusoph
reasoned out as follows:
Moreover, the general repealing clause in Section 3 of RA 7890 cannot impliedly repeal
Section 68 because the latter is not absolutely and irreconcilably incompatible with Article
286, as amended by RA 7890. Meaning, a case for disqualification due to coercion under
Section 68 can very well stand apart from the criminal case for coercion under Article 286,
as amended. This is so because Section 68 involves an administrative proceeding intended
to disqualify a candidate whereas Article 286, supra, involves a criminal proceeding
intended to penalize coercion. Both laws, therefore, can be given effect without nullifying
the other, hence the inapplicability of implied repeal.
To firm up our stance against implied repeal of coercion as a ground for disqualification,
the following pronouncements of the Supreme Court are guiding:
“Implied repeal by irreconcilable inconsistency takes place when the two statutes cover
the same subject matter; they are so clearly inconsistent and incompatible with each other
that they cannot be reconciled or harmonized; and both cannot be given effect, that is, that
one law cannot be enforced without nullifying the other.”
“Well-settled is the rule is statutory construction that implied repeals are disfavored. In
order to effect a repeal by implication, the latter statute must be so irreconcilably
inconsistent and repugnant with the existing law that they cannot be made to reconcile and
stand together. The clearest case possible must be made before the inference of implied
repeal may be drawn, for inconsistency is never presumed. x x x x”39
_______________
39 Rollo, p. 81, emphasis ours.
231
VOL. 780, JANUARY 12, 2016 231
We point out that this resolution and the dissenting opinion of Commissioner Guia became the
basis of the internal arrangement reached upon by the Commission En Banc whereby the
commissioners agreed to submit their respective opinions explaining their votes or their
concurrence with either Commissioner Yusoph or Guia.
As earlier stated, the vote was 4-2-1 in favor of disqualification; in a per curiam order
promulgated on January 12, 2015, the Commission En Banc disqualified Gov. Javier and
annulled his proclamation as the governor of Antique. Chairman Brillantes and Commissioner
Arthur Lim wrote their own opinions concurring with the position of Commissioner Yusoph,
while Commissioner Tagle submitted his vote concurring with the opinions of Commissioner
Yusoph and Chairman Brillantes.
In his Separate Opinion, Chairman Brillantes agreed with Commissioner Yusoph that the repeal
of Section 261(d) by R.A. No. 7890 was merely implied, and made the following disquisition:
xxxx
The Supreme Court, in a long line of cases, has constantly disfavored and struck down the
use of repeal by implication. Pursuant to jurisprudence, well-entrenched is the rule that an
implied repeal is disfavored. The apparently conflicting provisions of a law or two laws
should be harmonized as much as possible, so that each shall be effective. For a law to
operate to repeal another law, the two laws must actually be inconsistent. The former must
be so repugnant as to be irreconcilable with the latter act. Stated plainly, a petition for
disqualification on the ground of coercion shall be taken differently and distinctly from
coercion punishable under the RPC for the two can very well stand independently from
each other. x x x Therefore, unless proven that the two are inconsistent and would render
futile the application and
232
enforcement of the other, only then that a repeal by implication will be preferred. x x x x
40
A law that has been expressly repealed ceases to exist and becomes inoperative from the moment
the repealing law becomes effective.41 The discussion on implied repeals by the Yusoph
resolution, (and the concurring opinion of Chairman Brillantes, Jr.), including the concomitant
discussions on the absence of irreconcilable provisions between the two laws, were thus
misplaced. The harmonization of laws can only be had when the repeal is implied, not when it is
express, as in this case.
The COMELEC’s reasoning that coercion remains to be a ground for disqualification under
Section 68 of the Election Code despite the passage of R.A. No. 7890 is erroneous. To the point
of our being repetitive, R.A. No. 7890 expressly repealed Section 261(d)(1) and (2) of Batas
Pambansa Blg. 881, rendering these provisions inoperative. The effect of this repeal is to remove
Section 261(d) from among those listed as ground for disqualification under Section 68 of the
Omnibus Election Code.
In his Memorandum/Concurring Opinion, Commissioner Arthur Lim stated that the petition for
disqualification is anchored not only on violation of Section 261(d), but also on the violation of
Section 261(e) in relation to Section 68 of the OEC. We point out, however, that the COMELEC
Second Division’s October 3, 2014 resolution in SPA No. 13-254 (disqualifying Gov. Javier and
annulling his proclamation as the Governor of Antique) was premised solely on violation of
Section 261(d) of the OEC; it did not find that Gov. Javier — even by substantial evidence —
violated the provisions of Section 261(e). For clarity and accuracy, we quote the pertinent
portions of the COMELEC’s (Second Division) October 3, 2014 resolution:
_______________
40 Id., at p. 57.
41 See JG Summit Holdings, Inc. v. Court of Appeals, 458 Phil. 581, 609-610; 412 SCRA 10, 27
(2003).
233
VOL. 780, JANUARY 12, 2016 233

Ineluctably, the act of Gov. Javier in preventively suspending Mayor Roquero during the
Election period ban falls within the contemplation of Section 261(d) of the Election Code
which is a ground for disqualification under Section 68, Election Code. That is, Gov.
Javier issued Executive Order No. 003 suspending Mayor Roquero to coerce, intimidate,
compel, or influence the latter to collaborate with or campaign for the former, or to punish
the latter for having manifested political opposition against the former. For that, he must be
disqualified.42
With the express repeal of Section 261(d), the basis for disqualifying Javier no longer existed. As
we held in Jalosjos, Jr. v. Commission on Elections,43 [t]he jurisdiction of the COMELEC to
disqualify candidates is limited to those enumerated in Section 68 of the Omnibus Election Code.
All other election offenses are beyond the ambit of COMELEC jurisdiction. They are criminal
and not administrative in nature.44 Pursuant to Sections 265 and 268 of the Omnibus Election
Code, the power of the COMELEC is confined to the conduct of preliminary investigation on the
alleged election offenses for the purpose of prosecuting the alleged offenders before the regular
courts of justice.45
There is grave abuse of discretion justifying the issuance of the writ of certiorari when there is
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,46
where power is exercised arbitrarily or in a despotic manner by reason of passion, prejudice, or
personal hostility
_______________
42 Rollo, p. 80.
43 G.R. No. 193237, October 9, 2012, 683 SCRA 1, 29-30, citing Codilla, Sr. v. De Venecia, 442
Phil. 139, 177-178; 393 SCRA 639, 670 (2002).
44 Id.
45 See Blanco v. COMELEC, 577 Phil. 622, 633; 554 SCRA 755, 764 (2008), citing Codilla, Sr.
v. De Venecia, supra.
46 Abad Santos v. Province of Tarlac, 67 Phil. 480 (1939); Tan v. People, 88 Phil. 609 (1951);
Pajo v. Ago, 108 Phil. 905 (1960).
234
amounting to an evasion of positive duty, or to virtual refusal to perform the duty enjoined, or to
act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion and hostility.47
To our mind, the COMELEC gravely abused its discretion when it disqualified Gov. Javier based
on a provision of law that had already been expressly repealed. Its stubborn insistence that R.A.
No. 7890 merely impliedly repealed Section 261(d) despite the clear wordings of the law,
amounted to an arbitrary and whimsical exercise of judgment.
WHEREFORE, premises considered, we hereby GRANT the petition and SET ASIDE the
January 12, 2015 per curiam order of the Commission on Elections En Banc in SPA No. 13-254
(DC).
SO ORDERED.
Sereno (CJ.), Carpio, Leonardo-De Castro, Villarama, Jr., Perez, Mendoza, Reyes, Perlas-
Bernabe, Leonen and Jardeleza, JJ., concur.
Velasco, Jr., Peralta, Bersamin and Del Castillo, JJ.,

No part.
Petition granted, per curiam order of Commission on Elections En Banc set aside.
Notes.—The prohibition on transfer or detail whatever during the election period under Section
261(h) of Batas Pambansa (BP) Blg. 881 covers any personnel action including reassignments.
(Aquino vs. Commission on Elections, 753 SCRA 314 [2015])
_______________
47 Tavera-Luna, Inc. v. Nable, 67 Phil. 341 (1939): Alafriz v. Nable, 72 Phil. 278 (1941);
Liwanag v. Castillo, 106 Phil. 375 (1959).
235
VOL. 780, JANUARY 12, 2016 235
Under Section 261(h) of Batas Pambansa (BP) Blg. 881, a person commits the election offense
of violation of the election transfer ban when he makes or causes the transfer or detail whatever
of any official or employee of the government during the election period absent prior approval of
the Commission on Elections (COMELEC). (Id.)
——o0o——
G.R. No. 198627. January 13, 2016.*
DST MOVERS CORPORATION, petitioner, vs. PEOPLE’S GENERAL INSURANCE

CORPORATION, respondent.
Remedial Law; Civil Procedure; Appeals; The Supreme Court (SC) is not a trier of facts and it is
not its duty to review, evaluate, and weigh the probative value of the evidence adduced before the
lower courts.—Seeking recourse from this court through a petition for review on certiorari under
Rule 45 bears significantly on the manner by which this court shall treat findings of fact and
evidentiary matters. As a general rule, it becomes improper for this court to consider factual
issues: the findings of fact of the trial court, as
_______________
* SECOND DIVISION.
499
VOL. 780, JANUARY 13, 2016 499
DST Movers Corporation vs. People's General Insurance Corporation
affirmed on appeal by the Court of Appeals, are conclusive on this court. “The reason behind the
rule is that [this] Court is not a trier of facts and it is not its duty to review, evaluate, and weigh
the probative value of the evidence adduced before the lower courts.” A determination of
whether a matter has been established by a preponderance of evidence is, by definition, a
question of fact. It entails an appreciation of the relative weight of the competing parties’
evidence. Rule 133, Section 1 of the Revised Rules on Evidence provides a guide on what courts
may consider in determining where the preponderance of evidence lies.
Same; Same; Same; A determination of the causes of and circumstances relating to vehicular
accidents is a factual matter that this court may not revisit when the findings of the trial court
and the Court of Appeals (CA) are completely in accord; Exceptions.—This court has explained
in many instances that a determination of the causes of and circumstances relating to vehicular
accidents is a factual matter that this court may not revisit when the findings of the trial court and
the Court of Appeals are completely in accord. x x x However, there are exceptions that leave
room for this court to make a factual determination for itself and, ultimately, to overturn the
factual findings with which it is confronted: (1) When the conclusion is a finding grounded
entirely on speculation, surmises and conjectures; (2) When the inference made is manifestly
mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the
judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and
the same is contrary to the admissions of both appellant and appellee; (7) When the findings are
contrary to those of the trial court; (8) When the findings of fact are conclusions without citation
of specific evidence on which they are based; (9) When the facts set forth in the petition as well
as in the petitioners’ main and reply briefs are not disputed by the respondents; and (10) When
the findings of fact of the Court of Appeals are premised on the supposed absence of evidence
and contradicted by the evidence on record.
Same; Evidence; Hearsay Evidence Rule; Entries in Official Records; As an exception to the
Hearsay Rule, Rule 130, Section 44 does away with the need for presenting as witness the public
officer or person performing a duty specially enjoined by law who made the
500
entry.—Rule 130, Section 36 of the Revised Rules on Evidence provides for the Hearsay Rule. It
renders inadmissible as evidence out-of-court statements made by persons who are not presented
as witnesses but are offered as proof of the matters stated. This rule proceeds from the basic
rationale of fairness, as the party against whom it is presented is unable to cross-examine the
person making the statement: SECTION 36. Testimony generally confined to personal
knowledge; hearsay excluded.—A witness can testify only to those facts which he knows of his
personal knowledge; that is, which are derived from his own perception, except as otherwise
provided in these rules. The Hearsay Rule, however, is not absolute. Sections 37 to 47 of Rule
130 of the Revised Rules on Evidence enumerate the exceptions to the Hearsay Rule. Of these,
Section 44 — regarding entries in official records — is particularly relevant to this case:
SECTION 44. Entries in official records.—Entries in official records made in the performance of
his duty by a public officer of the Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts therein stated. Precisely as an
exception to the Hearsay Rule, Rule 130, Section 44 does away with the need for presenting as
witness the public officer or person performing a duty specially enjoined by law who made the
entry. This, however, is only true, for as long the following requisites have been satisfied: (a) that
the entry was made by a public officer or by another person specially enjoined by law to do so;
(b) that it was made by the public officer in the performance of his duties, or by such other
person in the performance of a duty specially enjoined by law; and (c) that the public officer or
other person had sufficient knowledge of the facts by him stated, which must have been acquired
by him personally or through official information.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals Former
Twelfth Division.
Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner.
Jabla, Brigola & Gonzales Law Offices for respondent.
501
VOL. 780, JANUARY 13, 2016 501
LEONEN, J.:
A determination of where the preponderance of evidence lies is a factual issue which, as a rule,
cannot be entertained in a Rule 45 petition. When, however, the sole basis of the trial court for
ruling on this issue is evidence that should not have been admitted for being hearsay, this court
will embark on its own factual analysis and will, if necessary, reverse the rulings of the lower
courts. A traffic accident investigation report prepared by a police officer relying solely on the
account of a supposed eyewitness and not on his or her personal knowledge is not evidence that
is admissible as an exception to the Hearsay Rule.
This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil
Procedure praying that the assailed May 11, 2011 Decision2 and September 8, 2011 Resolution3
of the Court of Appeals Former Twelfth Division in C.A.-G.R. S.P. No. 109163 be reversed and
set aside, and that a new one be entered dismissing respondent People’s General Insurance
Corporation’s (PGIC) Complaint for Sum of Money.4
In its assailed May 11, 2011 Decision, the Court of Appeals affirmed with modification the ruling
of Branch 47 of the Regional Trial Court of Manila in Civil Case No. 07-118093 which, in turn,
affirmed in toto the ruling of Branch 22 of the Metropolitan Trial Court of Manila in Civil Case
No. 181900. In its assailed September 8, 2011 Resolution, the Court of
_______________
1 Rollo, pp. 13-60.
2 Id., at pp. 62-73. The Decision was penned by Associate Justice Edwin D. Sorongon and
concurred in by Associate Justices Rosalinda Asuncion-Vicente and Romeo F. Barza.
3 Id., at pp. 75-77. The Resolution was penned by Associate Justice Edwin D. Sorongon and
concurred in by Associate Justices Rosalinda Asuncion-Vicente and Romeo F. Barza.
4 Id., at pp. 78-84, Complaint.
502
Appeals denied petitioner DST Movers Corporation’s (DST Movers) Motion for
Reconsideration.5
The Metropolitan Trial Court of Manila found DST Movers liable to pay PGIC the amount of
P90,000.00 by way of actual damages plus interest as well as P10,000.00 for attorney’s fees and
costs of suit.6 The Court of Appeals ordered DST Movers to pay PGIC the amount of P25,000.00
as temperate damages in lieu of the original award of P90,000.00 as actual damages.7
In a Complaint for Sum of Money filed before the Metropolitan Trial Court of Manila, PGIC
alleged that at about 10:30 p.m. on February 28, 2002, along the South Luzon Expressway and in
the area of Bilibid, Muntinlupa City, a Honda Civic sedan with plate number URZ 976 (sedan)
was hit on the rear by an Isuzu Elf truck with plate number UAL 295 (truck). PGIC underscored
that the sedan was on a stop position when it was hit. The sedan was then allegedly pushed
forward, thereby hitting a Mitsubishi Lancer. The driver of the truck then allegedly escaped.8
In support of its recollection of the events of February 28, 2002, PGIC relied on a Traffic
Accident Investigation Report (Report) prepared by PO2 Cecilio Grospe Tomas (PO2 Tomas) of
the Muntinlupa City Traffic Enforcement Unit of the Philippine National Police. This was
attached as Annex “E”9 of PGIC’s Complaint and also as Annex “E”10 of its Position Paper. It
stated:
_______________
5 Id., at pp. 72-73.
6 Id., at p. 67.
7 Id.
8 Id., at p. 79.
9 Id., at p. 89.
10 Id., at p. 197.
503
VOL. 780, JANUARY 13, 2016 503
TRAFFIC ACCIDENT INVESTIGATION REPORT
(Entry No. 805-285-0202)
504

F A C T S:
It appears that while V1 was on stop position facing north at the aforesaid place of
occurrence when the rear portion of the same was allegedly hit/bumped by V3 which was
moving same direction on the same place due to strong impact V1 pushed forward and hit
the left side rear portion of V2 causing damages and injuries thereon. After the impact, V3
escaped towards undisclosed direction and left V1 & V2 at the place of accident. During
investigation V1 & V2 driver gave voluntary handwritten statement and they were advised
to submit medical certificate, estimate/photos of damages as annexes.
Status of the case: For follow-up. . . . . . . . . . . . . .
(sgd.)
PO2 Cecilio Grospe Tomas PNP
- on case -11
The truck was supposedly subsequently discovered to be owned by DST Movers.12 The sedan
was covered by PGIC’s insurance under Policy No. HAL-PC-1314.13 As a result of the February
28, 2002 incident, the sedan’s owner, Fidel Yuboco, filed a total loss claim with PGIC in the
amount of P320,000.00. PGIC paid Fidel Yuboco the entire amount of P320,000.00.14
Asserting that it was subrogated to Fidel Yuboco’s rights and that the proximate cause of the
mishap was the negligence of the driver of the truck, PGIC, through counsel, sent DST Movers
demand letters. PGIC demanded from DST Movers the amount of P90,000.00, which
represented the difference between the P320,000.00 paid by PGIC to Yuboco and the salvage
price of P230,000.00, at which PGIC was supposedly able to sell what remained of the sedan.15
_______________
11 Id.
12 Id., at p. 79, Complaint.
13 Id.
14 Id., at p. 80.
15 Id., at p. 81, and pp. 96-98, Annexes “L” to “M.”
505
VOL. 780, JANUARY 13, 2016 505
Its demands not having been satisfied, PGIC proceeded to file its Complaint16 for Sum of
Money before the Metropolitan Trial Court of Manila. This case was docketed as Civil Case No.
181900.17
In its Answer,18 DST Movers acknowledged that it was the owner of the truck. However, it
claimed that the truck did not make any trips on February 28, 2002 as it was undergoing repairs
and maintenance.19 In support of this affirmative defense, DST Movers attached as Annexes “1”
to “1-F”20 copies of invoices, receipts, and cash vouchers relating to repairs and maintenance
procedures that were undertaken on the truck on specific dates, which included February 28,
2002.
Following the submission of the parties’ position papers, Branch 22 of the Metropolitan Trial
Court Manila rendered its Decision21 favoring PGIC’s version of events and finding DST
Movers liable. The dispositive portion of this Decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendant ordering to pay the latter to pay the [sic] of Php90,000.00 as actual damages
plus interest of 12% per annum from the date of filing of the complaint and the sum of
Php10,000.00 as and for attorney’s fees and the costs of suit.
SO ORDERED.22
_______________
16 Id., at pp. 78-83, Complaint.

17 Id.
18 Id., at pp. 103-111.
19 Id., at pp. 104-105, Answer.
20 Id., at pp. 112-118.
21 The case was decided pursuant to the Revised Rule on Summary Procedure considering that
petitioner’s total claims amounted to less than P200,000.00.
506
On appeal, the ruling of the Metropolitan Trial Court was affirmed in toto by Branch 47 of the
Regional Trial Court of Manila.23
DST Movers then filed before the Court of Appeals a Petition for Review under Rule 42 of the
1997 Rules of Civil Procedure.
In its assailed May 11, 2011 Decision, the Court of Appeals affirmed the rulings of the Regional
Trial Court and the Metropolitan Trial Court. However, it noted that PGIC failed to prove actual
loss with reasonable certainty. As such, the Court of Appeals deleted the award of P90,000.00 in
actual damages and replaced it with an award of P25,000.00 in temperate damages.
In its assailed September 8, 2011 Resolution,24 the Court of Appeals denied DST Movers’
Motion for Reconsideration.
Hence, DST Movers filed the present Petition insisting that its liability was not established by a
preponderance of evidence. Specifically, it faults the Metropolitan Trial Court for ruling in favor
of PGIC despite how its version of events was supported by nothing more the Traffic Accident
Investigation Report. It asserts that reliance on this Report was misplaced as it was supposedly
“improperly identified [and] uncorroborated.”25
For resolution is the issue of whether petitioner DST Movers Corporation’s liability was
established by a preponderance of evidence. Subsumed in this is whether it was an error for the
Metropolitan Trial Court to admit and lend evidentiary weight to the piece of evidence chiefly
relied upon by respondent People’s General Insurance Corporation: the Traffic Accident
Investigation Report prepared by PO2 Tomas.
_______________
23 Id.
24 Id., at pp. 75-77.
507
VOL. 780, JANUARY 13, 2016 507
Petitioner comes to this court through a Petition for Review on Certiorari under Rule 45 of the
1997 Rules of Civil Procedure. It invites this court to reconsider the consistent rulings of the
Court of Appeals, the Regional Trial Court, and the Metropolitan Trial Court that petitioner’s
liability arising from the February 28, 2002 incident was established by a preponderance of
evidence.
A Rule 45 petition pertains to questions of law and not to factual issues. Rule 45, Section 1 of the
1997 Rules of Civil Procedure is unequivocal:
SECTION 1. Filing of Petition with Supreme Court.—A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may
file with the Supreme Court a verified petition for review on certiorari. The petition shall
raise only questions of law which must be distinctly set forth.
This court’s Decision in Cheesman v. Intermediate Appellate Court26 distinguished questions of
law from questions of fact:
As distinguished from a question of law — which exists “when the doubt or difference
arises as to what the law is on a certain state of facts” — “there is a question of fact when
the doubt or difference arises as to the truth or the falsehood of alleged facts”; or when the
“query necessarily invites calibration of the whole evidence considering mainly the
credibility of witnesses, existence and relevancy of specific surrounding circumstances,
their relation to each other and to the whole and the probabilities of the situation.”27
(Citations omitted)
_______________
26 271 Phil. 89; 193 SCRA 93 (1991) [Per J. Narvasa, Second Division].
27 Id., at pp. 97-98; pp. 100-101.
508
Seeking recourse from this court through a petition for review on certiorari under Rule 45 bears
significantly on the manner by which this court shall treat findings of fact and evidentiary
matters. As a general rule, it becomes improper for this court to consider factual issues: the
findings of fact of the trial court, as affirmed on appeal by the Court of Appeals, are conclusive
on this court. “The reason behind the rule is that [this] Court is not a trier of facts and it is not its
duty to review, evaluate, and weigh the probative value of the evidence adduced before the lower
courts.”28
A determination of whether a matter has been established by a preponderance of evidence is, by

definition, a question of fact. It entails an appreciation of the relative weight of the competing
parties’ evidence. Rule 133, Section 1 of the Revised Rules on Evidence provides a guide on
what courts may consider in determining where the preponderance of evidence lies:
SECTION 1. Preponderance of evidence, how determined.—In civil cases, the party
having the burden of proof must establish his case by a preponderance of evidence. In
determining where the preponderance or superior weight of evidence on the issues
involved lies, the court may consider all the facts and circumstances of the case, the
witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing
the facts to which they are testifying, the nature of the facts to which they testify, the
probability or improbability of their testimony, their interest or want of interest, and also
their personal credibility so far as the same may legitimately appear upon the trial. The
court may also consider the number of witnesses, though the preponderance is not
necessarily with the greater number.
Consistent with Cheesman, such determination is a “query [that] necessarily invites calibration
of the whole evidence
_______________
28 Frondarina v. Malazarte, 539 Phil. 279, 290-291; 510 SCRA 223, 233 (2006) [Per J.
Velasco, Jr., Third Division].
509
VOL. 780, JANUARY 13, 2016 509
considering mainly the credibility of witnesses, existence and relevancy of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the
situation.”29
On point as regards civil liability for damages, this court in Caiña v. People of the Philippines30
explained:
Questions on whether or not there was a preponderance of evidence to justify the award of
damages or whether or not there was a causal connection between the given set of facts
and the damage suffered by the private complainant or whether or not the act from which
civil liability might arise exists are questions of fact.31
Equally on point, this court has explained in many instances that a determination of the causes of
and circumstances relating to vehicular accidents is a factual matter that this court may not
revisit when the findings of the trial court and the Court of Appeals are completely in accord.
In Industrial Insurance Company, Inc. v. Bondad:32
Questions regarding the cause of the accident and the persons responsible for it are factual issues
which we cannot pass upon. It is jurisprudentially settled that, as a rule, the jurisdiction of this
Court is limited to a review of errors of law allegedly committed by the appellate court. It is not
bound to analyze and weigh all over again the evidence already considered in the proceedings
below.33
_______________
29 Cheesman v. Intermediate Appellate Court, supra note 26 at pp. 97-98; p. 101.
30 G.R. No. 78777, September 2, 1992, 213 SCRA 309 [Per J. Gutierrez, Jr., Second Division].
31 Id., at p. 314.
32 386 Phil. 923; 330 SCRA 706 (2000) [Per J. Panganiban, Third Division].
33 Id., at p. 931; pp. 713-714.
510
Likewise, in Viron Transportation Co., Inc. v. Delos Santos:34
The rule is settled that the findings of the trial court especially when affirmed by the Court
of Appeals, are conclusive on this Court when supported by the evidence on record. The
Supreme Court will not assess and evaluate all over again the evidence, testimonial and
documentary adduced by the parties to an appeal particularly where, such as here, the
findings of both the trial court and the appellate court on the maker coincide.35 (Citation
omitted)
However, there are exceptions that leave room for this court to make a factual determination for
itself and, ultimately, to overturn the factual findings with which it is confronted:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and
conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on
which they are based;
_______________
34 399 Phil. 243; 345 SCRA 509 (2000) [Per J. Gonzaga-Reyes, Third Division].
35 Id., at p. 250; pp. 514-515.
511
VOL. 780, JANUARY 13, 2016 511
(9) When the facts set forth in the petition as well as in the petitioners’ main and reply
briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed
absence of evidence and contradicted by the evidence on record.36
In Dela Llana v. Biong,37 this court conducted its own (re-)examination of the evidence as the
findings of the Regional Trial Court conflicted with those of the Court of Appeals. The Regional
Trial Court held that the proximate cause of the injuries suffered by the petitioner was the
supposed reckless driving of the respondent’s employee; the Court of Appeals held otherwise. On
review, this court sustained the findings of the Court of Appeals.
In Standard Insurance Co., Inc. v. Cuaresma,38 the ruling of the Metropolitan Trial Court was
reversed by the Regional Trial Court. The latter was then sustained by the Court of Appeals. On
review, this court affirmed the decision of the Court of Appeals. This court noted that the
Metropolitan Trial Court erroneously gave weight to the traffic accident investigation report
presented by the petitioner as proof of the proximate cause of the damage sustained by a motor
vehicle.
II
Here, petitioner insists that the Traffic Accident Investigation Report prepared by PO2 Tomas
should not have been admitted and accorded weight by the Metropolitan Trial
_______________
36 Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc., 665
Phil. 784, 789; 650 SCRA 656, 660 (2011) [Per J. Carpio-Morales, Third Division].
37 G.R. No. 182356, December 4, 2013, 711 SCRA 522 [Per J. Brion, Second Division].
38 G.R. No. 200055, September 10, 2014, 734 SCRA 709 [Per J. Peralta, Third Division].
512
Court as it was “improperly identified [and] uncorroborated.”39 Petitioner, in effect, asserts that
the non-presentation in court of PO2 Tomas, the officer who prepared the report, was fatal to
respondent’s cause.
Unlike in Dela Llana and Standard Insurance, the findings of the Metropolitan Trial Court, the
Regional Trial Court, and the Court of Appeals in this case are all in accord. They consistently
ruled that the proximate cause of the damage sustained by the sedan was the negligent driving of
a vehicle owned by petitioner. As with Standard Insurance, however, this conclusion is founded
on the misplaced probative value accorded to a traffic accident investigation report. In the first
place, this Report should not have been admitted as evidence for violating the Hearsay Rule.
Bereft of evidentiary basis, the conclusion of the lower courts cannot stand as it has been reduced
to conjecture. Thus, we reverse this conclusion.
Rule 130, Section 36 of the Revised Rules on Evidence provides for the Hearsay Rule. It renders
inadmissible as evidence out-of-court statements made by persons who are not presented as
witnesses but are offered as proof of the matters stated. This rule proceeds from the basic
rationale of fairness, as the party against whom it is presented is unable to cross-examine the
person making the statement:40
SECTION 36. Testimony generally confined to personal knowledge; hearsay excluded.

—A witness can testify only to those facts which he knows of his personal knowledge; that
is, which are derived from his own perception, except as otherwise provided in these rules.
The Hearsay Rule, however, is not absolute. Sections 37 to 47 of Rule 130 of the Revised Rules
on Evidence enumerate the exceptions to the Hearsay Rule. Of these, Section 44 —
_______________
39 Rollo, p. 23.
40 See Estrella v. Court of Appeals, 254 Phil. 618; 172 SCRA 613 (1989) [Per J. Narvasa, First
Division].
513
VOL. 780, JANUARY 13, 2016 513
regarding entries in official records — is particularly relevant to this case:
SECTION 44. Entries in official records.—Entries in official records made in the

performance of his duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima facie evidence of the facts
therein stated.
Precisely as an exception to the Hearsay Rule, Rule 130, Section 44 does away with the need for
presenting as witness the public officer or person performing a duty specially enjoined by law
who made the entry. This, however, is only true, for as long the following requisites have been
satisfied:
(a) that the entry was made by a public officer or by another person specially enjoined by
law to do so;
(b) that it was made by the public officer in the performance of his duties, or by such other
person in the performance of a duty specially enjoined by law; and
(c) that the public officer or other person had sufficient knowledge of the facts by him
stated, which must have been acquired by him personally or through official
information.41
Respondent, the Metropolitan Trial Court, the Regional Trial Court, and the Court of Appeals are
all of the position that the Report prepared by PO2 Tomas satisfies these requisites. Thus, they
maintain that it is admissible as prima facie evidence of the facts it states. This despite the
admitted fact that neither PO2 Tomas, nor the person who supposedly re-
_______________
41 D.M. Consunji, Inc. v. Court of Appeals, 409 Phil. 275, 286; 357 SCRA 249, 254-255 (2001)
[Per J. Kapunan, First Division], citing Africa v. Caltex (Phil.), Inc., 123 Phil. 272; 16 SCRA 448
(1966) [Per J. Makalintal, En Banc] and People v. San Gabriel, 323 Phil. 102; 253 SCRA 84
(1996) [Per J. Kapunan, First Division].
514
ported the events of February 28, 2002 to PO2 Tomas — the person identified as “G. Simbahon
of PNCC/SLEX”42 — gave a testimony in support of the Report.
They are in serious error.
The statements made by this court in Standard Insurance are on point:
[F]or the Traffic Accident Investigation Report to be admissible as prima facie evidence of
the facts therein stated, the following requisites must be present:
. . . (a) that the entry was made by a public officer or by another person specially
enjoined by law to do so; (b) that it was made by the public officer in the
performance of his duties, or by such other person in the performance of a duty
specially enjoined by law; and (c) that the public officer or other person had
sufficient knowledge of the facts by him stated, which must have been acquired by
him personally or through official information.
Regrettably, in this case, petitioner failed to prove the third requisite cited above. As
correctly noted by the courts below, while the Traffic Accident Investigation Report was
exhibited as evidence, the investigating officer who prepared the same was not presented
in court to testify that he had sufficient knowledge of the facts therein stated, and that he
acquired them personally or through official information. Neither was there any
explanation as to why such officer was not presented. We cannot simply assume, in the
absence of proof, that the account of the incident stated in the report was based on the
personal knowledge of the investigating officer who prepared it.
Thus, while petitioner presented its assured to testify on the events that transpired during
the vehicular collision, his lone testimony, unsupported by other preponderant evidence,
fails to sufficiently establish peti-
_______________
42 Rollo, p. 89.
515
VOL. 780, JANUARY 13, 2016 515
tioner’s claim that respondents’ negligence was, indeed, the proximate cause of the
damage sustained by Cham’s vehicle.43 [Emphasis supplied]
Respondent presented proof of the occurrence of an accident that damaged Fidel Yuboco’s
Honda Civic sedan,44 that the sedan was insured by respondent,45 and that respondent paid
Fidel Yuboco’s insurance claims.46 As to the identity, however, of the vehicle or of the person
responsible for the damage sustained by the sedan, all that respondent relies on is the Report
prepared by PO2 Tomas.
It is plain to see that the matters indicated in the Report are not matters that were personally
known to PO2 Tomas. The Report is candid in admitting that the matters it states were merely
reported to PO2 Tomas by “G. Simbahon of PNCC/SLEX.”47 It was this “G. Simbahon,” not
PO2 Tomas, who had personal knowledge of the facts stated in the Report. Thus, even as the
Report embodies entries made by a public officer in the performance of his duties, it fails to
satisfy the third requisite for admissibility for entries in official records as an exception to the
Hearsay Rule.
To be admitted as evidence, it was thus imperative for the person who prepared the Report —
PO2 Tomas — to have himself presented as a witness and then testify on his Report. However,
even as the Report would have been admitted as evidence, PO2 Tomas’ testimony would not
have sufficed in establishing the identity of the motor vehicle and/or the per-
_______________
43 Standard Insurance Co., Inc. v. Cuaresma, supra note 38.
44 Rollo, p. 198, Photographs, Annexes “F” and “G” of respondent’s Position Paper.
45 Id., at p. 196, Private Car Policy, Annex “D” of respondent’s Position Paper.
46 Id., at pp. 199-200, Voucher, Annex “H”; and Release of Claim, Annex “I” of respondent’s
Position Paper.
47 Id., at p. 89.
516
son responsible for the damage sustained by the sedan. For this purpose, the testimony of G.
Simbahon was necessary.
Of course, we are aware that this case was decided by the Metropolitan Trial Court pursuant to
the Revised Rule on Summary Procedure (considering that petitioner’s total claims amounted to
less than P200,000.00).48 Accordingly, no trial was conducted as, after the conduct of a
preliminary conference, the parties were made to submit their position papers. There was, thus,
no opportunity to present witnesses during an actual trial. However, Section 9 of the Revised
Rule on Summary Procedure calls for the submission of witnesses’ affidavits together with a
party’s position paper and after the conduct of a preliminary conference:
SECTION 9. Submission of Affidavits and Position Papers.—Within ten (10) days from

receipt of the order mentioned in the next preceding section,49 the parties
_______________
48 SECTION 1. Scope.—This rule shall govern the summary procedure in the Metropolitan

Trial Courts, the Municipal Trial Courts in Cities, the Municipal Trial Courts, and the Municipal
Circuit Trial Courts in the following cases falling within their jurisdiction:
A. Civil Cases:
. . . .
(2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim
does not exceed one hundred thousand pesos (P100,000.00) or, two hundred thousand pesos
(P200,000.00) in Metropolitan Manila, exclusive of interest and costs.
49 SECTION 8. Record of Preliminary Conference.—Within five (5) days after the

termination of the preliminary conference, the court shall issue an order stating the matters taken
up therein, including but not limited to:
a) Whether the parties have arrived at an amicable settlement, and if so, the terms thereof;
b) The stipulations or admissions entered into by the parties;
c) Whether, on the basis of the pleadings and the stipulations and admissions made by the parties,
judgment may be rendered
517
VOL. 780, JANUARY 13, 2016 517
shall submit the affidavits of their witnesses and other evidence on the factual issues
defined in the order, together with their position papers setting forth the law and the facts
relied upon by them.
These affidavits take the place of actual testimony in court and serve to expedite the resolution of
cases covered by the Revised Rule on Summary Procedure. Thus, it was still insufficient for
respondent to have merely annexed the Report to its Position Paper. By its lonesome, and
unsupported by an affidavit executed by PO2 Tomas, the Report was hearsay and, thus,
inadmissible.
As the sole evidence relied upon by respondent as to the identity of the responsible motor vehicle
or person has been rendered unworthy of even the slightest judicial consideration, there is no
basis for holding — as the Metropolitan Trial Court did — that the motor vehicle responsible for
the damage sustained by the sedan was owned by petitioner. Not only this, petitioner has even
adduced proof that on February 28, 2002, its Isuzu Elf truck with plate number UAL 295 was
undergoing repairs and maintenance and, thus, could not have been at the South Luzon
Expressway. The weight of evidence is clearly in petitioner’s favor.
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The assailed May 11,
2011 Decision and September 8, 2011 Resolution of the Court of Appeals Former Twelfth
Division in C.A.-G.R. S.P. No. 109163 are REVERSED and SET ASIDE. Respondent People’s
General Insurance Corporation’s Complaint is DISMISSED.
_______________
without the need of further proceedings, in which event the judgment shall be rendered within
thirty (30) days from issuance of the order;
d) A clear specification of material facts which remain controverted; and
e) Such other matters intended to expedite the disposition of the case.
518
No pronouncement as to costs.
SO ORDERED.
Petition granted, judgment and resolution reversed and set aside.

Notes.—The rule provides that entries in official records made in the performance of the duty of
a public officer of the Philippines, or by a person in the performance of a duty specially enjoined
by law, are prima facie evidence of the facts therein stated. (Dimaguila vs. Monteiro, 714 SCRA
565 [2014])
Hearsay evidence is admissible in determining probable cause in a preliminary investigation

because such investigation is merely preliminary, and does not finally adjudicate rights and
obligations of parties. (Estrada vs. Office of the Ombudsman, 748 SCRA 1 [2015])
——o0o——
G.R. No. 168078. January 13, 2016.*
FABIO CAHAYAG and CONRADO RIVERA, petitioners, vs. COMMERCIAL CREDIT

CORPORATION, represented by its President, LEONARDO B. ALEJANDRO; TERESITA T.
QUA, assisted by her husband ALFONSO MA. QUA; and the REGISTER OF DEEDS OF LAS
PIÑAS, METRO MANILA, DISTRICT IV, respondents.
G.R. No. 168357. January 13, 2016.*
DULOS REALTY & DEVELOPMENT CORPORATION, represented by its President,

JUANITO C. DULOS; and MILAGROS E. ESCALONA, and ILUMINADA D. BALDOZA,
petitioners, vs. COMMERCIAL CREDIT CORPORATION, represented by its President,
LEONARDO B. ALEJANDRO; TERESITA T. QUA, assisted by her husband ALFONSO MA.
QUA; and the REGISTER OF DEEDS OF LAS PIÑAS, METRO MANILA, DISTRICT IV,
respondents.
Interpretation of Documents; Contra Proferentem Rule; Words and Phrases; The contra
proferentem rule provides that in the interpretation of documents, ambiguities are to be
construed against the drafter.—The contra proferentem rule finds no application to this case.
The doctrine provides that in the interpretation of documents, ambiguities are to be construed
against the drafter. By its very nature, the precept assumes the existence of an ambiguity in the
contract, which is why contra proferentem is also called the ambiguity doctrine. In this case, the
Deed of Real Estate Mortgage clearly establishes that the improvements found on the real
properties listed therein are included as subject-matter of the contract. It covers not only the real
properties, but the buildings and improvements thereon as well.
Remedial Law; Civil Procedure; Appeals; The general rule that the Supreme Court (SC) is
bound by the factual findings of the Court
_______________
* FIRST DIVISION.
256
Cahayag vs. Commercial Credit Corporation
of Appeals (CA) must yield in this case, as it falls under one (1) of the exceptions: when the
findings of the CA are contradicted by the evidence on record.—At this juncture, we note that the
CA, for reasons unknown, specified 29 September 1980, and not 29 March 1981, as the date of
the execution of the Contract to Sell in its Decision. Respondent Qua has raised this point in her
Memorandum filed with us. This Court cannot be bound by the factual finding of the CA with
regard to the date of the Contract to Sell in favor of Cahayag. The general rule that the Court is
bound by the factual findings of the CA must yield in this case, as it falls under one of the
exceptions: when the findings of the CA are contradicted by the evidence on record. In this case,
there is nothing in the records to support the CA’s conclusion that the Contract to Sell was
executed on 29 September 1980. The evidence on record, however, reveals that the correct date
is 29 March 1981.
Civil Law; Mortgages; Registration of the mortgage establishes a real right or lien in favor of
the mortgagee, as provided by Articles 1312 and 2126 of the Civil Code.—Registration of the
mortgage establishes a real right or lien in favor of the mortgagee, as provided by Articles 1312
and 2126 of the Civil Code. Corollary to the rule, the lien has been treated as “inseparable from
the property inasmuch as it is a right in rem.” In other words, it binds third persons to the
mortgage.
Same; Same; The purpose of registration is to notify persons other than the parties to the
contract that a transaction concerning the property was entered into.—The purpose of
registration is to notify persons other than the parties to the contract that a transaction concerning
the property was entered into. Ultimately, registration, because it provides constructive notice to
the whole world, makes the certificate of title reliable, such that third persons dealing with
registered land need only look at the certificate to determine the status of the property.
Same; Sales; The general rule is that the purchaser is not required to go beyond the Torrens title
if there is nothing therein to indicate any cloud or vice in the ownership of the property or any
encumbrance thereon; The exception arises when the purchaser or mortgagee has knowledge of
a defect in the vendor’s title or lack thereof, or is aware of sufficient facts to induce a reasonably
prudent
257
VOL. 780, JANUARY 13, 2016 257
person to inquire into the status of the property under litigation.—This Court stated therein the
general rule that the purchaser is not required to go beyond the Torrens title if there is nothing
therein to indicate any cloud or vice in the ownership of the property or any encumbrance
thereon. The case nonetheless provided an exception to the general rule. The exception arises
when the purchaser or mortgagee has knowledge of a defect in the vendor’s title or lack thereof,
or is aware of sufficient facts to induce a reasonably prudent person to inquire into the status of
the property under litigation. The Court applied the exception, taking into consideration the fact
that GSIS, the mortgagee, was a financing institution.
Foreclosure of Mortgage; Redemption; In extrajudicial foreclosures, the law grants mortgagors

or their successors-in-interest an opportunity to redeem the property within one (1) year from the
date of the sale. The 1-year period has been jurisprudentially held to be counted from the
registration of the foreclosure sale with the Register of Deeds; Exception.—When it comes to
extrajudicial foreclosures, the law grants mortgagors or their successors-in-interest an
opportunity to redeem the property within one year from the date of the sale. The one-year period
has been jurisprudentially held to be counted from the registration of the foreclosure sale with
the Register of Deeds. An exception to this rule has been carved out by Congress for juridical
mortgagors. Section 47 of the General Banking Law of 2000 shortens the redemption period to
within three months after the foreclosure sale or until the registration of the certificate of sale,
whichever comes first. The General Banking Law of 2000 came into law on 13 June 2000. If the
redemption period expires and the mortgagors or their successors-in-interest fail to redeem the
foreclosed property, the title thereto is consolidated in the purchaser. The consolidation confirms
the purchaser as the owner of the property; concurrently, the mortgagor — for failure to exercise
the right of redemption within the period — loses all interest in the property.
Civil Law; Sales; There is an established rule under the law on sales that one cannot give what
one does not have.—Undeniably, there is an established rule under the law on sales that one
cannot give what one does not have (Nemo dat quod non habet). The CA, however, confuses the
application of this rule with respect to time. It makes the nemo dat quod non habet rule a
requirement for the perfection of a contract of sale, such that a violation thereof goes into
258
the validity of the sale. But the Latin precept has been jurisprudentially held to apply to a
contract of sale at its consummation stage, and not at the perfection stage.
Same; Same; Ownership is not a requirement for a valid contract of sale; it is a requirement for
a valid transfer of ownership.—Case law also provides that the fact that the seller is not the
owner of the subject matter of the sale at the time of perfection does not make the sale void.
Hence, the lesson: for title to pass to the buyer, the seller must be the owner of the thing sold at
the consummation stage or at the time of delivery of the item sold. The seller need not be the
owner at the perfection stage of the contract, whether it is of a contract to sell or a contract of
sale. Ownership is not a requirement for a valid contract of sale; it is a requirement for a valid
transfer of ownership.
Same; Same; Innocent Purchaser for Value; Words and Phrases; An innocent purchaser for
value is one who “buys the property of another without notice that some other person has a right
to or interest in it, and who pays a full and fair price at the time of the purchase or before
receiving any notice of another person’s claim.”—An innocent purchaser for value is one who
“buys the property of another without notice that some other person has a right to or interest in it,
and who pays a full and fair price at the time of the purchase or before receiving any notice of
another person’s claim.” The concept thus presupposes that there must be an adverse claim or
defect in the title to the property to be purchased by the innocent purchaser for value.
Remedial Law; Evidence; Formal Offer of Evidence; Evidence not formally offered may be
admitted and considered by the trial court so long as the following requirements obtain: (1) the
evidence is duly identified by testimony duly recorded; and (2) the evidence is incorporated into
the records of the case.—Evidence not formally offered may be admitted and considered by the
trial court so long as the following requirements obtain: (1) the evidence is duly identified by
testimony duly recorded; and (2) the evidence is incorporated into the records of the case. The
exception does not apply to the case of Baldoza. While she duly identified the Contract to Sell
during her direct examination, which was duly recorded, Exhibit “L” was not incorporated into
the records.
259
VOL. 780, JANUARY 13, 2016 259
Same; Memorandum on Appeal; Issues raised in previous pleadings but not included in the
memorandum are deemed waived or abandoned.—Equally important is the fact that petitioners
failed to include the issue over Exhibit “L” in any of the Memoranda they filed with us. The
omission is fatal. Issues raised in previous pleadings but not included in the memorandum
are deemed waived or abandoned (A.M. No. 99-2-04-SC). As they are “a summation of the
parties’ previous pleadings, the memoranda alone may be considered by the Court in deciding or
resolving the petition.” Thus, even as the issue was raised in the Petition, the Court may not
consider it in resolving the case on the ground of failure of petitioners to include the issue in the
Memorandum. They have either waived or abandoned it.
Same; Civil Procedure; Appeals; Theories and issues not raised at the trial level will not be
considered by a reviewing court on the ground that they cannot be raised for the first time on
appeal.—Petitioners allege before the Court that the mortgage contract in this case was not
approved by the HLURB. They claim that this violates Section 18 of P.D. 957 and results in the
nullity of the mortgage. Respondents have disputed the claim and counterargue that the
allegation of the petitioners is not supported by evidence. Respondents likewise aver that the
argument was raised for the first time on appeal. It is rather too late in the day for petitioners to
raise this argument. Parties are not permitted to change their theory of a case at the appellate
stage. Thus, theories and issues not raised at the trial level will not be considered by a reviewing
court on the ground that they cannot be raised for the first time on appeal. Overriding
considerations of fair play, justice and due process dictate this recognized rule. This Court cannot
even receive evidence on this matter. Petitioners’ original theory of the case is the nullity of the
mortgage on the grounds previously discussed. If petitioners are allowed to introduce their new
theory, respondents would have no more opportunity to rebut the new claim with contrary
evidence, as the trial stage has already been terminated. In the interest of fair play and justice, the
introduction of the new argument must be barred.
PETITIONS for review on certiorari of the decision and resolution of the Court of Appeals.
260
Aguirre and Aguirre Law Firm for F. Cahayag and C. Rivera.
Felino M. Ganal for T. Qua.
Socrates M. Arevalo for Dulos Realty & Development Corp., et al.
Ma. Loreto U. Navarro for Penta Capital Finance Corp.
SERENO, CJ.:
Before us are consolidated Rule 45 Petitions1 seeking to nullify the Court of Appeals’ (CA)
Decision dated 2 November 20042 and Resolution dated 10 May 20053 in C.A.-G.R. CV No.
47421. The CA Decision reversed and set aside the Decision dated 6 July 1992 issued by the
Regional Trial Court (RTC), Branch 65 of Makati.4
Factual Antecedents
Petitioner Dulos Realty was the registered owner of certain residential lots covered by Transfer
Certificate of Title (TCT) Nos. S-39767, S-39775, S-28335, S-39778 and S-29776, located at
Airmen’s Village Subdivision, Pulang Lupa II, Las Piñas, Metro Manila.
On 20 December 1980, Dulos Realty obtained a loan from respondent CCC in the amount of
P300,000. To secure the loan, the realty executed a Real Estate Mortgage over the
_______________
1 Under Rule 45 of the Rules of Court; Rollo (G.R. No. 168078), pp. 3-31; (G.R. No. 168357)
pp. 11-47.
2 Penned by Perlita J. Tria-Tirona, Associate Justice and Chairperson, Fifth Division, and
concurred in by Associate Justice and Chairperson Jose C. Reyes, Jr. and Associate Justice
Ruben Reyes, Jr., Rollo (G.R. No. 168078), pp. 33-58.
3 Id., at pp. 61-62.
4 Penned by Judge Salvador S. Abad Santos; Records, pp. 492-493.
261
VOL. 780, JANUARY 13, 2016 261

subject properties in favor of respondent. The mortgage was duly annotated on the certificates of
title on 3 February 1981.5
On 29 March 1981, Dulos Realty entered into a Contract to Sell with petitioner Cahayag over the
lot covered by TCT No. S-39775.6
On 12 August 1981, Dulos Realty entered into another Contract to Sell, this time with petitioner
Rivera over the lot covered by TCT No. S-28335.7
Dulos Realty defaulted in the payment of the mortgage loan, prompting respondent CCC to
initiate extrajudicial foreclosure proceedings. On 17 November 1981, the auction sale was held,
with respondent CCC emerging as the highest bidder.8
On 23 November 1981, a Certificate of Sale covering the properties, together with all the
buildings and improvements existing thereon, was issued in favor of CCC.9 The Certificate of
Sale was annotated on the corresponding titles to the properties on 8 March 1982.10
Thereafter, or on 13 January 1983, Dulos Realty entered into a Contract to Sell with petitioner
Escalona over the house and lot covered by TCT No. S-29776.11
On 10 November 1983, an Affidavit of Consolidation in favor of respondent CCC dated 26

August 1983 was annotated on the corresponding titles to the properties.12 By virtue of the
affidavit, TCT Nos. S-39775, S-28335, S-39778 and S-29776 — all in the name of Dulos Realty
— were cancelled and TCT
_______________
5 Id., at pp. 20-23.
6 Id., at pp. 36-38.
7 CA Rollo, p. 121.
8 Records, p. 210.
9 Id., at pp. 210-211.
10 Id., at p. 209.
11 Id., at pp. 87-88.
12 Id., at p. 209.
262
Nos. 74531, 74532, 74533 and 74534 were issued in the name of respondent CCC on the same
day.13
On 10 December 1983, Dulos Realty entered into a Deed of Absolute Sale with petitioner
Baldoza over the property covered by TCT No. S-39778, together with the improvements
existing thereon.14
On 21 December 1983, respondent CCC, through a Deed of Absolute Sale, sold to respondent
Qua the same subject properties, now covered by TCT Nos. 74531, 74532, 74533 and 74534,
which were in the name of respondent CCC. The sale was duly annotated on the corresponding
titles to the properties on 5 January 1984.15
Accordingly, TCT Nos. 74531, 74532, 74533 and 74534 were cancelled; and TCT Nos. 77012,
77013, 77014 and 770015 were issued to respondent Qua on 5 January 1984.16
Subsequently, respondent Qua filed ejectment suits individually against petitioners Dulos
Realty,17 Cahayag,18 Escalona,19 and Rivera20 before the Metropolitan Trial Court (MTC) of
Las Piñas, Metro Manila.
The MTC rendered Decisions in favor of respondent Qua. It ordered Dulos Realty, Escalona,
Cahayag, and Rivera to vacate the properties.
On 8 March 1988, the MTC issued a Writ of Execution to enforce its Decision dated 20 October
1986 in Civil Case No. 2257 against Dulos Realty “and all persons claiming right under
defendant.”21 The subject of the writ of execution was
_______________
13 Id., at pp. 214-217.
14 Id., at p. 84.
15 Id., at p. 213.
16 Id., at pp. 218-220.
17 Docketed as Civil Case No. 2257.

18 Civil Case No. 2203.
21 Records, p. 112.
263
VOL. 780, JANUARY 13, 2016 263
Lot 11, Block II,22 which was the lot sold by Dulos Realty to petitioner Baldoza.
Complaint for Annulment

of Sheriff’s Sale and Other Documents
On 5 December 1988, petitioners filed a Complaint against respondents for the “Annulment of
Sheriff[’s] Sale and Other Documents with Preliminary Injunction and/or Temporary Restraining
Order” before the RTC of Makati City, where it was docketed as Civil Case No. 88-2599.23
The Complaint24 alleged that petitioners Cahayag, Rivera, Escalona and Baldoza were owners
of the properties in question by virtue of Contracts of Sale individually executed in their favor,
and that the Real Estate Mortgage between Dulos Realty and defendant-appellant CCC did not
include the houses, but merely referred to the lands themselves.25 Thus, the inclusion of the
housing units in the Deed of Sale executed by respondent CCC in favor of respondent Qua was
allegedly illegal.26
Respondents failed to file an answer within the reglementary period. Subsequently, they were
declared in default. They appealed the order of default but their appeal was dismissed on 8
February 1990.27
On 6 July 1992, the RTC rendered a Decision,28 which ruled that the houses were not included
in the Real Estate Mortgage; and that the foreclosure of the mortgage over the subject lots, as
well as the housing units, was not valid.29 The
_______________
22 Id.
23 Id., at p. 4.
24 Id.
25 Id., at pp. 9, 11-12.
26 Id.
27 Id., at p. 492.
28 Id., at pp. 492-493.
29 Id.
264
trial court held that this conclusion was established by the plaintiffs’ evidence, which went
unrefuted when defendants were declared in default.30
The CA’s Decision
Respondents proceeded to the CA, where they secured a favorable ruling. In its Decision
rendered on 2 November 2004,31 the appellate court held that the extrajudicial foreclosure was
valid, since the Real Estate Mortgage clearly included the buildings and improvements on the
lands, subject of the mortgage.
After establishing the inclusion of the housing units in the Real Estate Mortgage, the CA
determined the rights of the buyers in the Contracts to Sell/Contract of Sale vis-à-vis those of the
mortgagee and its successor-in-interest.
In the cases of petitioners Cahayag, Rivera and Escalona, the CA pointed to lack of evidence
establishing full payment of the price. As supporting reason, it stated that even if there were full
payment of the purchase price, the mortgagee and the latter’s successor-in-interest had a better
right over the properties. The CA anchored this conclusion on the fact that the Real Estate
Mortgage was annotated at the back of the titles to the subject properties before the execution of
the Contracts to Sell. It said that the annotation constituted sufficient notice to third parties that
the property was subject to an encumbrance. With the notice, Cahayag, Rivera and Escalona
should have redeemed the properties within the one-year redemption period, but they failed to do
so. Consequently, the right of respondent CCC over the properties became absolute, and the
transfer to respondent Qua was valid.
As regards Baldoza, though the case involved a Contract of Sale, and not a mere Contract to Sell,
the CA declared the
_______________
30 Id.
31 Rollo (G.R. No. 168078), pp. 33-58.
265
VOL. 780, JANUARY 13, 2016 265
transaction null and void on the purported ground that Dulos was no longer the owner at the time
of the sale.
The CA accordingly reversed and set aside the RTC Decision, dismissed the case for lack of
merit, and ordered petitioners to surrender possession of the properties to respondent Qua.
The Rule 45 Petitions
On 30 May 2005, petitioners Cahayag and Rivera filed their Rule 45 Petition with this Court.32
For their part, petitioners Dulos Realty, Baldoza and Escalona filed their Rule 45 Petition on 19
July 2005.33
In the Petition under G.R. No. 168357, it is argued, among others, that the Deed of Absolute Sale
in favor of petitioner Baldoza was the culmination of a Contract to Sell between her and Dulos
Realty. She claims that the Contract to Sell, marked as Exhibit “L” during the trial, was
executed on 10 January 1979, which preceded the execution of the Deed of Real Estate Mortgage
and the registration of the mortgage on 3 February 1981.34 After full payment of the price under
the Contract to Sell, Dulos Realty executed the Deed of Absolute Sale. In other words, Baldoza
is arguing that she has a better title to the property than respondent Qua since the unregistered
contract to sell in her favor was executed before the registration of the mortgage. But the CA
ignored Exhibit “L” and merely stated that there was only a Deed of Absolute Sale in favor of
Baldoza.
The Arguments
The arguments of petitioners, as stated in their respective Memoranda, are summarized as

follows:
_______________
32 Id., at p. 3.
33 Rollo (G.R. No. 168357), p. 11.
34 Id., at pp. 39-40.
266
Coverage of the Mortgage
Initially, petitioners attempt to stave off the effects of the extrajudicial foreclosure by attacking
the coverage of the Real Estate Mortgage with respect to its subject-matter.35 They draw
attention to the fact that the List of Properties attached to the Deed of Real Estate Mortgage
refers merely to the lands themselves and does not include the housing units found thereon.36
Petitioners also contend that doubts should be resolved against the drafter inasmuch as the
agreement is a contract of adhesion, having been prepared by the mortgagee.37
As backup argument for the theory that the houses are outside the coverage of the mortgage
agreement, petitioners argue that the improvements were not owned by Dulos Realty, the
mortgagor, but by its buyers under the Contracts to Sell and Contracts of Sale; hence, those
improvements are excluded from the coverage of the real estate mortgage.
Validity of the Mortgage
Petitioners next challenge the validity of the foreclosure sale on the ground that the mortgage
executed by the mortgagor (petitioner Dulos Realty) and the mortgagee (respondent CCC) was
null and void.38 Petitioners claim that Dulos Realty
_______________
35 Id., at p. 201; Rollo (G.R. No. 168078), p. 294.
36 Id.
37 Id., at p. 204; Rollo (G.R. No. 168078), p. 297.
38 For purposes of validity of a mortgage, Article 2085 of the New Civil Code requires, among
other things, ownership of the subject-matter of the mortgage by the mortgagor. See Torbela v.
Rosario, G.R. Nos. 140528 & 140553, 7 December 2011, 661 SCRA 633. Further, Article 2085
of the New Civil Code reads:
Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
267
VOL. 780, JANUARY 13, 2016 267
was no longer the owner of the properties it had mortgaged at the time of the execution of the
mortgage contract, as they were sold under existing Contracts to Sell and Deed of Absolute
Sale.39
Petitioners Cahayag, Rivera and Escalona lean on the unregistered Contracts to Sell they had
individually executed with Dulos Realty as vendor. For his part, petitioner Baldoza points to the
Deed of Absolute Sale executed by Dulos Realty in his favor.
Better Right over the Properties
Petitioners claim that respondent CCC cannot claim to be a mortgagee in good faith, since it is a
financial institution.40 As such, respondent CCC knew that it was dealing with a subdivision
developer, which was in the business of selling subdivision lots.41 Dela Merced v. GSIS42 which
states that the general rule that a mortgagee need not look beyond the title cannot benefit banks
and other financial institutions, as a higher due diligence requirement is imposed on them.
They also raise the contention that lack of full payment of the purchase price under the Contracts
to Sell on the part of
_______________
(1) That they be constituted to secure the fulfillment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property.
39 Rollo (G.R. No. 168078), p. 300.
40 Rollo (G.R. No. 168357), pp. 212-215.
41 Rollo (G.R. No. 168078), pp. 21-26.
42 417 Phil. 324; 365 SCRA 1 (2001).
268
Cahayag, Rivera and Escalona was due to respondent Qua’s “harassment and unlawful
actuations.”43
Petitioners further state that respondent Qua is a mere transferee of respondent CCC and that,
like a stream, she cannot rise higher than her source. They also argue that Qua is not an innocent
purchaser for value, since she is a former investor of
respondent CCC and one of its principal stockholders.44
No Prior Written HLURB

Approval of the Mortgage
Finally, petitioners allege that the mortgage contract in this case was not approved by the
HLURB, which violates Section 18 of P.D. 95745 and results in the nullity of the mortgage.46
Exhibit “L” as Evidence

of a Prior Contract to Sell
_______________
43 Rollo (G.R. No. 168357), p. 208.
44 Rollo (G.R. No. 168078), p. 301.
45 Section 18 of the Subdivision and Condominium Buyers’ Protective Decree, issued on 12

July 1976, states:
Section 18. Mortgages.—No mortgage on any unit or lot shall be made by the owner or

developer without prior written approval of the Authority. Such approval shall not be granted
unless it is shown that the proceeds of the mortgage loan shall be used for the development of the
condominium or subdivision project and effective measures have been provided to ensure such
utilization. The loan value of each lot or unit covered by the mortgage shall be determined and
the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his
option, pay his installment for the lot or unit directly to the mortgagee who shall apply the
payments to the corresponding mortgage indebtedness secured by the particular lot or unit being
paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full
payment thereto. (Emphasis supplied)
46 Rollo (G.R. No. 168078), pp. 299-301.
269
VOL. 780, JANUARY 13, 2016 269
The matter of CA ignoring Exhibit “L” as evidence of a prior unregistered Contract to Sell was
not included in the Memoranda of petitioners.
The Issues
Based on the foregoing facts and arguments raised by petitioners, the threshold issues to be
resolved are the following:
1. Whether the real mortgage covers the lands only, as enumerated in the Deed of Real Estate
Mortgage or the housing units as well;
2. Whether Dulos Realty was the owner of the properties it had mortgaged at the time of its
execution in view of the various Contracts to Sell and Deed of Absolute Sale respectively
executed in favor of petitioners Cahayag, Rivera, Escalona and Cahayag;
3. Who, as between petitioners-buyers and respondent Qua, has a better right over the properties?
4. Whether the Deed of Absolute Sale in favor of Baldoza was not preceded by a Contract to Sell
and full payment of the purchase price; and
5. Whether the mortgage is void on the ground that it lacked the prior written approval of the
HLURB.
Our Ruling
We deny the Petition for reasons as follows.
1. Attack on the Subject-matter

of the Real Estate Mortgage
It is true that the List of Properties attached to the Deed of Real Estate Mortgage refers merely to
the lands themselves and does not include the housing units found thereon. A plain reading of the
Real Estate Mortgage, however, reveals that it covers the housing units as well. We quote the
pertinent provision of the agreement:
270

[T]he MORTGAGOR has transferred and conveyed and, by these presents, do hereby
transfer and convey by way of FIRST MORTGAGE unto the MORTGAGEE, its
successors and assigns the real properties described in the list appearing at the back of this
document and/or in a supplemental document attached hereto as Annex “A” and made and
integral part hereof, together with all the buildings and/or other improvements now
existing or which may hereafter be place[d] or constructed thereon, all of which the
MORTGAGOR hereby warrants that he is the absolute owner and exclusive possessor
thereof, free from all liens and encumbrances of whatever kind and nature. x x x.47
(Emphasis ours)
Thus, the housing units would fall under the catchall phrase “together with all the buildings
and/or other improvements now existing or which may hereafter be placed or constructed
thereon.”
The contra proferentem rule finds no application to this case. The doctrine provides that in the
interpretation of documents, ambiguities are to be construed against the drafter.48 By its very
nature, the precept assumes the existence of an ambiguity in the contract, which is why contra
proferentem is also called the ambiguity doctrine.49 In this case, the Deed of Real Estate
Mortgage clearly establishes that the improvements found on the real properties listed therein are
included as subject-matter of the contract. It covers not only the real properties, but the buildings
and improvements thereon as well.
2. Challenge to the Foreclo-

sure Sale with Regard to
the Ownership of the Mort-
gaged Properties
_______________
47 Records, p. 16.
48 Black’s Law Dictionary, p. 995 (8th ed., 2004).
49 Id.
271
VOL. 780, JANUARY 13, 2016 271

To begin with, the Contracts to Sell and Deed of Absolute Sale could not have posed an
impediment at all to the mortgage, given that these contracts had yet to materialize when the
mortgage was constituted. They were all executed after the constitution of the Real Estate
Mortgage on 20 December 1980.
As regards Cahayag, the Contract to Sell in his favor was executed on 29 March 1981, more than
three months after the execution of the mortgage contract.50 This is taken from the Contract to
Sell itself, which forms part of the records of this case.51
At this juncture, we note that the CA, for reasons unknown, specified 29 September 1980,52 and
not 29 March 1981, as the date of the execution of the Contract to Sell in its Decision.
Respondent Qua has raised this point in her Memorandum filed with us. This Court cannot be
bound by the factual finding of the CA with regard to the date of the Contract to Sell in favor of
Cahayag. The general rule that the Court is bound by the factual findings of the CA must yield in
this case, as it falls under one of the exceptions: when the findings of the CA are contradicted by
the evidence on record.53 In this case, there is nothing in the records to support the CA’s
conclusion that the Contract to Sell was executed on 29 September 1980. The evidence on
record, however, reveals that the correct date is 29 March 1981.
In the case of petitioner Rivera, the corresponding Contract to Sell in his favor was executed
only on 12 August 1981, or almost eight months after the perfection of the mortgage contract on
20 December 1980.
_______________
50 Records, p. 210.
51 Id.
52 CA Decision, p. 2. CA Rollo, p. 120.
53 Benito v. People, G.R. No. 204644, 11 February 2015, 750 SCRA 450.
272
The Contract to Sell in favor of Escalona was executed on 13 January 1983, almost two years
after the constitution of the mortgage on 20 December 1980.
Lastly, Dulos Realty executed the Deed of Absolute Sale in favor of petitioner Baldoza on 10
December 1983, which was almost three years from the time the mortgage contract was executed
on 20 December 1980.
There was neither a contract to sell nor a deed of absolute sale to speak of when the mortgage
was executed.
Petitioners equate a contract to sell to a contract of sale, in which the vendor loses ownership
over the property upon its delivery.54 But a contract to sell, standing alone, does not transfer
ownership.55 At the point of perfection, the seller under a contract to sell does not even have the
obligation to transfer ownership to the buyer.56 The obligation arises only when the buyer fulfills
the condition: full payment of the pur-
_______________
54 Flancia v. Court of Appeals, 496 Phil. 693, 703; 457 SCRA 224, 230 (2005).
55 A contract to sell is an agreement stipulating that the seller shall execute a deed of sale only
upon or after full payment of the purchase price. It is not a contract of sale. The stipulation to
execute a deed of sale upon full payment of the purchase price signifies that the vendor reserves
title to the property until full payment. (Diego v. Diego, G.R. No. 179965, 20 February 2013, 691
SCRA 361)
56 Luzon Development Bank v. Enriquez, 654 Phil. 315; 639 SCRA 332 (2011), sheds light on
the nature of a contract to sell:
[A] contract to sell is one where the prospective seller reserves the transfer of title to the
prospective buyer until the happening of an event, such as full payment of the purchase price.
What the seller obliges himself to do is to sell the subject property only when the entire amount
of the purchase price has already been delivered to him. “In other words, the full payment of the
purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the
obligation to sell from arising and thus, ownership is retained by the prospective seller without
further remedies by the prospective buyer.” It does not, by itself, transfer ownership to the buyer.
(Emphasis supplied)
273
VOL. 780, JANUARY 13, 2016 273
chase price.57 In other words, the seller retains ownership at the time of the execution of the
contract to sell.58
There is no evidence to show that any of petitioners Cahayag, Rivera and Escalona were able to
effect full payment of the purchase price, which could have at least given rise to the obligation to
transfer ownership. Petitioners Cahayag and Rivera even admit that they defaulted on their
obligations under their respective Contracts to Sell, although they attribute the default to
respondent Qua’s “harassment and unlawful actuations.”59 The statement, though, was a mere
allegation that was left unsubstantiated and, as such, could not qualify as proof of anything.60
3. Who Has a Better Right

over the Properties
Registration of the mortgage
bound the buyers under the
Contracts to Sell
Registration of the mortgage establishes a real right or lien in favor of the mortgagee, as
provided by Articles 131261 and 212662
_______________
57 Id.
58 Id.
59 See Petition dated 28 May 2005, Rollo (G.R. No. 168078), p. 20.
60 Real v. Belo, 542 Phil. 109, 127; 513 SCRA 111, 125 (2007).
61 Article 1312 of the New Civil Code (NCC) states:
Art. 1312. In contracts creating real rights, third persons who come into possession of the
object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the
Land Registration laws.
62 Article 2126 of the NCC states:
Art. 2126. The mortgage directly and immediately subjects the property upon which it is
imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it
was constituted.
274
of the Civil Code.63 Corollary to the rule, the lien has been treated as “inseparable from the
property inasmuch as it is a right in rem.”64 In other words, it binds third persons to the
mortgage.
The purpose of registration is to notify persons other than the parties to the contract that a
transaction concerning the property was entered into.65 Ultimately, registration, because it
provides constructive notice to the whole world, makes the certificate of title reliable, such that
third persons dealing with registered land need only look at the certificate to determine the status
of the property.66
In this case, the Real Estate Mortgage over the property was registered on 3 February 1981. On
the other hand, the Contracts to Sell were all executed after the registration of the mortgage. The
Contract to Sell in favor of petitioner Cahayag was executed on 29 March 1981, or almost two
months after the registration of the mortgage. The corresponding Contract to Sell in favor of
Rivera was executed only on 12 August 1981, roughly six months after the registration of the
mortgage contract. Lastly, the Contract to Sell in favor of Escalona was executed on 13 January
1983, or nearly two years after the registration of the mortgage on 3 February 1981.
Consequently, petitioners Cahayag, Rivera and Escalona, were bound to the mortgage executed
between mortgagor Dulos Realty and mortgagee CCC, by virtue of its registration. Definitely,
the buyers each had constructive knowledge of the existence of the mortgage contract when they
individually executed the Contracts to Sell.
_______________
63 Paderes v. Court of Appeals, 502 Phil. 76; 463 SCRA 504 (2005).
64 Garcia v. Villar, G.R. No. 158891, 27 June 2012, 675 SCRA 80.
65 Gutierrez v. Mendoza-Plaza, 622 Phil. 844, 858; 607 SCRA 807, 817 (2009).
66 People v. Reyes, 256 Phil. 1015, 1027; 175 SCRA 597, 604 (1989).
275
VOL. 780, JANUARY 13, 2016 275
Dela Merced v. GSIS not applicable
Petitioner invokes the above case. Dela Merced involved a clash between an unrecorded contract
to sell and a registered mortgage contract. The contract to sell between the mortgagors (Spouses
Zulueta) and the buyer (Francisco Dela Merced) was executed before the former’s constitution
of the mortgage in favor of GSIS. Because the Zuluetas defaulted on their loans, the mortgage
was foreclosed; the properties were sold at public auction to GSIS as the highest bidder; and the
titles were consolidated after the spouses’ failure to redeem the properties within the one-year
redemption period. GSIS later sold the contested lot to Elizabeth D. Manlongat and Ma. Therese
D. Manlongat. However, Dela Merced was able to fully pay the purchase price to Spouses
Zulueta, who executed a Deed of Absolute Sale in his favor prior to the foreclosure sale.
This Court stated therein the general rule that the purchaser is not required to go beyond the
Torrens title if there is nothing therein to indicate any cloud or vice in the ownership of the
property or any encumbrance thereon. The case nonetheless provided an exception to the general
rule. The exception arises when the purchaser or mortgagee has knowledge of a defect in the
vendor’s title or lack thereof, or is aware of sufficient facts to induce a reasonably prudent person
to inquire into the status of the property under litigation. The Court applied the exception, taking
into consideration the fact that GSIS, the mortgagee, was a financing institution.
But Dela Merced is not relevant here. Dela Merced involved a Contract to Sell that was executed
prior to the mortgage, while the Contracts to Sell in this case were all executed after the
constitution and registration of the mortgage.
In Dela Merced, since GSIS had knowledge of the contract to sell, this knowledge was
equivalent to the registration of the Contract to Sell. Effectively, this constitutes registration
canceled out the subsequent registration of the mortgage. In
276
other words, the buyer under the Contract to Sell became the first to register. Following the
priority in time rule in civil law, the lot buyer was accorded preference or priority in right in
Dela Merced.
In this case, the registration of the mortgage, which predated the Contracts to Sell, already
bound the buyers to the mortgage. Consequently, the determination of good faith does not come
into play.
Dela Merced materially differs from this case on another point. The Contract to Sell in favor of
Dela Merced was followed by full payment of the price and execution of the Deed of
Absolute Sale. In this case, the Contract to Sell in favor of each of petitioners Cahayag, Rivera
and Escalona, is not coupled with full payment and execution of a deed of absolute sale.
This case also needs to be distinguished from Luzon Development Bank v. Enriquez.67 In that
case, the unregistered Contract to Sell was executed after the execution of the mortgage. Instead
of resorting to foreclosure, the owner/developer and the bank entered into a dacion en pago. The
Court declared that the bank was bound by the Contract to Sell despite the non-registration of the
contract. It reasoned that the bank impliedly assumed the risk that some of the units might have
been covered by contracts to sell. On the other hand, the Court pronounced the mortgage to be
void, as it was without the approval of the Housing and Land Use Regulatory Board (HLURB).
The Court consequently ordered the unit buyer in that case to pay the balance to the bank, after
which the buyer was obliged to deliver a clean title to the property.
There are points of distinction between the case at bar and Luzon Development Bank. First, there
is a definite finding in Luzon Development Bank that the mortgage was without prior HLURB
approval, rendering the mortgage void. In the
_______________
67 Supra note 56.
277
VOL. 780, JANUARY 13, 2016 277
present case, as will be discussed later, there is no proof from the records on whether the
HLURB did or did not approve the mortgage. Second, Luzon Development Bank did not even
reach the foreclosure stage of the mortgage. This case, however, not only reached the foreclosure
stage; it even went past the redemption period, consolidation of the title in the owner, and sale of
the property by the highest bidder to a third person.
The first distinction deserves elaboration. The absence of prior written approval of the mortgage
by the HLURB rendered it void. This effectively wiped out any discussion on whether
registration bound the installment buyer. In fact, Luzon Development Bank did not even bother to
state whether the mortgage was registered or not. More important, the tables were turned when
Luzon Development Bank held that the bank was bound to the Contract to Sell in view of the
latter’s constructive notice of the Contract to Sell. Stated differently, the actually unregistered
Contract to Sell became fictionally registered, making it binding on the bank.
In this case, on account of its registration, and the fact that the contracts were entered into after
it, the mortgage is valid even as to petitioners.
No Redemption within One Year
from the Foreclosure Sale

When it comes to extrajudicial foreclosures, the law68 grants mortgagors or their successors-in-
interest an opportunity to redeem the property within one year from the date of the sale. The one-
year period has been jurisprudentially held to be counted from the registration of the foreclosure
sale with the Register of Deeds.69 An exception to this rule has been carved out by Congress for
juridical mortgagors. Section 47 of the
_______________
68 Section 6 of Act No. 3135, as amended.
69 See also UCPB v. Lumbo, G.R. No. 162757, 11 December 2013, 712 SCRA 217.
278
General Banking Law of 2000 shortens the redemption period to within three months after the
foreclosure sale or until the registration of the certificate of sale, whichever comes first.70 The
General Banking Law of 2000 came into law on 13 June 2000.
If the redemption period expires and the mortgagors or their successors-in-interest fail to redeem
the foreclosed property, the title thereto is consolidated in the purchaser.71 The consolidation
confirms the purchaser as the owner of the property; concurrently, the mortgagor — for failure to
exercise the right of redemption within the period — loses all interest in the property.72
We now apply the rules to this case.
As the foreclosure sale took place prior to the advent of the General Banking Law of 2000, the
applicable redemption period is one year. In this case, because the Certificate of Sale in favor of
respondent CCC was registered on 8 March 1982, the redemption period was until 8 March
1983. It lapsed without any right of redemption having been exercised by Dulos Realty.
Consequently, the right of respondent CCC, as purchaser of the subject lots, became absolute. As
a matter of right, it was entitled to the consolidation of the titles in its name and to the possession
of those lots. Further, the right of
_______________
70 The second paragraph of Section 47 of the General Banking Law of 2000 reads:
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an
extrajudicial foreclosure, shall have the right to redeem the property in accordance with this
provision until, but not after, the registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale
prior to the effectivity of this Act shall retain their redemption rights until their expiration.
71 Id.
72 Id.
279
VOL. 780, JANUARY 13, 2016 279
respondent CCC over the lots was transferred to respondent Qua by virtue of the Deed of Sale
executed between them.
Given the foregoing considerations, respondent Qua, who now has title to the properties subject
of the various Contracts to Sell, is the lawful owner thereof.
Foreclosure Sale vs. Contract of Sale
When Dulos Realty executed a Deed of Absolute Sale covering the real property registered under
TCT No. S-39778 in favor of petitioner Baldoza on 10 December 1983, it was no longer the
owner of the property. Titles to the subject properties, including the one sold to Baldoza, had
already been consolidated in favor of respondent CCC as early as 10 November 1983. In fact, on
the same date, the titles to the subject lots in the name of Dulos Realty had already been
cancelled and new ones issued to respondent CCC.
The fact that Dulos Realty was no longer the owner of the real property at the time of the sale led
the CA to declare that the Contract of Sale was null and void. On this premise, the appellate court
concluded that respondent Qua had a better title to the property over petitioner Baldoza.
We find no error in the conclusion of the CA that respondent Qua has a better right to the
property. The problem lies with its reasoning. We therefore take a different route to reach the
same conclusion.
Proper place of nemo dat quod
non habet in the Law on Sales
Undeniably, there is an established rule under the law on sales that one cannot give what one
does not have (Nemo dat quod non habet).73 The CA, however, confuses the application
_______________
73 Noel v. Court of Appeals, G.R. Nos. 59550 & 60636, 11 January 1995, 240 SCRA 78; Nool v.
Court of Appeals, 342 Phil. 106, 124;
280
of this rule with respect to time. It makes the nemo dat quod non habet rule a requirement for the
perfection of a contract of sale, such that a violation thereof goes into the validity of the sale. But
the Latin precept has been jurisprudentially held to apply to a contract of sale at its
consummation stage, and not at the perfection stage.74
Cavite Development Bank v. Spouses Syrus Lim75 puts nemo dat quod non habet in its proper
place. Initially, the Court rules out ownership as a requirement for the perfection of a contract of
sale. For all that is required is a meeting of the minds upon the object of the contract and the
price. The case then proceeds to give examples of the rule. It cites Article 1434 of the Civil Code,
which provides that in case the seller does not own the subject matter of the contract at the time
of the sale, but later acquires title to the thing sold, ownership shall pass to the buyer. The Court
also refers to the rule as the rationale behind Article 1462, which deals with sale of “future
goods.”
Cavite Development Bank thereafter turns to Article 1459, which requires ownership by the seller
of the thing sold at the time of delivery or consummation stage of the sale. The Court explains
that if the rule were otherwise, the seller would not be able to comply with the latter’s obligation
to transfer ownership to the buyer under a perfected contract of sale. The Court ends the
discourse with the conclusion that “[i]t is at the consummation stage where the principle of nemo
dat quod non habet applies.”76
_______________
276 SCRA 149, 159 (1997); Tangalin v. Court of Appeals, 422 Phil. 358, 366; 371 SCRA 49, 56
(2001); Naval v. Court of Appeals, 518 Phil. 271, 285; 483 SCRA 102, 112 (2006); Midway
Maritime and Technological Foundation v. Castro, G.R. No. 189061, 6 August 2014, 732 SCRA
192.
74 Cavite Development Bank v. Lim, 381 Phil. 355, 365-366; 324 SCRA 346, 355-356 (2000).
75 Id.
76 Id.
281
VOL. 780, JANUARY 13, 2016 281
Case law also provides that the fact that the seller is not the owner of the subject matter of the
sale at the time of perfection does not make the sale void.77
Hence, the lesson: for title to pass to the buyer, the seller must be the owner of the thing sold at
the consummation stage or at the time of delivery of the item sold. The seller need not be the
owner at the perfection stage of the contract, whether it is of a contract to sell or a contract of
sale. Ownership is not a requirement for a valid contract of sale; it is a requirement for a valid
transfer of ownership.
Consequently, it was not correct for the CA to consider the contract of sale void. The CA
erroneously considered lack of ownership on the part of the seller as having an effect on the
validity of the sale. The sale was very much valid when the Deed of Absolute Sale between the
parties was executed on 10 December 1983, even though title to the property had earlier been
consolidated in favor of respondent CCC as early as 10 November 1983. The fact that Dulos
Realty was no longer the owner of the property in question at the time of the sale did not affect
the validity of the contract.
On the contrary, lack of title goes into the performance of a contract of sale. It is therefore
crucial to determine in this case if the seller was the owner at the time of delivery of the object of
the sale. For this purpose, it should be noted that execution of a public instrument evidencing a
sale translates to delivery.78 It transfers ownership of the item sold to the buyer.79
In this case, the delivery coincided with the perfection of the contract — the Deed of Absolute
Sale covering the real property in favor of petitioner Baldoza was executed on 10 December
1983. As already mentioned, Dulos Realty was no
_______________
77 Nool v. Court of Appeals, supra note 73.
78 Article 1498 of the Civil Code. See also Velarde v. Court of Appeals, 413 Phil. 360, 376; 361
SCRA 56, 66 (2001).
79 Id.
282
longer the owner of the property on that date. Accordingly, it could not have validly transferred
ownership of the real property it had sold to petitioner.
Thus, the correct conclusion that should be made is that while there was a valid sale, there was
no valid transfer of title to Baldoza, since Dulos Realty was no longer the owner at the time of
the execution of the Deed of Absolute Sale.
No Bad Faith on Qua
The contention that Qua is a stockholder and former member of the Board of Directors of
respondent CCC and therefore she is not exactly a stranger to the affairs of CCC is not even
relevant.
An innocent purchaser for value is one who “buys the property of another without notice that
some other person has a right to or interest in it, and who pays a full and fair price at the time of
the purchase or before receiving any notice of another person’s claim.”80 The concept thus
presupposes that there must be an adverse claim or defect in the title to the property to be
purchased by the innocent purchaser for value.
Respondent Qua traces her title to respondent CCC, whose acquisition over the property
proceeded from a foreclosure sale that was valid. As there is no defect in the title of respondent
CCC to speak of in this case, there is no need to go into a discussion of whether Qua is an
innocent purchaser for value.
4. Dispute as to the Factual

Finding of the CA that the
Deed of Absolute Sale in
Favor of Baldoza was not
Preceded by a Contract to
_______________
80 Leong v. See, G.R. No. 194077, 3 December 2014, 743 SCRA 677.
283
VOL. 780, JANUARY 13, 2016 283
Sell and Full Payment of

the Purchase Price
We absolutely discard the argument. We can think of at least four reasons why. First, Exhibit “L”
was not formally offered in evidence. Second, it was not even incorporated into the records.
Third, the argument is irrelevant. Fourth, it was even abandoned in the Memoranda filed by
petitioners with us. Last, we are not a trier of facts and thus we yield to the finding of the CA.
Exhibit “L” not formally

offered
A perusal of the records shows that the Contract to Sell that Baldoza referred to had in fact been
marked as Exhibit “L” during her direct examination in court.81 Even so, Exhibit “L” was never
formally offered as evidence. For this reason, we reject her contention. Courts do not consider
evidence that has not been formally offered.82 This explains why the CA never mentioned the
alleged Contract to Sell in favor of Baldoza.
The rationale behind the rule rests on the need for judges to confine their factual findings and
ultimately their judgment solely and strictly to the evidence offered by the parties to a suit.83
The rule has a threefold purpose. It allows the trial judge to know the purpose of the evidence
presented; affords opposing parties the opportunity to examine the evidence and object to its
admissibility when necessary; and facilitates review, given that an appellate court does not have
to review documents that have not been subjected to scrutiny by the trial court.84
_______________
81 Records, p. 537.
82 Heirs of Romana Saves v. Heirs of Escolastico Saves, 646 Phil. 536, 544; 632 SCRA 236,
246 (2010).
83 Id.
84 Id.
284
Exhibit “L” not incorporated
into the records
The rule, of course, admits an exception. Evidence not formally offered may be admitted and
considered by the trial court so long as the following requirements obtain: (1) the evidence is
duly identified by testimony duly recorded; and (2) the evidence is incorporated into the records
of the case.
The exception does not apply to the case of Baldoza. While she duly identified the Contract to
Sell during her direct examination, which was duly recorded, Exhibit “L” was not incorporated
into the records.
Exhibit “L” not relevant
Be that as it may, the contention that a Contract to Sell in favor of Baldoza preceded the sale in
her favor is irrelevant. It must be stressed that the sale to Baldoza made by Dulos Realty took
place after the lapse of the redemption period and after consolidation of title in the name of
respondent CCC on 10 November 1983, one month prior to the sale to Baldoza on 10 December
1983. Dulos Realty still would have lost all interest over the property mortgaged.
The fact that Dulos Realty ceased to be the owner of the property and therefore it could no longer
effect delivery of the property at the time the Deed of Absolute Sale in favor of Baldoza was
executed is the very reason why the case of Baldoza cannot be compared with Dela Merced. In
the case, the buyer in the Contract to Sell was able to effect full payment of the purchase price
and to execute a Deed of Absolute Sale in his favor before the foreclosure sale. In this case, the
full payment of the purchase price and the execution of a Deed of Absolute Sale in favor of
Baldoza was done after the foreclosure sale.
285
VOL. 780, JANUARY 13, 2016 285
Issue over Exhibit “L” not
included in the Memorandum
Equally important is the fact that petitioners failed to include the issue over Exhibit “L” in any of
the Memoranda they filed with us. The omission is fatal. Issues raised in previous pleadings
but not included in the memorandum are deemed waived or abandoned (A.M. No. 99-2-04-
SC). As they are “a summation of the parties’ previous pleadings, the memoranda alone may be
considered by the Court in deciding or resolving the petition.”85 Thus, even as the issue was
raised in the Petition, the Court may not consider it in resolving the case on the ground of failure
of petitioners to include the issue in the Memorandum. They have either waived or abandoned it.
5. Issue of HLURB’s Non-

Approval of the Mortgage
Petitioners allege before the Court that the mortgage contract in this case was not approved by
the HLURB. They claim that this violates Section 18 of P.D. 95786 and results in the nullity of
the mortgage. Respondents have disputed the claim and counterargue that the allegation of the
petitioners is not supported by evidence. Respondents likewise aver that the argument was raised
for the first time on appeal.87
It is rather too late in the day for petitioners to raise this argument. Parties are not permitted to
change their theory of a case at the appellate stage.88 Thus, theories and issues not
_______________
85 De Castro v. Liberty Broadcasting Network, Inc., G.R. No. 165153, 25 August 2010, 629
SCRA 77, 86.
86 The Subdivision and Condominium Buyers’ Protective Decree, issued on 12 July 1976.
87 Rollo (G.R. No. 168357), p. 251.

88 Ramos v. PNB, G.R. No. 178218, 14 December 2011, 662 SCRA 479.
286
raised at the trial level will not be considered by a reviewing court on the ground that they cannot
be raised for the first time on appeal.89 Overriding considerations of fair play, justice and due
process dictate this recognized rule.90 This Court cannot even receive evidence on this matter.
Petitioners’ original theory of the case is the nullity of the mortgage on the grounds previously
discussed. If petitioners are allowed to introduce their new theory, respondents would have no
more opportunity to rebut the new claim with contrary evidence, as the trial stage has already
been terminated. In the interest of fair play and justice, the introduction of the new argument
must be barred.91
Exceptions Not Applicable
The Court is aware that the foregoing is merely a general rule. Exceptions are written in case
law: first, an issue of jurisdiction may be raised at any time, even on appeal, for as long as the
exercise thereof will not result in a mockery of the demands of fair play;92 second, in the interest
of justice and at the sound discretion of the appellate court, a party may be allowed to change its
legal theory on appeal, but only when the factual bases thereof would not require further
presentation of evidence by the adverse party for the purpose of addressing the issue raised in the
new theory;93 and last, which is actually a bogus exception, is when the question falls within the
issues raised at the trial court.94
_______________
89 Id.
90 Id.
91 Maxicare PCIB CIGNA Healthcare v. Contreras, G.R. No. 194352, 30 January 2013, 689
SCRA 763.
92 Supra note 88.
93 Id.
94 Farolan v. Court of Appeals, 441 Phil. 377, 385; 393 SCRA 128, 133 (2002).
287
VOL. 780, JANUARY 13, 2016 287
The exceptions do not apply to the instant case. The new argument offered in this case concerns a
factual matter — prior approval by the HLURB. This prerequisite is not in any way related to
jurisdiction, and so the first exception is not applicable. There is nothing in the record to allow us
to make any conclusion with respect to this new allegation.
Neither will the case fall under the second exception. Evidence would be required of the
respondents to disprove the new allegation that the mortgage did not have the requisite prior
HLURB approval. Besides, to the mind of this court, to allow petitioners to change their theory
at this stage of the proceedings will be exceedingly inappropriate.
Petitioners raised the issue only after obtaining an unfavorable judgment from the CA.
Undoubtedly, if we allow a change of theory late in the game, so to speak, we will unjustifiably
close our eyes to the fundamental right of petitioners to procedural due process. They will lose
the opportunity to meet the challenge, because trial has already ended. Ultimately, we will be
throwing the Constitutional rulebook out the window.
WHEREFORE, premises considered, the Petitions are DENIED, and the Court of Appeals’
Decision dated 2 November 2004 and Resolution dated 10 May 2005 in C.A.-G.R. CV No.
47421 are hereby AFFIRMED.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perez and Perlas-Bernabe, JJ., concur.

Petitions denied, judgment and resolution affirmed.
Notes.—In extrajudicial foreclosure of real estate mortgage, the rule is upon the expiration of the
one year redemption period, it forecloses the obligors’ right to redeem and that the sale thereby
becomes absolute. (Erdenberger vs. Aquino, 656 SCRA 44 [2011])
288
A formal offer is necessary because judges are mandated to rest their findings of facts and their
judgment only and strictly upon the evidence offered by the parties at the trial. (Union Bank of
the Philippines vs. Tiu, 657 SCRA 86 [2011])
——o0o——
G.R. No. 198752. January 13, 2016.*
ARTURO C. ALBA, JR., duly represented by his Attorneys-in-Fact, ARNULFO B. ALBA and
ALEXANDER C. ALBA, petitioner, vs. RAYMUND D. MALAPAJO, RAMIL D. MALAPAJO
and the Register of Deeds for the City of Roxas, respondents.
Remedial Law; Civil Procedure; Pleadings and Practice; Service by Registered Mail; Service
made through registered mail is proved by the registry receipt issued by the mailing office and an
_______________
* THIRD DIVISION.
535
VOL. 780, JANUARY 13, 2016 535
Alba, Jr. vs. Malapajo
affidavit of the person mailing of facts showing compliance with the rule.—Clearly, service made
through registered mail is proved by the registry receipt issued by the mailing office and an
affidavit of the person mailing of facts showing compliance with the rule. In this case, Nerissa
Apuyo, the secretary of petitioner’s counsel, had executed an affidavit of personal service and
service by registered mail which she attached to the petition marked as original filed with the
CA. She stated under oath that she personally served a copy of the petition to the RTC of Roxas
City on December 6, 2010, as evidenced by a stamp mark of the RTC on the corresponding page
of the petition; that she also served copies of the petition by registered mail to respondents’
counsels on December 6, 2010 as evidenced by registry receipts numbers “PST 188” and “PST
189,” both issued by the Roxas City Post Office. The registry receipts issued by the post office
were attached to the petition filed with the CA. Petitioner had indeed complied with the rule on
proof of service.
Same; Same; Counterclaims; Compulsory Counterclaim; Words and Phrases; A compulsory

counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is
connected with the transaction or occurrence constituting the subject matter of the opposing
party’s claim and does not require for its adjudication the presence of third parties of whom the
court cannot acquire jurisdiction.—A counterclaim is any claim which a defending party may
have against an opposing party. A compulsory counterclaim is one which, being cognizable by
the regular courts of justice, arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire jurisdiction. Such a
counterclaim must be within the jurisdiction of the court both as to the amount and the nature
thereof, except that in an original action before the Regional Trial Court, necessarily connected
with the subject matter of the opposing party’s claim or even where there is such a connection,
the Court has no jurisdiction to entertain the claim or it requires for adjudication the presence of
third persons over whom the court acquire jurisdiction. A compulsory counterclaim is barred if
not set up in the same action. A counterclaim is permissive if it does not arise out of or is not
necessarily connected with the subject matter of the opposing party’s claim. It is essentially an
independent claim that may be filed separately in another case.
536
Same; Same; Same; Same; Tests to Determine Whether a Counterclaim is Compulsory or

Permissive.—To determine whether a counterclaim is compulsory or permissive, we have
devised the following tests: (a) Are the issues of fact and law raised by the claim and by the
counterclaim largely the same? (b) Would res judicata bar a subsequent suit on defendants’
claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence
support or refute plaintiffs’ claim as well as the defendants’ counterclaim? and (d) Is there any
logical relation between the claim and the counterclaim? A positive answer to all four questions
would indicate that the counterclaim is compulsory.
Same; Same; Same; Same; Since respondents’ counterclaim is compulsory, it must be set up in
the same action; otherwise, it would be barred forever.—Since respondents’ counterclaim is
compulsory, it must be set up in the same action; otherwise, it would be barred forever. If it is
filed concurrently with the main action but in a different proceeding, it would be abated on the
ground of litis pendentia; if filed subsequently, it would meet the same fate on the ground of res
judicata. There is, therefore, no need for respondents to pay docket fees and to file a certification
against forum shopping for the court to acquire jurisdiction over the said counterclaim.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
Diaz Law Office for petitioner.
Ilarde, Penetrante, Tungala & Associates and Tirol & Tirol Law Office for respondents
Raymund and Ramil D. Malapajo.
PERALTA, J.:
Assailed in this petition for review on certiorari are the Resolution1 dated February 28, 2011 and
the Resolution2
_______________
1 Penned by Associate Justice Eduardo B. Peralta, Jr., with Associate Justices Edgardo L. delos
Santos and Agnes Reyes-Carpio, concurring; Rollo, pp. 140-142.
2 Penned by Associate Justice Eduardo B. Peralta, Jr., with As-
537
VOL. 780, JANUARY 13, 2016 537
dated August 31, 2011 issued by the Court of Appeals (CA) Cebu City, in C.A.-G.R. S.P. No.
05594.
sociate Justices Edgardo L. delos Santos and Gabriel T. Ingles, concurring; id., at pp. 162-164.
The antecedents are as follows:
On October 19, 2009, petitioner Arturo C. Alba, Jr., duly represented by his attorneys-in-fact,
Arnulfo B. Alba and Alexander C. Alba, filed with the Regional Trial Court (RTC) of Roxas City,
Branch 15, a Complaint3 against respondents Raymund D. Malapajo, Ramil D. Malapajo and the
Register of Deeds of Roxas City for recovery of ownership and/or declaration of nullity or
cancellation of title and damages alleging, among others, that he was the previous registered
owner of a parcel of land consisting of 98,146 square meters situated in Bolo, Roxas City,
covered by TCT No. T-22345; that his title was subsequently canceled by virtue of a deed of sale
he allegedly executed in favor of respondents Malapajo for a consideration of Five Hundred
Thousand Pesos (P500,000.00); that new TCT No. T-56840 was issued in the name of
respondents Malapajo; that the deed of sale was a forged document which respondents Malapajo
were the co-authors of.
Respondents Malapajo filed their Answer with Counterclaim4 contending that they were
innocent purchasers for value and that the deed was a unilateral document which was presented
to them already prepared and notarized; that before the sale, petitioner had, on separate
occasions, obtained loans from them and their mother which were secured by separate real estate
mortgages covering the subject property; that the two real estate mortgages had never been
discharged. Respondents counterclaimed for damages and for reimbursement of petitioner’s loan
from them plus the agreed monthly interest in the event that the deed of sale is declared null and
void on the ground of forgery.
_______________
3 Docketed as Civil Case No. V-49-09; id., at pp. 45-50.
4 Id., at pp. 55A-62.
538
Petitioner filed a Reply to Answer and Answer to (Permissive) Counterclaim5 stating, among
others, that the court had not acquired jurisdiction over the nature of respondents’ permissive
counterclaim; and, that assuming without admitting that the two real estate mortgages are valid,
the rate of five percent (5%) per month uniformly stated therein is unconscionable and must be
reduced. Respondents filed their Rejoinder6 thereto.
Petitioner filed a Motion to Set the Case for Preliminary Hearing as if a Motion to Dismiss had
been Filed7 alleging that respondents’ counterclaims are in the nature of a permissive
counterclaim, thus, there must be payment of docket fees and filing of a certification against
forum shopping; and, that the supposed loan extended by respondents’ mother to petitioner, must
also be dismissed as respondents are not the real parties-in-interest. Respondents filed their
Opposition8 thereto.
On June 4, 2010, the RTC issued an Order9 denying petitioner’s motion finding that respondents’
counterclaims are compulsory. Petitioner’s motion for reconsideration was denied in an Order10
dated September 30, 2010.
Petitioner filed a petition for certiorari with the CA which sought the annulment of the RTC
Orders dated June 4, 2010 and September 30, 2010.
In a Resolution dated February 28, 2011, the CA dismissed the petition for certiorari saying that
there was no proper proof of service of the petition to the respondents, and that only the last page
of the attached copy of the RTC Order was
_______________
5 Id., at pp. 67-74.
6 Id., at pp. 76-85.
7 Id., at pp. 86-90.
8 Id., at pp. 91-93.
9 Id., at pp. 94-97; per Judge Juliana C. Azarraga.
10 Id., at p. 116.
539
VOL. 780, JANUARY 13, 2016 539
signed and certified as a true copy of the original while the rest of the pages were mere machine
copies.
Petitioner filed a motion for reconsideration which the CA denied in a Resolution dated August
31, 2011 based on the following findings:
Nevertheless, while petitioner filed with the Petition his Affidavit of Service and
incorporated the registry receipts, petitioner still failed to comply with the requirement on
proper proof of service. Post office receipt is not the required proof of service by registered
mail. Section 10, Rule 13 of the 1997 Rules of Civil Procedure specifically stated that
service by registered mail is complete upon actual receipt by the addressee, or after five (5)
days from the date he received the first notice of the postmaster, whichever is earlier.
Verily, registry receipts cannot be considered sufficient proof of service; they are merely
evidence of the mail matter with the post office of the sender, not the delivery of said mail
matter by the post office to the addressee. Moreover, Section 13, Rule 13 of the 1997
Rules of Civil Procedure specifically stated that the proof of personal service in the form
of an affidavit of the party serving shall contain a full statement of the date, place and
manner of service, which was not true in the instant petition.11
Petitioner filed the instant petition for review raising the following assignment of errors:
I. CONTRARY TO THE ERRONEOUS RULING OF THE COURT A QUO, THE

COUNTERCLAIMS INTERPOSED BY RESPONDENTS MALAPAJO IN THEIR
ANSWER WITH COUNTERCLAIM ARE, BASED ON APPLICABLE LAW AND
JURISPRUDENCE, PERMISSIVE IN NATURE, NOT COMPULSORY, AND
THEREFORE, SUCH ANSWER WITH RESPECT TO SUCH COUNTERCLAIMS IS IN
REALITY AN INITIATORY PLEADING WHICH SHOULD HAVE BEEN ACCOM-
_______________
11 Id., at pp. 163-164. (Italics omitted)
540
PANIED BY A CERTIFICATION AGAINST FORUM SHOPPING AND

CORRESPONDING DOCKET FEES, THEREFORE, SHOULD HAVE BEEN PAID,
FAILING IN WHICH THE COUNTERCLAIMS SHOULD HAVE BEEN ORDERED
DISMISSED. MOREOVER, AS REGARDS THE LOAN ALLEGEDLY EXTENDED BY
THEIR MOTHER TO PETITIONER, WHICH UP TO NOW IS SUPPOSEDLY STILL
UNPAID, RESPONDENTS MALAPAJO ARE NOT THE REAL PARTIES-IN-
INTEREST AND IS, THEREFORE, DISMISSIBLE ON THIS ADDITIONAL GROUND;
and
II. THE HONORABLE COURT OF APPEALS COMMITTED A VERY SERIOUS

ERROR WHEN IT DISMISSED THE PETITION FOR CERTIORARI BASED ON PURE
TECHNICALITY, THEREBY GIVING MORE PREMIUM AND MORE WEIGHT ON
TECHNICALITIES RATHER THAN SUBSTANCE AND DISREGARDING THE
MERITS OF THE PETITION.12
We find that the CA erred in denying petitioner’s petition for certiorari after the latter had clearly
shown compliance with the proof of service of the petition as required under Section 13 of Rule
13 of the 1997 Rules of Civil Procedure, which provides:
Sec. 13. Proof of service.—
Proof of personal service shall consist of a written admission of the party served, or the
official return of the server, or the affidavit of the party serving, containing a full statement
of the date, place and manner of service. If the service is by ordinary mail, proof thereof
shall consist of an affidavit of the person mailing of facts showing compliance with
Section 7 of this Rule. If service is made by registered mail, proof shall be made by such
affidavit and the registry receipt issued by the mailing office. The registry return card shall
be filed immediately upon its receipt by the sender, or in lieu thereof the unclaimed
_______________
12 Id., at p. 18.
541
VOL. 780, JANUARY 13, 2016 541
letter together with the certified or sworn copy of the notice given by the postmaster to the
addressee.
Clearly, service made through registered mail is proved by the registry receipt issued by the
mailing office and an affidavit of the person mailing of facts showing compliance with the rule.
In this case, Nerissa Apuyo, the secretary of petitioner’s counsel, had executed an affidavit13 of
personal service and service by registered mail which she attached to the petition marked as
original filed with the CA. She stated under oath that she personally served a copy of the petition
to the RTC of Roxas City on December 6, 2010, as evidenced by a stamp mark of the RTC on the
corresponding page of the petition; that she also served copies of the petition by registered mail
to respondents’ counsels on December 6, 2010 as evidenced by registry receipts numbers “PST
188” and “PST 189,” both issued by the Roxas City Post Office. The registry receipts issued by
the post office were attached to the petition filed with the CA. Petitioner had indeed complied
with the rule on proof of service.
Since the case was dismissed outright on technicality, the arguments raised in the petition for
certiorari were not at all considered. However, we will now resolve the issue on the merits so as
not to delay further the disposition of the case instead of remanding it to the CA.
The issue for resolution is whether respondents’ counterclaim, i.e., reimbursement of the loan
obtained from them in case the deed of absolute sale is declared null and void on the ground of
forgery, is permissive in nature which requires the payment of docket fees and a certification
against forum shopping for the trial court to acquire jurisdiction over the same.
A counterclaim is any claim which a defending party may have against an opposing party.14 A
compulsory counterclaim
_______________
13 Id., at p. 150.
542
is one which, being cognizable by the regular courts of justice, arises out of or is connected with
the transaction or occurrence constituting the subject matter of the opposing party’s claim and
does not require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to
the amount and the nature thereof, except that in an original action before the Regional Trial
Court, necessarily connected with the subject matter of the opposing party’s claim or even where
there is such a connection, the Court has no jurisdiction to entertain the claim or it requires for
adjudication the presence of third persons over whom the court acquire jurisdiction.15 A
compulsory counterclaim is barred if not set up in the same action.
A counterclaim is permissive if it does not arise out of or is not necessarily connected with the
subject matter of the opposing party’s claim.16 It is essentially an independent claim that may be
filed separately in another case.
To determine whether a counterclaim is compulsory or permissive, we have devised the

following tests: (a) Are the issues of fact and law raised by the claim and by the counterclaim
largely the same? (b) Would res judicata bar a subsequent suit on defendants’ claims, absent the
compulsory counterclaim rule? (c) Will substantially the same evidence support or refute
plaintiffs’ claim as well as the defendants’ counterclaim? and (d) Is there any logical relation
between the claim and the counterclaim?17 A positive answer to all four questions would
indicate that the counterclaim is compulsory.18
_______________
16 See Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, 486 Phil. 123, 134;
443 SCRA 522, 534 (2004), citing Lopez v. Gloria, 40 Phil. 26 (1919), per J. Torres.
17 Valencia v. Court of Appeals, 331 Phil. 590, 606; 263 SCRA 275, 287-288 (1996).
18 Id.
543
VOL. 780, JANUARY 13, 2016 543
Based on the above mentioned tests, we shall determine the nature of respondents’ counterclaim.
Respondents anchored their assailed counterclaim on the following allegations in their
affirmative defenses in their Answer with Counterclaim, thus:
xxxx
10. The plaintiff’s cause of action is based on his allegation that his signature on the
Deed of Absolute Sale was forged.
The Deed of Absolute Sale is a unilateral instrument, i.e., it was signed only by the vendor,
who is the plaintiff in this case and his instrumental witnesses, who are his parents in this
case. It was presented to defendants already completely prepared, accomplished and
notarized. Defendants had no hand in its preparation, accomplishment and notarization.
While the plaintiff claims that his signature on the instrument is forged, he never
questioned the genuineness of the signatures of his instrumental witnesses, his parents
Arturo P. Alba, Sr. and Norma C. Alba, who signed the said instrument below the words
“SIGNED IN THE PRESENCE OF” and above the words “Father” and “Mother,”
respectively.
Furthermore, plaintiff acknowledged in par. 7 of his Complaint that the stated

consideration in the Deed of Absolute Sale is P500,000.00 and he never categorically
denied having received the same.
11. Before the plaintiff sold the property to the defendants, he secured a loan from them
in the sum of Six Hundred Thousand Pesos (P600,000.00) payable on or before November
10, 2008. The loan is evidenced by a Promissory Note and secured by a Real Estate
Mortgage dated September 11, 2008, both executed by him, covering the parcel of land
subject of this case, Lot 2332-D, Psd 06-000738. Like the Deed of Absolute Sale, the Real
Estate Mortgage is a unilateral instrument, was signed solely by the plaintiff, and
furthermore, his parents affixed their signatures thereon under the heading “WITH MY
PARENTAL CONSENT,” and above the words, “Father” and “Mother,” respectively.
544
Prior to this, or as early as July 25, 2008, the plaintiff also obtained a loan payable on or
before September 6, 2008 from defendants’ mother, Alma D. David, and already
mortgaged to her Lot 2332-D, Psd 06-000738. The loan is evidenced by a Promissory Note
and a Real Estate Mortgage, both of which were executed by plaintiff. Again, the Real
Estate Mortgage is an unilateral instrument, was signed solely by the plaintiff and
furthermore, his parents also affixed their signatures thereon under the heading, “WITH
MY PARENTAL CONSENT” and above the words, “Father” and “Mother,” respectively.
In both instances, the plaintiff was always represented by his parents, who always
manifested their authority to transact in behalf of their son the plaintiff.
As in the case with the Deed of Absolute Sale, the defendants or their mother did not have
any hand in the preparation, accomplishment or notarization of the two Promissory Notes
with accompanying Real Estate Mortgages, x x x.
Neither of the two Real Estate Mortgages have been discharged or extinguished.
12. Considering the foregoing, the plaintiff’s allegation that his signature on the Deed of
Absolute Sale was forged, and that the defendants are the “co-authors” of the said forgery,
are absolutely false and baseless.
13. If the Deed of Absolute Sale is declared null and void on the ground of forgery, then
the plaintiff should reimburse the defendants the loan he obtained from them, which he did
not deny having obtained, plus the agreed monthly interest.19
Petitioner seeks to recover the subject property by assailing the validity of the deed of sale on the
subject property which he allegedly executed in favor of respondents Malapajo on the ground of
forgery. Respondents counterclaimed that, in case the deed of sale is declared null and void, they
be paid the
_______________
19 Rollo, pp. 56-58.
545
VOL. 780, JANUARY 13, 2016 545

loan petitioner obtained from them plus the agreed monthly interest which was covered by a real
estate mortgage on the subject property executed by petitioner in favor of respondents. There is a
logical relationship between the claim and the counterclaim, as the counterclaim is connected
with the transaction or occurrence constituting the subject matter of the opposing party’s claim.
Notably, the same evidence to sustain respondents’ counterclaim would disprove petitioner’s
case. In the event that respondents could convincingly establish that petitioner actually executed
the promissory note and the real estate mortgage over the subject property in their favor then
petitioner’s complaint might fail. Petitioner’s claim is so related logically to respondents’
counterclaim, such that conducting separate trials for the claim and the counterclaim would result
in the substantial duplication of the time and effort of the court and the parties.20
Since respondents’ counterclaim is compulsory, it must be set up in the same action; otherwise, it
would be barred forever.21 If it is filed concurrently with the main action but in a different
proceeding, it would be abated on the ground of litis pendentia; if filed subsequently, it would
meet the same fate on the ground of res judicata.22 There is, therefore, no need for respondents
to pay docket fees and to file a certification against forum shopping for the court to acquire
jurisdiction over the said counterclaim.
We agree with the RTC’s disquisition in finding that respondents’ counterclaim is compulsory, to
wit:
The arguments of the plaintiffs that this transaction is a permissive counterclaim do not
convince.
_______________
20 Tan v. Kaakbay Finance Corporation, 452 Phil. 637, 647; 404 SCRA 518, 526 (2003).
21 See Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, supra note 16.
22 Id., at p. 137; pp. 536-537.
546

By the manner in which the answer pertaining to this transaction was phrased, the real
estate mortgage was the origin of the Deed of Absolute Sale after the loan of P600,000.00
using the same property as security for the payment thereof was not settled. In short, it is
one of defendants’ defenses and controverting evidence against plaintiffs’ allegations of
falsification of the Deed of Absolute Sale, the property subject of the Deed of Sale being
one and the same property subject of the mortgage.23
xxxx
Can the Court adjudicate upon the issues [of whether or not the plaintiff could recover
ownership and or whether or not the title to the property in question may be canceled or
declared null and void, and damages] without the presence of the mother of defendants in
whose favor the Real Estate Mortgage of the property subject of this action was executed?
Definitely, this Court can. That there was an allegation pertaining to the mortgage of the
property in question to defendants’ mother is only some sort of a backgrounder on why a
deed of sale was executed by plaintiff in defendants’ favor, the truth or falsity of which
will have to be evidentiary on the part of the parties hereto. In short, the Court does not
need the presence of defendants’ mother before it can adjudicate on whether or not the
deed of absolute sale was genuine or falsified and whether or not the title to the property
may be cancelled.24
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The

Resolutions dated February 28, 2011 and August 31, 2011 issued by the Court of Appeals in
C.A.-G.R. S.P. No. 05594 dismissing the petition for certiorari and denying reconsideration
thereof, respectively, for failure to show proper proof of service of the petition to re-
_______________
23 Rollo, pp. 125-126.
24 Id., at pp. 126-127.
547
VOL. 780, JANUARY 13, 2016 547

spondents, are SET ASIDE. Acting on the petition for certiorari, we resolve to DENY the same
and AFFIRM the Order dated June 4, 2010 of the Regional Trial Court of Roxas City, Branch
15, denying petitioner’s motion to set the case for hearing as if a motion to dismiss had been
filed, and the Order dated September 30, 2010 denying reconsideration thereof.
SO ORDERED.
Petition partially granted, resolutions set aside.
Notes.—The case of Pinga v. Heirs of German Santiago, 494 SCRA 393 (2006), is quite
instructive which the Supreme Court (SC) finds worth reiterating. In Pinga, the SC clearly stated
that the dismissal of the complaint does not necessarily result to the dismissal of the
counterclaim. (Lim Teck Chuan vs. Uy, 752 SCRA 268 [2015])
It is elementary that a defending party’s compulsory counterclaim should be interposed at the

time he files his Answer, and that failure to do so shall effectively bar such claim. (Metropolitan
Bank and Trust Company vs. CPR Promotions and Marketing, Inc., 760 SCRA 59 [2015])
——o0o——
CASES REPORTED
SUPREME COURT REPORTS ANNOTATED
____________________
G.R. No. 211737. January 13, 2016.*
SERGIO R. OSMEÑA III, petitioner, vs. DEPARTMENT OF TRANSPORTATION AND

COMMUNICATIONS SECRETARY JOSEPH EMILIO A. ABAYA, MACTAN-CEBU
INTERNATIONAL AIRPORT AUTHORITY (MCIAA), THE PRE-QUALIFICATION, BIDS
AND AWARDS COMMITTEE (PBAC) FOR THE MACTAN-CEBU INTERNATIONAL
AIRPORT PROJECT THROUGH ITS CHAIRMAN, UNDERSECRETARY JOSE PERPETUO
M. LOTILLA, GMR INFRASTRUCTURE, LTD. and MEGAWIDE CONSTRUCTION
* THIRD DIVISION.
Osmeña III vs. Abaya
CORPORATION, respondents.
G.R. No. 214756. January 13, 2016.*

BUSINESS FOR PROGRESS MOVEMENT as represented by MEDARDO C. DEACOSTA,
JR., petitioner, vs. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS,
GMR-MEGAWIDE CEBU AIRPORT CORPORATION, respondents.
Remedial Law; Civil Procedure; Locus Standi; Words and Phrases; Legal standing or locus
standi refers to a personal and substantial interest in a case such that the party has sustained or
will sustain direct injury because of the challenged governmental act.—Legal standing or locus
standi refers to a personal and substantial interest in a case such that the party has sustained or
will sustain direct injury because of the challenged governmental act. The requirement of
standing, which necessarily sharpens the presentation of issues, relates to the constitutional
mandate that this Court settle only actual cases or controversies. Thus, generally, a party will be
allowed to litigate only when (1) he can show that he has personally suffered some actual or
threatened injury because of the allegedly illegal conduct of the government; (2) the injury is
fairly traceable to the challenged action; and (3) the injury is likely to be redressed by a favorable
action.
Same; Same; Same; In any case, locus standi being a mere procedural technicality, the Court
has, in the exercise of its discretion, relaxed the rules on standing when the issues involved as of
“transcendental importance” to the public.—In any case, locus standi being a mere procedural
technicality, the Court has, in the exercise of its discretion, relaxed the rules on standing when
the issues involved as of “transcendental importance” to the public. The Court, through Associate
Justice Florentino P. Feliciano (retired and now deceased), provided the following instructive
guides as determinants in determining whether a matter is of transcendental importance: (1) the
character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of
VOL. 781, JANUARY 13, 2016 3
the government; and (3) the lack of any other party with a more direct and specific interest in the
questions being raised.
Same; Same; Courts; Hierarchy of Courts; A direct invocation of the Supreme Court’s (SC’s)
jurisdiction is allowed only when there are special and important reasons therefor, clearly and
especially set out in the petition.—While this Court has original jurisdiction over petitions for
certiorari, prohibition, mandamus, quo warranto, and habeas corpus, such jurisdiction is shared
with the Court of Appeals and the Regional Trial Courts. It is judicial policy that — x x x a
direct invocation of the Supreme Court’s jurisdiction is allowed only when there are special
and important reasons therefor, clearly and especially set out in the petition. Reasons of
practicality, dictated by an increasingly overcrowded docket and the need to prioritize in favor of
matters within our exclusive jurisdiction, justify the existence of this rule otherwise known as the
“principle of hierarchy of courts.” More generally stated, the principle requires that recourse
must first be made to the lower-ranked court exercising concurrent jurisdiction with a higher
court. (Italics omitted; emphasis supplied) The Court thus declared in Heirs of Bertuldo Hinog v.
Melicor, 455 SCRA 460 (2005), that it will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the availment
of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary
jurisdiction.
Bids and Bidding; It is well-settled in our jurisprudence that the government is granted broad
discretion in choosing who among the bidders can offer the most advantageous terms and courts
will not interfere therewith or direct the committee on bids to do a particular act or to enjoin
such act within its prerogatives, except when in the exercise of its authority, it gravely abuses or
exceeds its jurisdiction, or otherwise commits injustice, unfairness, arbitrariness or fraudulent
acts.—It is well-settled in our jurisprudence that the government is granted broad discretion in
choosing who among the bidders can offer the most advantageous terms and courts will not
interfere therewith or direct the committee on bids to do a particular act or to enjoin such act
within its prerogatives, except when in the exercise of its authority, it gravely abuses or exceeds
its jurisdiction, or otherwise commits injustice, unfairness, arbitrariness or fraudulent
acts. We have recognized that the exercise of that discretion is a policy decision that necessitates
prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be
discharged by the concerned government agencies, not by the courts.
Same; A reservation of the government of its right to reject any bid, generally vests in the
authorities a wide discretion as to who is the best and most advantageous bidder.—Under the
ITPB, the PBAC reserves the right to waive any minor defects in the Qualification Documents,
and accept the offer it deems most advantageous to the government. Verily, a reservation of the
government of its right to reject any bid, generally vests in the authorities a wide discretion as to
who is the best and most advantageous bidder. The exercise of such discretion involves inquiry,
investigation, comparison, deliberation and decision, which are quasi-judicial functions, and
when honestly exercised, may not be reviewed by the court.
Same; Build-Operate-and-Transfer; Under the Build-Operate-and-Transfer (BOT) Law

Implementing Rules and Regulations (IRR), the Pre-qualification, Bids and Awards Committee
(PBAC) shall be responsible for all aspects of the bidding process, including the interpretation
of the rules regarding the bidding, the conduct of bidding, evaluation of bids, resolution of
disputes between bidders, and recommendation for the acceptance of the bid award and/or for
the award of the project.—The issues raised against DIAL, as contained in the CAG’s report had
been addressed and resolved by the PBAC. In the same vein, GMR’s alleged violation of the
conflict of interest rule was found to be nonexistent. Contrary to petitioners’ asseveration, the
interpretation made by PBAC on this bidding rule was reasonable, fair and practical. Under the
BOT Law IRR, the PBAC shall be responsible for all aspects of the bidding process, including
the interpretation of the rules regarding the bidding, the conduct of bidding, evaluation of bids,
resolution of disputes between bidders, and recommendation for the acceptance of the bid award
and/or for the award of the project.
Remedial Law; Provisional Remedies; Injunction; For the writ of injunction to issue, the
existence of a clear and positive right especially calling for judicial protection must be shown;
injunction is not to protect contingent or future rights; nor is it a remedy to enforce an abstract
right.—For the writ of injunction to issue, the existence of a
VOL. 781, JANUARY 13, 2016 5
clear and positive right especially calling for judicial protection must be shown; injunction is not
to protect contingent or future rights; nor is it a remedy to enforce an abstract right. An injunction
will not issue to protect a right not in esse and which may never arise or to restrain an act which
does not give rise to cause of action. There must exist an actual right. Petitioners failed to
establish such actual right that needs to be protected by injunctive relief. There being no
violation of any law, regulation or the bidding rules, nor any arbitrariness or unfairness
committed by public respondents, the presumption of regularity of the bidding for the MCIA
Project must stand.
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari.
Bernas Law Office for Sen. Sergio Osmeña III.
De Leon and Desiderio for Business for Progress Movement.
Angara, Abello, Concepcion, Regala & Cruz for Megawide Construction Corp. and GMR
Megawide Cebu Airport Corp.
Quasha, Ancheta, Pena and Nolasco co-counsel for Megawide Construction Corp. and GMR
Megawide Cebu Airport Corp.
Poblador, Bautista & Reyes for GMR Infrastructures, Ltd.
VILLARAMA, JR., J.:
Before us are the consolidated petitions for certiorari and injunction to restrain public
respondents from awarding the Mactan-Cebu International Airport (MCIA) Project to private
respondents GMR Infrastructure Limited (GMR) and Megawide Construction Corporation
(MCC). Petitioners subsequently prayed for invalidation of the award after private respondents
won the public bidding.
The Facts
The MCIA Project consists of the construction of a new passenger terminal with all associated
infrastructure facilities; construction of apron for the new passenger terminal; rehabilitation and
expansion of the existing terminal along with all associated infrastructure and facilities;
installation of all the required equipment and other associated facilities; installation of the
required information technology and other equipment commensurate with the operations; and
operation and maintenance of both passenger terminals during the concession period.1 The
project is being implemented by the Department of Transportation and Communications (DOTC)
under the provisions of Republic Act (R.A.) No. 6957 as amended by R.A. No. 7718, otherwise
known as the “Build-Operate-and-Transfer (BOT) Law.”
On December 21, 2012, the Pre-qualification, Bids and Awards Committee (PBAC) caused the
publication of the invitation to prequalify and bid for the MCIA Project.2 PBAC sets as criteria
the following: (1) legal qualification; (2) technical qualification; and (3) financial capability
requirements.3 On December 27, 2012, the DOTC and Mactan-Cebu International Airport
Authority (MCIAA) issued the Instructions to Prospective Bidders (ITPB).4
On February 13, 2013, the PBAC conducted a Pre-Qualification Conference. In its Resolution5
dated May 14, 2013, the PBAC recommended the prequalification of the following prospective
bidders:
1. AAA Airport Partners;
2. Filinvest-CAI Consortium;
_______________
1 Rollo (G.R. No. 211737), Vol. I, p. 786.
2 Id., at p. 54.
3 Id., Vol. IV, pp. 2209-2212.
4 Id., Vol. II, pp. 783-853.
5 Id., Vol. III, pp. 1972-1976.
VOL. 781, JANUARY 13, 2016 7

3. First Philippine Airports;
4. GMR Infrastructure & Megawide Consortium;
5. MPIC-JGS Airport Consortium;
6. Premier Airport Group; and
7. San Miguel & Incheon Airport Consortium.
After the submission and approval of the technical proposals submitted by the prequalified
bidders, the PBAC proceeded with accepting their financial proposals. The financial bids were
ranked in terms of “premium” to the government such that “[a]ll bids received by the DOTC
were ‘premium’ offers, meaning the money would go directly to the government and would
come on top of the cost to develop the airport.”6 The seven bids, from highest to lowest, are:
On April 3, 2014, PBAC issued a Resolution8 recommending GMR-Megawide Consortium as

the winning bidder for the MCIA Project. The resolution reads in part:
WHEREAS, the GMR Infrastructure & Megawide Consortium, formed by Megawide

Construction Corporation (“Megawide”) and GMR Infrastructure Limited (“GMR”)
qualified under the Technical and Financial Qualification requirements, through the
following entities:
_______________
6 Page 3 of Consolidated Comment filed by DOTC and MCIAA, id., at p. 1897.
7 Id.
8 Rollo (G.R. No. 211737), Vol. IV, pp. 2279-2300.

8
Development Experience
* Delhi International Airport (P) Limited (DIAL) Affiliate of GMR Infrastructure Limited
* GMR Hyderabad International Airport Limited (GHIAL) Affiliate of GMR Infrastructure Limited
Operation and Maintenance
* Delhi International Airport (P) Limited (DIAL) Affiliate of GMR Infrastructure Limited
* GMR Hyderabad International Airport Limited (GHIAL) Affiliate of GMR Infrastructure Limited
Financial Qualification
* Megawide Construction Corp. Consortium Member
xxxx
WHEREAS, upon completion of verification of the information, representations and

statements made in its Qualification Documents, Bid Letter, Technical Proposal and
Financial Proposal and recommendation of the TWG [Technical Working Group] under its
report dated 2 April 2014, (i) the PBAC has not found any deficiency in the Financial
Proposal, (ii) nor has any misrepresentation been found in the information, representations
and statements made by the GMR Infrastructure & Megawide Consortium in its
Qualification Documents, Technical Proposal, Financial Proposal, and (iii) nor has the
Consortium been found to have engaged in any Corrupt Practice, Fraud, Collusion,
Coercion, Undesirable and Restrictive Practice, Conflict of Interest, or violated the Lock-
up Rules. A copy of the TWG Report dated 2 April 2014 is attached as Annex “DD”;
NOW THEREFORE, upon review and deliberation, pursuant to and in accordance with
the provisions, constraints and limitations under the BOT Law, BOT Law IRR, and the
rules under the ITPB and ITB, the PBAC hereby resolves to recommend to the Honorable
Secretary of the DOTC and the Board of the MCIAA: (i) to designate GMR Infrastructure
& Megawide Consortium as the Winning Bidder for the Project, and (ii) to conse-
9
VOL. 781, JANUARY 13, 2016 9
quently issue the Notice of Award to GMR Infrastructure & Megawide Consortium.9
On the same day, Senator Sergio R. Osmeña III (petitioner Osmeña III) filed in this Court a
petition for certiorari and prohibition with application for temporary restraining order and/or
writ of preliminary injunction (G.R. No. 211737) praying that this Court (a) immediately issue an
order restraining the public respondents from further acting on the bid of private respondents; (b)
issue an order enjoining public respondents, their agents, representatives or assigns from issuing
a Notice of Award and executing a Concession Agreement for the MCIA Project for private
respondents; and (c) give due course to his petition, and after due proceedings to render
judgment declaring private respondents as unqualified bidder and making the injunction
permanent.
On April 4, 2014, DOTC and MCIAA issued the Notice of Award10 to GMR-Megawide
Consortium. Pursuant to Section 8.1 of the Instruction to Bidders (ITB), private respondents
were directed to submit the required documents and pay the Bid Amount to MCIAA.
On April 7, 2014, petitioner Osmeña III filed a Supplemental Petition reiterating his prayer for
injunctive reliefs and for this Court to further restrain the implementation of the Notice of Award
and render judgment declaring the same as null and void.
Private respondents GMR and MCC, and public respondents DOTC, MCIAA and PBAC filed
their respective Comments.
Meanwhile, private respondents complied with the post-award requirements, including the
payment of the Php14.4 Billion bid amount to MCIAA. On April 22, 2014, the Conces-
_______________
9 Id., at pp. 2283, 2298-2299.
10 Id., at pp. 2302-2304.

10
sion Agreement was executed between DOTC and MCIAA, and GMR-Megawide Consortium.
On October 31, 2014, a petition for injunction was filed by Business for Progress Movement
(BPM), represented by Medardo C. Deacosta, Jr. (G.R. No. 214756). Petitioner BPM sought to
restrain the turnover of the operation and maintenance of the MCIA to GMR-Megawide
Consortium. With the simultaneous imposition of increased terminal fees, BPM claims that it
stands to suffer great and irreparable damage and injury once GMR-Megawide Consortium takes
over the operation and management of the MCIA.
On November 1, 2014, DOTC turned over to GMR-Megawide Consortium the operation and
maintenance of the MCIA.
Petitioners’ Arguments
G.R. No. 211737
The following grounds are set forth in the petition:
THE PBAC ILLEGALLY QUALIFIED THE GMR-MEGAWIDE CONSORTIUM

DESPITE ITS PATENT VIOLATION OF THE CONFLICT OF INTEREST RULE.
II
THE PBAC ILLEGALLY REFUSED TO DISQUALIFY THE GMR-MEGAWIDE

CONSORTIUM IN THE FACE OF UNREFUTED EVIDENCE OF GMR’S POOR
FINANCIAL HEALTH AND TRACK RECORD IN ITS INTERNATIONAL AIRPORT
OPERATIONS.
III
PUBLIC RESPONDENTS ILLEGALLY FAILED TO AND LATER REFUSED TO

DISQUALIFY PRIVATE RESPONDENTS FOR VIOLATING THE CONFLICT OF
11
VOL. 781, JANUARY 13, 2016 11
INTEREST RULE AND THEIR OTHER INCAPACITIES EVEN IF IT WAS THEIR

MINISTERIAL DUTY TO DO SO.
IV
THE PUBLIC RESPONDENTS ILLEGALLY ACCORDED PRIVATE RESPONDENTS

AN UNDUE ADVANTAGE AND/OR ACTED WITH UNDUE BIAS IN FAVOR OF
PRIVATE RESPONDENTS.
Petitioner Osmeña III argues that PBAC should have disqualified GMR-Megawide Consortium
because it violated the conflict of interest rule when it failed to disclose that Mr. Tan Shri Bashir
Ahmad bin Abdul Majid was a director of two subsidiaries of the GMR-Megawide Consortium,
and is also the Managing Director of Malaysia Airport Holdings Berhad (MAHB), which joined
the bidding for MCIA Project as member of the First Philippine Airports Consortium. He asserts
that this rule is mala prohibita; hence, it does not matter whether the violation was intentional or
not, and the penalty of disqualification should be imposed. GMR-Megawide’s violation
disadvantaged the other bidders as they were restricted from entering into similar arrangements,
and thus deprived them of an even playing field or a fair and competitive bidding.
Another ground of disqualification raised by petitioner Osmeña III concerns the financial and
technical capabilities of GMR as his investigation and online research showed that GMR was in
dire financial health and has been offloading several assets and its stake in various infrastructure
projects to meet its financial obligations. He likewise discovered GMR’s unsavory record
involving the Delhi International Airport Pvt. Ltd. (DIAL), which is the concessionaire for
GMR’s Indira Gandhi International Airport at Delhi. According to the Auditor General of India,
(i) 27% of the project cost for Delhi Airport was not funded by DIAL but charged to the
travelling public; (ii) outsourcing of contracts to GMR joint venture companies was not on arms-
length basis in violation
12
of contract; and (iii) DIAL violated the master plan and incurred delay in the completion of the
project. The Male International Airport (MIA) case also proves GMR’s lack of technical
qualification to undertake the MCIA Project. GMR Male International Airport Pvt. Ltd.
(GMIAL), an indirect subsidiary of GMR, through its direct subsidiary GMR Infrastructure
(Mauritius) Limited, entered into a Concession Agreement dated June 28, 2010 with the
Maldives Airport Company Ltd. (MACL) and the Maldives Government Ministry of Finance and
Treasury for the Rehabilitation, Expansion, Modernization, Operation and Maintenance of Male
International Airport for a period of 25 years. However, on November 27, 2012, the Maldives
Government and MACL declared the Concession Agreement void ab initio and gave GMIAL
seven days to vacate the MIA, which prompted GMIAL to initiate arbitration proceedings.
GMIAL sought a declaration that it was entitled to adjust the fees payable to MACL by virtue of
the invalidity of portions of the Concession Agreement, while MACL sought the declaration of
the Concession Agreement as void ab initio. GMIAL had applied for an injunction before the
courts of Singapore to restrain the Maldives Government from interfering with the performance
of the Concession Agreement pending arbitration proceedings. On appeal, the Singapore Court of
Appeal set aside the preliminary injunction issued by a High Court judge of Singapore. Thus,
effective December 8, 2012, the Maldives Government and MACL took control of the MIA.
Following a privilege speech he delivered at the Senate, petitioner Osmeña III said that the
Senate Committee on Public Services, in fact, conducted two hearings on the matter where all
the respondents were represented. It was alleged that during these hearings, it was established
that: (a) PBAC did not compare the submissions of the various members of consortia or bidders
in order to determine the existence of conflict of interest; (b) public respondents did not look into
cross-directorships or conflict of interest violations of GMR even if the rules compel an
inspection based on the submission of
13
VOL. 781, JANUARY 13, 2016 13
private respondents, and even refused to impose the penalty of disqualification when the
violation was pointed out; (c) GMR admitted that MAHB is GMR’s partner in several of its
airport operations and that the Managing Director of MAHB is indeed a member of at least two
subsidiaries of GMR; and (d) granting there was doubt in the existence of a violation of the
conflict of interest rule, public respondents did not take the precaution of asking for the opinion
of the Department of Justice (DOJ).
Citing the case of Agan, Jr. v. PIATCO,11 petitioner Osmeña III claims the parallelisms between
said case and the present controversy are too uncanny to ignore, and as in Agan, Jr., the Court
should exercise its solemn constitutional duty to nullify the award of the MCIA Project to private
respondents and avert serious damage to a project that the Province of Cebu looks forward to.
GMR also confirmed its operating losses during the Senate hearings, and its present financial
situation indicates that GMR Infra may not be earning enough money to meet its interest
payments on time. As to the Airport Development Fund being levied by DIAL, the Supreme
Court of India found that the levy made by DIAL during the period March 1, 2009 to April 23,
2010, prior to the notice from Airport Economic Regulatory Authority (AERA) permitting DIAL
to subsequently continue the levy, was made contrary to law.
Petitioner Osmeña III further avers that during the hearing conducted by the House of
Representatives on the MCIA Project on March 12, 2014, it was revealed that MCC failed to
complete its school building project despite two extensions granted to it. This is relevant because
under the Procurement Law (R.A. No. 9184), if a bidder is more than 15% delayed in any of its
infrastructure projects, it cannot be awarded a new contract. While the MCIA Project is under the
BOT Law, the underlying principle still holds for the simple reason that
_______________
11 450 Phil. 744; 402 SCRA 612 (2003).
14
what is involved is a public contract. The foregoing negative findings affecting both partners in
the GMR-Megawide Consortium should have compelled the PBAC, at the very least, to
disqualify said consortium during the post-qualification as they were unable to demonstrate
viable commercial operations.
G.R. No. 214756
Petitioner BPM also expressed doubts on the financial capacity of the winning bidder, GMR-
Megawide Consortium, to undertake the construction, development, operation and maintenance
of the MCIA in view of several news reports about GMR Infrastructure’s state of being “debt-
ridden,” as it had to raise funds through sale, equity issue and divest a few road and power plants
in order to pay its corporate loans. It was also reported that GMR asked the US private equity
firm KKR & Co. LP to provide about $175 Million in a debt and equity deal. Apparently, the
cancellation by the Maldives Government of GMR’s contract for modernizing the MIA had
greatly affected GMR’s revenues coming from its airport business.
With GMR’s lack of financial capacity, BPM contends that the GMR-Megawide Consortium had
come up with a scheme of imposing increased terminal fees to cover the operating costs and
expansion of the MCIA. From a news report published in the Business Mirror on October 13,
2014, BPM learned that the MCIA board approved on October 10, 2014 higher passenger service
charge (PSC) rates, commonly known as terminal fees, “to help fund the expansion and cover
increasing operating costs as well as comply with the 25-year concession agreement between
MCIAA and private airport operator GMR-Megawide Cebu Airport Corp. (GMCAC),” and that
effective November 1, a domestic passenger would have to pay Php220, Php20 more than the
current Php200 fee, while an international passenger would have to shell out Php750, or Php200
more than the current Php550; the do-
15
VOL. 781, JANUARY 13, 2016 15

mestic PSC rate will increase further to Php300 effective January 1, 2016.12
Petitioner maintains that all the requisites for the issuance of a writ of preliminary injunction are
present in this case. Petitioner as taxpayer has a clear and unmistakable right to be protected as
the imposition of the terminal fees in the increased amount as well as the turnover of the MCIA
to private respondents despite the fact that the latter has no financial capacity will be prejudicial
to petitioners. There is also an urgent and paramount necessity for the issuance of the writ
considering the scheduled turnover on November 1, 2014, and petitioner has no other plain,
speedy and adequate remedy in the course of law except this petition, for which purpose it is
ready, able and willing to post the necessary bond in the amount that this Court may determine.
BMP claims that there appears a clear and present danger that the instant petition will be
rendered nugatory and ineffectual, and that the highest interest of justice will not be served if the
act complained of — that is, the immediate turnover of the operations of the MCIA to private
respondents, would not be enjoined.
In its Consolidated Reply, BPM argues that the petition has not been mooted by the actual
turnover of MCIA’s operation to private respondents since the terminal fees will continue to
increase in 2016 to defray the cost of the project. GMR’s financial incapacity, as confirmed by
online articles on GMR’s moves to bring down its debt burden and finance its projects, will thus
continue to cause grave and irreparable damage to BPM. Direct injury is being suffered by BPM
members who are taxpayers frequently travelling to Cebu and Mactan from the increased
terminal fees.
_______________
12 “MACTAN-Cebu airport upgrade set,” posted on October 13, 2014,

http://www.bworldonline.com/content.php?section=TopStory&title=mactan-cebu-airport-
upgrade-set&id=96020 (visited last January 4, 2016).
16

Respondents’ Arguments
G.R. No. 211737
Megawide Construction Corp.
On procedural grounds, MCC contends that the petition should be dismissed for fatal defects or
infirmities. First, the petition raises several factual questions which this Court is not required to
entertain, particularly in a petition for certiorari and prohibition. Second, the petition for
certiorari under Rule 65 of the Rules of Court is improper and cannot be pursued against the
public respondents, more so against GMR and MCC, which do not exercise quasi-judicial or
ministerial functions vis-à-vis the bidding process for the MCIA Project. And third, petitioner has
no locus standi to file the petition, and neither has he shown any justification for this Court to
disregard his lack of personality to maintain this suit.
MCC argues that the petition lacks merit considering that: (a) the petition assails matters which
require to be left to the sole determination of the executive department, particularly the PBAC
and DOTC, and thus is beyond judicial cognizance; (b) petitioner’s prayer to enjoin the public
respondents from issuing a Notice of Award or executing a Concession Agreement — both of
which have already occurred — is already moot and thus is not a proper subject of controversy;
(c) even assuming that this Court can take cognizance of the petition, petitioner failed to allege,
much less establish a violation of law but rather, merely relies on DOTC and MCIAA issuances
— the ITPB and ITB — both of which the PBAC has faithfully applied in this instance, in
accordance with its intent and interpretation, thus negating any grave abuse of discretion; (d)
contrary to petitioner’s own interpretation of PBAC’s ITPB and ITB, which interpretation finds
no basis therein and in law, there is no conflict of interest; and (e) contrary to petitioner’s
allegations, GMR-Megawide Consortium is financially and technically capable of undertaking
the MCIA Project, and developing, maintaining, and operating the renovated MCIA.
17
VOL. 781, JANUARY 13, 2016 17

Opposing the application for a writ of preliminary injunction, MCC asserts that petitioner failed
to show (1) a clear, unmistakable legal right that demands protection nor a prima facie
entitlement to the relief demanded in the petition, and hence no injunctive relief must issue; and
(2) that he, or even the other bidders, the public and the State, will suffer grave and irreparable
injury from the continuation of the Award, the execution of the Concession Agreement, and/or
the MCIA Project. On the contrary, grave and irreparable injury will result should the bidding
process be enjoined and, consequently, the project be delayed. MCC contends that under
previous and existing laws, the policy has been that a national government infrastructure project
may not be enjoined save for exceptional circumstances, in order to avoid unnecessary costs and,
more importantly, delay in the enjoyment of benefits from such project. In this case, the
government agencies have regularly performed their duty and the winning Consortium is eager
to comply with their orders. All the queries raised by the other bidders have been addressed by
private respondents and what remains to be done is the work that ought to be the result from the
bidding procedure. The MCIA Project, among the present administration’s Public-Private
Partnership (PPP) projects should not be delayed any further on the basis of unsubstantiated
allegations.
GMR Infrastructure Ltd.
GMR points out similar defects in the petition such as the failure to attach certified true copy of
the assailed order, judgment or resolution since petitioner only attached the transcripts of
stenographic notes taken during the Senate hearings which are mere recording of the proceedings
therein; lack of requisite standing of petitioner who has not raised any constitutional issue nor
alleged any violation of application of a law, but merely points to a supposed unequal
enforcement of PBAC’s instructions to the bidders; non-submission of his income tax return,
having sued as a taxpayer; no other Fili-
18
pino, local or foreign bidder, joined his petition despite his self-serving claim that the petition
involves issues of transcendental importance; and lack of any allegation whatsoever that
respondents usurped legislative powers.
On the merits of the case, GMR emphasizes that the assailed acts involve policy decisions that
are not subject to judicial review. The situation in Agan, Jr. v. PIATCO is also not the same
herein because the public respondents did not disregard any legal requirement when they
determined that GMR-Megawide was the most qualified to undertake the MCIA Project.
Assuming that the assailed acts can be reviewed by this Court, petitioner nevertheless chose an
improper remedy as his petition raises several questions of fact while relying merely on
online/internet sources. This notwithstanding, GMR addressed the concerns regarding its
financial capability in its letter to PBAC dated December 20, 2013 and also during the Senate
hearings attended by its representatives. Notably, GMR-Megawide already paid the upfront
premium to the government in the amount of Php14,404,570,002.99 which shows the consortium
has the financial strength and capacity to deliver the Project.
On the conflict of interest issue, GMR explains that this was already clarified by public
respondents during the Senate hearings. It points out that having a “common director” is
obviously not the same as a director of one Consortium member being “also directly involved in
any capacity related to the Bidding Process” for another Bidder. Citing the verified petition of
Osmeña III, GMR avers that petitioner could not truthfully allege having information and
personal knowledge that Mr. Bashir was also directly involved in the Bidding Process for the
GMR-Megawide Consortium, because he was not. To remove all doubts and as required by
PBAC, GMR submitted sworn certifications to that effect. GMR maintains that the conflict of
interest rule and the examples/instances cited therein do not apply automatically, but are always
subject to discretion and evaluation by the PBAC, and more im-
19
VOL. 781, JANUARY 13, 2016 19
portantly, there has to be a finding by the DOTC/MCIAA that a conflict of interest exists before
any Bidder is disqualified.
On petitioner’s claim that respondents violated the Equal Protection Clause, GMR argues that
concededly there is no statute or law here that infringed the constitutional principle. What clearly
emerges is petitioner’s grievance that the Conflict of Interest provision in the bidding rules was
supposedly not followed, and on that premise private respondents should be disqualified and the
award in their favor set aside. These consequences are not only harsh but unwarranted. For
assuming the said rule may be considered as “statute” that public respondents had breached, such
breach is not a violation of the Equal Protection Clause that will give rise to a constitutional
issue. Citing jurisprudence, GMR asserts that “an erroneous or mistaken performance of a
statutory duty, although a violation of the statute, is not without more a denial of the equal
protection of the laws.” Public respondents’ acts in this regard do not amount to violation of the
Equal Protection Clause, as the facts do not show there was “intentional or purposeful
discrimination” when they determined that no conflict of interest exists for GMR-Megawide
Consortium.
GMR further contends that petitioner is not entitled to a writ of preliminary injunction, as
petitioner Osmeña III has no clear and unmistakable right, not being a bidder himself and having
failed to establish any grave abuse of discretion committed by the public respondents in the
performance of their duty. The alleged grave and irreparable injury, what petitioner feared as
“bad precedent” in public bidding, is not irreparable but imaginary. On the contrary, it is the
government and the public who will suffer irreparable injury if an injunction is issued that will
further delay the project for the expansion and development of an international airport in the
Province of Cebu.
20
G.R. No. 214756
GMR and Megawide (GMR-

Megawide Cebu Airport Corp.)
The consortium now called the GMR-Megawide Cebu Airport Corp. (GMCAC), reiterates its
previous arguments, given the similar procedural infirmities of the present petition, and those
addressing the issue of its alleged lack of financial capacity. The consortium’s financial
capability has already been evaluated by the PBAC — including the controversies or issues
raised by the other bidders — which finally determined that GMR-Megawide Consortium is the
most qualified to undertake the MCIA Project.
GMCAC asserts that BPM’s prayer to enjoin the turnover of MCIA’s operation and maintenance
to GMCAC and the imposition of the increased PSC rates have already occurred. Hence, this
issue is already moot and academic, and not the proper subject of this petition for injunction.
More, there is no grave and irreparable injury that will be inflicted upon the State and the general
public should the turnover of the MCIA and increased PSC rates be implemented as these are
part of the MCIA Project and in pursuance of the Concession Agreement. Since the alleged
financial incapacity of GMR was unfounded, based merely on news reports and online materials,
in contrast to official documents submitted to and evaluated by the PBAC, petitioner’s fear that it
will be prejudiced by GMR’s financial incapacity is likewise baseless.
G.R. Nos. 211737 & 214756
DOTC, MCIAA and PBAC
Public respondents argue that a direct resort to this Court is premature and improper under the
doctrine of hierarchy of courts. Having failed to establish special and important reasons to
support petitioners’ invocation of this Court’s original
21
VOL. 781, JANUARY 13, 2016 21
jurisdiction, the petitions should be dismissed. It is likewise asserted that the mere claim that the
case is of transcendental importance or that it has an economic impact would not present a
special and important ground that would justify the exercise of this Court’s original jurisdiction
and ignoring the hierarchy of courts.
There is also no showing that Medardo Deacosta, Jr. was authorized to file the petition in behalf
of petitioner BPM. The certification of non-forum shopping submitted by Deacosta did not
include proof of his authority to sign the said certificate for BPM.
Both petitioners have no legal standing to institute the present petitions. The petition in G.R. No.
211737 does not identify any specific constitutional question or issue, the principal requirement
for legal standing in public suits. The invocation of violation of the equal protection clause does
not qualify as a constitutional question or issue. Neither has petitioner Osmeña III sufficiently
shown that the funds to be expended are derived from taxation and that he will be directly
injured by the award of the MCIA Project to GMCAC, and eventually, by the implementation
thereof. Further, there is no allegation of disregard of specific constitutional or statutory
prohibition, nor of direct injury to be sustained by petitioner.
G.R. No. 214756 should also be dismissed on the same ground as BPM failed to show how the
increase in terminal fees will constitute an illegal disbursement of public funds. Besides, the
petition has become moot and academic with the turnover of the MCIA to GMCAC on
November 1, 2014. Hence, there is nothing more to enjoin and there is no more justiciable
controversy to be resolved. Even assuming that this case has not become moot, injunction is
clearly not proper as the requisites for the issuance of the writ have not been satisfied.
On the merits of the case, public respondents contend that petitioner Osmeña’s reliance on Agan,
Jr. v. PIATCO is improper as the ruling therein is not on all fours with the pre-
22
sent case. This Court ruled in Agan, Jr. that “the crucial issues submitted for resolution are of
first impression and they entail the proper legal interpretation of key provisions of the
Constitution, the BOT Law and its Implementing Rules and Regulations”13 and hence, the
specific provisions of law violated by PIATCO were identified. In stark contrast, the present case
does not present constitutional issues. Moreover, this Court in Agan, Jr. ruled that the PBAC
erroneously evaluated PIATCO’s financial ability to fund the subject project when it speculated
on PIATCO’s future financial ability on the basis of the documents it submitted. Here, however,
the proper procedure was observed in evaluating the qualifications of all the bidders.
Public respondents maintain that they exercised due diligence and strictly complied with the
rules in evaluating the submitted bids. In concluding that GMR-Megawide Consortium did not
violate Conflict of Interest Rule, they applied the clear words of the ITPB, ITB and Special Bid
Bulletins. The interpretation of the rule is lodged in the DOTC being the government agency
tasked to implement the MCIA Project. No advantage was given to GMR-Megawide Consortium
or to First Philippine Airports Consortium which had in fact given the lowest bid in terms of
premium.
As to GMR-Megawide Consortium’s qualifications for the MCIA Project, public respondents
assert that they exercised due diligence and acted within jurisdiction when the PBAC determined
that GMR-Megawide Consortium is the most qualified in terms of technical experience and
financial capability. It was stressed that under the ITPB, the detailed evaluation of the
compliance by the Prospective Bidder with the Legal, Technical and Financial Qualification
Requirements shall be based solely upon the qualification documents submitted.
_______________
13 Agan, Jr. v. PIATCO, supra note 11 at p. 805; p. 646.
23
VOL. 781, JANUARY 13, 2016 23
As to the issues concerning GMR’s dispute with the Maldives Government over the Male
International Airport, as well as the alleged violations of DIAL, the concessionaire for the Indira
Gandhi International Airport, these have already been threshed out and addressed by GMR
during the post-qualification stage. On the other hand, petitioner’s reference to online articles
that pertain to MCC deserves no consideration. Said materials are hearsay and unofficial and do
not warrant the disqualification of a Bidder. As between those online articles and the official
submissions — certifications, qualifications, documents and financial statements submitted by
the bidders, respondent PBAC is mandated by law to give preference and weight to the latter in
determining the track record or technical qualifications of a prospective bidder. Indeed, PBAC
would do injustice against a prospective bidder if, notwithstanding that it passed all the
qualifications provided by law and the applicable rules, it will be disqualified merely on the basis
of hearsay evidence. While PBAC has the right to seek clarifications and make inquiries
regarding information supplied by the prospective bidders in the qualification documents, it
cannot be expected to consider every possible allegation as it would just delay the entire bidding
process. Having exercised its function within the parameters of the law, relevant rules and
regulations and the ITPB, the PBAC cannot be faulted if it finds that GMR passed all the
qualifications requirements provided by the rules and the ITPB. Hence, there is no merit in
petitioner Osmeña’s argument that public respondents “illegally refused to disqualify” the GMR-
Megawide Consortium.
Issues
From the foregoing, the core issues to be resolved in the present controversy are: (1) whether
GMR-Megawide Consortium is a qualified bidder; (2) whether the increased terminal fees
imposed by the winning bidder, GMCAC, is legal; (3) whether petitioners are entitled to
injunctive relief.
24
Our Ruling
The petitions are without merit.
Preliminaries
A. Legal Standing
Legal standing or locus standi refers to a personal and substantial interest in a case such that the
party has sustained or will sustain direct injury because of the challenged governmental act.14
The requirement of standing, which necessarily sharpens the presentation of issues, relates to the
constitutional mandate that this Court settle only actual cases or controversies.15 Thus, generally,
a party will be allowed to litigate only when (1) he can show that he has personally suffered
some actual or threatened injury because of the allegedly illegal conduct of the government; (2)
the injury is fairly traceable to the challenged action; and (3) the injury is likely to be redressed
by a favorable action.16
In David v. Macapagal-Arroyo,17 we explained the rules on locus standi, as follows:

Locus standi is defined as “a right of appearance in a court of justice on a given question.”
In private suits, standing is governed by the “real parties-in-interest rule” as contained in
Section 2, Rule 3 of the 1997 Rules of
_______________
14 Tolentino v. Commission on Elections, 465 Phil. 385, 402; 420 SCRA 438, 542 (2004), citing
Joya v. Presidential Commission on Good Government, G.R. No. 96541, August 24, 1993, 225
SCRA 568, 576.
15 Id., citing Kilosbayan, Incorporated v. Morato, 316 Phil. 652; 246 SCRA 540 (1995) and
Article VIII, Sections 1 and 5(2), 1987 Constitution.
16 Id., citing Telecommunications and Broadcast Attorneys of the Philippines, Inc. v.

Commission on Elections, 352 Phil. 153, 168; 289 SCRA 337, 343 (1998).
17 522 Phil. 705; 489 SCRA 160 (2006).
25
VOL. 781, JANUARY 13, 2016 25
Civil Procedure, as amended. It provides that “every action must be prosecuted or

defended in the name of the real party-in-interest.” Accordingly, the “real party-in-interest”
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.” Succinctly put, the plaintiff’s standing is based on his
own right to the relief sought.
The difficulty of determining locus standi arises in public suits. Here, the plaintiff who
asserts a “public right” in assailing an allegedly illegal official action, does so as a
representative of the general public. He may be a person who is affected no differently
from any other person. He could be suing as a “stranger,” or in the category of a “citizen,”
or “taxpayer.” In either case, he has to adequately show that he is entitled to seek judicial
protection. In other words, he has to make out a sufficient interest in the vindication of
the public order and the securing of relief as a “citizen” or “taxpayer.”
Case law in most jurisdictions now allows both “citizen” and “taxpayer” standing in public
actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that
the plaintiff in a taxpayer’s suit is in a different category from the plaintiff in a citizen’s
suit. In the former, the plaintiff is affected by the expenditure of public funds, while in the
latter, he is but the mere instrument of the public concern. As held by the New York
Supreme Court in People ex rel Case v. Collins: “In matter of mere public right, however
… the people are the real parties…. It is at least the right, if not the duty, of every citizen
to interfere and see that a public offence be properly pursued and punished, and that a
public grievance be remedied.” With respect to taxpayer’s suits, Terr v. Jordan held that
“the right of a citizen and a taxpayer to maintain an action in courts to restrain the
unlawful use of public funds to his injury cannot be denied.”
However, to prevent just about any person from seeking judicial interference in any
official policy or act with which he disagreed with, and thus hinders the activities of
governmental agencies engaged in public ser-
26
vice, the United States Supreme Court laid down the more stringent “direct injury” test in
Ex Parte Levitt, later reaffirmed in Tileston v. Ullman. The same Court ruled that for a
private individual to invoke the judicial power to determine the validity of an
executive or legislative action, he must show that he has sustained a direct injury as a
result of that action, and it is not sufficient that he has a general interest common to all
members of the public.
This Court adopted the “direct injury” test in our jurisdiction. In People v. Vera, it held
that the person who impugns the validity of a statute must have “a personal and
substantial interest in the case such that he has sustained, or will sustain direct injury as
a result.” The Vera doctrine was upheld in a litany of cases, such as, Custodio v. President
of the Senate, Manila Race Horse Trainers’ Association v. De la Fuente, Pascual v.
Secretary of Public Works and Anti-Chinese League of the Philippines v. Felix.18 (Italics
in the original; emphasis and underscoring supplied)
The nature of personal interest in public suits was summarized as follows:
For a party to have locus standi, one must allege “such a personal stake in the outcome of
the controversy as to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional
questions.”
Because constitutional cases are often public actions in which the relief sought is likely to
affect other persons, a preliminary question frequently arises as to this interest in the
constitutional question raised.
When suing as a citizen, the person complaining must allege that he has been or is
about to be denied some right or privilege to which he is lawfully enti-
_______________
18 Id., at pp. 755-757; pp. 216-218.
27
VOL. 781, JANUARY 13, 2016 27
tled or that he is about to be subjected to some burdens or penalties by reason of the

statute or act complained of. When the issue concerns a public right, it is sufficient that
the petitioner is a citizen and has an interest in the execution of the laws.
For a taxpayer, one is allowed to sue where there is an assertion that public funds are
illegally disbursed or deflected to an illegal purpose, or that there is a wastage of public
funds through the enforcement of an invalid or unconstitutional law. The Court retains
discretion whether or not to allow a taxpayer’s suit.
In the case of a legislator or member of Congress, an act of the Executive that injures the
institution of Congress causes a derivative but nonetheless substantial injury that can be
questioned by legislators. A member of the House of Representatives has standing to
maintain inviolate the prerogatives, powers and privileges vested by the Constitution in his
office.
An organization may be granted standing to assert the rights of its members, but the mere
invocation by the Integrated Bar of the Philippines or any member of the legal profession
of the duty to preserve the rule of law does not suffice to clothe it with standing.
As regards a local government unit (LGU), it can seek relief in order to protect or
vindicate an interest of its own, and of the other LGUs.19 (Emphasis supplied; citations
omitted)
Here, BPM alleges a direct personal injury for its members who as frequent travelers to Cebu
and Mactan will be burdened by the increased terminal fees imposed by the private respondents
upon taking over the operation and management of MCIA. On the other hand, petitioner Osmeña
III claims to be suing as a legislator, taxpayer and citizen asserting a public right in the stringent
application of the bidding rules on
_______________
19 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), 589 Phil. 387, 486-487; 568 SCRA 402, 456-457 (2008).
28
the qualifications of private respondents for the MCIA Project.
In any case, locus standi being a mere procedural technicality,20 the Court has, in the exercise of
its discretion, relaxed the rules on standing when the issues involved as of “transcendental
importance” to the public.21 The Court, through Associate Justice Florentino P. Feliciano (retired
and now deceased), provided the following instructive guides as determinants in determining
whether a matter is of transcendental importance: (1) the character of the funds or other assets
involved in the case; (2) the presence of a clear case of disregard of a constitutional or statutory
prohibition by the public respondent agency or instrumentality of the government; and (3) the
lack of any other party with a more direct and specific interest in the questions being raised.22
In not a few cases, the Court, in keeping with its duty under the Constitution to determine
whether the other branches of government have kept themselves within the limits of the
Constitution and the laws and have not abused the discretion given them, has brushed aside
technical rules of procedure.23
_______________
20 De Castro v. Judicial and Bar Council (JBC), 629 Phil. 629, 678; 615 SCRA 666, 723
(2010).
21 David v. Macapagal-Arroyo, supra note 17 at p. 757; p. 219; Francisco, Jr. v.

Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc., 460 Phil. 830,
899; 415 SCRA 44, 139 (2003), citing Kilosbayan, Incorporated v. Morato, 320 Phil. 171; 250
SCRA 130 (1995).
22 Chamber of Real Estate and Builders’ Associations, Inc. (CREBA) v. Energy Regulatory
Commission (ERC), 638 Phil. 542, 556-557; 624 SCRA 556, 570 (2010), citing Senate of the
Philippines v. Ermita, 522 Phil. 1, 31; 488 SCRA 1, 39 (2006); and Francisco, Jr. v.
Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino, Inc., id., citing
Kilosbayan, Incorporated v. Guingona, Jr., G.R. No. 113375, May 5, 1994, 232 SCRA 110.
23 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), supra note 19 at
p. 488; p. 458, citing Tatad v. Secretary of the Department of Energy, 346 Phil. 321, 359; 281
SCRA 330, 349 (1997).
29
VOL. 781, JANUARY 13, 2016 29
In Agan, Jr. v. PIATCO, also involving a controversy in the qualifications of the winning bidder
for the construction and operation of the country’s premier international airport, the Court
resolved to grant standing to the petitioners in view of “the serious legal questions involved and
their impact on public interest.”24 Although the factual milieu in this case is not similar and no
constitutional issue was raised by petitioners, we hold that the same rationale in Agan, Jr.
justifies the relaxation of the rules on standing.
B. Hierarchy of Courts
While this Court has original jurisdiction over petitions for certiorari, prohibition, mandamus,
quo warranto, and habeas corpus, such jurisdiction is shared with the Court of Appeals and the
Regional Trial Courts. It is judicial policy that —
x x x a direct invocation of the Supreme Court’s jurisdiction is allowed only when

there are special and important reasons therefor, clearly and especially set out in the
petition. Reasons of practicality, dictated by an increasingly overcrowded docket and the
need to prioritize in favor of matters within our exclusive jurisdiction, justify the existence
of this rule otherwise known as the “principle of hierarchy of courts.” More generally
stated, the principle requires that recourse must first be made to the lower-ranked court
exercising concurrent jurisdiction with a higher court.25 (Italics omitted; emphasis
supplied)
The Court thus declared in Heirs of Bertuldo Hinog v. Melicor,26 that it will not entertain direct
resort to it unless the
_______________
24 Agan, Jr. v. PIATCO, supra note 11 at p. 804.
25 Bagabuyo v. Commission on Elections, 593 Phil. 678, 689; 573 SCRA 290, 296-297 (2008).
26 495 Phil. 422, 433; 455 SCRA 460, 471-472 (2005).
30

redress desired cannot be obtained in the appropriate courts, and exceptional and compelling
circumstances, such as cases of national interest and of serious implications, justify the availment
of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary
jurisdiction.27
After a thorough study and evaluation of the issues involved, the Court is of the view that
exceptional circumstances exist in this case to warrant the relaxation of the rule. The Court can
resolve the factual issues from the available evidence on record.
Mactan-Cebu International Airport is the second busiest airport in the country after the Ninoy
Aquino International Airport, handling millions of passengers and thousands of aircraft
movements every year. Opened in the mid-1960s, it is owned by the DOTC and managed by the
MCIAA.28 The multi-billion expansion and development project for MCIA is being
implemented through the PPP program. The Government’s PPP program has two objectives: (1)
increase private investment in infrastructure through solicited mode; and (2) follow good
governance practices in preparing, bidding and implementing the PPP projects.29 There is no
dispute then that this case is of paramount national interest for it raises serious questions on the
evaluation of bids by the public respondents.
_______________
27 Holy Spirit Homeowners Association, Inc. v. Defensor, 529 Phil. 573, 586; 497 SCRA 581,
594 (2006).
28 “Mactan-Cebu International Airport, Philippines,” <http://www.airport-

technology.com/projects/mactan-cebu-international-airport/> (visited last January 4, 2016).
29 “Strengthening Public-Private Partnerships in the Philippines,” Performance Overview,

March 2012 (Asian Development Bank Project Document),
<http://www.adb.org/projects/documents/strengthening-public-private-partnerships-philippines>
(visited last January 4, 2016).
31
VOL. 781, JANUARY 13, 2016 31
C. Mootness
Respondents’ contention that the case was mooted by the Notice of Award and turnover of
operations of the MCIA to GMCAC likewise deserves scant consideration. For even in cases
where the supervening events had made the cases moot, the Court did not hesitate to resolve the
legal or constitutional issues raised to formulate controlling principles to guide the bench and the
bar, and the public.30 Hence, the subsequent issuance of Notice of Award, execution of the
Concession Agreement and turnover to GMCAC of the operation and maintenance of MCIA, did
not remove the issue of GMCAC’s qualifications from the ambit of judicial review.
Substantive Issues
No Grave Abuse of Discretion
in PBAC’s Determination that GMR-Megawide
Consortium was a Qualified Bidder
For public biddings of PPP contracts under the BOT Law and Implementing Rules and
Regulations (IRR), the evaluation of bids is undertaken in two stages. The first stage evaluation
involves the assessment of the technical, operational, environmental and financing viability of
the proposal as contained in the bidder’s first envelopes vis-à-vis the prescribed requirements and
criteria/minimum standards and basic parameters prescribed in the bidding documents. The
second stage evaluation shall involve the assessment and comparison of the financial proposals
of the bidders. Within
_______________
30 Chavez v. Public Estates Authority, 433 Phil. 506, 522; 384 SCRA 152, 177 (2002), citing
Salonga v. Cruz Paño, No. L-59524, February 18, 1985, 134 SCRA 438; Gonzales v. Marcos,
160 Phil. 637; 65 SCRA 624 (1975); Aquino, Jr. v. Enrile, 158-A Phil. 1; 59 SCRA 183 (1974);
and De la Camara v. Enage, 148-B Phil. 502; 41 SCRA 1 (1971).
32
three days from completion of the financial evaluation, the PBAC submits its recommendation to
the head of the Implementing Agency (IA) or Local Government Unit (LGU). Upon approval of
the recommendation, the head of the IA or LGU will issue a notice of award to a winning
proponent. Subject to compliance with the post-award requirements in the notice of award, the
PPP contract shall be executed and signed by the winning bidder and the head of the IA or
LGU.31
During the post-qualification evaluation and prior to the final award to GMR-Megawide
Consortium as the Highest Bidder, the latter’s disqualification was sought by the Second Highest
Bidder, Filinvest Development Corporation (FDC), on the following grounds: (1) GMR’s
questionable record in airport construction and development; (2) GMR’s financial incapacity;
and (3) violation of the Conflict of Interest Rule.
In its letters32 dated December 13, 2013 and December 16, 2013 addressed to PBAC Chairman
Undersecretary Jose Perpetuo M. Lotilla, FDC, citing published newspaper reports, brought up
the following issues: (1) cancellation by the Maldives Government of the GMR Group’s contract
for modernizing the Male Ibrahim Nasir International Airport (Male International Airport) and
which cancellation was affirmed in a Singapore court; (2) the rapid rise of GMR’s debt level and
MCC’s equity of only roughly P8 Billion; (3) GMR’s exit from the management of Istanbul
Gokcen International Airport in Istanbul, Turkey, supposedly as part of the GMR Group’s
articulated strategy of “develop-build-create value-divest,” which does not augur well for the
long-term commitment intended for the 25-year concession period of the MCIA Project; (4)
critical findings of the Comptroller and Auditor General of India based on the performance audit
of the implemen-
_______________
31 Revised BOT Law Implementing Rules and Regulations (2012), Sections 8.1, 8.2, 11.1, 11.2,
and 11.3.
32 Annexes “7” and “7-A,” Rollo (G.R. No. 211737), Vol. III, pp. 1496-1507.
33
VOL. 781, JANUARY 13, 2016 33
tation of the public-private partnership for the Indira Gandhi International Airport at Delhi, India,
including the development fee imposed on travelers which was used by DIAL (Delhi Airport
concessionaire) to finance 27% of the project cost, outsourcing of numerous contracts which are
not arms-length transactions and in violation of the Operation Management and Development
Agreement (OMDA) because these were given to joint venture companies in which DIAL had
substantial equity interest, violation of the Master Plan and delay in project completion, financial
documents showing GMR posting net loss from operations in the last three years and debt levels
increasing in relation to its equity; and (5) concern as to MCC’s equity in view of several PPP
projects awarded to it which involve substantial amount in project costs.
As part of the Technical Qualifications, the ITPB mandates compliance with certain supporting
documents from entities who fulfill the requirements for Development Experience, and
Operation and Maintenance Experience:
3. The entity whose experience is being submitted in fulfillment of this requirement —

whether the Prospective Bidder or a Consortium Member and any Affiliates of any of these
entities, should submit a certificate from an Auditor, as per the format provided at Annex
QD-11 to satisfactorily establish its claim.
4. The entity, whose experience is being submitted in fulfillment of this requirement —

whether the Prospective Bidder or a Consortium Member and any Affiliates of any of these
entities must certify that they have no Unsatisfactory Performance Record as per the
format provided at Annex QD-4A or Annex QD-4B.33 (Emphasis supplied)
_______________
33 Rollo (G.R. No. 211737), Vol. II, p. 795.

34
The certificate from an Auditor, as per the format provided in Annex QD-11, serves as evidence
of having the claimed Development Experience, and in Annex QD-13, a certificate for details of
eligible projects for Operation and Maintenance Experience, such as the number of years in
operation of the airport and the annual passenger throughout registered by the airport.34 The
more relevant document is the certificate from the entities whose experience is being submitted
in fulfillment of the Development Experience, and Operation and Maintenance Experience, of
“No Unsatisfactory Performance Record.”
As per the format prescribed in Annex QD-4A, the Notarized Certification of Absence of
Unsatisfactory Performance Record, the entity fulfilling the Development Experience, and
Operation and Maintenance Experience, certifies that it does not have any record of
unsatisfactory performance in any of its projects and contracts.
x x x “Unsatisfactory Performance” means any of the following:
1. within the last five (5) years prior to the Qualification Documents Submission Date —
a. failure to satisfactorily perform any of its material obligations on any contract, as

evidenced by an imposition of a judicial pronouncement or arbitration award;
b. expulsion from any project or contract;
c. termination or suspension of any of its projects or contracts due to breach of its

obligations; or
d. material violations of laws and/or regulations applicable to any of its projects or

contracts x x x.35
_______________
34 Id., at pp. 844, 846.
35 Id., at pp. 824-828.

35
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Evaluating the information provided by FDC and the explanation given by private respondents
concerning the latter’s performance record, PBAC in its Resolution dated April 3, 2014, stated its
findings and conclusion, viz.:
I. Existence of Unsatisfactory Performance in relation to GMR-Male
Pursuant to QD-4A of the ITPB, the relevant project or contract refers to any project or contract
of the entity or entities whose experience is being used to meet any of the Technical
Qualification Requirements which was commenced or in the process of implementation within
the last five (5) years before the Qualification Documents Submission Date, and not just to the
particular projects or contracts being submitted to meet such Technical Qualification
Requirements. Based on the clear reading of the provisions under QD-4A, the performance
record of GMR-Male is not relevant to the Project, considering its credentials were not used to
satisfy any qualification requirement. The PBAC also appreciated that —
 the information pertaining to the Male Airport Contract was disclosed by GMR during the
Prequalification process, even if it was not a required submission; and
 in a letter dated 23 December 2013 addressed to the DOTC, through Undersecretary Rene K.
Limcaoco, Isabel Chaterton of the International Finance Corporation (“IFC”) Public-Private
Partnership Advisory Services for South Asia said that “IFC has been consistently of the view that
the sanctity of the Male airport concession agreement should be upheld and have noted publicly
our strong belief that the process leading to the award of the concession for that project was
conducted in an open and transparent manner and in accordance with international best practice.
We understand the matter is now under arbitration which is the appropriate dispute resolution
mechanism provided for in the
36
concession agreement. We should also point out, that in June 2013, the Anti-Corruption
Commission of the Maldives concluded that there was no corruption involved in the award and
concession of the Male airport to GMR-MAHB.” IFC is a member of the World Bank Group and the
largest global development institution focused exclusively on the private sector in developing
countries. A copy of IFC’s letter dated 20 December 2013 is attached hereto as Annex “AA.”
II. Misrepresentation as to the Absence of Unsatisfactory Performance of DIAL
Based on the definition of unsatisfactory performance under the ITPB and ITB, absence of
unsatisfactory performance must be evidenced by the imposition of a judicial
pronouncement or arbitration award. The CAG Report is neither a judicial pronouncement
nor an arbitration award. Therefore, based on the definition, the CAG Report is not
sufficient basis for an adverse finding. On further evaluation of the documentary
submissions and at the close of several discussions, it was determined that the CAG Report
is primarily addressed to the relevant government agencies of India. The PBAC noted,
among others, that the charging of development fee and outsourcing to service providers
through a procurement process is allowed under the contract.
It has been reported as well that the Ministry of Civil Aviation has contested the findings
under the CAG Report. Briefly, the Ministry has said that: (i) the charging of the
development fee is authorized under the relevant law and known to all bidders prior to bid
submission, (ii) there was no deviation from the Master Plan, particularly as regards the
extent of permissible commercial development as follows:
“Ministry of Civil Aviation has gone through the report of the CAG on Indira Gandhi
International Airport, Delhi as tabled in Parliament today and strongly refutes the loss
figures and other allegations as made in the report.
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VOL. 781, JANUARY 13, 2016 37
“The calculation of presumptive gain from the commercial use of land at the Delhi Airport
is totally erroneous and misleading as it simply adds the nominal value of the projected
revenue, without taking the net present value. In fact the net present value of the figure
quoted by CAG is Rs 13795 crores only. CAG has further failed to appreciate that 46% of
this amount would be payable to AAI as revenue share.
“It is also pointed out that the levy of Development Fee is under Section 22(A) of AAI Act,
1994 and was in the knowledge of all the bidders prior to the bidding process. Hence,
contrary to what the CAG has said, the levy of Development Fee by DIAL was not a post
contractual benefit provided to DIAL at the cost of passengers. Further, the levy of the
Development Fee has been upheld by the Supreme Court, which has already examined and
rejected all the issues now being raised by CAG in its report.
“On the issue of lease of Airport land, it is clarified that the land has not been given to
DIAL on rental basis. Rs100 is just a token amount for the purpose of the Conveyance
Deed. The determining factor for grant of concession to the bidder was the Gross Revenue
share quoted by the bidders. As a result, Airports Authority of India (AAI) now receives
45.99% share of Gross Revenues of DIAL and 26% of all Dividends. Benefit to AAI is
likely to be more than Rs 3 lakh crores in this process during the entire Concession period.
AAI has already got its revenue share of Rs.2936 crores in the last 6 years and likely to get
Rs. 1770 crores in the year 2012-13 and Rs. 2287 crores in the year 2013-14. The AAI
share of revenue from DIAL is further going to constantly rise every year in the balance
concession period.
“It may also be noted that the right to use 5% of Airport land for commercial purpose was
also defined in the bid and known to all bidders.”
III. Misrepresentation as to financial capacity of GMR Infrastructure & Megawide

Consortium
Pursuant to the ITPB and ITB, to be financially qualified to bid for the Project, a bidder
must meet the following
38
Financial Qualification requirements: (a) (i) Net Worth of at least Php2.0 billion, or its
equivalent as of its latest audited financial statements, which must be for financial year
ending not earlier than 31 December 2011, or (ii) a Set-Aside Deposit equivalent to the
same amount, and (b) a letter testimonial from a domestic universal/commercial bank or an
international bank with a subsidiary/branch in the Philippines or any international bank
recognized by the BSP attesting that the Prospective Bidder and/or members of the
Consortium are banking with them, and that they are in good financial standing and/or are
qualified to obtain credit accommodations from such banks to finance the Project. These
parameters for the determination of financial qualification requirements are consistent with
Section 5.4(c) of the BOT Law IRR.
On further evaluation, the PBAC determined that, for purposes of meeting the Financial
Qualification requirement, QD-8, with supporting information, was submitted by
Megawide for the GMR Infrastructure & Megawide Consortium. Megawide’s submission
was previously determined to have fulfilled these requirements. Furthermore, in the course
of completing the financial evaluation, the PBAC examined the Financial Proposal
comprising the Bid Amount and the Final Draft Concession Agreement signed and
executed by the Authorized Representative of the GMR Infrastructure & Megawide
Consortium pursuant to the ITB, and the PBAC has not found any deficiency in the
financial proposal.
IV. Long term commitment to Project
Filinvest-CAI Consortium also shared its observation that it doubts the long term
commitment of GMR Infrastructure & Megawide Consortium to the Project in view of its
reported intention to withdraw from the ISGIA. The PBAC noted this observation and
resolved that the reported divestment from Istanbul Airport does not affect the evaluation
of GMR Infrastructure & Megawide Consortium’s qualification to undertake the Project
under the terms of the Concession Agreement. Divestment or withdrawal by a Consortium
Member from the Project is
39
VOL. 781, JANUARY 13, 2016 39
permitted, subject to the applicable Lock-up Rules under V-05 and V-06 of the ITPB, as
well, as under the Concession Agreement. This is an important provision in the ITB, ITPB
and Concession Agreement, validated in the course of the market sounding exercise
undertaken for the Project and in keeping with the declared policy under the BOT Law to
provide the most appropriate incentives to mobilize private resources for the purpose of
financing the construction, operation and maintenance of infrastructure and development
projects. Further, under Annex BL-1, GMR Infrastructure & Megawide Consortium has
certified that it will undertake the project in accordance with the Concession Agreement,
including the applicable Lock-up Rules, which undertaking was affirmed in a letter
addressed to PBAC dated 20 December 2013.
There is no reason to doubt the commitment in view of the certificate of good standing
from the Ministry of Defence of Turkey, which states that the operating company founded
by Limak Holding, GMR Infrastructure Limited and MAHB has been operating the
Istanbul Sabiha Gocken International Airport Terminal satisfactorily per the provisions of
the Implementation Agreement executed in 2008 and that the transfer of the forty percent
(40%) shares held by GMR and its affiliates to Malaysia Airports MSC Sdn Bhd has been
duly approved by the Undersecretary for Defense Industries on 20 March 2014, consistent
with the terms of the Implementation Agreement.
V. Violation of Conflict of Interest
The ITB, in Section 5.6(c) states in part:
Each Bidder may submit only one Bid Proposal. To ensure a level playing field and a
competitive Bidding Process, Bidders (in the case of Consortia, each Consortium
Members), including their Affiliates, must not have any Conflict of Interest. Without
limiting the generality of what would constitute a Conflict of Interest, any of the following
will be considered a Conflict of Interest:
40
x x x x x x x x x
c. a member of the board of directors, partner, officer, employee or agent of a
Bidder, any Consortium Member, or any of their Affiliates (of either the Bidder or
any of its Consortium Members), is also directly involved in any capacity related to
the Bidding Process for the Project for another Bidder, any Consortium Member of
any other Bidder, or any of their Affiliates (of either the Bidder or any of its
Consortium Members), within a period of two (2) years prior to the publication of
the Invitation to Pre-Qualify and Bid and one (1) year after award of the Project.
The same conflict of interest arises in case of professional advisors except when
prior written disclosure was made to their client-Bidders, DOTC/MCIAA and the
Public-Private Partnership Center, including the submission of a Conflict
Management Plan for this purpose. A written consent or clearance to this effect
shall likewise be secured from DOTC.
x x x x x x x x x
(This is similar to the Conflict of Interest provision appearing in the ITPB, Section V04-d.)
Consequently, in Annex BL-1 of the ITB, or the Form of Bid Letter, a bidder is required to
state under oath that it “including all of its Consortium Members, and all of the entities it
has proposed to comply with the Qualification Requirements under the ITPB, have not at
any time (i) engaged in any Corrupt Practice, Fraud, Collusion, Coercion, Undesirable
Practice, or Restrictive Practice, (ii) have a Conflict of Interest, (iii) violated the Lock-Up
Rules, or (iv) has Unsatisfactory Performance Record.”
During the prequalification stage, a question was submitted seeking clarification on

Section V04-d of the ITPB on Conflict of Interest. In its answer to the query under SBB
No. 06-2013, the PBAC stated that “without limiting the discretion of the PBAC to
determine what constitutes
41
VOL. 781, JANUARY 13, 2016 41

Conflict of Interest, direct involvement shall mean actual participation in the deliberations
and decision-making for the bidding process of the Prospective Bidder that would give the
director knowledge/information regarding the bid of such Prospective Bidder.”
In June 2013, GMR Infrastructure & Megawide Consortium submitted the following
query:
PBAC to please confirm our understanding that a conflict of interest shall arise with
respect to a director, partner, officer, advisor, employee, or agent if:
1. such director, partner, officer, advisor, employee, or agent of a Bidder (Bidder

“A”) is directly involved in the Bidding Process for the Project; and
2. such director, partner, officer, advisor, employee, or agent is also directly

involved in any capacity related to the Bidding Process for the Project for another
Bidder (“Bidder B”), any Consortium Member of Bidder B, or any of their
Affiliates.
Accordingly, a conflict of interest will arise only if such director, partner, officer,
advisor, employee, or agent is directly involved in the Bidding Process for the
Project with respect to both Bidders A and B.
PBAC to further confirm that for purposes of Section 5.6(c) of the Instructions to
Bidders, “direct involvement” shall mean actual participation in the deliberations
and decision-making for the bidding process of the Bidder that would give the
director, officer, advisor, employee or agent knowledge or information regarding the
bid of the Bidder, as previously clarified by the PBAC in SBB 6-2013, Query 4.
The Consortium, further suggested the following revision to the ITB:
A member of the board of directors, partner, officer, employee or agent of a Bidder,

any Consortium Member, or any of their Affiliates (of either the Bidder or any of
Consortium Members), who is directly involved in the Bidding Process for the
Project with respect to a
42

Bidder, is also directly involved in any capacity related to the Bidding Process for the
Project for another Bidder, any Consortium Member of any other Bidder, or any of their
Affiliates (of either the Bidder or any of its Consortium Members), within a period of two
(2) years prior to the publication of the Invitation to Pre-Qualify and Bid and one (1) year
after award of the Project.
The same conflict of interest arises in case of professional advisors except when prior
written disclosure was made to their client-Bidders, DOTC/MCIAA, and the Public-
Private Partnership Centre, including the submission of a Conflict Management Plan for
this purpose. A written consent or clearance to this effect shall likewise be secured from
DOTC.
For purposes of this provision, direct involvement shall mean actual participation in the
deliberations and decision-making for the bidding process of the Bidder that would give
the director, officer, advisor, employee, or agent knowledge or information regarding the
bid of the Bidder.
The PBAC, under SBB No. 11-2013 Query No. 5 released in August 2013, replied as
follows:
Please be guided that in cases of conflict of interest under ITB, Sec. 5.6(c), Bidders
who may be affected are advised to comply with SBB02-2013, Amendments to the
ITPB, No. 10, with respect to the compliance requirements for professional advisors.
Thus, Bidder, is advised, so that there will be no conflict of interest, to make a prior
written disclosure to the affected Bidders, DOTC, and the PPPC, and submit a
Conflict Management Plan. A written consent or clearance must be likewise secured
from DOTC.
Based on the relevant rule, there must be direct involvement or participation in the
deliberations and decision-making as to the Bid Process of two or more bidders and that
mere partnership or common directorship, or direct involvement in one bidder is not
enough.
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VOL. 781, JANUARY 13, 2016 43
The rule under Section 5.6(c), as previously explained under SBB No. 06-2013 (Query No.
4), is that the existence of common partners, directors or officers between two Bidders is
not of itself ground for a finding of Conflict of Interest. In SBB No. 07-2013 (Query No.
36), the PBAC reiterated that “[t]he position in the ITPB is reiterated. However, please
note that Section V-04(d) shall only apply if the common director is directly involved in
the bidding process for another Prospective Bidder. The PBAC provided guidance as to
what would constitute direct involvement in our response to Query No. 4 in SBB No. 06-
ANNEX A.” There must be (1) common partner, director, officer, or employee and (2)
direct involvement by such partner, director, officer, or employee, which consists of actual
participation in the deliberations and decision-making for the Bidding Process of both
Bidders affected, that would give the director knowledge or information regarding the bid
of such Bidder.
The PBAC adopted and approved the Conflict of Interest provision in the ITPB(V04-d)
and later in the ITB (5.6c) pursuant to its authority and function under the BOT Law IRR,
Section 3.2, which states that the PBAC shall be responsible for all aspects of the pre-
bidding and bidding process, including among others, the interpretation of the rules
regarding the bidding. In adopting the ITPB and ITB provisions on conflict of interest, the
PBAC was aware that in its implementation it would require direct involvement or actual
participation in the deliberations and decision-making process as to the Bid for both
affected bidders, for the following reasons.
 The clear expression of this intention in the use of the adverb “also,” indicating similarity
and further action of the same nature, in the qualifying phrase “is also directly involved,”
meaning that in requiring such action on the part of one bidder, the same action should
have been taken in behalf of or in relation to another bidder.
 The PBAC also noted that this meaning has been carried in the language of the provision as
used in several other PPP projects implemented prior to
44
the Project and from which reference documents the provision was drawn.
Significant in this regard is SBB No. 3, Response No. 4 to Metro Pacific Tollways
Corporation (see attached), issued in September 2012 for the NAIA Expressway
Project, where it is clear that for conflict of interest to arise there has to be actual
participation for or in both bidders involved. The meaning of the provision as
explained in the SBB No. 3 has been retained and carried in its use in the Project’s
ITB and ITPB. A copy of SBB No. 3 issued in September 2012 for the NAIA
Expressway Project is attached hereto as Annex “BB.”
That this is the proper interpretation is supported by the PBAC’s application of the same
principle in the treatment of professional advisers. The ITPB and ITB in stating that “the
same conflict of interest arises in case of professional advisors” has been implemented by
the PBAC by requiring the disclosure and clearance where the professional adviser is
under “the same conflict of interest,” meaning they are involved in that capacity for two or
more bidders. A written consent, clearance and compliance with conflict management plan
was required in the case of a professional adviser who was understood to have taken such a
role for two bidders in the Project. Otherwise, if at least two bidders are not involved, the
PBAC would not have required a conflict management plan for the simple reason that a
conflict of interest, in that case, would not exist.
In relation to the history of the conflict of interest provision, the PBAC also discussed that,
due to the numerous interlocking directors prevalent among the Philippine conglomerates,
an interpretation not requiring direct participation in both companies may possibly lead to
the disqualification of a large number of bidders. The result would be extremely
detrimental for the government, and surely this cannot be the purpose of the provision.
The purpose of specifying Section 5.6(c) as a form of Conflict of Interest is to prevent

collusion among the bidders that may arise from the specific conflict of interest sce-
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VOL. 781, JANUARY 13, 2016 45
narios (as differentiated from Collusion as defined under the ITPB and ITB), which may
prejudice or defeat competition in the Bidding Process. Particularly, Section 5.6(c) seeks to
prevent a situation in which the common partner, director, or officer of two (or more)
Bidders will have information and involvement in the preparation of the bids of both
Bidders. By actual participation, the common partner, director, or officer can influence the
bids of both bidders, which will not be achieved if a common director does not have direct
involvement in both bids.
It is, therefore erroneous, to conclude that the PBAC has taken a different view solely on
the basis of the response given under SBB No. 11-2013, Query No. 5. The PBAC
responded only to the query with regard to professional advisers without taking action on
the rest considering the lack of concrete factual scenario to support the query, apart from
the fact that it is not necessary to adopt the proposed revision by the bidder under Query
No. 5. The provision as it appears in the ITPB and ITB sufficiently conveys the meaning
that for Conflict of Interest to arise under Section 5.6(c) of the ITB there must be direct
involvement or participation in the deliberations and decision-making as to the Bid Process
of two or more bidders. Mere partnership or common directorship, or direct involvement
in only one bidder is not enough. It is worth recalling Section 6.1 of the BOT Law IRR,
which states that the implementing agency concerned shall not assume any responsibility
regarding erroneous interpretations or conclusions by the prospective bidder out of data
furnished or indicated in the bidding documents.
Applying the foregoing interpretation, therefore, the sworn certifications submitted by

GMR Infrastructure & Megawide Consortium set out the required certification on facts
which indicate compliance with the rules on Conflict of Interest.
Upon further consideration of this issue, the PBAC noted that GMR Infrastructure &
Megawide Consortium, in its comment on Filinvest-CA Consortium’s letters dated 2 and 3
January, confirmed that Mr. Tansri Bashir Ahmad
46

bin Abdul Majid (“Mr. Tansri Bashir Ahmad”) is the Managing Director of MAHB, but not
a member of the board of directors of GMR. While Mr. Tansri Bashir Ahmad sits on the
board of DIAL, GHIAL, and GMR-Male, as well as ISGIA, GMR Infrastructure &
Megawide Consortium, in its letter dated 6 January 2014, explained that “[a]side from
using the Hyderabad and Delhi airports for meeting the technical requirements for the bid,
DIAL, GHIAL, [GMR-Male] or ISGIA themselves were never involved in the bidding
process and anything remotely connected with the bid was never discussed in the boards of
these companies.”
It is also worth noting that at the time the GMR Infrastructure & Megawide Consortium
submitted its Qualification Documents on 22 April 2013, when it indicated that it is
fulfilling the Qualification Requirements through Affiliates of GMR, namely DIAL and
GHIAL, First Philippine Airport Consortium had as its members First Philippine Holdings
Corporation and Infratil (of New Zealand). The First Philippine Airports Consortium
requested the change in its consortium membership, with the replacement of Infratil by
MAHB was approved only in September 2013, following the evaluation of the prequa-
lification documents submitted by MAHB. In their respective Bid Letters (Annex BL-1),
each of the GMR Infrastructure & Megawide Consortium and First Philippine Airport
Consortium declared under oath the absence of Conflict of Interest. The PBAC further
noted that the respective boards of DIAL and GHIAL authorized their respective Chief
Financial Officers (“CFO”) to sign and execute relevant documents on their behalf from a
board meeting back in 2011 and 2012, way before the bid for the MCIA was published.
The same CFOs signed on behalf of each of their boards for the use of their O&M
experience as an affiliate of GMR.
The PBAC, in its meeting on 6 January 2013, resolved to require GMR Infrastructure &
Megawide to submit within three (3) days a certification affirming under oath the absence
of conflict of interest, specifically that neither MAHB nor Mr. Tansri Bashir Ahmad was
directly
47
VOL. 781, JANUARY 13, 2016 47

involved in any capacity related to the Bidding Process for the Project for both GMR-
Megawide Consortium and the Consortium of First Philippine Holdings Corporation and
MAHB at the same time, or any of their respective Consortium members, or any of their
respective Affiliates, through actual participation in the deliberations and decision-making
for the Bidding Process of both GMR-Megawide Consortium and First Philippine Airports
Consortium that would give MAHB or Mr. Tansri Bashir Ahmad knowledge/information
regarding the bid of both GMR Infrastructure & Megawide Consortium and First
Philippine Airports Consortium, within a period of two (2) years prior to the publication of
the Invitation to Pre-Qualify and Bid. Through its letter dated 8 January 2013, GMR
Infrastructure & Megawide Consortium submitted the requested certification.36
On the basis of the foregoing, the PBAC resolved to recommend to public respondents to
designate GMR-Megawide Consortium as the Winning Bidder for the MCIA Project, and to
issue the corresponding Notice of Award.
It is well-settled in our jurisprudence that the government is granted broad discretion in choosing
who among the bidders can offer the most advantageous terms and courts will not interfere
therewith or direct the committee on bids to do a particular act or to enjoin such act within its
prerogatives, except when in the exercise of its authority, it gravely abuses or exceeds its
jurisdiction,37 or otherwise commits injustice, unfairness, arbitrariness or fraudulent acts.38 We
have recognized that the exercise of that discretion is a policy decision that necessitates prior
inquiry, investigation, comparison,
_______________
36 Rollo (G.R. No. 211737), Vol. II, pp. 2289-2298.
37 Public Estates Authority v. Bolinao Security and Investigation Service, Inc., 509 Phil. 157,
176; 472 SCRA 165, 185 (2005), citing Republic v. Silerio, 338 Phil. 784, 793; 272 SCRA 280,
289-290 (1997).
38 Id., citing National Power Corporation v. Court of Appeals, 339 Phil. 605, 635; 273 SCRA
419, 446 (1997).
48

evaluation, and deliberation. This task can best be discharged by the concerned government
agencies, not by the courts.39
The Court thus expounded at length in Bureau Veritas v. Office of the President:40
x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al. (No.
L-18751, 28 April 1962, 4 SCRA 1245), that in an “invitation to bid, there is a condition
imposed upon the bidders to the effect that the bidding shall be subject to the right of the
government to reject any and all bids subject to its discretion. In the case at bar, the
government has made its choice and unless an unfairness or injustice is shown, the losing
bidders have no cause to complain nor right to dispute that choice. This is a well-settled
doctrine in this jurisdiction and elsewhere.”
The discretion to accept or reject a bid and award contracts is vested in the
Government agencies entrusted with that function. The discretion given to the
authorities on this matter is of such wide latitude that the Courts will not interfere
therewith, unless it is apparent that it is used as a shield to a fraudulent award.
(Jalandoni v. NARRA, 108 Phil. 486 [1960]) x x x The choice of who among the bidders is
best qualified to perform this task should be left to the sound discretion of the proper
Government authorities in the executive branch since they are in a better position than the
Courts to make the determination owing to the experience and knowledge that they have
acquired by virtue of their functions. The exercise of this discretion is a policy decision
that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This
task can best be discharged
_______________
39 National Power Corporation v. Pinatubo Commercial, 630 Phil. 599, 608; 616 SCRA 611,
620 (2010), citing Albay Accredited Constructors Association, Inc. v. Desierto, 516 Phil. 308,
322; 480 SCRA 520, 533 (2006).
40 G.R. No. 101678, February 3, 1992, 205 SCRA 705.
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VOL. 781, JANUARY 13, 2016 49
by the Government agencies concerned, not by the Courts. The role of the Courts is to
ascertain whether a branch or instrumentality of the Government has transgressed its
constitutional boundaries. But the Courts will not interfere with executive or legislative
discretion exercised within those boundaries. Otherwise, it strays into the realm of policy
decision-making.
It is only upon a clear showing of grave abuse of discretion that the Courts will set
aside the award of a contract made by a government entity. Grave abuse of discretion
implies a capricious, arbitrary and whimsical exercise of power. (Filinvest Credit Corp. v.
Intermediate Appellate Court, No. L-65935, 30 September 1988, 166 SCRA 155) The
abuse of discretion must be 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, as to act at all in contemplation of
law, where the power is exercised in an arbitrary and despotic manner by reason of passion
or hostility. (Litton Mills, Inc. v. Galleon Trader, Inc., et al., No. L-40867, 26 July 1988,
163 SCRA 489)41 (Emphasis supplied)
Under the ITPB, the PBAC reserves the right to waive any minor defects in the Qualification
Documents, and accept the offer it deems most advantageous to the government.42 Verily, a
reservation of the government of its right to reject any bid, generally vests in the authorities a
wide discretion as to who is the best and most advantageous bidder. The exercise of such
discretion involves inquiry, investigation, comparison, deliberation and decision, which are
quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.43
_______________
41 Id., at pp. 717-718.
42 Sec. V-09, ITPB, Rollo (G.R. No. 211737), Vol. II, p. 812.
43 National Power Corporation v. Philipp Brothers Oceanic, Inc., 421 Phil. 532, 546; 369
SCRA 629, 641 (2001).
50
We find no patent error or arbitrariness in the DOTC’s decision to award the contract to private
respondents after the PBAC had carefully verified and evaluated FDC’s allegations regarding
GMR’s expulsion from the Male International Airport by the Maldives Government, DIAL’s
financing and operation of the Delhi Airport, GMR’s poor financial health and violation of the
Conflict of Interest Rule.
On GMR’s supposed fiasco from the cancellation of the concession agreement of its subsidiary,
GMR Male International Airport Private Ltd. (GMIAL), with the Maldives Government in 2010,
more recent online news reports showed that GMIAL had won the arbitration case and is seeking
compensation from the wrongful termination of its contract. Two of such published
articles/reports reads:
GMR wins maldives airport case, seeks compensation
Anirban Chowdhury, ET Bureau Jun 20, 2014, 04.26AM IST
MUMBAI: GMR Infra on Thursday said it has won a more than 18-month long legal
battle with the Maldives government which started after the government cancelled the
company’s contract to develop and operate the country’s main airport.
According to GMR’s filing on the National Stock Exchange, a Maldives’ tribunal has
judged the government’s rejection of the contract “wrongful.”
The tribunal has directed Maldives and the state-owned Maldives Airports Company
(MACL) to pay $4 million legal damages to GMR within 42 days.
GMR has in addition, demanded a compensation of $1.4 billion for losses incurred in the
last one year on its bid amount and investments in developing the airport.
Hassan Areef, a spokesman for the MACL didn’t immediately respond to emailed queries.
The ruling and possible compensation will bring much-needed relief for GMR whose
international airport projects have been facing trouble.
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After winning its latest project the Philippines Mactan-Cebu International airport last year,
the company had faced trouble when a rival bidder raised issues of conflict of interest.
GMR, however, subsequently bagged the project.
Last December, the company sold its 40% stake in its second Turkey’s Istanbul Sabiha
Gokcen International Airport for 220 million. The company had invested 90 million (.`737
crore) in the airport but lost. `123 crore on it in 2012-13.
On July 28, 2010, a joint venture between GMR Infra (77%) and Malaysia Airports
(Labuan) Private Limited (23%) bagged a development and operations contract for
Ibrahim Nasir International Airport a brownfield airport at Male. The venture had bid $511
million.
The new terminal development project was on track for an early 2014 commercial opening
date before it had to be halted due to a ‘Stop-Work’ order by the Maldives aviation
ministry in August, 2012, according to GMR’s latest annual report.44
GMR’s Maldives airport concession pact was not void: Singapore-based tribunal
The tribunal has said that Maldives government and MACL should pay GMR $4
million as compensation within 42 days.
BY ANURADHA VERMA
GMR Infrastructure Limited’s subsidiary GMR Male International Airport Ltd. (GMIAL),
whose contract for modernisation of Male international airport was unilaterally terminated
by the Maldives government in 2012,
_______________
44 “GMR wins Maldives airport case, seeks compensation,”

<http://articles.economictimes.indiatimes.com/2014-06-20/news/50739360_1_maldives-airports-
company-gmr-infra-macl> (visited last January 4, 2016).
52
has got relief as an international tribunal has declared its concession agreement for
Maldives airport as valid.
In a filing to the stock exchanges, GMR Infrastructure said that the Singapore-based Rt
Hon Hoffman’s Tribunal declared that the concession agreement “was not void for any
mistake of law or discharged by frustration.”
“Government of Maldives and Maldives Airport Co. Ltd. (MACL) are jointly and
severally liable in damages to GMIAL for loss caused by wrongful repudiation of the
agreement as per the concession agreement,” GMR Infrastructure said.
After detailed proceedings lasting more than 18 months, the tribunal has said that Maldives
government and MACL should pay GMR $4 million of compensation within 42 days.
GMIAL had signed a concession agreement with the government of Maldives and MACL
for the $500 million modernisation and operation of Ibrahim Nasir International Airport in
2010.
However, the Maldives government terminated the contract and subsequently started off
arbitration proceedings on November 29, 2012, seeking a declaration that the concession
agreement was void ab initio. GMIAL had disputed this termination.
Shares of the GMR Infrastructure were trading at Rs 33.15, up 0.91 percent on the BSE
from their previous close, in a flat Mumbai market on Thursday. GMR Infrastructure runs
airports in Hyderabad and New Delhi. (Edited by Joby Puthuparampil Johnson)45
While the foregoing information was not yet available during the post-qualification stage, we
find no unfairness or arbi-
_______________
45 “GMR’s Maldives airport concession pact was not void: Singapore-based tribunal,”
<http://www.vccircle.com/news/infrastructure/2014/06/19/gmrs-maldives-airport-concession-
pact-was-not-void-singapore-based> (visited last January 4, 2016).
53
VOL. 781, JANUARY 13, 2016 53
trariness on the part of public respondents when they relied on the opinion of the IFC PPP
Services for Southeast Asia that the Male project “was conducted in an open and transparent
manner and in accordance with international best practice,” citing the June 2013 report of the
Anti-Corruption Commission of the Maldives which concluded that “there was no corruption
involved in the award and concession of the Male airport to GMR-MAHB.” As the lead advisor
for the project, IFC has in fact, included the Male International Airport as among the successful
PPPs in various infrastructure sectors.46 Public respondents thus committed no grave abuse of
discretion in determining that GMR has complied with the technical qualifications insofar as the
absence of Unsatisfactory Performance Record is concerned.
As to the financial incapacity of private respondents, this, too, has been sufficiently addressed by
PBAC when it further evaluated the financial proposal of MCC prior to the execution of the
Final Concession Agreement. And contrary to the claims of petitioner Osmeña III,
representatives from GMR have satisfactorily answered the issue raised on their financial
capability for the MCIA Project during the Senate hearing held on March 25, 2014. What
petitioner Osmeña III chiefly assailed was DOTC’s due diligence which to him, fell short
because they did not “dig in” and made a more in-depth investigation into GMR’s background,
specifically on the negative findings of India’s Comptroller and General Auditor. Herein
reproduced are relevant portions of the transcript taken during said hearing:
THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Now, let’s go to GMR so that
they’ll have a chance to explain.
_______________
46 Success Stories Public-Private Partnerships, “Maldives: Male International Airport,”

<http://www.pidg.org/resource-library/case-studies/successstories-maleairport.pdf> (visited last
January 4, 2016).
54
You wanted to react to a certain point we raised earlier. You’re Mr. Kapur?
MR. KAPUR. Yes, sir.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. Yes, please.
MR. KAPUR. I think there have been three points which were raised. One was about the
financial.
And just to react to that point, as far as GMR is concerned, as I had mentioned in my last
hearing also, the group is absolutely financially sound. It’s rated BBB investment grade by
the rating agencies. It has not departed to any lender. It has got letters of good standing
from Asian Development Bank and Standard Chartered Bank which have been submitted
at the time of our submission. That was primarily about the GMR Group. And, in fact, last
time, I had also made a very detailed submission about its financials, its operating profits
and its cash profits and the group is very much profitable. It has the ability to meet the
finances required to complete this project.
Having said that, the prime criteria of financial capability was that of Megawide because
they were the 60 percent partner as far as this project is concerned.
xxxx
THE ACTING CHAIRMAN (SEN. OSMEÑA).
xxxx
Your net losses increased — surged to 10.7 billion rupees during the nine-month period
ending December 31st 2013, is that correct?
xxxx
MR. KAPUR. … Just give me a moment.

Our GMR’s consolidated net loss for the 9-month period ending December of 2013 was
about 4 billion Indian rupees.
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VOL. 781, JANUARY 13, 2016 55
THE ACTING CHAIRMAN (SEN. OSMEÑA). That’s your net loss.
MR. KAPUR. Net loss. This is the net loss.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Okay. And your EBITDA increased to
18 billion —
MR. KAPUR. Yeah. It is about 7 billion profit. There’s a positive of 7 billion Indian
rupees.
THE ACTING CHAIRMAN (SEN. OSMEÑA). No. I’m giving you more. I’m giving
you 18 billion in EBITDA. That’s Earnings Before Income Tax, Depreciation and
Amortization.
MR. KAPUR. Ah, okay. That is 17 billion. Nine months is 17 billion — it’s about 18.8
billion.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Eighteen point eight billion. And your
interest expenses jumped to 20.5 billion in that same period.
MR. KAPUR. That’s right, that’s right.
THE ACTING CHAIRMAN (SEN. OSMEÑA). So, therefore, you don’t even have —
generate enough cash, operating profit to cover your interest expense?
It’s just a simple question. Twenty billion is more than 18 billion, right?
MR. KAPUR. Your Honor, I think one has to understand this is a consolidated balance
sheet.
THE ACTING CHAIRMAN (SEN. OSMEÑA). I’m just asking. I know it’s a
consolidated balance sheet, I know it’s a mother company.
MR. KAPUR. So, I think what is really the element is that the GMR has the ability to
implement this project whether it is credit rating because everybody has their own
discretion to analyze what the profitability is and come to their own subjective judgment.
But the subjective judgment has to be based upon a credible third party. And the credible
third party in this case are the rating agencies who continuously rate any listed entity. And
if found giving that information in public domain, other purpose of consumption of people
who are going to
56
deal with that entity. And the rating of GMR is something which is the most important and
should be relied upon. Because if any point of time, GMR is potentially and financially
distressed, it would impact the rating. And automatically, the rating agencies are going to
come back and change the rating, and that has not happened. The rating agencies have
maintained consistently the investment credit rating of GMR Group. And I would
just like to reiterate that the GMR Group is not in financial distress. It is robust, it
has got the ability to meet its long-term debt as well as the short-term debt.
THE ACTING CHAIRMAN (SEN. OSMEÑA). By borrowing some more.
MR. KAPUR. I think, sir, that is the —
THE ACTING CHAIRMAN (SEN. OSMEÑA). I’m not saying you’re going belly up.
What I am saying is that there are always warnings that those of us who understand the —
how to read financial statements can always come to preliminary conclusions. We do
ratios, we do analysis. And right here, this is very clear that you’re spending more in
interest than what you are earning. So, if things were to stand still today, you wouldn’t be
able to pay 2 billion in interest, 2 billion rupees interest.
That’s all I’m saying. I’m not saying you’re not going to pay it because you can always
borrow some more tomorrow. But this is a situation that’s been obtaining for some time.
This is not just 2013. This happened in 2012, this happened in 2011. So, you’ve had
operating losses for three years running.
MR. KAPUR. The EBITDA is before other income also. If you actually see the financial
statement, there is another income also which is below the line after EBITDA. And that is
also used to meet the interest and the payment liabilities.
THE ACTING CHAIRMAN (SEN. OSMEÑA). I understand what’s below the line.
Thank you for that. Anyway —
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VOL. 781, JANUARY 13, 2016 57
MR. KAPUR. And sir, I think can I also respond on the CAG report which you raised?
THE ACTING CHAIRMAN (SEN. OSMEÑA). On the…?
MR. KAPUR. The report of the Comptroller and Auditor General-Indian government
audited.
THE ACTING CHAIRMAN (SEN. OSMEÑA). I think you responded to that already in
the previous hearing.
MR. KAPUR. We have not responded. Last time we did not respond. It was not an issue
raised last time.
THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Please respond to it.
MR. KAPUR. Let me explain the process of —
THE ACTING CHAIRMAN (SEN. OSMEÑA). You know, the whole point I’m trying
to make is that there’s always a response to any charge that’s made. There are two sides in
a question: There is the prosecutor; there is the defense. You can always come up with a
defense. It will always sound very rational and very logical. But what I am questioning is
that why the DOTC did not exercise the due diligence to pick up the Comptroller and
Auditor General’s Report with regard to the performance of GMR. That’s all I am
saying. Whether it’s valid or not, whether you will dispute it or not, we expected you to
dispute that, we expected you to have answers, and we have read your answers. But what I
am saying is why didn’t you know about it? Why didn’t you take the effort to do more in-
depth due diligence on whoever bidders came before you in order to protect the interest of
the Filipino people. That’s what I am saying. So, whether you can answer it or not is really
beside the point. It’s why did they not pick it up? And you can answer that, you can answer
me why DOTC didn’t pick it up?
MR. KAPUR. No, sir.
THE ACTING CHAIRMAN (SEN. OSMEÑA). So, I think you’ll have to hold your
comments first, Mr.
58
Kapur, because we know what you’re going to say, and we are not saying that they’re not
valid answers. My concern is why didn’t they pick it up.
MR. KAPUR. Can I respond to that?
THE ACTING CHAIRMAN (SEN. OSMEÑA). I don’t think you can answer that
question why they didn’t pick it up. That’s the DOTC’s question.
MR. KAPUR. No, sir. I just wanted to say something which is relevant for that purpose.
He had submitted a letter which is dated 19 December from the government of India,
Ministry of Civil Aviation to the DOTC and PBAC, which actually is that DIAL has
been operating the airport from May 2006 satisfactorily as per the provisions of the
UNDA, executed between DIAL and airport authority. Further, we have also been
operating the Hyderabad Airport, and the airport also has been operating satisfactorily.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. That’s a good side. Did you
disclose it? Did you disclose the CAG findings to DOTC?
MR. KAPUR. That is for the letter of good standing from the government of India.
THE ACTING CHAIRMAN (SEN. OSMEÑA). And you disclosed that we were
charged by the Comptroller and Auditor General of India with this, and this is our
response. Did you disclose that you were charged?
MR. KAPUR. Sir, let me make a correction here, sir, may I request?
THE ACTING CHAIRMAN (SEN. OSMEÑA). No. Just answer the question. Yes or no.
Did you disclose it?
MR. KAPUR. We were not charged by the CAG.
THE ACTING CHAIRMAN (SEN. OSMEÑA). Did you disclose the existence of the
CAG report?
MR. KAPUR. No, we were not required to disclose.
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VOL. 781, JANUARY 13, 2016 59
THE ACTING CHAIRMAN (SEN. OSMEÑA). You’re not required.
MR. KAPUR. The charge is not on us.47 (Emphasis supplied)
The issues raised against DIAL, as contained in the CAG’s report had been addressed and
resolved by the PBAC. In the same vein, GMR’s alleged violation of the conflict of interest rule
was found to be nonexistent. Contrary to petitioners’ asseveration, the interpretation made by
PBAC on this bidding rule was reasonable, fair and practical. Under the BOT Law IRR, the
PBAC shall be responsible for all aspects of the bidding process, including the interpretation of
the rules regarding the bidding, the conduct of bidding, evaluation of bids, resolution of disputes
between bidders, and recommendation for the acceptance of the bid award and/or for the award
of the project.48
Petitioner Osmeña contends that the DOTC may not apply its own bidding rules in a manner that
puts bidders on unequal footing. He emphasizes that the grounds raised to disqualify private
respondents are not minor defects that may be waived by the PBAC in order to qualify a
disqualified bidder. He points out that the arbitrariness of PBAC is apparent because despite its
knowledge of grounds to disqualify private respondents, i.e., the existence of a violation of the
rule on conflict of interest and a showing of private respondents’ poor financial health and track
record, the resulting decision nevertheless declared them as qualified bidders.49
The contention has no merit.
_______________
47 Rollo (G.R. No. 211737), Vol. III, pp. 1792-1802.
48 Rule 3, Sec. 3.2, BOT Law Implementing Rules and Regulations.
49 Rollo (G.R. No. 211737), Vol. IV, pp. 2416-2419 (Consolidated Reply dated November 25,
2015).
60
As earlier stated, PBAC’s interpretation of the Conflict of Interest provision requiring direct
involvement or participation in the deliberations and decision-making related to the bidding for
the MCIA Project was fair, reasonable and practical. The issues regarding GMR’s Male airport
case and MCC’s financial capability have been fully ventilated during the post-qualification
stage. Both private respondents and the second highest bidder, FDC, argued their respective
positions which were duly considered, including a detailed evaluation of their technical and
financial qualification documents. That PBAC’s own inquiry did not yield any concrete evidence
of GMR’s unsatisfactory performance, as defined in the ITPB, and MCC’s poor financial health
does not necessarily indicate preference for one bidder over the others, especially as the bidding
in this case was conducted with transparency.
Increased Terminal Fees Valid and Legal

On the legality of the increased terminal fees imposed by GMCAC, this is based on the right
granted under the Concession Agreement to collect such fees. For this kind of BOT projects, the
law expressly provides that the project proponent operates the facility over a fixed term during
which it is allowed to charge facility users appropriate tolls, fees, rentals and charges not
exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the
project proponent to recover its investment and operating and maintenance expenses in the
project.50
At any rate, the Concession Agreement provided for a formula and procedure to be applied
should there be an increase in Passenger Service Charge, Aircraft Parking Fees and Tacking Fees,
thus:
24.2.c Unless otherwise provided by any Relevant Rules and Procedure promulgated by
MCIAA
_______________
50 Sec. 2(b), R.A. No. 7718.
61
VOL. 781, JANUARY 13, 2016 61
or by any Government Authority, the following procedure shall apply for every increase in
the Passenger Service Charge, aircraft Parking Fees, and Tacking Fees, after the expiration
of the first (1st) Contract Year:
24.2.c (1) The Concessionaire shall file with the MCIAA an application for such increase
no later than six (6) months prior to the date that the relevant increase in the Passenger
Service Charge, Aircraft Parking Fees, and Tacking Fees shall take effect.
24.2.c (2) The Concessionaire shall publish the application in a newspaper of general
circulation at least two (2) weeks before the first hearing on the application.
24.2.c (3) MCIAA shall conduct a public hearing on the said application in accordance
with any rule of procedure that it may promulgate.
24.2.c (4) The Concessionaire shall comply with all other requirements of Relevant Rules
and Procedures that may be promulgated by MCIAA or any Government Authority for the
increase of the Passenger Service Charge, Aircraft Parking Fees, and Tacking Fees.
24.2.c (5) The Grantors and the Concessionaire shall conduct the procedure for
implementing the increase in Passenger Service Charge, Aircraft Parking Fees, and
Tacking Fees in such a manner as to ensure that all Relevant Consents are secured
promptly to enable the Concessionaire to implement a timely increase in Passenger Service
Charge, Aircraft Parking Fees, and Tacking Fees in accordance with the parametric
formula and at such times as contemplated in Annex 21-A (Parametric Formula for
Passenger Service Charge) or Annex 21-B (Parametric Formula
62
for Aircraft Parking Fee and Tacking Fee), as the case may be.51
Petitioners not Entitled to Preliminary Injunction
For the writ of injunction to issue, the existence of a clear and positive right especially calling for
judicial protection must be shown; injunction is not to protect contingent or future rights; nor is it
a remedy to enforce an abstract right. An injunction will not issue to protect a right not in esse
and which may never arise or to restrain an act which does not give rise to cause of action. There
must exist an actual right.52
Petitioners failed to establish such actual right that needs to be protected by injunctive relief.
There being no violation of any law, regulation or the bidding rules, nor any arbitrariness or
unfairness committed by public respondents, the presumption of regularity of the bidding for the
MCIA Project must stand.
WHEREFORE, the petition in G.R. No. 211737 is hereby DISMISSED for lack of merit. The
petition in G.R. No. 214756 is DENIED for lack of sufficient legal and factual bases.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Reyes and Perlas-Bernabe,** JJ., concur.
Petition in G.R. No. 211737 dismissed, while petition in G.R. No. 214756 denied.
_______________
51 Rollo (G.R. No. 214756), pp. 483-484.
52 Philippine Ports Authority v. Court of Appeals, 323 Phil. 260, 291-292; 253 SCRA 212, 236
(1996), citing Prado v. Veridiano II, G.R. No. 98118, December 6, 1991, 204 SCRA 654, 672.
** Designated additional member, in lieu of Associate Justice Francis H. Jardeleza, per Raffle
dated August 26, 2015.
63
VOL. 781, JANUARY 13, 2016 63
Notes.—A strict application of the rule on hierarchy of courts may be excused when the reason
behind the rule is not present in a case, as in the present case, where the issues are not factual but
purely legal. (Chua vs. Ang, 598 SCRA 229 [2009])
Legal standing or locus standi is a party’s personal and substantial interest in a case such that it
has sustained or will sustain direct injury as a result of the government’s act being challenged.
(Chamber of Real Estate and Builders’ Associations, Inc. vs. Romulo, 614 SCRA 605 [2010])
——o0o——
G.R. No. 214241. January 13, 2016.*
SPOUSES RAMON and LIGAYA GONZALES, petitioners, vs. MARMAINE REALTY

CORPORATION, represented by MARIANO MANALO, respondent.
Remedial Law; Civil Procedure; Exhaustion of Administrative Remedies; Jurisprudence

instructs that before a party is allowed to seek the intervention of the courts, it is a precondition
that he avail himself of all administrative processes afforded him.—The doctrine of exhaustion
of administrative remedies is a cornerstone of our judicial system. The thrust of the rule is that
courts must allow administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. The rationale for this
doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of
controversies. Comity and convenience also impel courts of justice to shy away from a dispute
until the system of administrative redress has been completed. In view of this doctrine,
jurisprudence instructs that before a party is allowed to seek the intervention of the courts, it is a
_______________
* FIRST DIVISION.
64
Gonzales vs. Marmaine Realty Corporation
precondition that he avail himself of all administrative processes afforded him. Hence, if a
remedy within the administrative machinery can be resorted to by giving the administrative
officer every opportunity to decide on a matter that comes within his jurisdiction, then such
remedy must be exhausted first before the court’s power of judicial review can be sought. The
premature resort to the court is fatal to one’s cause of action. Accordingly, absent any finding of
waiver or estoppel, the case may be dismissed for lack of cause of action. However, it must be
clarified that the aforementioned doctrine is not absolute as it is subject to certain exceptions, one
of which is when the question involved is purely legal and will ultimately have to be decided by
the courts of justice.
Same; Same; Lis Pendens; A notice of lis pendens is an announcement to the whole world that a
particular property is in litigation and serves as a warning that one who acquires an interest
over said property does so at his own risk or that he gambles on the result of the litigation over
said property.—“Lis pendens,” which literally means pending suit, refers to the jurisdiction,
power or control which a court acquires over a property involved in a suit, pending the
continuance of the action, and until final judgment. Founded upon public policy and necessity,
lis pendens is intended to keep the properties in litigation within the power of the court until the
litigation is terminated; and to prevent the defeat of the judgment or decree by subsequent
alienation. Its notice is an announcement to the whole world that a particular property is in
litigation and serves as a warning that one who acquires an interest over said property does so at
his own risk or that he gambles on the result of the litigation over said property. The filing of a
notice of lis pendens has a two-fold effect: (a) to keep the subject matter of the litigation within
the power of the court until the entry of the final judgment to prevent the defeat of the final
judgment by successive alienations; and (b) to bind a purchaser, bona fide or not, of the land
subject of the litigation to the judgment or decree that the court will promulgate subsequently.
Same; Same; Same; Under Section 14, Rule 13 of the Rules of Court, a notice of lis pendens may
be cancelled “after proper showing that the notice is for the purpose of molesting the adverse
party, or that it is not necessary to protect the rights of the party who caused it to be
recorded.”—Under Section 14, Rule 13 of the Rules of Court, a
65
VOL. 781, JANUARY 13, 2016 65
notice of lis pendens may be cancelled “after proper showing that the notice is for the purpose of
molesting the adverse party, or that it is not necessary to protect the rights of the party who
caused it to be recorded.” In the same vein, case law likewise instructs that a notice of lis
pendens may be cancelled in situations where: (a) there are exceptional circumstances imputable
to the party who caused the annotation; (b) the litigation was unduly prolonged to the prejudice
of the other party because of several continuances procured by petitioner; (c) the case which is
the basis for the lis pendens notation was dismissed for non-prosequitur on the part of the
plaintiff; or (d) judgment was rendered against the party who caused such a notation.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
De Guia, De Guia Law Office for petitioners.
Mark Lester G. Manalo for respondent.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Resolutions dated April 24, 20142 and
September 10, 20143 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 132871, which
dismissed the petition for review filed by herein petitioners-spouses Ramon and Ligaya Gonzales
(Sps. Gonzales) before it on the ground of non-exhaustion of administrative remedies.
_______________
1 Rollo, pp. 10-33.
2 Id., at pp. 35-40. Penned by Associate Justice Melchor Q.C. Sadang, with Associate Justices
Celia C. Librea-Leagogo and Franchito N. Diamante, concurring.
3 Id., at pp. 42-44.
66
The Facts
The instant case arose from a Complaint4 dated October 30, 1997 for Recognition as Tenant with
Damages and Temporary Restraining Order filed by Sps. Gonzales against herein respondent
Marmaine Realty Corporation (Marmaine) before the Office of the Provincial Adjudicator,
Department of Agrarian Reform Adjudication Board (DARAB), Region IV (Tenancy Case).
After initially filing a Motion to Dismiss,5 Marmaine seasonably filed an Answer with
Counterclaim6 and, thereafter, trial ensued.
On January 6, 1998, the Provincial Agrarian Reform Adjudicator (PARAD) issued a Resolution7
ordering the issuance of a writ of preliminary injunction in Sps. Gonzales’ favor. In view thereof,
Sps. Gonzales filed a Notice of Lis Pendens8 dated September 26, 2000 before the Register of
Deeds of Batangas, which was then annotated on the certificates of title of Marmaine’s
properties.
After due proceedings, the PARAD issued a Decision9 dated June 27, 2002 in the Tenancy Case,
dismissing Sps. Gonzales’ complaint for lack of merit. Sps. Gonzales moved for
reconsideration,10 which was, however, denied in an Order11 dated August 7, 2002. Aggrieved,
they appealed12 to the DARAB, but
_______________
4 Id., at pp. 52-58.
5 Dated November 19, 1997. Id., at pp. 60-62.
6 Dated November 29, 1997. Id., at pp. 68-74.
7 Id., at pp. 99-100. Penned by Provincial Adjudicator Antonio C. Cabili.
8 Id., at pp. 138-145.
9 Id., at pp. 146-148.
10 Dated July 4, 2002. Id., at pp. 149-156.
11 Id., at p. 164.
12 See Notice of Appeal dated August 12, 2002; id., at pp. 165-166.
67
VOL. 781, JANUARY 13, 2016 67

the latter affirmed the PARAD ruling in a Decision13 dated October 17, 2008. Dissatisfied, Sps.
Gonzales moved for reconsideration14 of the DARAB’s October 17, 2008 Decision, but the
same was denied in a Resolution15 dated March 23, 2009. Due to the failure on the part of Sps.
Gonzales to further appeal, the DARAB Decision became final and executory on May 7, 2009,
and an Entry of Judgment16 was issued on January 19, 2012.
In view of the finality of the ruling in the Tenancy Case, Marmaine filed a Motion for
Cancellation of Notice of Lis Pendens17 dated January 31, 2012.
The PARAD’s Ruling
In an Order18 dated May 15, 2012, the PARAD initially denied Marmaine’s motion on the
ground of, inter alia, prematurity because a civil case involving the same parties is still pending
before the Regional Trial Court of Rosario, Batangas, Branch 87, docketed as Civil Case No.
RY2K-052. However, on Marmaine’s motion for reconsideration,19 the PARAD issued an
Order20 dated December 4, 2012 setting aside its earlier Order and, accordingly, directed the
Register of Deeds
_______________
13 Id., at pp. 189-196. Penned by Assistant Secretary Edgar A. Igano, with Assistant Secretaries
Augusto P. Quijano, Ma. Patricia Rualo-Bello, and Delfin B. Samson, concurring.
14 Not attached to the Rollo.
15 Rollo, pp. 199-200. Penned by Assistant Secretary Edgar A. Igano, with OIC-Assistant
Secretary Jim G. Coleto and Assistant Secretaries Ma. Patricia Rualo-Bello and Ambrosio B. De
Luna, concurring.
16 Id., at pp. 201-202. Signed by OIC-Executive Director, DARAB Secretariat, Atty. Roland C.
Manalaysay.
17 Id., at pp. 203-204.
18 Id., at p. 206. Penned by Provincial Adjudicator Pacito M. Canonoy, Jr.
19 Dated May 23, 2012. Id., at pp. 207-210.

20 Id., at pp. 45-46. Penned by Provincial Adjudicator Pacito M. Canonoy, Jr.
68
of Batangas to cancel the notice of lis pendens annotated on Marmaine’s certificates of title.21
The PARAD held that such cancellation is warranted in view of the final and executory judgment
in the Tenancy Case in Marmaine’s favor. In this relation, the PARAD pointed out that the
cancellation of the notice of lis pendens only pertains to the Tenancy Case and does not involve
Civil Case No. RY2K-052.22
Sps. Gonzales moved for reconsideration23 which was, however, denied in a Resolution24 dated
October 16, 2013. Dissatisfied, petitioners went straight to the CA via a petition for review under
Rule 43 of the Rules of Court.25
The CA’s Ruling
In a Resolution26 dated April 24, 2014, the CA dismissed the petition on the ground of non-
exhaustion of administrative remedies. It held that Sps. Gonzales improperly elevated the case to
it via a petition for review under Rule 43 of the Rules of Court, pointing out that the proper
remedy from a PARAD’s denial of a motion for reconsideration is an appeal to the DARAB, and
not a petition for review under Rule 43 of the Rules of Court.27
Undaunted, Sps. Gonzales moved for reconsideration,28 but was denied in a Resolution29 dated
September 10, 2014; hence, this petition.
_______________
21 Id., at p. 46.
22 Id.
23 See motion for reconsideration dated January 22, 2013; id., at pp. 212-214.
24 Id., at p. 47. Penned by Provincial Adjudicator Pacito M. Canonoy, Jr.
25 Dated December 13, 2013. Id., at pp. 223-234.
26 Id., at pp. 35-40.
27 Id., at pp. 38-39.
28 See motion for reconsideration dated May 22, 2014; id., at

pp. 48-51.
29 Id., at pp. 42-44.
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The Issue Before the Court
The issues raised for the Court’s resolution are as follows: (a) whether or not the CA erred in
dismissing the petition for review before it due to petitioners’ failure to exhaust administrative
remedies; and (b) whether or not the PARAD correctly ordered the cancellation of the notice of
lis pendens annotated on the certificates of title of Marmaine’s properties.
The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system.

The thrust of the rule is that courts must allow administrative agencies to carry out their
functions and discharge their responsibilities within the specialized areas of their respective
competence. The rationale for this doctrine is obvious. It entails lesser expenses and provides for
the speedier resolution of controversies. Comity and convenience also impel courts of justice to
shy away from a dispute until the system of administrative redress has been completed.30 In
view of this doctrine, jurisprudence instructs that before a party is allowed to seek the
intervention of the courts, it is a precondition that he avail himself of all administrative processes
afforded him. Hence, if a remedy within the administrative machinery can be resorted to by
giving the administrative officer every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy must be exhausted first before the court’s power of judicial review
can be sought. The premature resort to the court is fatal to one’s cause of action. Accordingly,
absent any finding of waiver or estoppel, the case may be dismissed for lack of cause of
action.31
_______________
30 Universal Robina Corp. (Corn Division) v. Laguna Lake Development Authority, 664 Phil.
754, 759-760; 649 SCRA 506, 511 (2011).
31 Samar II Electric Cooperative, Inc. (SAMELCO II) v. Seludo, Jr., G.R. No. 173840, April 25,
2012, 671 SCRA 78, 88; citations omitted.
70
However, it must be clarified that the aforementioned doctrine is not absolute as it is subject to
certain exceptions, one of which is when the question involved is purely legal and will ultimately
have to be decided by the courts of justice.32 In Vigilar v. Aquino,33 the Court had the
opportunity to explain the rationale behind this exception, to wit:
It does not involve an examination of the probative value of the evidence presented by the
parties. There is a question of law when the doubt or difference arises as to what the law is
on a certain state of facts, and not as to the truth or the falsehood of alleged facts. Said
question at best could be resolved tentatively by the administrative authorities. The
final decision on the matter rests not with them but with the courts of justice.
Exhaustion of administrative remedies does not apply, because nothing of an
administrative nature is to be or can be done. The issue does not require technical
knowledge and experience but one that would involve the interpretation and
application of law.34 (Emphasis and underscoring supplied)
In the case at bar, Sps. Gonzales correctly pointed out that the issue they raised before the CA,
i.e., the propriety of the cancellation of the Notice of Lis Pendens, falls within the aforesaid
exception as the same is a purely legal question, considering that the resolution of the same
would not involve an examination of the probative value presented by the litigants and must rest
solely on what the law provides on the given set of circumstances.35
_______________
32 Id., at p. 89.
33 654 Phil. 755; 639 SCRA 772 (2011).
34 Id., at pp. 761-762; p. 778, citing Republic v. Lacap, 546 Phil. 87, 98; 517 SCRA 255, 266-
267 (2007).
35 See Tongonan Holdings and Dev’t. Corp. v. Escaño, Jr., 672 Phil. 747, 756; 657 SCRA 306,
314 (2011), citing Republic v. Malabanan, 646 Phil. 631, 637-638; 632 SCRA 338, 345 (2010).
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VOL. 781, JANUARY 13, 2016 71
Verily, the CA erred in dismissing Sps. Gonzales’ petition for review before it, considering that
the matter at issue — a question of law — falls within the known exceptions of the doctrine of
exhaustion of administrative remedies. In such a case, court procedure dictates that the instant
case be remanded to the CA for a resolution on the merits. However, when there is already
enough basis on which a proper evaluation of the merits may be had, as in this case, the Court
may dispense with the time-consuming procedure of remand in order to prevent further delays in
the disposition of the case and to better serve the ends of justice.36 In view of the foregoing —
as well as the fact that Sps. Gonzales prayed for a resolution of the issue on the merits37 — the
Court finds it appropriate to finally settle the conflicting claims of the parties.
“Lis pendens,” which literally means pending suit, refers to the jurisdiction, power or control
which a court acquires over a property involved in a suit, pending the continuance of the action,
and until final judgment. Founded upon public policy and necessity, lis pendens is intended to
keep the properties in litigation within the power of the court until the litigation is terminated;
and to prevent the defeat of the judgment or decree by subsequent alienation. Its notice is an
announcement to the whole world that a particular property is in litigation and serves as a
warning that one who acquires an interest over said property does so at his own risk or that he
gambles on the result of the litigation over said property. The filing of a notice of lis pendens has
a two-fold effect: (a) to keep the subject matter of the litigation within the power of the court
until the entry of the final judgment to prevent the defeat of the final judgment by successive
alienations; and (b) to bind a purchaser, bona fide or not, of the land subject of the
_______________
36 See Real v. Sangu Philippines, Inc., 655 Phil. 68, 90; 640 SCRA 67, 89 (2011), citing
Alcantara v. Philippine Commercial and International Bank, 648 Phil. 267, 280; 634 SCRA 48,
61-62 (2010).
37 See Rollo, p. 29.
72
litigation to the judgment or decree that the court will promulgate subsequently.38
Under Section 14, Rule 13 of the Rules of Court, a notice of lis pendens may be cancelled “after
proper showing that the notice is for the purpose of molesting the adverse party, or that it is not
necessary to protect the rights of the party who caused it to be recorded.” In the same vein, case
law likewise instructs that a notice of lis pendens may be cancelled in situations where: (a) there
are exceptional circumstances imputable to the party who caused the annotation; (b) the litigation
was unduly prolonged to the prejudice of the other party because of several continuances
procured by petitioner; (c) the case which is the basis for the lis pendens notation was dismissed
for non-prosequitur on the part of the plaintiff; or (d) judgment was rendered against the party
who caused such a notation.39
In the case at bar, records show that the notice of lis pendens that Sps. Gonzales caused to be
annotated on Marmaine’s certificates of title stemmed from the Tenancy Case filed by the former
against the latter. Since the Tenancy Case had already been decided against Sps. Gonzales with
finality, it is but proper that the PARAD order the cancellation of the notice of lis pendens subject
of this case. In this relation, the PARAD correctly ruled that its cancellation of the
aforementioned notice of lis pendens only pertains to the Tenancy Case and, thus, would not
affect any other case involving the same parties, such as Civil Case No. RY2K-052 pending
before the Regional Trial Court of Rosario, Batangas, Branch 87.
In sum, the PARAD properly ordered the cancellation of the notice of lis pendens that Sps.
Gonzales caused to be an-
_______________
38 Romero v. Court of Appeals, 497 Phil. 775, 784-785; 458 SCRA 483, 492-493 (2005);
citations omitted.
39 See Fernandez v. Court of Appeals, 397 Phil. 205, 217; 343 SCRA 184, 195 (2000).
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notated on Marmaine’s certificates of title in view of the finality of the decision in the Tenancy
Case.
WHEREFORE, the petition is hereby DENIED for lack of merit.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Bersamin and Perez, JJ., concur.
Petition denied.
Notes.—The doctrine of lis pendens has no application to a proceeding in which the only object
sought is the recovery of a money judgment, though the title or right of possession to property be
incidentally affected. (Gagoomal vs. Villacorta, 663 SCRA 444 [2012])
It is true that the doctrine of exhaustion of administrative remedies is not an ironclad rule, but
recognizes exceptions. (Ejera vs. Merto, 714 SCRA 397 [2014])
——o0o——
G.R. No. 199440. January 18, 2016.*
MARY LOU GETURBOS TORRES, petitioner, vs. CORAZON ALMA G. DE LEON, in her
capacity as Secretary General of the Philippine National Red Cross and THE BOARD OF
GOVERNORS of the PHILIPPINE NATIONAL RED CROSS, National Headquarters,
respondents.
Philippine National Red Cross; Government-Owned and Controlled Corporations; As ruled by

this Court in Liban, et al. v. Gordon, 639 SCRA 709 (2011), the Philippine National Red Cross
(PNRC), although not a Government-Owned and -Controlled Corporations (GOCCs), is sui
generis in character, thus, requiring the Supreme Court (SC) to approach controversies involving
the PNRC on a case-to-case basis.—As ruled by this Court in Liban, et al. v. Gordon, 639 SCRA
709 (2011), the PNRC, although not a GOCC, is sui generis in character, thus, requiring this
Court to approach controversies involving the PNRC on a case-to-case basis.
Same; Same; Administrative Agencies; Civil Service Commission; Jurisdiction; The Civil
Service Commission (CSC) has jurisdiction over the Philippine National Red Cross (PNRC)
because the issue at hand is the enforcement of labor laws and penal statutes, thus, in this
particular matter, the PNRC can be treated as a Government-Owned and -Controlled
Corporation (GOCC), and as such, it is within the ambit of Rule I, Section 1 of the Implementing
Rules of Republic Act (RA) No. 6713.—In this particular case, the CA did not err in ruling that
the CSC has jurisdiction over the PNRC because the issue at hand is the enforcement of labor
laws and penal statutes, thus, in this particular matter, the PNRC can be treated as a GOCC, and
as such, it is within the ambit of Rule I, Section 1 of the Implementing Rules of Republic Act
6713, stating that: Section 1. These Rules shall cover all officials and employees in the
government, elective and appointive, permanent or temporary, whether in the career or noncareer
service, including military and police personnel, whether or not they receive compensation,
regardless of amount. Thus, having jurisdiction over the PNRC, the CSC had
_______________
* THIRD DIVISION.
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Torres vs. De Leon

authority to modify the penalty and order the dismissal of petitioner from the service. Under the
Administrative Code of 1987, as well as decisions of this Court, the CSC has appellate
jurisdiction on administrative disciplinary cases involving the imposition of a penalty of
suspension for more than thirty (30) days, or fine in an amount exceeding thirty (30) days salary.
The CA, therefore, did not err when it agreed with the CSC that the latter had appellate
jurisdiction.
Remedial Law; Civil Procedure; Certification Against Forum Shopping; A comment is not an
initiatory pleading but a responsive pleading. The required certification against forum shopping
is intended to cover an “initiatory pleading,” meaning an “incipient application of a party
asserting a claim for relief.”—Anent the issue that respondents’ Comment filed before the CA
lacks verification and a certificate of non-forum shopping, such is inconsequential because a
comment is not an initiatory pleading but a responsive pleading. [T]he required certification
against forum shopping is intended to cover an “initiatory pleading,” meaning an “incipient
application of a party asserting a claim for relief.” A comment, required by an appellate tribunal,
to a petition filed with it is not a pleading but merely an expression of the views and observations
of the respondent for the purpose of giving the court sufficient information as to whether the
petition is legally proper as a remedy to the acts complained of.
PETITION for review on certiorari of a decision of the Court of Appeals.
Joseph Arnold K. Calonzo for petitioner.
Kapunan, Garcia & Castillo Law Offices for respondents.
PERALTA, J.:
For this Court’s consideration is the Petition for Review on Certiorari,1 under Rule 45 of the
Rules of Court, dated December 23, 2011 of petitioner Mary Lou Geturbos Torres seek-
_______________
1 Rollo, pp. 12-95.

112
Torres vs. De Leon
ing the reversal of the Decision2 of the Court of Appeals (CA), dated June 30, 2011 that affirmed
Resolution No. 080691 dated April 21, 2008 and Resolution No. 081845 dated September 26,
2008, both of the Civil Service Commission (CSC) that imposed upon her the penalty of
dismissal from service as Chapter Administrator of the Philippine National Red Cross (PNRC),
General Santos City Chapter for grave misconduct.
The facts follow.
When petitioner was the Chapter Administrator of the PNRC, General Santos City Chapter, the
PNRC Internal Auditing Office conducted an audit of the funds and accounts of the PNRC,
General Santos City Chapter for the period November 6, 2002 to March 14, 2006, and based on
the audit report submitted to respondent Corazon Alma G. De Leon (De Leon), petitioner
incurred a “technical shortage” in the amount of P4,306,574.23.
Hence, respondent De Leon in a Memorandum dated January 3, 2007, formally charged

petitioner with Grave Misconduct for violating PNRC Financial Policies on Oversubscription,
Remittances and Disbursement of Funds.
After the completion of the investigation of the case against petitioner, respondent issued a
Memorandum dated June 12, 2007 imposing upon petitioner the penalties of one-month
suspension effective July 1-31, 2007 and transfer to the National Headquarters effective August
1, 2007.
Petitioner filed a motion for reconsideration, but it was denied in a Memorandum dated June 28,
2007.
Thereafter, petitioner filed a Notice of Appeal addressed to the Board of Governors of the PNRC
through respondent and furnished a copy thereof to the CSC. Petitioner addressed her
_______________
2 Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo Y. Borja and
Carmelita Salandanan-Manahan, concurring; id., at pp. 82-92.
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Torres vs. De Leon
appeal memorandum to the CSC and sent copies thereof to the PNRC and the CSC. Respondent,
in a memorandum dated August 13, 2007, denied petitioner’s appeal.
The CSC, on April 21, 2008, promulgated a Resolution dismissing petitioner’s appeal and
imposing upon her the penalty of dismissal from service. Petitioner filed a motion for
reconsideration with the CSC, but the same was denied.
Thus, petitioner filed a petition for review under Rule 43 with the CA, and in its assailed
Decision dated June 30, 2011, the CA denied the said petition. Petitioner’s motion for
reconsideration was likewise denied on October 6, 2011.
Hence, the present petition with the following grounds relied upon:
Grounds for the Petition
THE COURT A QUO ERRED IN NOT FINDING THAT THE CIVIL SERVICE
COMMISSION (CSC) HAS NO APPELLATE JURISDICTION OVER THE CASE;
THE COURT A QUO SERIOUSLY ERRED IN FAILING TO REALIZE THAT

RESPONDENT DE LEON HAS NO INTENTION TO DISMISS PETITIONER FROM
THE SERVICE AND IT WAS SERIOUS ERROR ON THE PART OF THE CSC TO
MODIFY THE SAME OR TERMINATE PETITIONER FROM THE SERVICE
WITHOUT ANY AUTHORITY;
GRANTING ARGUENDO THAT THE CSC HAS CONSTITUTIONAL CONTROL

OVER THE PNRC, THE COURT A QUO ERRED IN NOT FINDING THAT THE CSC
DID NOT ACQUIRE OR HAD LOST APPELLATE JURISDICTION OVER THE CASE;
[and]
114
Torres vs. De Leon
THE COURT A QUO ERRED IN NOT FINDING THAT THE COMMENT

(INITIATORY PLEADING) FILED BY THE KAPUNAN LOTILLA FLORES GARCIA
& CASTILLO LAW FIRM IN BEHALF OF THE RESPONDENTS, DATED MARCH
31, 2009, IS NOT VERIFIED NOR ACCOMPANIED BY A CERTIFICATION AGAINST
FORUM SHOPPING.
According to petitioner, this Court has decided that PNRC is not a government-owned and
-controlled corporation (GOCC), hence, the CSC has no jurisdiction or authority to review the
appeal that she herself filed. As such, she insists that the CSC committed grave abuse of
discretion in modifying the decision of respondent De Leon. She further argues that the PNRC
did not give due course to her notice of appeal since petitioner’s counsel erroneously addressed
and filed her notice of appeal to the office of respondent PNRC NHQ BOGs through the office of
respondent De Leon instead of filing it directly with the CSC, and respondent De Leon denied
due course to the notice of appeal, thus, according to petitioner, there was no more appeal to
speak of. Petitioner also claims that she voluntarily served the sentence of one month suspension
and transfer of assignment before her counsel erroneously filed the notice of appeal, hence, when
the notice of appeal was filed, the decision of respondent De Leon was already final. Finally,
petitioner asserts that the CA erred in not finding that the comment filed by the law firm in behalf
of the respondents, dated March 31, 2009, violated the rules against forum shopping.
The petition lacks merit.
As ruled by this Court in Liban, et al. v. Gordon,3 the PNRC, although not a GOCC, is sui
generis in character, thus, requiring this Court to approach controversies involving the PNRC on
a case-to-case basis. As discussed:
_______________
3 654 Phil. 680, 708-709; 639 SCRA 709, 727 (2011).
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Torres vs. De Leon
A closer look at the nature of the PNRC would show that there is none like it not just in
terms of structure, but also in terms of history, public service and official status accorded
to it by the State and the international community. There is merit in PNRC’s contention
that its structure is sui generis.
xxxx
National Societies such as the PNRC act as auxiliaries to the public authorities of their
own countries in the humanitarian field and provide a range of services including disaster
relief and health and social programmes.
The International Federation of Red Cross (IFRC) and Red Crescent Societies (RCS)
Position Paper, submitted by the PNRC, is instructive with regard to the elements of the
specific nature of the National Societies such as the PNRC, to wit:
National Societies, such as the Philippine National Red Cross and its sister Red
Cross and Red Crescent Societies, have certain specificities deriving from the 1949
Geneva Convention and the Statutes of the International Red Cross and Red
Crescent Movement (the Movement). They are also guided by the seven
Fundamental Principles of the Red Cross and Red Crescent Movement: Humanity,
Impartiality, Neutrality, Independence, Voluntary Service, Unity and Universality.
A National Society partakes of a sui generis character. It is a protected

component of the Red Cross movement under Articles 24 and 26 of the First Geneva
Convention, especially in times of armed conflict. These provisions require that the
staff of a National Society shall be respected and protected in all circumstances.
Such protection is not ordinarily afforded by an international treaty to ordinary
private entities or even nongovernmental organizations (NGOs). This
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Torres vs. De Leon
sui generis character is also emphasized by the Fourth Geneva Convention which
holds that an Occupying Power cannot require any change in the personnel or
structure of a National Society. National societies are therefore organizations that are
directly regulated by international humanitarian law, in contrast to other ordinary
private entities, including NGOs.
xxxx
In addition, National Societies are not only officially recognized by their public
authorities as voluntary aid societies, auxiliary to the public authorities in the
humanitarian field, but also benefit from recognition at the International level. This
is considered to be an element distinguishing National Societies from other
organizations (mainly NGOs) and other forms of humanitarian response.
x x x No other organization belongs to a worldwide Movement in which all

Societies have equal status and share equal responsibilities and duties in helping
each other. This is considered to be the essence of the Fundamental Principle of
Universality.
Furthermore, the National Societies are considered to be auxiliaries to the public

authorities in the humanitarian field. x x x.
The auxiliary status of [a] Red Cross Society means that it is at one and the same
time a private institution and a public service organization because the very nature of
its work implies cooperation with the authorities, a link with the State. In carrying
out their major functions, Red Cross Societies give their humanitarian support to
official bodies, in general having larger resources than the Societies, working
towards comparable ends in a given sector.
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Torres vs. De Leon
x x x No other organization has a duty to be its government’s humanitarian partner

while remaining independent.
It is in recognition of this sui generis character of the PNRC that R.A. No. 95 has remained
valid and effective from the time of its enactment in March 22, 1947 under the 1935
Constitution and during the effectivity of the 1973 Constitution and the 1987 Constitution.
The PNRC Charter and its amendatory laws have not been questioned or challenged on
constitutional grounds, not even in this case before the Court now.
xxxx
By requiring the PNRC to organize under the Corporation Code just like any other private
corporation, the Decision of July 15, 2009 lost sight of the PNRC’s special status under
international humanitarian law and as an auxiliary of the State, designated to assist it in
discharging its obligations under the Geneva Conventions. Although the PNRC is called to
be independent under its Fundamental Principles, it interprets such independence as
inclusive of its duty to be the government’s humanitarian partner. To be recognized in the
International Committee, the PNRC must have an autonomous status, and carry out its
humanitarian mission in a neutral and impartial manner.
However, in accordance with the Fundamental Principle of Voluntary Service of National

Societies of the Movement, the PNRC must be distinguished from private and profit-
making entities. It is the main characteristic of National Societies that they “are not
inspired by the desire for financial gain but by individual commitment and devotion to a
humanitarian purpose freely chosen or accepted as part of the service that National
Societies through its volunteers and/or members render to the Community.”
The PNRC, as a National Society of the International Red Cross and Red Crescent
Movement, can neither “be classified as an instrumentality of the State, so as not to lose its
character of neutrality” as well as its in-
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Torres vs. De Leon
dependence, nor strictly as a private corporation since it is regulated by international

humanitarian law and is treated as an auxiliary of the State.
Based on the above, the sui generis status of the PNRC is now sufficiently established.
Although it is neither a subdivision, agency, or instrumentality of the government, nor a
government-owned or -controlled corporation or a subsidiary thereof, as succinctly
explained in the Decision of July 15, 2009, so much so that respondent, under the
Decision, was correctly allowed to hold his position as Chairman thereof concurrently
while he served as a Senator, such a conclusion does not ipso facto imply that the PNRC is
a “private corporation” within the contemplation of the provision of the Constitution, that
must be organized under the Corporation Code. As correctly mentioned by Justice Roberto
A. Abad, the sui generis character of PNRC requires us to approach controversies
involving the PNRC on a case-to-case basis.4
In this particular case, the CA did not err in ruling that the CSC has jurisdiction over the PNRC
because the issue at hand is the enforcement of labor laws and penal statutes, thus, in this
particular matter, the PNRC can be treated as a GOCC, and as such, it is within the ambit of Rule
I, Section 1 of the Implementing Rules of Republic Act No. 6713,5 stating that:
Section 1. These Rules shall cover all officials and employees in the government,
elective and appointive, permanent or temporary, whether in the career or nonca-
_______________
4 Id., at pp. 701-709; pp. 718-727. (Emphases ours; citations omitted)
5 An Act Establishing a Code of Conduct and Ethical Standards for Public Officials and
Employees, to Uphold the Time-Honored Principle of Public Office Being a Public Trust,
Granting Incentives and Rewards for Exemplary Service, Enumerating Prohibited Acts and
Transactions and Providing Penalties for Violations thereof and for Other Purposes.
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Torres vs. De Leon
reer service, including military and police personnel, whether or not they receive compensation,
regardless of amount.
Thus, having jurisdiction over the PNRC, the CSC had authority to modify the penalty and order
the dismissal of petitioner from the service. Under the Administrative Code of 1987,6 as well as
decisions7 of this Court, the CSC has appellate jurisdiction on administrative disciplinary cases
involving the imposition of a penalty of suspension for more than thirty (30) days, or fine in an
amount exceeding thirty (30) days salary. The CA, therefore, did not err when it agreed with the
CSC that the latter had appellate jurisdiction, thus:
The Court cites with approval the disquisition of the CSC in this regard:
The Commission is fully aware that under the Civil Service Law and rules and
jurisprudence, it has appellate jurisdiction only on administrative disciplinary cases
involving the imposition of a penalty of suspension for more than thirty (30) days, or
fine in an amount exceeding thirty (30) days’ salary.
In the instant case, although the decision appealed from states that Torres was
imposed the penalty of “one-month” suspension from the service, it is unequivocally
spelled out therein that the period of her suspension is from July 1-31, 2007. This
specifically written period unmistakably indicates that Torres was actually imposed
the penalty
_______________
6 Book V, Title I, Subtitle A, Sec. 47.
7 University of the Philippines v. Civil Service Commission, G.R. No. 108740, December 1,
1993, 228 SCRA 207, 211-212, citing Paredes v. Civil Service Commission, G.R. No. 88177,
December 4, 1990, 192 SCRA 84, and Mendez v. Civil Service Commission, G.R. No. 95575,
December 23, 1991, 204 SCRA 965.
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Torres vs. De Leon
of thirty-one (31) days and not merely thirty (30) days or one (1) month.
Petitioner submits that the actual duration of the period of her suspension was only thirty
(30) days since July 1, 2007 was a legal holiday, it being a Sunday. This submission,
however, is flawed considering that she was imposed the penalty of “One-Month
Suspension effective July 1-31, 2007” or for a period of thirty-one (31) days.
Even granting that petitioner was imposed the penalty of suspension for thirty (30) days
only, it should be noted that she was also imposed another penalty of “Transfer to the NHQ
effective August 01, 2007.” Hence, the CSC would still have appellate jurisdiction.8
Neither can it be considered that the CSC had lost its appellate jurisdiction because, as claimed
by petitioner, she voluntarily served the sentence of one month suspension and transfer of
assignment before her counsel filed the notice of appeal, hence, the decision of the PNRC was
already final even before a notice of appeal was filed with the CSC. The CA was correct in
finding that petitioner’s appeal was properly and timely made with the CSC under the Uniform
Rules on Administrative Cases in the Civil Service (URACCS). It ruled:
As enunciated in the cases cited by petitioner, a decision becomes final even before the
lapse of the fifteen-day period to appeal when the defendant voluntarily submits to the
execution of the sentence. In the present case, however, it cannot be said that she
voluntarily served her penalty in view of the fact that she appealed therefrom.
Moreover, the service of the penalty is pursuant to Section 47 of the Uniform Rules on
Administrative Cases in the Civil Service (URACCS) which reads:
Section 47. Effect of filing.—An appeal shall not stop the decision from being
_______________
8 Rollo, pp. 86-87.

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Torres vs. De Leon
executory, and in case the penalty is suspension or removal, the respondent shall be
considered as having been under preventive suspension during the pendency of the
appeal, in the event he wins the appeal.
Petitioner’s claim that the Notice of Appeal and the Appeal Memorandum were filed with
the PNRC and not with the CSC deserves scant consideration. Section 43 of the URACCS
pertinently provides:
Section 43. Filing of Appeals.—
xxx
A notice of appeal including the appeal memorandum shall be filed with the
appellate authority, copy furnished the disciplining office. The latter shall submit the
records of the case, which shall be systematically and chronologically arranged,
paged and securely bound to prevent loss, with its comment, within fifteen (15)
days, to the appellate authority.
An examination of the Notice of Appeal shows that the same was addressed to the PNRC
and copy furnished the CSC. On the other hand, an examination of the Appeal
Memorandum shows that the same was addressed to the CSC and copies thereof were sent
to both the PNRC and the CSC. It is thus clear that a copy of the Notice of Appeal was
furnished the CSC and the Appeal Memorandum was filed with it. While the rules required
that the notice of appeal including the appeal memorandum shall be filed with the CSC, it
is undeniable that furnishing a copy of the Notice of Appeal with the CSC and filing with
it the Appeal Memorandum substantially complied with the rule. The important thing is
that the Appeal Memorandum was clearly addressed to the CSC.9
_______________
9 Id., at pp. 87-89. (Emphasis ours)

122
Torres vs. De Leon
Anent the issue that respondents’ Comment filed before the CA lacks verification and a
certificate of non-forum shopping, such is inconsequential because a comment is not an initiatory
pleading but a responsive pleading. [T]he required certification against forum shopping is
intended to cover an “initiatory pleading,” meaning an “incipient application of a party asserting
a claim for relief.”10 A comment, required by an appellate tribunal, to a petition filed with it is
not a pleading but merely an expression of the views and observations of the respondent for the
purpose of giving the court sufficient information as to whether the petition is legally proper as a
remedy to the acts complained of.11
Based on the above disquisitions, all other issues presented by petitioner are rendered
immaterial.
WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of Court
dated December 23, 2011 of petitioner Mary Lou Geturbos Torres is DENIED for lack of merit.
The Decision of the Court of Appeals, dated June 30, 2011, is therefore AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Perez, Reyes and Jardeleza, JJ., concur.
Petition denied, judgment affirmed.
Notes.—With the enactment of the GOCC Governance Act of 2011, the President is now
authorized to fix the compensa-
_______________
10 Carpio v. Rural Bank of Sto. Tomas (Batangas), Inc., 523 Phil. 158, 163; 489 SCRA 492, 497
(2006), citing Santo Tomas University Hospital v. Surla, 355 Phil. 804, 813-814; 294 SCRA
382,391-392 (1998).
11 Moreno, Federico B., Philippine Law Dictionary (3rd edition) (1988), citing Lepanto
Consolidated Mining Co. v. Commercial Union Assurance Co., Ltd., 555948-R, May 23, 1975, p.
169.
123
VOL. 781, JANUARY 18, 2016 123
Torres vs. De Leon
tion framework of Government-Owned and -Controlled Corporations (GOCCs) and Government

Financial Institutions (GFIs). (Galicto vs. Aquino III, 667 SCRA 150 [2012])
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or -controlled corporations (GOCCs) with original
charters. Thus, all appointive local government employees are covered by civil service laws and
rules. (Abad vs. Dela Cruz, 753 SCRA 680 [2015])
——o0o——
G.R. No. 180235. January 20, 2016.*
ALTA VISTA GOLF AND COUNTRY CLUB, petitioner, vs. THE CITY OF CEBU, HON.
MAYOR TOMAS R. OSMEÑA, in his capacity as Mayor of Cebu, and TERESITA C.
CAMARILLO, in her capacity as the City Treasurer, respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; Rule 41, Section
2(c) of the Rules of Court provides that “[i]n all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court (SC) by petition for review on certiorari in
accordance with Rule 45.”—It is incontestable that petitioner may directly appeal to this Court
from the judgment of the RTC on pure questions of law via its Petition for Review on Certiorari.
Rule 41, Section 2(c) of the Rules of Court provides that “[i]n all cases where only questions of
law are raised or involved, the appeal shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45.” As the Court declared in Bonifacio v. Regional Trial
Court of Makati, Branch 149, 620 SCRA 268 (2010): The established policy of strict observance
of the judicial hierarchy of courts, as a rule, requires that recourse must first be made to the
lower-ranked court exercising concurrent jurisdiction with a higher
_______________
* FIRST DIVISION.
336

Alta Vista Golf and Country Club vs. City of Cebu
court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of
extraordinary writs against first level courts should be filed in the RTC and those against the
latter should be filed in the Court of Appeals. The rule is not iron-clad, however, as it admits of
certain exceptions. Thus, a strict application of the rule is unnecessary when cases brought before
the appellate courts do not involve factual but purely legal questions.
Taxation; Local Taxation; Amusement Tax; The Local Government Code (LGC) authorizes the
imposition by local government units (LGUs) of amusement tax under Section 140.—The Local
Government Code authorizes the imposition by local government units of amusement tax under
Section 140, which provides: Sec. 140. Amusement Tax.—(a) The province may levy an
amusement tax to be collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of
not more than thirty percent (30%) of the gross receipts from admission fees. (b) In the case of
theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the gross receipts are divided between said
proprietors, lessees, or operators and the distributors of the cinematographic films. (c) The
holding of operas, concerts, dramas, recitals, painting, and art exhibitions, flower shows, musical
programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be
exempt from the payment of the tax hereon imposed. (d) The sangguniang panlalawigan may
prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or
failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interests and
penalties as it may deem appropriate. (e) The proceeds from the amusement tax shall be shared
equally by the province and the municipality where such amusement places are located.
Same; Same; Same; Amusement Places; Words and Phrases; “Amusement places,” as defined in
Section 131(c) of the Local Government Code (LGC), “include theaters, cinemas, concert halls,
circuses and other places of amusement where one seeks admission to entertain oneself by
seeing or viewing the show or performance.”—“Amusement places,” as defined in Section
131(c) of the Local Government Code, “include theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain
337
VOL. 781, JANUARY 20, 2016 337

oneself by seeing or viewing the show or performance.” The pronouncements of the Court in
Pelizloy Realty Corporation v. The Province of Benguet, 695 SCRA 491 (2013), are of particular
significance to this case. The Court, in Pelizloy Realty, declared null and void the second
paragraph of Article X, Section 59 of the Benguet Provincial Code, insofar as it imposes
amusement taxes on admission fees to resorts, swimming pools, bath houses, hot springs, and
tourist spots. Applying the principle of ejusdem generis, as well as the ruling in the Philippine
Basketball Association v. Court of Appeals, 337 SCRA 358 (2000), case, the Court expounded on
the authority of local government units to impose amusement tax under Section 140, in relation
to Section 131(c), of the Local Government Code.
Same; Uniformity of Taxation; Uniformity of taxation, like the kindred concept of equal
protection, requires that all subjects or objects of taxation, similarly situated, are to be treated
alike both in privileges and liabilities.—In light of Pelizloy Realty, a golf course cannot be
considered a place of amusement. As petitioner asserted, people do not enter a golf course to see
or view a show or performance. Petitioner also, as proprietor or operator of the golf course, does
not actively display, stage, or present a show or performance. People go to a golf course to
engage themselves in a physical sport activity, i.e., to play golf; the same reason why people go
to a gym or court to play badminton or tennis or to a shooting range for target practice, yet there
is no showing herein that such gym, court, or shooting range is similarly considered an
amusement place subject to amusement tax. There is no basis for singling out golf courses for
amusement tax purposes from other places where people go to play sports. This is in
contravention of one of the fundamental principles of local taxation: that the “[t]axation shall be
uniform in each local government unit.” Uniformity of taxation, like the kindred concept of equal
protection, requires that all subjects or objects of taxation, similarly situated, are to be treated
alike both in privileges and liabilities.
Same; Local Taxation; Residual Powers; A local government unit (LGU) may exercise its
residual power to tax when there is neither a grant nor a prohibition by statute; or when such
taxes, fees, or charges are not otherwise specifically enumerated in the Local Government Code
(LGC), National Internal Revenue Code (NIRC), as amended, or other applicable laws.—
Respondents, however, cannot
338
claim that Section 42 of the Revised Omnibus Tax Ordinance, as amended, imposing amusement
tax on golf courses, was enacted pursuant to the residual power to tax of respondent Cebu City. A
local government unit may exercise its residual power to tax when there is neither a grant nor a
prohibition by statute; or when such taxes, fees, or charges are not otherwise specifically
enumerated in the Local Government Code, National Internal Revenue Code, as amended, or
other applicable laws. In the present case, Section 140, in relation to Section 131(c), of the Local
Government Code already explicitly and clearly cover amusement tax and respondent Cebu City
must exercise its authority to impose amusement tax within the limitations and guidelines as set
forth in said statutory provisions.
PETITION for review on certiorari of the resolution and order of the Regional Trial Court of
Cebu City, Br. 9.
Baduel, Espina and Associates for petitioner.
Lyndon B.J. Basan for respondents.
Before the Court is a Petition for Review on Certiorari of the Resolution1 dated March 14, 2007
and the Order2 dated October 3, 2007 of the Regional Trial Court (RTC), Cebu City, Branch 9 in
Civil Case No. CEB-31988, dismissing the Petition for Injunction, Prohibition, Mandamus,
Declaration of Nullity of Closure Order, Declaration of Nullity of Assessment, and Declaration
of Nullity of Section 42 of Cebu City Tax Ordinance, with Prayer for Temporary Restraining
Order and Writ of Preliminary Injunction3 filed by petitioner Alta Vista Golf and Country Club
against respondents City of Cebu (Cebu City), then Cebu City Mayor Tomas R. Osmeña
_______________
1 Rollo, pp. 29-33; penned by Presiding Judge Geraldine A. Econg.
2 Id., at pp. 36-38.
3 Id., at pp. 51-66.

339
VOL. 781, JANUARY 20, 2016 339
(Osmeña), and then Cebu City Treasurer Teresita Camarillo (Camarillo).
Petitioner is a non-stock and nonprofit corporation operating a golf course in Cebu City.
On June 21, 1993, the Sangguniang Panglungsod of Cebu City enacted City Tax Ordinance No.
LXIX, otherwise known as the “Revised Omnibus Tax Ordinance of the City of Cebu” (Revised
Omnibus Tax Ordinance). Section 42 of the said tax ordinance on amusement tax was amended
by City Tax Ordinance Nos. LXXXII4 and LXXXIV5 (which were enacted by the Sangguniang
Panglungsod of Cebu City on December 2, 1996 and April 20, 1998, respectively)6 to read as
follows:
Section 42. Rate of Tax.—There shall be paid to the Office of the City Treasurer by the
proprietors, lessees or operators of theaters, cinemas, concert halls, circuses and other
similar places of entertainment, an amusement tax at the rate of thirty percent (30%), golf
courses and polo grounds at the rate of twenty percent (20%), of their gross receipts
on entrance, playing green, and/or admission fees; PROVIDED, HOWEVER, That in
case of movie premieres or gala shows for the benefit of a charitable institution/foundation
or any government institution where higher admission fees are charged, the
aforementioned rate of thirty percent (30%) shall be levied against the gross receipts based
on the regular admission fees, subject to the approval of the Sangguniang Panglungsod;
PROVIDED, FURTHER, That in case payment of the amusement tax is made promptly on
or before the date hereinbelow pre-
_______________
4 Records, pp. 588-597.
5 Id., at pp. 585-587.
6 Section 4 of City Tax Ordinance No. LXXXIV expressly provides that its effectivity shall
retroact to October 9, 1997 when City Tax Ordinance No. LXXXII was signed by then Mayor
Alvin B. Garcia (Garcia). City Tax Ordinance No. LXXXIV, in turn, was signed by Mayor
Garcia on May 4, 1998.
340
scribed, a rebate of five percent (5%) on the aforementioned gross receipts shall be given
to the proprietors, lessees or operators of theaters; PROVIDED, FURTHERMORE, that as
an incentive to theater operators who own the real property and/or building where the
theater is located, an additional one percent (1%) rebate shall be given to said operator/real
property owner concerned for as long as their theater/movie houses are then (10) years old
or older or the theater or movie house is located at the city’s redevelopment area bounded
on the north by Gen. Maxilom Street up to the port area; on the south by V. Rama Avenue
up to San Nicolas area; and on the west by B. Rodriguez St. and General Maxilom Avenue;
PROVIDED, FINALLY, that the proceeds of this additional one percent (1%) rebate shall
be used by the building/property owner-theater operator to modernize their theater
facilities. (Emphases supplied)
In an Assessment Sheet7 dated August 6, 1998, prepared by Cebu City Assessor Sandra I. Po,
petitioner was originally assessed deficiency business taxes, fees, and other charges for the year
1998, in the total amount of P3,820,095.68, which included amusement tax on its golf course
amounting to P2,612,961.24 based on gross receipts of P13,064,806.20.8
Through the succeeding years, respondent Cebu City repeatedly attempted to collect from
petitioner its deficiency business taxes, fees, and charges for 1998, a substantial portion of which
consisted of the amusement tax on the golf course. Petitioner steadfastly refused to pay the
amusement tax arguing that the imposition of said tax by Section 42 of the Revised Omnibus Tax
Ordinance, as amended, was irregular, improper, and illegal. Petitioner reasoned that under the
Local Government Code, amusement tax can only be im-
_______________
7 Records, p. 20.
8 The amusement tax and the other deficiency business taxes, fees, and charges were subjected
to surcharge of 25% and interest of 16%.
341
VOL. 781, JANUARY 20, 2016 341
posed on operators of theaters, cinemas, concert halls, or places where one seeks to entertain
himself by seeing or viewing a show or performance. Petitioner further cited the ruling in
Philippine Basketball Association (PBA) v. Court of Appeals9 that under Presidential Decree No.
231, otherwise known as the Local Tax Code of 1973, the province could only impose
amusement tax on admission from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses, and other places of amusement, but not professional
basketball games. Professional basketball games did not fall under the same category as theaters,
cinematographs, concert halls, and circuses as the latter basically belong to artistic forms of
entertainment while the former catered to sports and gaming.
Through a letter dated October 11, 2005, respondent Camarillo sought to collect once more from
petitioner deficiency business taxes, fees, and charges for the year 1998, totaling P2,981,441.52,
computed as follows:
_______________
9 392 Phil. 133, 139-141; 337 SCRA 358, 364 (2000).
342
Petitioner, through counsel, wrote respondent Camarillo a letter11 dated October 17, 2005 still
disputing the amusement tax assessment on its golf course for 1998 for being illegal. Petitioner,
in a subsequent letter dated November 30, 2005, proposed that:
While the question of the legality of the amusement tax on golf courses is still unresolved,
may we propose that Alta Vista Golf and Country Club settle first the other assessments
contained in your Assessment Sheet issued on October 11, 2005.
At this early stage, we also request that pending resolution of the legality of the
amusement tax imposition on golf courses in [the Revised Omnibus Tax Ordinance, as
amended], Alta Vista Golf and Country Club be issued the required Mayor’s and/or
Business Permit.12
Respondent Camarillo treated the letter dated October 17, 2005 of petitioner as a Protest of
Assessment and rendered on December 5, 2005 her ruling denying said Protest on the following
grounds: (a) a more thorough and comprehensive reading of the PBA case would reveal that the
Court actually ruled therein that PBA was liable to pay amusement tax, but to the national
government, not the local government; (b) Section 42 of the Revised Omnibus Tax Ordinance, as
amended, enjoyed the presumption of constitutionality and petitioner failed to avail itself of the
remedy under Section 187 of the Local Government Code to challenge the legality or validity of
Section 42 of the Revised Omnibus Tax Ordinance, as amended, by filing an appeal with the
Secretary of Justice within 30 days
_______________
10 Records, p. 45.
11 Id.
12 Id., at p. 87.
343
VOL. 781, JANUARY 20, 2016 343
from effectivity of said ordinance; and (c) the Office of the City Attorney issued a letter dated
July 9, 2004 affirming respondent Camarillo’s position that petitioner was liable to pay
amusement tax on its golf course.13 Ultimately, respondent Camarillo held:
WHEREFORE, upon consideration of the legal grounds as above mentioned, we reiterate

our previous stand on the validity of the ASSESSMENT SHEET pertaining to the Tax
Deficiencies for CY 1998 and this ruling serve as the FINAL DEMAND for immediate
settlement and payment of your amusement tax liabilities and/or delinquencies otherwise
we will constrained (sic) the non-issuance of a Mayor’s Business Permit for nonpayment
of the said deficiency on amusement tax and/or other tax liabilities as well as to file the
appropriate filing of administrative and judicial remedies for the collection of the said tax
liability and the letter treated as a Protest of Assessment that was duly submitted before
this office is hereby DENIED.14
Shortly after, on January 12, 2006, petitioner was served with a Closure Order15 dated
December 28, 2005 issued by respondent City Mayor Osmeña. According to the Closure Order,
petitioner committed blatant violations of the laws and Cebu City Ordinances, to wit:
1. Operating a business without a business permit for five (5) years, from year 2001-
2005, in relation to Chapters I and II and the penalty clauses under Sections 4, 6, 8, 66(f)
and 114 of the City Tax Ordinance No. 69, otherwise known as the REVISED CITY TAX
ORDINANCE OF THE CITY OF CEBU, as amended by C.O. 75;
_______________
13 Id., at pp. 83-86.

14 Id., at p. 86.
15 Id., at pp. 69-70.
344
2. Nonpayment of deficiency on Business Taxes and Fees amounting to Seventeen

Thousand Four Hundred Ninety-Nine Pesos and Sixty-Four Centavos
(Php17,499.64), as adjusted, despite repeated demands in violation [of] Sections 4 and 8
of City Tax Ordinance No. 69, as amended;
3. Nonpayment of deficiency on Amusement Tax and the penalties relative therewith

totaling Two Million Nine Hundred Fifty-Three Thousand Five Hundred Eighty-Six
Pesos and Eighty-Six Centavos (Php2,953,586.86) in violation of Sections 4 and 8 in
relation to Section 42 of City Tax Ordinance No. 69, as amended, business permit-
violation of the Article 172, Revised Penal Code of the Philippines. (Emphases supplied)
The Closure Order established respondent Mayor Osmeña’s authority for issuance of the same
and contained the following directive:
As the chief executive of the City, the Mayor has the power and duty to: Enforce all laws
and ordinances relative to the governance of the city x x x and, in addition to the
foregoing, shall x x x Issue such executive orders for the faithful and appropriate
enforcement and execution of laws and ordinances x x x. These are undeniable in the
LOCAL GOVERNMENT CODE, Section 455, par. (2) and par. (2)(iii).
Not only that, these powers can be exercised under the general welfare clause of the Code,
particularly Section 16 thereof, where it is irrefutable that “every government unit shall
exercise the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental of its efficient and effective governance, and
those which are essential to the promotion of the general welfare.”
This CLOSURE ORDER precisely satisfies these legal precedents. Hence now, in view
whereof, your business establishment is hereby declared closed in direct contra-
345
VOL. 781, JANUARY 20, 2016 345
vention of the above specified laws and city ordinances. Please cease and desist from
further operating your business immediately upon receipt of this order.
This closure order is without prejudice to the constitutional/statutory right of the City to
file criminal cases against corporate officers, who act for and its behalf, for violations of
Section 114 of the REVISED CITY TAX ORDINANCE OF THE CITY OF CEBU and
Section 516 of the LOCAL GOVERNMENT CODE, with penalties of imprisonment
and/or fine.
FOR STRICT AND IMMEDIATE COMPLIANCE.16
The foregoing developments prompted petitioner to file with the RTC on January 13, 2006 a
Petition for Injunction, Prohibition, Mandamus, Declaration of Nullity of Closure Order,
Declaration of Nullity of Assessment, and Declaration of Nullity of Section 42 of Cebu City Tax
Ordinance, with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction,
against respondents, which was docketed as Civil Case No. CEB-31988.17 Petitioner eventually
filed an Amended Petition on January 19, 2006.18 Petitioner argued that the Closure Order is
unconstitutional as it had been summarily issued in violation of its right to due process; a city
mayor has no power under the Local Government Code to deny the issuance of a business permit
and order the closure of a business for nonpayment of taxes; Section 42 of the Revised Omnibus
Tax Ordinance, as amended, is null and void for being ultra vires or beyond the taxing authority
of respondent Cebu City, and consequently, the assessment against petitioner for amusement tax
for 1998 based on said Section 42 is illegal and unconstitutional; and assuming arguendo that
respondent Cebu City has the power to impose amuse-
_______________
16 Id.
17 Id., at pp. 2-17.
18 Id., at pp. 51-68.
346
ment tax on petitioner, such tax for 1998 already prescribed and could no longer be enforced.
Respondents filed a Motion to Dismiss based on the grounds of (a) lack of jurisdiction of the
RTC over the subject matter; (b) non-exhaustion of administrative remedies; (c) noncompliance
with Section 187 of the Local Government Code, which provides the procedure and prescriptive
periods for challenging the validity of a local tax ordinance; (d) noncompliance with Section 252
of the Local Government Code and Section 75 of Republic Act No. 3857, otherwise known as
the Revised Charter of the City of Cebu, requiring payment under protest of the tax assessed; and
(e) failure to establish the authority of Ma. Theresa Ozoa (Ozoa) to institute the case on behalf of
petitioner.19
In its Opposition to the Motion to Dismiss, petitioner countered that the RTC, a court of general
jurisdiction, could take cognizance of its Petition in Civil Case No. CEB-31988, which not only
involved the issue of legality or illegality of a tax ordinance, but also sought the declaration of
nullity of the Closure Order and the issuance of writs of injunction and prohibition. Petitioner
likewise asserted that Section 195 of the Local Government Code on the protest of assessment
does not require payment under protest. Section 252 of the same Code invoked by respondents
applies only to real property taxes. In addition, petitioner maintained that its Petition in Civil
Case No. CEB-31988 could not be barred by prescription. There is nothing in the Local
Government Code that could deprive the courts of the power to determine the constitutionality or
validity of a tax ordinance due to prescription. It is the constitutional duty of the courts to pass
upon the validity of a tax ordinance and such duty cannot be limited or restricted. Petitioner
further contended that there is no need for exhaustion of administrative remedies given that the
issues involved are purely legal; the notice of closure is pat-
_______________
19 Id., at pp. 173-181.

347
VOL. 781, JANUARY 20, 2016 347
ently illegal for having been issued without due process; and there is an urgent need for judicial
intervention. Lastly, petitioner pointed out that there were sufficient allegations in the Petition
that its filing was duly authorized by petitioner. At any rate, petitioner already attached to its
Opposition its Board Resolution No. 104 authorizing Ozoa to file a case to nullify the Closure
Order. Thus, petitioner prayed for the denial of the Motion to Dismiss.20
Respondents, in their Rejoinder to Petitioner’s Opposition to the Motion to Dismiss,21 asserted

that the Closure Order was just a necessary consequence of the nonpayment by petitioner of the
amusement tax assessed against it. The Revised Omnibus Tax Ordinance of respondent Cebu
City directs that no permit shall be issued to a business enterprise which made no proper
payment of tax and, correspondingly, no business enterprise may be allowed to operate or
continue to operate without a business permit. The fundamental issue in the case was still the
nonpayment by petitioner of amusement tax. Respondents relied on Reyes v. Court of Appeals,22
in which the Court categorically ruled that the prescriptive periods fixed in Section 187 of the
Local Government Code are mandatory and prerequisites before seeking redress from a
competent court. Section 42 of the Revised Omnibus Tax Ordinance, as amended, was passed on
April 20, 1998, so the institution by petitioner of Civil Case No. CEB-31988 before the RTC on
January 13, 2006 — without payment under protest of the assessed amusement tax and filing of
an appeal before the Secretary of Justice within 30 days from the effectivity of the Ordinance —
was long barred by prescription.
After filing by the parties of their respective Memorandum, the RTC issued an Order23 dated
March 16, 2006 denying the
_______________
20 Id., at pp. 183-193.
21 Id., at pp. 196-204.
22 378 Phil. 232, 237-238; 320 SCRA 486, 492 (1999).
23 Records, pp. 249-253.

348
prayer of petitioner for issuance of a Temporary Restraining Order (TRO). The RTC found that
when the business permit of petitioner expired and it was operating without a business permit, it
ceased to have a legal right to do business. The RTC affirmed respondent Mayor Osmeña’s
authority to issue or grant business licenses and permits pursuant to the police power inherent in
his office; and such authority to issue or grant business licenses and permits necessarily included
the authority to suspend or revoke or even refuse the issuance of the said business licenses and
permits in case of violation of the conditions for the issuance of the same. The RTC went on to
hold that:
[Petitioner] was given opportunities to be heard when it filed a protest [of] the assessment
which was subsequently denied. To the mind of this court, this already constitutes the
observance of due process and that [petitioner] had already been given the opportunity to
be heard. Due process and opportunity to be heard does not necessarily mean winning the
argument in one’s favor but to be given the fair chance to explain one’s side or views with
regards [to] the matter in issue, which in this case is the legality of the tax assessment.
It is therefore clear that when this case was filed, [petitioner] had no more legal right in its
favor for the courts to protect. It would have been a different story altogether had
[petitioner] paid the tax assessment for the green fees even under protest and despite
payment and [respondent] Mayor refused the issuance of the business permit because all
the requisites for the issuance of the said permit are all complied with.24
On March 20, 2006, petitioner paid under protest to respondent Cebu City, through respondent
Camarillo, the assessed amusement tax, plus penalties, interest, and surcharges, in the total
amount of P2,750,249.17.25
_______________
24 Id., at p. 253.
25 Id., at pp. 255-259.
349
VOL. 781, JANUARY 20, 2016 349
Since the parties agreed that the issues raised in Civil Case No. CEB-31988 were all legal in
nature, the RTC already considered the case submitted for resolution after the parties filed their
respective Memorandum.26
On March 14, 2007, the RTC issued a Resolution granting the Motion to Dismiss of respondents.
Quoting from Reyes and Hagonoy Market Vendor Association v. Municipality of Hagonoy,
Bulacan,27 the RTC sustained the position of respondents that Section 187 of the Local
Government Code is mandatory. Thus, the RTC adjudged:
From the above cited cases, it can be gleaned that the period in the filing of the protests is
important. In other words, it is the considered opinion of this court [that] when a taxpayer
questions the validity of a tax ordinance passed by a local government legislative body, a
different procedure directed in Section 187 is to be followed. The reason for this could be
because the tax ordinance is clearly different from a law passed by Congress. The local
government code has set several limitations on the taxing power of the local government
legislative bodies including the issue of what should be taxed.
In this case, since the Petitioner failed to comply with the procedure outlined in Section
187 of the Local Government Code and the fact that this case was filed way beyond the
period to file a case in court, then this court believes that the action must fail.
Because of the procedural infirmity in bringing about this case to the court, then the
substantial issue of the propriety of imposing amusement taxes on the green fees could no
longer be determined.
WHEREFORE, in view of the aforegoing, this case is hereby DISMISSED.28
_______________
26 Id., at p. 280.
27 426 Phil. 769; 376 SCRA 376 (2002).
28 Rollo, p. 33.
350
The RTC denied the Motion for Reconsideration of petitioner in an Order dated October 3, 2007.
Petitioner is presently before the Court on pure questions of law, viz.:
I. WHETHER OR NOT THE POWER OF JUDICIAL REVIEW OVER THE VALIDITY

OF A LOCAL TAX ORDINANCE HAS BEEN RESTRICTED BY SECTION 187 OF
THE LOCAL GOVERNMENT CODE.
II. WHETHER OR NOT THE CITY OF CEBU OR ANY LOCAL GOVERNMENT CAN
VALIDLY IMPOSE AMUSEMENT TAX TO THE ACT OF PLAYING GOLF.29
There is merit in the instant Petition.
The RTC judgment on pure

questions of law may be di-
rectly appealed to this Court
via a petition for review on
certiorari.
Even before the RTC, the parties already acknowledged that the case between them involved
only questions of law; hence, they no longer presented evidence and agreed to submit the case
for resolution upon submission of their respective memorandum.
It is incontestable that petitioner may directly appeal to this Court from the judgment of the RTC
on pure questions of law via its Petition for Review on Certiorari. Rule 41, Section 2(c) of the
Rules of Court provides that “[i]n all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in
_______________
29 Id., at p. 15.
351
VOL. 781, JANUARY 20, 2016 351
accordance with Rule 45.” As the Court declared in Bonifacio v. Regional Trial Court of Makati,
Branch 149:30
The established policy of strict observance of the judicial hierarchy of courts, as a rule,
requires that recourse must first be made to the lower-ranked court exercising concurrent
jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that
petitions for the issuance of extraordinary writs against first level courts should be filed in
the RTC and those against the latter should be filed in the Court of Appeals. The rule is not
iron-clad, however, as it admits of certain exceptions.
Thus, a strict application of the rule is unnecessary when cases brought before the
appellate courts do not involve factual but purely legal questions. (Citations omitted)
“A question of law exists when the doubt or controversy concerns the correct application of law
or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the
probative value of the evidence presented, the truth or falsehood of facts being admitted”[;] and
it may be brought directly before this Court, the undisputed final arbiter of all questions of
law.31
The present case is an exception
to Section 187 of the Local Gov-
ernment Code and the doctrine
of exhaustion of administrative
remedies.
Section 187 of the Local Government Code reads:
Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue

Measures; Mandatory Public Hearings.—The procedure for approval of local tax
_______________
30 634 Phil. 348, 358-359; 620 SCRA 268, 277 (2010).
31 Chua v. Ang, 614 Phil. 416, 427; 598 SCRA 229, 239 (2009).
352
ordinances and revenue measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose prior to the enactment
thereof: Provided, further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30) days from the
effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60)
days from the date of receipt of the appeal: Provided, however, That such appeal shall not
have the effect of suspending the effectivity of the ordinance and the accrual and payment
of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice
acting upon the appeal, the aggrieved party may file appropriate proceedings with a court
of competent jurisdiction.
Indeed, the Court established in Reyes that the aforequoted provision is a significant procedural
requisite and, therefore, mandatory:
Clearly, the law requires that the dissatisfied taxpayer who questions the validity or
legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days
from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days
is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon,
after the lapse of 60 days, a party could already proceed to seek relief in court. These three
separate periods are clearly given for compliance as a prerequisite before seeking redress
in a competent court. Such statutory periods are set to prevent delays as well as enhance
the orderly and speedy discharge of judicial functions. For this reason the courts construe
these provisions of statutes as mandatory.
A municipal tax ordinance empowers a local government unit to impose taxes. The power
to tax is the most effective instrument to raise needed revenues to finance and support the
myriad activities of local govern-
353
VOL. 781, JANUARY 20, 2016 353
ment units for the delivery of basic services essential to the promotion of the general
welfare and enhancement of peace, progress, and prosperity of the people. Consequently,
any delay in implementing tax measures would be to the detriment of the public. It is for
this reason that protests over tax ordinances are required to be done within certain time
frames. In the instant case, it is our view that the failure of petitioners to appeal to the
Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their
cause.32 (Citations omitted)
The Court further affirmed in Hagonoy that:
At this point, it is apropos to state that the timeframe fixed by law for parties to avail of
their legal remedies before competent courts is not a “mere technicality” that can be easily
brushed aside. The periods stated in Section 187 of the Local Government Code are
mandatory. Ordinance No. 28 is a revenue measure adopted by the municipality of
Hagonoy to fix and collect public market stall rentals. Being its lifeblood, collection of
revenues by the government is of paramount importance. The funds for the operation of its
agencies and provision of basic services to its inhabitants are largely derived from its
revenues and collections. Thus, it is essential that the validity of revenue measures is not
left uncertain for a considerable length of time. Hence, the law provided a time limit for an
aggrieved party to assail the legality of revenue measures and tax ordinances.33 (Citations
omitted)
Nevertheless, in later cases, the Court recognized exceptional circumstances that justify
noncompliance by a taxpayer with Section 187 of the Local Government Code.
_______________
32 Reyes v. Court of Appeals, supra note 22 at p. 238; p. 492.
33 Hagonoy Market Vendor Association v. Municipality of Hagonoy, Bulacan, supra note 27 at

p. 778; p. 383.
354
The Court ratiocinated in Ongsuco v. Malones,34 thus:

It is true that the general rule is that before a party is allowed to seek the intervention of
the court, he or she should have availed himself or herself of all the means of
administrative processes afforded him or her. Hence, if resort to a remedy within the
administrative machinery can still be made by giving the administrative officer concerned
every opportunity to decide on a matter that comes within his or her jurisdiction, then such
remedy should be exhausted first before the court’s judicial power can be sought. The
premature invocation of the intervention of the court is fatal to one’s cause of action. The
doctrine of exhaustion of administrative remedies is based on practical and legal reasons.
The availment of administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of justice, for reasons of comity and
convenience, will shy away from a dispute until the system of administrative redress has
been completed and complied with, so as to give the administrative agency concerned
every opportunity to correct its error and dispose of the case. However, there are several
exceptions to this rule.
The rule on the exhaustion of administrative remedies is intended to preclude a court from
arrogating unto itself the authority to resolve a controversy, the jurisdiction over which is
initially lodged with an administrative body of special competence. Thus, a case where
the issue raised is a purely legal question, well within the competence; and the
jurisdiction of the court and not the administrative agency, would clearly constitute
an exception. Resolving questions of law, which involve the interpretation and
application of laws, constitutes essentially an exercise of judicial power that is
exclusively allocated to the Supreme Court and such lower courts the Legislature
may establish.
_______________
34 619 Phil. 492, 504-506; 604 SCRA 499, 511-513 (2009).
355
VOL. 781, JANUARY 20, 2016 355
In this case, the parties are not disputing any factual matter on which they still need
to present evidence. The sole issue petitioners raised before the RTC in Civil Case No.
25843 was whether Municipal Ordinance No. 98-01 was valid and enforceable despite the
absence, prior to its enactment, of a public hearing held in accordance with Article 276 of
the Implementing Rules and Regulations of the Local Government Code. This is
undoubtedly a pure question of law, within the competence and jurisdiction of the
RTC to resolve.
Paragraph 2(a) of Section 5, Article VIII of the Constitution, expressly establishes the
appellate jurisdiction of this Court, and impliedly recognizes the original jurisdiction of
lower courts over cases involving the constitutionality or validity of an ordinance:
Section 5. The Supreme Court shall have the following powers:
xxxx
(2) Review, revise, reverse, modify or affirm on appeal or certiorari, as the law or

the Rules of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international

or executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
In J.M. Tuason and Co., Inc. v. Court of Appeals, Ynot v. Intermediate Appellate Court,
and Commissioner of Internal Revenue v. Santos, the Court has affirmed the jurisdiction of
the RTC to resolve questions of constitutionality and validity of laws (deemed to include
local ordinances) in the first instance, without deciding questions which pertain to
legislative policy. (Emphases supplied, citations omitted)
356
In Cagayan Electric Power and Light Co., Inc. (CEPALCO) v. City of Cagayan De Oro,35 the
Court initially conceded that as in Reyes, the failure of taxpayer CEPALCO to appeal to the
Secretary of Justice within the statutory period of 30 days from the effectivity of the ordinance
should have been fatal to its cause. However, the Court purposefully relaxed the application of
the rules in view of the more substantive matters.
Similar to Ongsuco and CEPALCO, the case at bar constitutes an exception to the general rule.
Not only does the instant Petition raise pure questions of law, but it also involves substantive
matters imperative for the Court to resolve.
Section 42 of the Revised Omnibus

Tax Ordinance, as amended, im-
posing amusement tax on golf
courses is null and void as it is
beyond the authority of respondent
Cebu City to enact under the Local
Government Code.
The Local Government Code authorizes the imposition by local government units of amusement
tax under Section 140, which provides:
Sec. 140. Amusement Tax.—(a) The province may levy an amusement tax to be

collected from the proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement at a rate of not more than
thirty percent (30%) of the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by
their proprietors, lessees, or operators and paid to the provincial treasurer before the gross
receipts are divided between said pro-
_______________
35 G.R. No. 191761, November 14, 2012, 685 SCRA 609, 622.
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VOL. 781, JANUARY 20, 2016 357

prietors, lessees, or operators and the distributors of the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting, and art exhibitions, flower
shows, musical programs, literary and oratorical presentations, except pop, rock, or similar
concerts shall be exempt from the payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and
conditions for the payment of tax. In case of fraud or failure to pay the tax, the
sangguniang panlalawigan may impose such surcharges, interests and penalties as it may
deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and the
municipality where such amusement places are located. (Emphasis supplied)
“Amusement places,” as defined in Section 131(c) of the Local Government Code, “include
theaters, cinemas, concert halls, circuses and other places of amusement where one seeks
admission to entertain oneself by seeing or viewing the show or performance.”
The pronouncements of the Court in Pelizloy Realty Corporation v. The Province of Benguet36
are of particular significance to this case. The Court, in Pelizloy Realty, declared null and void
the second paragraph of Article X, Section 59 of the Benguet Provincial Code, insofar as it
imposes amusement taxes on admission fees to resorts, swimming pools, bath houses, hot
springs, and tourist spots. Applying the principle of ejusdem generis, as well as the ruling in the
PBA case, the Court expounded on the authority of local government units to impose amusement
tax under Section 140, in relation to Section 131(c), of the Local Government Code, as follows:
_______________
36 G.R. No. 183137, April 10, 2013, 695 SCRA 491.
358

Under the principle of ejusdem generis, “where a general word or phrase follows an
enumeration of particular and specific words of the same class or where the latter follow
the former, the general word or phrase is to be construed to include, or to be restricted to
persons, things or cases akin to, resembling, or of the same kind or class as those
specifically mentioned.”
The purpose and rationale of the principle was explained by the Court in National Power
Corporation v. Angas as follows:
The purpose of the rule on ejusdem generis is to give effect to both the particular
and general words, by treating the particular words as indicating the class and the
general words as including all that is embraced in said class, although not
specifically named by the particular words. This is justified on the ground that if the
lawmaking body intended the general terms to be used in their unrestricted sense, it
would have not made an enumeration of particular subjects but would have used
only general terms. [2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400]
In Philippine Basketball Association v. Court of Appeals, the Supreme Court had an

opportunity to interpret a starkly similar provision or the counterpart provision of Section
140 of the LGC in the Local Tax Code then in effect. Petitioner Philippine Basketball
Association (PBA) contended that it was subject to the imposition by LGUs of amusement
taxes (as opposed to amusement taxes imposed by the national government). In support of
its contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the
Local Tax Code of 1973, (which is analogous to Section 140 of the LGC) providing the
following:
Section 13. Amusement tax on admission.—The province shall impose a tax on

admission to be collected from the proprietors, lessees, or operators of theaters, cine-
359
VOL. 781, JANUARY 20, 2016 359
matographs, concert halls, circuses and other places of amusement x x x.
Applying the principle of ejusdem generis, the Supreme Court rejected PBA’s assertions
and rioted that:
[I]n determining the meaning of the phrase ‘other places of amusement,’ one must
refer to the prior enumeration of theaters, cinematographs, concert halls and circuses
with artistic expression as their common characteristic. Professional basketball
games do not fall under the same category as theaters, cinematographs, concert halls
and circuses as the latter basically belong to artistic forms of entertainment while the
former caters to sports and gaming.
However, even as the phrase ‘other places of amusement’ was already clarified in
Philippine Basketball Association, Section 140 of the LGC adds to the enumeration of
‘places of amusement’ which may properly be subject to amusement tax. Section 140
specifically mentions ‘boxing stadia’ in addition to “theaters, cinematographs, concert
halls [and] circuses” which were already mentioned in PD No. 231. Also, ‘artistic
expression’ as a characteristic does not pertain to ‘boxing stadia.’
In the present case, the Court need not embark on a laborious effort at statutory
construction. Section 131(c) of the LGC already provides a clear definition of ‘amusement
places’:
xxxx
Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a
common typifying characteristic in that they are all venues primarily for the staging
of spectacles or the holding of public shows, exhibitions, performances, and other
events meant to be viewed by an audience. Accordingly, ‘other places of amusement’
must be interpreted in light of the typifying characteristic of being venues “where one
seeks admission to entertain oneself by seeing or viewing the show or
360
performances” or being venues primarily used to stage spectacles or hold public

shows, exhibitions, performances, and other events meant to be viewed by an
audience.
As defined in The New Oxford American Dictionary, ‘show’ means “a spectacle or display
of something, typically an impressive one”; while ‘performance’ means “an act of staging
or presenting a play, a concert, or other form of entertainment.” As such, the ordinary
definitions of the words ‘show’ and ‘performance’ denote not only visual engagement
(i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or
presenting) such that actions are manifested to, and (correspondingly) perceived by
an audience.
Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and
tourist spots cannot be considered venues primarily “where one seeks admission to
entertain oneself by seeing or viewing the show or performances.” While it is true that they
may be venues where people are visually engaged, they are not primarily venues for their
proprietors or operators to actively display, stage or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to
the same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia.
It follows that they cannot be considered as among the ‘other places of amusement’
contemplated by Section 140 of the LGC and which may properly be subject to
amusement taxes.37 (Emphases supplied, citations omitted)
In light of Pelizloy Realty, a golf course cannot be considered a place of amusement. As

petitioner asserted, people do not enter a golf course to see or view a show or performance.
Petitioner also, as proprietor or operator of the golf course,
_______________
37 Id., at pp. 505-508.
361
VOL. 781, JANUARY 20, 2016 361
does not actively display, stage, or present a show or performance. People go to a golf course to
engage themselves in a physical sport activity, i.e., to play golf; the same reason why people go
to a gym or court to play badminton or tennis or to a shooting range for target practice, yet there
is no showing herein that such gym, court, or shooting range is similarly considered an
amusement place subject to amusement tax. There is no basis for singling out golf courses for
amusement tax purposes from other places where people go to play sports. This is in
contravention of one of the fundamental principles of local taxation: that the “[t]axation shall be
uniform in each local government unit.”38 Uniformity of taxation, like the kindred concept of
equal protection, requires that all subjects or objects of taxation, similarly situated, are to be
treated alike both in privileges and liabilities.39
Not lost on the Court is its declaration in Manila Electric Company v. Province of Laguna40 that
under the 1987 Constitution, “where there is neither a grant nor a prohibition by statute, the tax
power [of local government units] must be deemed to exist although Congress may provide
statutory limitations and guidelines.” Section 186 of the Local Government Code also expressly
grants local government units the following residual power to tax:
Sec. 186. Power to Levy Other Taxes; Fees, or Charges.—Local government units may

exercise the power to levy taxes, fees, or charges on any base or subject not otherwise
specifically enumerated herein or taxed under the provisions of the National Internal
Revenue Code, as amended, or other applicable laws: Provided, that the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared
national policy: Pro-
_______________
38 Section 130(a) of the Local Government Code.
39 Tan v. Del Rosario, Jr., G.R. Nos. 109289 and 109446, October 3, 1994, 237 SCRA 324, 331.
40 366 Phil. 428, 434; 306 SCRA 750, 757 (1999).
362
vided, further, That the ordinance levying such taxes, fees or charges shall not be enacted
without any prior public hearing conducted for the purpose. (Emphasis supplied)
Respondents, however, cannot claim that Section 42 of the Revised Omnibus Tax Ordinance, as
amended, imposing amusement tax on golf courses, was enacted pursuant to the residual power
to tax of respondent Cebu City. A local government unit may exercise its residual power to tax
when there is neither a grant nor a prohibition by statute; or when such taxes, fees, or charges are
not otherwise specifically enumerated in the Local Government Code, National Internal Revenue
Code, as amended, or other applicable laws. In the present case, Section 140, in relation to
Section 131(c), of the Local Government Code already explicitly and clearly cover amusement
tax and respondent Cebu City must exercise its authority to impose amusement tax within the
limitations and guidelines as set forth in said statutory provisions.
WHEREFORE, in view of all the foregoing, the Court GRANTS the instant Petition, and
REVERSES and SETS ASIDE the Resolution dated March 14, 2007 and the Order dated
October 3, 2007 of the Regional Trial Court, Cebu City, Branch 9 in Civil Case No. CEB-31988.
The Court DECLARES NULL and VOID the following: (a) Section 42 of the Revised
Omnibus Tax Ordinance of the City of Cebu, as amended by City Tax Ordinance Nos. LXXXII
and LXXXIV, insofar as it imposes amusement tax of 20% on the gross receipts on entrance,
playing green, and/or admission fees of golf courses; (b) the tax assessment against petitioner for
amusement tax on its golf course for the year 1998 in the amount of P1,373,761.24, plus
surcharges and interest pertaining to said amount, issued by the Office of the City Treasurer, City
of Cebu; and (c) the Closure Order dated December 28, 2005 issued against Alta Vista Golf and
Country Club by the Office of the Mayor, City of Cebu. The Court also ORDERS the City of
Cebu to refund to Alta Vista Golf and
363
VOL. 781, JANUARY 20, 2016 363
Country Club the amusement tax, penalties, surcharge, and interest paid under protest by the
latter in the total amount of P2,750,249.17 or to apply the same amount as tax credit against
existing or future tax liability of said Club.
SO ORDERED.
Sereno (CJ., Chairperson), Bersamin, Perlas-Bernabe and Jardeleza, JJ., concur.

Petition granted, resolution and order reversed and set aside.
Note.—Through the application and enforcement of Sec. 14 of Republic Act (RA) 9167, the
income from the amusement taxes levied by local government units (LGUs) did not and will
under no circumstance accrue to them, not even partially, despite being the taxing authority
therefor. Congress, therefore, clearly overstepped its plenary legislative power, the amendment
being violative of the fundamental law’s guarantee on local autonomy, as echoed in Sec. 130(d)
of the Local Government Code (LGC). (Film Development Council of the Philippines vs. Colon
Heritage Realty Corporation, 758 SCRA 536 [2015])
——o0o——
G.R. No. 180434. January 20, 2016.*
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MIRANT PAGBILAO

CORPORATION (now TeaM Energy Corporation),** respondent.
Remedial Law; Civil Procedure; Jurisdiction; It is settled that a jurisdictional issue may be
invoked by either party or even the Court motu proprio, and may be raised at any stage of the
proceedings, even on appeal.—While the matter was not raised by the CIR in its petition, it is
settled that a jurisdictional issue may be invoked by either party or even the Court motu proprio,
and may be raised at any stage of the proceedings, even on appeal. Thus, the Court emphasized
in Sales, et al. v. Barro, 573 SCRA 456 (2008): It is well-settled that a court’s jurisdiction may be
raised at any stage of the proceedings, even on appeal. The reason is that jurisdiction is conferred
by law, and lack of it affects the very authority of the court to take cognizance of and to render
judgment on the action. x x x [E]ven if [a party] did not raise the issue of jurisdiction, the
reviewing court is not precluded from ruling that it has no jurisdiction over the case. In this
sense, dismissal for lack of jurisdiction may even be ordered by the court motu proprio.
Taxation; The one hundred twenty (120)-day period is mandatory and jurisdictional, and that the
Court of Tax Appeals (CTA) does not acquire jurisdiction over a judicial claim that is filed
before the expiration of the 120-day period.—The doctrine laid down in CIR v. San Roque
Power Corporation, 690 SCRA 336 (2013), was reiterated in subsequent cases. In CIR v. Aichi
Forging Company of Asia, Inc., 739 SCRA 91 (2014), the Court cited the general rule that parties
must observe the mandatory 120-day waiting period to give the CIR an opportunity to act on
administrative claims; otherwise, their judicial claims are prematurely filed. In Team Energy
Corporation (formerly MPC) v. CIR, 713 SCRA 142 (2014), the Court again emphasized the rule
stating that “the 120-day period is crucial in filing an appeal with the CTA.” “[T]he 120-day
period is mandatory and
_______________
* THIRD DIVISION.
** Per Resolution dated June 18, 2008; Rollo, p. 133.
365
VOL. 781, JANUARY 20, 2016 365

Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation (now TeaM Energy
Corporation)
jurisdictional, and that the CTA does not acquire jurisdiction over a judicial claim that is filed
before the expiration of the 120-day period.” Clearly, MPC’s failure to observe the mandatory
120-day period under the law was fatal to its immediate filing of a judicial claim before the CTA.
It rendered the filing of the CTA petition premature, and barred the tax court from acquiring
jurisdiction over the same. Thus, the dismissal of the petition is in order. “[T]ax refunds or tax
credits — just like tax exemptions — are strictly construed against taxpayers, the latter having
the burden to prove strict compliance with the conditions for the grant of the tax refund or
credit.”
PETITION for review on certiorari of the decision and resolution of the Court of Tax Appeals En
Banc.
Office of the Solicitor General for petitioner.
Jose R. Matibag for respondent.
REYES, J.:
This appeal by Petition for Review on Certiorari1 seeks to reverse and set aside the Decision2
dated September 11, 2007 and Resolution3 dated November 7, 2007 of the Court of Tax Appeals
(CTA) En Banc in E.B. Case Nos. 216 and 225, affirming the Decision4 dated August 31, 2005
of the CTA Second Division in CTA Case No. 6417, ordering petitioner Commissioner of
Internal Revenue (CIR) to issue a refund or a tax credit certificate in the amount of
P118,756,640.97 in favor of Mirant Pagbilao Corporation5 (MPC).
_______________
1 Id., at pp. 13-33.
2 Id., at pp. 35-49.
3 Id., at pp. 9-11.

4 Penned by Associate Justice Erlinda P. Uy, with Chairman Juanito C. Castañeda, Jr. and
Associate Justice Olga Palanca-Enriquez, concurring; id., at pp. 184-200.
5 Formerly known as Hopewell Power (Philippines) Corporation and Southern Energy Quezon,
Inc., id., at p. 17.
366
Corporation)
The Facts
MPC is a duly-registered Philippine corporation located at Pagbilao Grande Island in Pagbilao,

Quezon, and primarily engaged in the generation and distribution of electricity to the National
Power Corporation (NAPOCOR) under a Build, Operate, Transfer Scheme. As such, it is
registered with the Bureau of Internal Revenue (BIR) as a Value-Added Tax (VAT) taxpayer in
accordance with Section 236 of the National Internal Revenue Code (NIRC) of 1997, with
Taxpayer Identification No. 0001-726-870, and registered under RDO Control No. 96-600-
002498.6
On November 26, 1999, the BIR approved MPC’s application for Effective Zero-Rating for the
construction and operation of its power plant.7
For taxable year 2000, the quarterly VAT returns filed by MPC on April 25, 2000, July 25, 2000,
October 24, 2000, and August 27, 2001 showed an excess input VAT paid on domestic purchases
of goods, services and importation of goods in the amount of P127,140,331.85.8
On March 11, 2002, MPC filed before the BIR an administrative claim for refund of its input
VAT covering the taxable year of 2000, in accordance with Section 112, subsections (A) and (B)
of the NIRC. Thereafter, or on March 26, 2002, fearing that the period for filing a judicial claim
for refund was about to expire, MPC proceeded to file a petition for review before the CTA,
docketed as CTA Case No. 6417,9 without waiting for the CIR’s action on the administrative
claim.
On August 31, 2005, the CTA Second Division rendered a Decision10 partially granting MPC’s
claim for refund, and
_______________
6 Id., at p. 185.
7 Id., at p. 186.
8 Id., at pp. 36-37.
9 Id., at p. 187.
10 Id., at pp. 184-200.
367
VOL. 781, JANUARY 20, 2016 367
Corporation)
ordering the CIR to grant a refund or a tax credit certificate, but only in the reduced amount of
P118,749,001.55, representing MPC’s unutilized input VAT incurred for the second, third and
fourth quarters of taxable year 2000.
The CTA Second Division held that by virtue of NAPOCOR’s exemption from direct and
indirect taxes as provided for in Section 1311 of Republic Act No. 6395,12 MPC’s sale of
services to NAPOCOR is subject to VAT at 0% rate. The Secretary of Finance even issued a
Memorandum dated January 28, 1998, addressed to the CIR, espousing the Court’s ruling that
pur-
_______________
11 Sec. 13. Nonprofit Character of the Corporation; Exemption from all Taxes, Duties,

Fees, Imposts and Other Charges by the Government and Government Instrumentalities.—
The Corporation shall be nonprofit and shall devote all its returns from its capital investment, as
well as excess revenues from its operations, for expansion. To enable the Corporation to pay its
indebtedness and obligations and in furtherance and effective implementation of the policy
enunciated in Section One of this Act, the Corporation is hereby declared exempt:
a. From the payment of all taxes, duties, fees, imposts, charges, costs and service fees in any
court or administrative proceedings in which it may be a party, restrictions and duties to the
Republic of the Philippines, its provinces, cities, municipalities and other government agencies
and instrumentalities;
b. From all income taxes, franchise taxes and realty taxes to be paid to the National
Government, its provinces, cities, municipalities and other government agencies and
instrumentalities;
c. From all import duties, compensating taxes and advanced sales tax, and wharfage fees on
import of foreign goods required for its operations and projects; and
d. From all taxes, duties, fees, imposts, and all other charges imposed by the Republic of the
Philippines, its provinces, cities, municipalities and other government agencies and
instrumentalities, on all petroleum products used by the Corporation in the generation,
transmission, utilization, and sale of electric power.
12 An Act Revising the Charter of the National Power Corporation.
368
Corporation)
chases by NAPOCOR of electricity from independent power producers are subject to VAT at 0%
rate, to wit:
As explained by the Supreme Court, the rationale for the [NAPOCOR’s] tax exemption is
to ensure cheaper power. If the BIR’s recent view is to be implemented, the VAT being an
indirect tax, may be passed on by the seller of electricity to [NAPOCOR]. Effectively, this
means that electricity will be sold at a higher rate to the consumers. Estimates show that a
10% VAT on electricity which is purchased by [NAPOCOR] from its independent power
producers will increase power cost by about P1.30 billion a year. The effect on the
consumer is an additional charge of P0.59 per kilowatt-hour. The recognition of
[NAPOCOR’s] broad privilege will inure to the benefit of the Filipino consumer.
In view of the foregoing and using the power of review granted to the Secretary of Finance
under Section 4 of Republic Act No. 8424, the DOF upholds the ruling of the Supreme
Court that the [NAPOCOR] is exempt under its charter and subsequent laws from all direct
and indirect taxes on its purchases of petroleum products and electricity. Thus, the
purchases by [NAPOCOR] of electricity from independent power producers are subject to
VAT at zero-rate.13
In arriving at the reduced amount of P118,749,001.55, the CTA Second Division found out that:
(a) P2,116,851.79 input taxes claimed should be disallowed because MPC failed to validate by
VAT official receipts and invoices the excess payment of input taxes; (b) P6,274,478.51 of input
taxes was not properly documented; and (c) the input taxes of P127,140,331.85 for the year 2000
were already deducted by MPC from the total available input VAT as of April 25, 2002 as
evidenced by the 2002 first quarterly VAT return. Thus, the input taxes sought to be refunded
were not applied by MPC against its
_______________
13 Rollo, pp. 191-192.
369
VOL. 781, JANUARY 20, 2016 369
Corporation)
output VAT liability as of April 25, 2002 and can no longer be used as credit against its future
output VAT liability.14
Undaunted, MPC filed a motion for partial reconsideration and new trial in view of the additional
amount it sought to be approved.
In an Amended Decision dated August 30, 2006, the CTA Second Division found that MPC is
entitled to a modified amount of P118,756,640.97 input VAT, upon allowing the amount of
P7,639.42 in addition to the VAT input tax. However, MPC’s motion for new trial was denied.
Dissatisfied, MPC elevated the matter to the CTA En Banc, particularly in E.B. Case No. 216.15
Meanwhile, the CIR filed a motion for reconsideration of the amended decision. However, on
November 13, 2006, the CTA Second Division issued a Resolution denying the motion.
Thereafter, the CIR filed a petition for review before the CTA En Banc, docketed as E.B. Case
No. 225.16
In a Decision17 dated September 11, 2007, the CTA En Banc affirmed in toto the assailed
amended decision and resolved the issues presented in E.B. Case Nos. 216 and 225.
In sustaining the decision of the CTA Second Division in E.B. Case No. 216, the CTA En Banc
ruled that:
(a) MPC’s claim for the refund of P810,047.31 is disallowed for lack of supporting
documents. Tax refunds, being in the nature of tax exemptions, are construed in
strictissimi juris against the claimant. Thus, a mere summary list submitted by MPC is
considered immaterial to prove the amount of its claimed unutilized input taxes.18
_______________
14 Id., at pp. 193-199.
15 Id., at p. 36.
16 Id., at pp. 36-37.
17 Id., at pp. 35-49.
18 Id., at pp. 41-42.
370
Corporation)
(b) MPC’s claim for the refund of P836,768.00 as input taxes is denied due to lack of
proof of payment. As a rule, “input tax on importations should be supported with Import
Entry and Internal Revenue Declarations (IEIRDs) duly validated for actual payment of
input tax” and that other documents may be adduced to determine its payment.19 Here, the
IEIRDs presented by MPC did not show payment of the input taxes and the amounts
indicated therein differed from the bank debit advice. More so, the bank debit advice did
not properly describe the mode of payment of the input tax which made it difficult to
determine which payee, and to what kind of payment did the bank debit advices pertain
to.20
(c) The denial of MPC’s motion for new trial was correct since it was pointless to require
MPC to submit additional documents in support of the unutilized input tax of
P3,310,109.20, in view of MPC’s admission that the VAT official receipts and invoices
were not even pre-marked and proffered before the court. Regrettably, without such
documents, the CTA could not in any way properly verify the correctness of the certified
public accountant’s conclusion.21
As regards E.B. Case No. 225, the CTA En Banc upheld the ruling of the CTA Second Division
that VAT at 0% rate may be imposed on the sale of services of MPC to NAPOCOR on the basis
of NAPOCOR’s exemption from direct and indirect taxes.22
Disagreeing with the CTA En Banc’s decision, both parties filed their respective motions for
reconsideration, which were denied in the CTA En Banc Resolution23 dated November 7, 2007.
_______________
19 Id., at p. 43.
20 Id.
21 Id., at p. 44.
22 Id., at pp. 46-47.
23 Id., at pp. 50-52.
371
VOL. 781, JANUARY 20, 2016 371

Corporation)
Feeling aggrieved by the adverse ruling of the CTA En Banc, the CIR now seeks recourse to the
Court via a petition for review on certiorari.
The Issues
The CIR raises in the petition the sole issue of whether or not the CTA erred in granting MPC’s
claim for refund of its excess input VAT payments on domestic purchases of goods, services and
importation of goods attributable to zero-rated sales for taxable year 2000.24
The Court, however, points out that given the factual antecedents, the case also raises a
jurisdictional issue inasmuch as MPC instituted the CTA action 15 days from the filing of its
administrative claim for refund and without waiting for the CIR’s action thereon. Thus, towards a
full and proper resolution of the issue on the tax court’s action on MPC’s case, the Court finds it
necessary to likewise resolve the issue of whether or not the CTA had jurisdiction to entertain
MPC’s judicial claim.
Ruling of the Court
The Court shall first address the issue on jurisdiction. While the matter was not raised by the CIR
in its petition, it is settled that a jurisdictional issue may be invoked by either party or even the
Court motu proprio, and may be raised at any stage of the proceedings, even on appeal. Thus,
the Court emphasized in Sales, et al. v. Barro:25
It is well-settled that a court’s jurisdiction may be raised at any stage of the proceedings,
even on appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the
very authority of the court to take
_______________
24 Id., at pp. 21-22.
25 594 Phil. 116; 573 SCRA 456 (2008).
372
Corporation)
cognizance of and to render judgment on the action. x x x [E]ven if [a party] did not raise
the issue of jurisdiction, the reviewing court is not precluded from ruling that it has no
jurisdiction over the case. In this sense, dismissal for lack of jurisdiction may even be
ordered by the court motu proprio.26 (Citations omitted)
In the present dispute, compliance with the requirements on administrative claims with the CIR,
which are to precede judicial actions with the CTA, indubitably impinge on the tax court’s
jurisdiction. In CIR v. Aichi Forging Company of Asia, Inc.,27 the Court ruled that the premature
filing of a claim for refund or credit of input VAT before the CTA warrants a dismissal, inasmuch
as no jurisdiction is acquired by the tax court.28 Pertinent thereto are the provisions of Section
112 of the NIRC at the time of MPC’s filing of the administrative and judicial claims, and which
prescribe the periods within which to file and resolve such claims, to wit:
Sec. 112. Refunds or Tax Credits of Input Tax.—
(A) Zero-Rated or Effectively Zero-Rated Sales.—Any VAT-registered person, whose

sales are zero-rated or effectively zero-rated may, within two (2) years after the close of
the taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales x x x.
xxxx
(D) Period within which Refund or Tax Credit of Input Taxes shall be Made.—In proper
cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of
submission of complete documents in support of the ap-
_______________
26 Id., at p. 123; p. 464.
27 646 Phil. 710; 632 SCRA 422 (2010).
28 Id., at p. 732; p. 444.
373
VOL. 781, JANUARY 20, 2016 373
Corporation)
plication filed in accordance with Subsections (A) and (B) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the
part of the Commissioner to act on the application within the period prescribed above, the
taxpayer affected may, within thirty (30) days from the receipt of the decision
denying the claim or after the expiration of the one hundred twenty-day period,
appeal the decision or the unacted claim with the [CTA].
xxxx
Contrary to the specified periods, specifically those that are provided in the second paragraph of
Section 112(D), MPC filed its petition for review with the CTA on March 26, 2002, or a mere 15
days after it filed an administrative claim for refund with the CIR on March 11, 2002. It then did
not wait for the lapse of the 120-day period expressly provided for by law within which the CIR
shall grant or deny the application for refund. The Court’s pronouncement in CIR v. San Roque
Power Corporation29 is instructive on the effect of such failure to comply with the 120-day
waiting period, to wit:
1. Application of the 120+30-Day Periods
xxxx
It is indisputable that compliance with the 120-day waiting period is mandatory and
jurisdictional. The waiting period, originally fixed at 60 days only, was part of the
provisions of the first VAT law, Executive Order No. 273, which took effect on 1 January
1988. The waiting period was extended to 120 days effective 1 January 1998 under RA
8424 or the Tax Reform Act of 1997. Thus, the waiting period has been in our statute
books for more than fifteen (15) years before San Roque filed its judicial claim.
_______________
29 G.R. No. 187485, February 12, 2013, 690 SCRA 336.
374
Corporation)
Failure to comply with the 120-day waiting period violates a mandatory provision of law.
It violates the doctrine of exhaustion of administrative remedies and renders the petition
premature and thus without a cause of action, with the effect that the CTA does not acquire
jurisdiction over the taxpayer’s petition. Philippine jurisprudence is replete with cases
upholding and reiterating these doctrinal principles.
The charter of the CTA expressly provides that its jurisdiction is to review on appeal
“decisions of the [CIR] in cases involving x x x refunds of internal revenue taxes.” When a
taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without
waiting for the decision of the Commissioner, there is no “decision” of the Commissioner
to review and thus the CTA as a court of special jurisdiction has no jurisdiction over the
appeal. The charter of the CTA also expressly provides that if the Commissioner fails to
decide within “a specific period” required by law, such “inaction shall be deemed a
denial” of the application for tax refund or credit. It is the Commissioner’s decision, or
inaction “deemed a denial,” that the taxpayer can take to the CTA for review. Without a
decision or an “inaction x x x deemed a denial” of the Commissioner, the CTA has no
jurisdiction over a petition for review.30 (Citations omitted, emphasis in the original and
underscoring ours)
The Court explained further:
The old rule that the taxpayer may file the judicial claim, without waiting for the
Commissioner’s decision if the two-year prescriptive period is about to expire, cannot
apply because that rule was adopted before the enactment of the 30-day period. The 30-
day period was adopted precisely to do away with the old rule, so that under the VAT
System the taxpayer will always have 30 days to file the judicial claim even if the
Commissioner acts only on the 120th day, or
_______________
30 Id., at pp. 380-382.
375
VOL. 781, JANUARY 20, 2016 375
Corporation)
does not act at all during the 120-day period. With the 30-day period always available
to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input
VAT without waiting for the Commissioner to decide until the expiration of the 120-day
period.
To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed
strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit
under the VAT System is compliance with the 120+30-day mandatory and jurisdictional
periods. Thus, strict compliance with the 120+30-day periods is necessary for such a
claim to prosper, whether before, during or after the effectivity of the Atlas doctrine,
except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December
2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the
120+30-day periods as mandatory and jurisdictional.31 (Citations omitted and emphasis in
the original)
The cited exception to the general rule, which came as a result of the issuance of BIR Ruling No.
DA-489-03, does not apply to MPC’s case as its administrative and judicial claims were both
filed in March 2002.
The doctrine laid down in San Roque was reiterated in subsequent cases. In CIR v. Aichi Forging
Company of Asia, Inc.,32 the Court cited the general rule that parties must observe the
mandatory 120-day waiting period to give the CIR an opportunity to act on administrative
claims; otherwise, their judicial claims are prematurely filed.33 In Team Energy Corporation
(formerly MPC) v. CIR,34 the Court again emphasized the rule stating that “the 120-day period is
crucial in
_______________
31 Id., at pp. 398-399.
32 G.R. No. 183421, October 22, 2014, 739 SCRA 91.
33 Id.
34 G.R. No. 197760, January 13, 2014, 713 SCRA 142.
376
Corporation)
filing an appeal with the CTA.”35 “[T]he 120-day period is mandatory and jurisdictional, and
that the CTA does not acquire jurisdiction over a judicial claim that is filed before the expiration
of the 120-day period.”36
Clearly, MPC’s failure to observe the mandatory 120-day period under the law was fatal to its
immediate filing of a judicial claim before the CTA. It rendered the filing of the CTA petition
premature, and barred the tax court from acquiring jurisdiction over the same. Thus, the
dismissal of the petition is in order. “[T]ax refunds or tax credits — just like tax exemptions —
are strictly construed against taxpayers, the latter having the burden to prove strict compliance
with the conditions for the grant of the tax refund or credit.”37
With the CTA being barren of jurisdiction to entertain MPC’s petition, the Court finds it
unnecessary, even inappropriate, to still discuss the main issue of MPC’s entitlement to the
disputed tax refund. The petition filed by MPC with the CTA instead warrants a dismissal. It is
settled that “a void judgment for want of jurisdiction is no judgment at all.”38
WHEREFORE, the Decision dated September 11, 2007 and Resolution dated November 7,
2007 of the Court of Tax Appeals En Banc in E.B. Case Nos. 216 and 225 are SET ASIDE, as
the CTA Case No. 6417 was prematurely filed, and therefore, the CTA lacked jurisdiction to
entertain Mirant Pagbilao Corporation’s judicial claim.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Perez and Jardeleza, JJ., concur.
_______________
35 Id., at pp. 153-154, citing CIR v. Aichi Forging Company of Asia, Inc., supra note 27 at p.
732; p. 444.
36 CIR v. San Roque Power Corporation, supra note 29 at p. 401.
37 Applied Food Ingredients Company, Inc. v. CIR, G.R. No. 184266, November 11, 2013, 709
SCRA 164, 169.
38 Zacarias v. Anacay, G.R. No. 202354, September 24, 2014, 736 SCRA 508, 522.
377
VOL. 781, JANUARY 20, 2016 377
Corporation)
Judgment and resolution set aside.
Notes.—The taxpayer may, if he wishes, appeal the decision of the Commissioner to the Court of
Tax Appeals within 30 days from receipt of the Commissioner’s decision, or if the Commissioner
does not act on the taxpayer’s claim within the 120-day period, the taxpayer may appeal to the
Court of Tax Appeals within 30 days from the expiration of the 120-day period. (Commissioner
of Internal Revenue vs. San Roque Power Corporation, 690 SCRA 336 [2013])
The taxpayer can file the appeal in one of two ways: (1) file the judicial claim within thirty days
after the Commissioner denies the claim within the 120-day period, or (2) file the judicial claim
within thirty days from the expiration of the 120-day period if the Commissioner does not act
within the 120-day period. (Commissioner of Internal Revenue vs. Mindanao II Geothermal
Partnership, 713 SCRA 645 [2014])
——o0o——
G.R. No. 207970. January 20, 2016.*
FERNANDO MEDICAL ENTERPRISES, INC., petitioner, vs. WESLEYAN UNIVERSITY

PHILIPPINES, INC., respondent.
Remedial Law; Civil Procedure; Judgment on the Pleadings; The essential query in resolving a
motion for judgment on the pleadings is whether or not there are issues of fact generated by the
pleadings.—The essential query in resolving a motion for judgment on the pleadings is whether
or not there are issues of fact generated by the pleadings. Whether issues of fact exist in a case or
not depends on how the defending party’s answer has dealt with the ultimate facts alleged in the
complaint. The defending party’s answer either admits or denies the allegations of ultimate facts
in the complaint or other initiatory pleading. The allegations of ultimate facts the answer
_______________
* FIRST DIVISION.
509
VOL. 781, JANUARY 20, 2016 509
Fernando Medical Enterprises, Inc. vs. Wesleyan University of the Philippines, Inc.
admit, being undisputed, will not require evidence to establish the truth of such facts, but the
allegations of ultimate facts the answer properly denies, being disputed, will require evidence.
Same; Same; Same; Specific Denial; Any material averment in the complaint not so specifically
denied are deemed admitted except an averment of the amount of unliquidated damages.—The
answer admits the material allegations of ultimate facts of the adverse party’s pleadings not only
when it expressly confesses the truth of such allegations but also when it omits to deal with them
at all. The controversion of the ultimate facts must only be by specific denial. Section 10, Rule 8
of the Rules of Court recognizes only three modes by which the denial in the answer raises an
issue of fact. The first is by the defending party specifying each material allegation of fact the
truth of which he does not admit and, whenever practicable, setting forth the substance of the
matters upon which he relies to support his denial. The second applies to the defending party
who desires to deny only a part of an averment, and the denial is done by the defending party
specifying so much of the material allegation of ultimate facts as is true and material and denying
only the remainder. The third is done by the defending party who is without knowledge or
information sufficient to form a belief as to the truth of a material averment made in the
complaint by stating so in the answer. Any material averment in the complaint not so specifically
denied are deemed admitted except an averment of the amount of unliquidated damages.
Same; Same; Same; Actionable Documents; In the case of a written instrument or document
upon which an action or defense is based, which is also known as the actionable document, the
pleader of such document is required either to set forth the substance of such instrument or
document in the pleading, and to attach the original or a copy thereof to the pleading as an
exhibit, which shall then be deemed to be a part of the pleading, or to set forth a copy in the
pleading.—In the case of a written instrument or document upon which an action or defense is
based, which is also known as the actionable document, the pleader of such document is required
either to set forth the substance of such instrument or document in the pleading, and to attach the
original or a copy thereof to the pleading as an exhibit, which shall then be deemed to be a part
of the pleading, or to set forth a copy in the pleading. The adverse party is deemed to
510
admit the genuineness and due execution of the actionable document unless he specifically
denies them under oath, and sets forth what he claims to be the facts, but the requirement of an
oath does not apply when the adverse party does not appear to be a party to the instrument or
when compliance with an order for an inspection of the original instrument is refused.
Same; Same; Same; Under Section 1, Rule 34 of the Rules of Court, the answer was the sole
basis for ascertaining whether the complaint’s material allegations were admitted or properly
denied.—We should emphasize that in order to resolve the petitioner’s Motion for Judgment
Based on the Pleadings, the trial court could rely only on the answer of the respondent filed in
Civil Case No. 09-122116. Under Section 1, Rule 34 of the Rules of Court, the answer was the
sole basis for ascertaining whether the complaint’s material allegations were admitted or properly
denied. As such, the respondent’s averment of payment of the total of P78,401,650.00 to the
petitioner made in its complaint for rescission had no relevance to the resolution of the Motion
for Judgment Based on the Pleadings. The CA thus wrongly held that a factual issue on the total
liability of the respondent remained to be settled through trial on the merits. It should have
openly wondered why the respondent’s answer in Civil Case No. 09-122116 did not allege the
supposed payment of the P78,401,650.00, if the payment was true, if only to buttress the specific
denial of its alleged liability. The omission exposed the respondent’s denial of liability as
insincere.
PETITION for review on certiorari of a decision of the Court of Appeals.
Mañacop Law Office for petitioner.
J.V. Bautista Law Offices for respondent.
BERSAMIN, J.:
The trial court may render a judgment on the pleadings upon motion of the claiming party when
the defending party’s answer fails to tender an issue, or otherwise admits the mate-
511
VOL. 781, JANUARY 20, 2016 511
rial allegations of the adverse party’s pleading. For that purpose, only the pleadings of the parties
in the action are considered. It is error for the trial court to deny the motion for judgment on the
pleadings because the defending party’s pleading in another case supposedly tendered an issue of
fact.
The Case
The petitioner appeals the decision promulgated on July 2, 2013,1 whereby the Court of Appeals
(CA) affirmed the order issued on November 23, 2011 by the Regional Trial Court (RTC),
Branch 1, in Manila, denying its motion for judgment on the pleadings in Civil Case No. 09-
122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-Philippines.2
Antecedents
From January 9, 2006 until February 2, 2007, the petitioner, a domestic corporation dealing with
medical equipment and supplies, delivered to and installed medical equipment and supplies at the
respondent’s hospital under the following contracts:
a. Memorandum of Agreement dated January 9, 2006 for the supply of medical equipment in the
total amount of P18,625,000.00;3
b. Deed of Undertaking dated July 5, 2006 for the installation of medical gas pipeline system
valued at P8,500,000.00;4
_______________
1 Rollo, pp. 91-100; penned by Associate Justice Florito S. Macalino with the concurrence of
Associate Justices Sesinando E. Villon and Pedro B. Corales.
2 CA Rollo, pp. 106-107.
3 Id., at pp. 21-22.
4 Id., at pp. 23-25.
512
c. Deed of Undertaking dated July 27, 2006 for the supply of one unit of Diamond Select Slice
CT and one unit of Diamond Select CV-P costing P65,000,000.00;5 and
d. Deed of Undertaking dated February 2, 2007 for the supply of furnishings and equipment
worth P32,926,650.00.6
According to the petitioner, the respondent paid only P67,357,683.23 of its total obligation of
P123,901,650.00, leaving unpaid the sum of P54,654,195.54.7 However, on February 11, 2009,
the petitioner and the respondent, respectively represented by Rafael P. Fernando and Guillermo
T. Maglaya, Sr., entered into an agreement,8 whereby the former agreed to reduce its claim to
only P50,400,000.00, and allowed the latter to pay the adjusted obligation on installment basis
within 36 months.9
In the letter dated May 27, 2009,10 the respondent notified the petitioner that its new
administration had reviewed their contracts and had found the contracts defective and rescissible
due to economic prejudice or lesion; and that it was consequently declining to recognize the
February 11, 2009 agreement because of the lack of approval by its Board of Trustees and for
having been signed by Maglaya whose term of office had expired.
On June 24, 2009, the petitioner sent a demand letter to the respondent.11
_______________
5 Id., at pp. 26-28.
6 Id., at pp. 32-35.
7 Rollo, p. 3.
8 CA Rollo, pp. 36-39.
9 Rollo, p. 4.
10 CA Rollo, pp. 41-42.
11 Id., at p. 43.
513
VOL. 781, JANUARY 20, 2016 513
Due to the respondent’s failure to pay as demanded, the petitioner filed its complaint for sum of
money in the RTC,12 averring as follows:
xxxx
2. On January 9, 2006, plaintiff supplied defendant with hospital medical equipment for
an in consideration of P18,625,000.00 payable in the following manner: (2.1) For nos. 1 to
9 of items to be sourced from Fernando Medical Equipment, Inc. (FMEI) — 30% down
payment of P17,475,000 or P5,242,500 with the balance of P12,232,500 or 70% payable in
24 equal monthly installments of P509,687.50 and (2.2.) cash transaction amounting to
P1,150,000.00 (2.3) or an initial cash payment of P6,392,500.00 with the remaining
balance payable in 24 equal monthly installments every 20th day of each month until paid,
as stated in the Memorandum of Agreement, copy of which is hereto attached as Annex
“A”;
3. On July 5, 2006, plaintiff installed defendants medical gas pipeline system in the
latter’s hospital building complex for and in consideration of P8,500,000.00 payable upon
installation thereof under a Deed of Undertaking, copy of which is hereto attached as
Annex “B”;
4. On July 27, 2006, plaintiff supplied defendant one (1) unit Diamond Select Slice CT
and one (1) unit Diamond Select CV-9 for and in consideration of P65,000,000.00 thirty
percent (30%) of which shall be paid as down payment and the balance in 30 equal
monthly installments as provided in that Deed of Undertaking, copy of which is hereto
attached as Annex “C”;
5. On February 2, 2007, plaintiff supplied defendants hospital furnishings and equipment
for an in consideration of P32,926,650.00 twenty percent (20%) of which was to be paid as
down payment and the balance in 30 months under a Deed of Undertaking, copy of which
is hereto attached as Annex “D”;
514
6. Defendant’s total obligation to plaintiff was P123,901,650.00 as of February 15, 2009,

but defendant was able to pay plaintiff the sum of P67,357,683.23 thus leaving a balance
P54,654,195.54 which has become overdue and demandable;
7. On February 11, 2009, plaintiff agreed to reduce its claim to only P50,400,000.00 and
extended its payment for 36 months provided defendants shall pay the same within 36
months and to issue 36 postdated checks therefor in the amount of P1,400,000.00 each to
which defendant agreed under an Agreement, copy of which is hereto attached as Annex
“E”;
8. Accordingly, defendant issued in favor of plaintiff 36 postdated checks each in the

[a]mount of P1,400,000.00 but after four (4) of the said checks in the sum of
P5,600,000.00 were honored defendant stopped their payment thus making the entire
obligation of defendant due and demandable under the February 11, 2009 agreement;
9. In a letter dated May 27, 2009, defendant claimed that all of the first four (4)
agreements may be rescissible and one of them is unenforceable while the Agreement
dated February 11, 2009 was without the requisite board approval as it was signed by an
agent whose term of office already expired, copy of which letter is hereto attached as
Annex “F”;
10. Consequently, plaintiff told defendant that if it does not want to honor the February
11, 2009 contract then plaintiff will insists [sic] on its original claim which is
P54,654,195.54 and made a demand for the payment thereof within 10 days from receipt
of its letter copy of which is hereto attached as Annex “G”;
11. Defendant received the aforesaid letter on July 6, 2009 but to date it has not paid
plaintiff any amount, either in the first four contracts nor in the February 11, 2009
agreement, hence, the latter was constrained to institute the instant suit and thus incurred
attorney’s fee equivalent to 10% of the overdue account
515
VOL. 781, JANUARY 20, 2016 515
but only after endeavouring to resolve the dispute amicable and in a spirit of friendship[;]
12. Under the February 11, 2009 agreement the parties agreed to bring all actions or
proceedings thereunder or characterized therewith in the City of Manila to the exclusion of other
courts and for defendant to pay plaintiff 3% per months of delay without need of demand.13
xxxx
The respondent moved to dismiss the complaint upon the following grounds,14 namely: (a) lack
of jurisdiction over the person of the defendant; (b) improper venue; (c) litis pendentia; and (d)
forum shopping. In support of the ground of litis pendentia, it stated that it had earlier filed a
complaint for the rescission of the four contracts and of the February 11, 2009 agreement in the
RTC in Cabanatuan City; and that the resolution of that case would be determinative of the
petitioner’s action for collection.15
After the RTC denied the motion to dismiss on July 19, 2009,16 the respondent filed its answer
(ad cautelam),17 averring thusly:
xxxx
2. The allegations in Paragraph Nos. 2, 3, 4, and 5 of the complaint are ADMITTED

subject to the special and affirmative defenses hereafter pleaded;
3. The allegations in Paragraph Nos. 6, 7 and 8 of the complaint are DENIED for lack of
knowledge or information sufficient to form a belief as to the truth or falsity thereof,
inasmuch as the alleged transactions were undertaken during the term of office of the past
officers
_______________
13 Id., at pp. 14-17.
14 Id., at pp. 20-26.
15 Id., at p. 23.
16 Id., at pp. 36-39.
17 Id., at pp. 40-46.
516
of defendant Wesleyan University-Philippines. At any rate, these allegations are subject to

the special and affirmative defenses hereafter pleaded;
4. The allegations in Paragraph Nos. 9 and 10 of the complaint are ADMITTED subject
to the special and affirmative defenses hereafter pleaded;
5. The allegations in Paragraph Nos. 11 and 12 of the complaint are DENIED for being
conclusions of law.18
xxxx
The petitioner filed its reply to the answer.19
On September 28, 2011, the petitioner filed its Motion for Judgment Based on the Pleadings,20
stating that the respondent had admitted the material allegations of its complaint and thus did not
tender any issue as to such allegations.
The respondent opposed the Motion for Judgment Based on the Pleadings, arguing that it had
specifically denied the material allegations in the complaint, particularly paragraphs 6, 7, 8, 11
and 12.21
On November 23, 2011, the RTC issued the order denying the Motion for Judgment Based on the
Pleadings of the petitioner, to wit:
At the hearing of the “Motion for Judgment Based on the Pleadings” filed by the plaintiff
thru counsel, Atty. Jose Mañacop on September 28, 2011, the court issued an Order dated
October 27, 2011 which read in part as follows:
xxxx
_______________
18 Id., at pp. 40-41.
19 CA Rollo, pp. 87-89.
20 Rollo, pp. 47-48.
21 Id., at pp. 49-50.
517
VOL. 781, JANUARY 20, 2016 517
Considering that the allegations stated on the Motion for Judgment Based on the
Pleadings, are evidentiary in nature, the Court, instead of acting on the same, hereby
sets this case for pretrial, considering that with the Answer and the Reply, issues
have been joined.
xxxx
In view therefore of the Order of the Court dated October 27, 2011, let the Motion
for Judgment Based on the Pleadings be hereby ordered DENIED on reasons as
above stated and hereto reiterated.
xxxx
SO ORDERED.22
The petitioner moved for reconsideration,23 but its motion was denied on December 29, 2011.24
The petitioner assailed the denial in the CA on certiorari.25
Judgment of the CA
On July 2, 2013, the CA promulgated its decision. Although observing that the respondent had
admitted the contracts as well as the February 11, 2009 agreement, viz.:
It must be remembered that Private Respondent admitted the existence of the subject
contracts, including Petitioner’s fulfilment of its obligations under the same, but subjected
the said admission to the “special and affirmative defenses” earlier raised in its Motion to
Dismiss.
xxxx
_______________
22 CA Rollo, p. 106.
23 Id., at pp. 103-105.
24 Id., at p. 102.
25 Id., at pp. 3-20.

518
Obviously, Private Respondent’s special and affirmative defenses are not of such character
as to avoid Petitioner’s claim. The same special and affirmative defenses have been passed
upon by the RTC in its Order dated July 19, 2010 when it denied Private Respondent’s
Motion to Dismiss. As correctly found by the RTC, Private Respondent’s special and
affirmative defences of lack of jurisdiction over its person, improper venue, litis pendentia
and willful and deliberate forum shopping are not meritorious and cannot operate to
dismiss Petitioner’s Complaint. Hence, when Private Respondent subjected its admission
to the said defenses, it is as though it raised no defense at all.
Not even is Private Respondent’s contention that the rescission case must take precedence
over Petitioner’s Complaint for Sum of Money tenable. To begin with, Private Respondent
had not yet proven that the subject contracts are rescissible. And even if the subject
contracts are indeed rescissible, it is well-settled that rescissible contracts are valid
contracts until they are rescinded. Since the subject contracts have not yet been rescinded,
they are deemed valid contracts which may be enforced in legal contemplation.
In effect, Private Respondent admitted that it entered into the subject contracts and that
Petitioner had performed its obligations under the same.
As regards Private Respondent’s denial by disavowal of knowledge of the Agreement

dated February 11, 2009, We agree with Petitioner that such denial was made in bad faith
because such allegations are plainly and necessarily within its knowledge.
In its letter dated May 27, 2009, Private Respondent made reference to the Agreement
dated February 11, 2009, viz.:
“The Agreement dated 11 February 2009, in particular, was entered into by an Agent
of the University without the requisite authority from the Board of Trustees, and
executed when said agent’s term of office had
519
VOL. 781, JANUARY 20, 2016 519
already expired. Consequently, such contract is, being an unenforceable contract.”
Also, Private Respondent averred in page 5 of its Complaint for Rescission, which it attached to
its Motion to Dismiss, that:
“13. On 6 February 2009, when the terms of office of plaintiff’s Board of Trustees
chaired by Dominador Cabasal, as well as of Atty. Guillermo C. Maglaya as
President, had already expired, thereby rendering them on a hold-over capacity, the
said Board once again authorized Atty. Maglaya to enter into another contract with
defendant FMEI, whereby the plaintiff was obligated to pay and deliver to defendant
FMEI the amount of Fifty Million Four Hundred Thousand Pesos
(Php50,400,000.00) in thirty-five (35) monthly installments of One Million Four
Hundred Thousand Pesos (Php1,400,000.00), representing the balance of the
payment for the medical equipment supplied under the afore-cited rescissible
contracts. This side agreement, executed five (5) days later, or on 11 February 2009,
and denominated as “AGREEMENT,” had no object as a contract, but was entered
into solely for the purpose of getting the plaintiff locked-in to the payment of the
balance price under the rescissible contracts. x x x”
From the above averments, Private Respondent cannot deny knowledge of the Agreement
dated February 11, 2009. In one case, it was held that when a respondent makes a “specific
denial” of a material allegation of the petition without setting forth the substance of the
matters relied upon to support its general denial, when such matters where plainly within
its knowledge and the de-
520
fendant could not logically pretend ignorance as to the same, said defendant fails to properly
tender an issue.26
the CA ruled that a judgment on the pleadings would be improper because the outstanding
balance due to the petitioner remained to be an issue in the face of the allegations of the
respondent in its complaint for rescission in the RTC in Cabanatuan City, to wit:
However, Private Respondent’s disavowal of knowledge of its outstanding balance is well-

taken. Paragraph 6 of Petitioner’s Complaint states that Private Respondent was able to
pay only the amount of P67,357,683.23. Taken together with paragraph 8, which states that
Private Respondent was only able to make good four (4) check payments worth
P1,400,000.00 or a total of P5,600,000.00, Private Respondent’s total payments would be,
in Petitioner’s view, P72,957,683.23. However, in its Complaint for Rescission, attached to
its Motion to Dismiss Petitioner’s Complaint for Sum of Money, Private Respondent
alleged that:
“16. To date, plaintiff had already paid defendant the amount of Seventy-Eight
Million Four Hundred One Thousand Six Hundred Fifty Pesos (P78,401,650.00)”
It is apparent that Private Respondent’s computation and Petitioner’s computation of the

total payments made by Private Respondent are different. Thus, Private Respondent
tendered an issue as to the amount of the balance due to Petitioner under the subject
contracts.27
Hence, this appeal.
_______________
27 Id.
521
VOL. 781, JANUARY 20, 2016 521
Issue
The petitioner posits that the CA erred in going outside of the respondent’s answer by relying on
the allegations contained in the latter’s complaint for rescission; and insists that the CA should
have confined itself to the respondent’s answer in the action in order to resolve the petitioner’s
motion for judgment based on the pleadings.
In contrast, the respondent contends that it had specifically denied the material allegations of the
petitioner’s complaint, including the amount claimed; and that the CA only affirmed the previous
ruling of the RTC that the pleadings submitted by the parties tendered an issue as to the balance
owing to the petitioner.
Did the CA commit reversible error in affirming the RTC’s denial of the petitioner’s motion for
judgment on the pleadings?
Ruling of the Court
The appeal is meritorious.
The rule on judgment based on the pleadings is Section 1, Rule 34 of the Rules of Court, which
provides thus:
Section 1. Judgment on the pleadings.—Where an answer fails to tender an issue, or

otherwise admits the material allegations of the adverse party’s pleading, the court may, on
motion of that party, direct judgment on such pleading. x x x
The essential query in resolving a motion for judgment on the pleadings is whether or not there
are issues of fact generated by the pleadings.28 Whether issues of fact exist in a case
_______________
28 Wood Technology Corporation v. Equitable Banking Corporation, G.R. No. 153867,
February 17, 2005, 451 SCRA 724, 731.
522
or not depends on how the defending party’s answer has dealt with the ultimate facts alleged in
the complaint. The defending party’s answer either admits or denies the allegations of ultimate
facts in the complaint or other initiatory pleading. The allegations of ultimate facts the answer
admit, being undisputed, will not require evidence to establish the truth of such facts, but the
allegations of ultimate facts the answer properly denies, being disputed, will require evidence.
The answer admits the material allegations of ultimate facts of the adverse party’s pleadings not
only when it expressly confesses the truth of such allegations but also when it omits to deal with
them at all.29 The controversion of the ultimate facts must only be by specific denial. Section 10,
Rule 8 of the Rules of Court recognizes only three modes by which the denial in the answer
raises an issue of fact. The first is by the defending party specifying each material allegation of
fact the truth of which he does not admit and, whenever practicable, setting forth the substance of
the matters upon which he relies to support his denial. The second applies to the defending party
who desires to deny only a part of an averment, and the denial is done by the defending party
specifying so much of the material allegation of ultimate facts as is true and material and denying
only the remainder. The third is done by the defending party who is without knowledge or
information sufficient to form a belief as to the truth of a material averment made in the
complaint by stating so in the answer. Any material averment in the complaint not so specifically
denied are deemed admitted except an averment of the amount of unliquidated damages.30
In the case of a written instrument or document upon which an action or defense is based, which
is also known as the actionable document, the pleader of such document is
_______________
29 Mongao v. Pryce Properties Corporation, G.R. No. 156474, August 16, 2005, 467 SCRA
201, 214.
30 Section 11, Rule 8 of the Rules of Court.

523
VOL. 781, JANUARY 20, 2016 523
required either to set forth the substance of such instrument or document in the pleading, and to
attach the original or a copy thereof to the pleading as an exhibit, which shall then be deemed to
be a part of the pleading, or to set forth a copy in the pleading.31 The adverse party is deemed to
admit the genuineness and due execution of the actionable document unless he specifically
denies them under oath, and sets forth what he claims to be the facts, but the requirement of an
oath does not apply when the adverse party does not appear to be a party to the instrument or
when compliance with an order for an inspection of the original instrument is refused.32
In Civil Case No. 09-122116, the respondent expressly admitted paragraph nos. 2, 3, 4, 5, 9 and
10 of the complaint. The admission related to the petitioner’s allegations on: (a) the four
transactions for the delivery and installation of various hospital equipment; (b) the total liability
of the respondent; (c) the payments made by the respondents; (d) the balance still due to the
petitioner; and (e) the execution of the February 11, 2009 agreement. The admission of the
various agreements, especially the February 11, 2009 agreement, significantly admitted the
petitioner’s complaint. To recall, the petitioner’s cause of action was based on the February 11,
2009 agreement, which was the actionable document in the case. The complaint properly alleged
the substance of the February 11, 2009 agreement, and contained a copy thereof as an annex.
Upon the express admission of the genuineness and due execution of the February 11, 2009
agreement, judgment on the pleadings became proper.33 As held in Santos v. Alcazar:34
There is no need for proof of execution and authenticity with respect to documents the
genuineness and due
_______________
31 Section 7, id.
32 Section 8, id.
33 Dino v. Valencia, G.R. No. 43886, July 19, 1989, 175 SCRA 406, 414.
34 G.R. No. 183034, March 12, 2014, 718 SCRA 636.
524
execution of which are admitted by the adverse party. With the consequent admission
engendered by petitioners’ failure to properly deny the Acknowledgment in their Answer,
coupled with its proper authentication, identification and offer by the respondent, not to
mention petitioners’ admissions in paragraphs 4 to 6 of their Answer that they are indeed
indebted to respondent, the Court believes that judgment may be had solely on the
document, and there is no need to present receipts and other documents to prove the
claimed indebtedness. The Acknowledgment, just as an ordinary acknowledgment receipt,
is valid and binding between the parties who executed it, as a document evidencing the
loan agreement they had entered into. The absence of rebutting evidence occasioned by
petitioners’ waiver of their right to present evidence renders the Acknowledgment as the
best evidence of the transactions between the parties and the consequential indebtedness
incurred. Indeed, the effect of the admission is such that a prima facie case is made for the
plaintiff which dispenses with the necessity of evidence on his part and entitled him to a
judgment on the pleadings unless a special defense of new matter, such as payment, is
interposed by the defendant.35 (citations omitted)
The respondent denied paragraph nos. 6, 7 and 8 of the complaint “for lack of knowledge or
information sufficient to form a belief as to the truth or falsity thereof, inasmuch as the alleged
transactions were undertaken during the term of office of the past officers of defendant Wesleyan
University-Philippines.” Was the manner of denial effective as a specific denial?
We answer the query in the negative. Paragraph no. 6 alleged that the respondent’s total
obligation as of February 15, 2009 was P123,901,650.00, but its balance thereafter became only
P54,654,195.54 because it had since then paid P67,357,683.23 to the petitioner. Paragraph no. 7
stated that
_______________
35 Id., at pp. 652-653.

525
VOL. 781, JANUARY 20, 2016 525
the petitioner had agreed with the respondent on February 11, 2009 to reduce the balance to only
P50,400,000.00, which the respondent would pay in 36 months through 36 postdated checks of
P1,400,000.00 each, which the respondent then issued for the purpose. Paragraph no. 8 averred
that after four of the checks totalling P5,600,000.00 were paid the respondent stopped payment
of the rest, rendering the entire obligation due and demandable pursuant to the February 11, 2009
agreement. Considering that paragraph nos. 6, 7 and 8 of the complaint averred matters that the
respondent ought to know or could have easily known, the answer did not specifically deny such
material averments. It is settled that denials based on lack of knowledge or information of
matters clearly known to the pleader, or ought to be known to it, or could have easily been
known by it are insufficient, and constitute ineffective36 or sham denials.37
That the respondent qualified its admissions and denials by subjecting them to its special and
affirmative defenses of lack of jurisdiction over its person, improper venue, litis pendentia and
forum shopping was of no consequence because the affirmative defenses, by their nature,
involved matters extrinsic to the merits of the petitioner’s claim, and thus did not negate the
material averments of the complaint.
Lastly, we should emphasize that in order to resolve the petitioner’s Motion for Judgment Based
on the Pleadings, the trial court could rely only on the answer of the respondent filed in Civil
Case No. 09-122116. Under Section 1, Rule 34 of the Rules of Court, the answer was the sole
basis for ascertaining whether the complaint’s material allegations were admitted or properly
denied. As such, the respondent’s averment of payment of the total of P78,401,650.00 to the peti-
_______________
36 J.P. Juan & Sons, Inc. v. Lianga Industries, Inc., No. L-25137, July 28, 1969, 28 SCRA 807,
809-812.
37 Manufacturer’s Bank & Trust Co. v. Diversified Industries, Inc., G.R. No. 33695, May 15,
1989, 173 SCRA 357, 364.
526

tioner made in its complaint for rescission had no relevance to the resolution of the Motion for
Judgment Based on the Pleadings. The CA thus wrongly held that a factual issue on the total
liability of the respondent remained to be settled through trial on the merits. It should have
openly wondered why the respondent’s answer in Civil Case No. 09-122116 did not allege the
supposed payment of the P78,401,650.00, if the payment was true, if only to buttress the specific
denial of its alleged liability. The omission exposed the respondent’s denial of liability as
insincere.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on July 2,
2013; DIRECTS the Regional Trial Court, Branch 1, in Manila to resume its proceedings in
Civil Case No. 09-122116 entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-
Philippines, and to forthwith act on and grant the Motion for Judgment Based on the Pleadings
by rendering the proper judgment on the pleadings; and ORDERS the respondent to pay the
costs of suit.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Perlas-Bernabe and Jardeleza,** JJ., concur.
Judgment reversed and set aside.
Notes.—It is basic in remedial law that a defendant in a civil case must apprise the trial court and
the adverse party of the facts alleged by the complaint that he admits and of the facts alleged by
the complaint that he wishes to place into contention — only a specific denial shall be sufficient
to place into contention an alleged fact. (Republic vs. Sandiganbayan [First Division], 648
SCRA 47 [2011])
_______________
** Designated acting member pursuant to Special Order No. 2311, effective January 16, 2016.
527
VOL. 781, JANUARY 20, 2016 527
A specific denial is made by specifying each material allegation of fact, the truth of which the
defendant does not admit and, whenever practicable, setting forth the substance of the matters
upon which he relies to support his denial. (Cua vs. Wallem Philippines Shipping, Inc., 676
SCRA 143 [2012])
——o0o——
G.R. No. 197970. January 25, 2016.*
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. FADCOR, INC. or THE
FLORENCIO CORPORATION, LETICIA D. FLORENCIO, RACHEL FLORENCIO-
AGUSTIN, MA. MERCEDES FLORENCIO and ROSENDO CESAR FLORENCIO, JR.,
respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; As a general rule,
petitions for review under Rule 45 of the Rules of Civil Procedure filed before the Supreme Court
(SC) may only raise questions of law.—As a general rule, petitions for review under Rule 45 of
the Rules of Civil Procedure filed before this Court may only raise questions of law. However,
jurisprudence has recognized several exceptions to this rule. In Almendrala v. Ngo, 471
_______________
* THIRD DIVISION.
562

Metropolitan Bank and Trust Company vs. Fadcor, Inc.
SCRA 311 (2005), we have enumerated several instances when this Court may review findings
of fact of the Court of Appeals on appeal by certiorari, to wit: (1) when the findings are
grounded entirely on speculation, surmises or conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when in making its findings the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to that of the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when
the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; or (11) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties, which, if properly considered, would justify a different
conclusion. In the present case, the RTC and the CA have conflicting findings of fact. Hence, the
need to rule on the matter.
Same; Same; Pre-Trial; In The Philippine American Life and General Insurance Company v.
Joseph Enario, 630 SCRA 607 (2010), the Supreme Court (SC) ruled that, [t]he legal
ramification of defendant’s failure to appear for pretrial is still detrimental to him while
beneficial to the plaintiff.—Unfortunately, when respondents failed to appear during the pretrial
despite due notice, they have already acquired the risk of not being able to dispute the evidence
presented ex parte by petitioner. In The Philippine American Life & General Insurance
Company v. Joseph Enario, 630 SCRA 607 (2010), this Court ruled that, “[t]he legal ramification
of defendant’s failure to appear for pretrial is still detrimental to him while beneficial to the
plaintiff. The plaintiff is given the privilege to present his evidence without objection from the
defendant, the likelihood being that the court will decide in favor of the plaintiff, the defendant
having forfeited the opportunity to rebut or present its own evidence.”
563
VOL. 781, JANUARY 25, 2016 563

Perez, Calima, Suratos, Maynigo & Roque Law Offices for petitioner.
Armando San Antonio for respondents.
PERALTA, J.:
This is to resolve the Petition for Review on Certiorari,1 under Rule 45 of the Rules of Court,
dated September 19, 2011 of petitioner Metropolitan Bank and Trust Company (Metrobank) that
seeks to reverse the Decision2 dated May 17, 2011 and Resolution3 dated August 5, 2011, both
of the Court of Appeals (CA) that set aside the Decision4 dated March 8, 2006 of the Regional
Trial Court (RTC), Branch 59, Makati City ordering respondents to pay petitioner
P17,479,371.86 representing deficiency obligation plus 12 percent interest per annum and
P50,000.00 as attorney’s fees.
The facts follow.
Metrobank granted five (5) loans in the aggregate amount of P32,950,000.00 to respondent
Fadcor, Inc. or The Florencio Corporation (Fadcor), represented by its President Ms. Leticia D.
Florencio and its Executive Vice President, Ms. Rachel D. Florencio-Agustin. As such, Fadcor
executed five (5) Non-negotiable Promissory Notes in favor of Metrobank. In addition, Fadcor
through individual respondents President, Ms. Leticia D. Florencio; Exec. Vice President, Ms.
Rachel D. Florencio-Agustin; Treasurer, Ms. Ma. Cecilia D. Florencio; Corporate Secretary, Ms.
Ma. Mercedes D. Florencio; and Director, Mr. Rosendo Cesar D. Florencio, Jr., executed two (2)
Real Estate Mortgages in favor of Metrobank over ten (10)
_______________
1 Rollo, pp. 15-190.
2 Penned by Associate Justice Antonio L. Villamor, with Associate Justices Jose C. Reyes, Jr.
and Ramon A. Cruz, concurring; id., at pp. 42-53.
3 Id., at pp. 54-55.
4 Penned by Judge Winlove M. Dumayas, id., at pp. 174-176.

564
parcels of land as collateral for the loans obtained on August 2, 1995, in the amount of
P18,000,000.00; P10,000,000.00, obtained on September 14, 1995, and an Amendment of Real
Estate Mortgage to secure a loan of P22,000,000.00, obtained on October 26, 1995. Furthermore,
the same respondents executed two (2) Continuing Surety Agreements in favor of Metrobank,
binding themselves jointly and severally liable to pay any existing or future obligation in favor of
Metrobank up to a maximum amount of Ninety Million Pesos (P90,000,000.00) only.
Thereafter, respondents defaulted in the payment of their loan amortizations in the total
aggregate sum of P32,350,594.12, hence, after demands for payment of the arrears were ignored,
Metrobank filed on April 20, 2001 an extrajudicial petition for foreclosure of mortgage before
the Notary Public for and in the Province of Rizal, of the ten (10) mortgaged parcels of land in
accordance with Act No. 3135, as amended. On July 31, 2001, the foreclosed properties were
sold at public auction in the amount of P32,961,820.72 to Metrobank as the highest bidder.
Consequently, the corresponding Certificate of Sale was issued to Metrobank and the proceeds of
sale were applied to Fadcor’s indebtedness and expenses of foreclosure. Nonetheless, the amount
of P17,479,371.86 remained unpaid as deficiency obligation, prompting Metrobank to demand
from respondents payment of such deficiency obligation. Respondents, on the other hand, failed
to pay. Hence, on September 23, 2003, Metrobank filed a Complaint against Fadcor for recovery
of the deficiency obligation.
Respondents failed to appear at the scheduled pretrial. The RTC, therefore, issued an Order
directing Metrobank to present its evidence ex parte. Metrobank presented as lone witness its
Senior Assistant Manager, Ms. Irene Sih-Tan and, thereafter, on September 4, 2004, it filed its
Formal Offer of Evidence. Respondents filed a Motion for Reconsideration of the same Order,
but on September 21, 2004, the RTC denied the said motion.
565
VOL. 781, JANUARY 25, 2016 565

The RTC, on March 8, 2006, rendered its Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff

Metropolitan Bank and Trust Company ordering defendants jointly and severally to pay
plaintiff the amount of P17,479,371.86 representing deficiency obligation plus interest
thereon at the legal rate of 12% per annum computed from August 1, 2001 until the
obligation is fully paid, plus the amount of P50,000.00 as and for reasonable attorney’s
fees.
SO ORDERED.5
After the denial of its motion for reconsideration, Metrobank appealed the case to the CA and the
latter, on May 17, 2011, granted the appeal, thus, reversing and setting aside the decision of the
RTC, thus:
WHEREFORE, premises considered, the instant appeal is GRANTED. The Decision dated
March 8, 2006 of the Regional Trial Court, Branch 59, Makati City, in Civil Case No. 03-
1262 ordering defendants to pay plaintiff P17,479,371.86 representing deficiency
obligation plus 12% interest per annum and P50,000.00 as attorney’s fees is REVERSED
and SET ASIDE.
SO ORDERED.6
In reversing the RTC, the CA ruled that during the ex parte hearing held on August 24, 2004, the
petitioner’s lone witness, Irene Sih-Tan identified and marked Exhibits “A” to “DD-4” only as
shown in the TSN, however, the RTC admitted Exhibits “A” to “MM,” contrary to this Court’s
resolution in
_______________
5 Id., at p. 176.
6 Id., at pp. 52-53.
566
Administrative Matter (A.M.) No. 03-1-09-SC7 which provides that no evidence shall be
allowed to be presented and offered during the trial in support of the party’s evidence-in-chief
other than those that have been identified below and pre-marked during the trial.
The CA, in its Resolution dated August 5, 2011, denied the motion for reconsideration filed by
Metrobank, hence, the present petition.
Petitioner argues that the CA erred in reversing the decision of the RTC. It claims that A.M. No.
03-1-09-SC has no application to the proceedings before the RTC because there was no pretrial
conducted as the respondents failed to appear nor filed their pretrial brief.
As a general rule, petitions for review under Rule 45 of the Rules of Civil Procedure filed before
this Court may only raise questions of law.8 However, jurisprudence has recognized several
exceptions to this rule. In Spouses Almendrala v. Spouses Ngo,9 we have enumerated several
instances when this Court may review findings of fact of the Court of Appeals on appeal by
certiorari, to wit: (1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when
there is grave abuse of discretion; (4) when the judgment is based on misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to that of the trial court; (8)
when the findings are
_______________
7 Guidelines to be Observed by Trial Court Judges and Clerks of Court in the Conduct of Pre-
Trial and Use of Deposition-Discovery Measures, En Banc Resolution, August 16, 2004.
8 Triumph International (Phils.), Inc. v. Apostol, 607 Phil. 157, 168; 589 SCRA 185, 195 (2009).
9 508 Phil. 305; 471 SCRA 311 (2005).

567
VOL. 781, JANUARY 25, 2016 567
conclusions without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would justify a
different conclusion.10 In the present case, the RTC and the CA have conflicting findings of fact.
Hence, the need to rule on the matter.
The petition is impressed with merit.
One must not deviate from the fact that this case involves an ex parte presentation of evidence
allowed by the RTC after the respondents herein failed to appear at the scheduled pretrial
conference and submit a pretrial brief despite receipt of the Order of the same court. Section 5,
Rule 18 of the Rules of Court, states:
Section 5. Effect of failure to appear.—The failure of the plaintiff to appear when so

required pursuant to the next preceding section shall be cause for dismissal of the action.
The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar
failure on the part of the defendant shall be cause to allow the plaintiff to present his
evidence ex parte and the court to render judgment on the basis thereof.
The “next preceding” section mandates that:
_______________
10 Id., at p. 316; p. 322, citing The Insular Life Assurance Company, Ltd. v. Court of Appeals,
G.R. No. 126850, April 28, 2004, 428 SCRA 79, 86; Aguirre v. Court of Appeals, 466 Phil. 32,
42-43; 421 SCRA 310, 319 (2004), and C & S Fishfarm Corporation v. Court of Appeals, 442
Phil. 279, 288; 394 SCRA 82, 88 (2002).
568
Section 4. Appearance of parties.—It shall be the duty of the parties and their counsel to
appear at the
pretrial. The nonappearance of a party may be excused only if a valid cause is shown
therefor or if a representative shall appear in his behalf fully authorized in writing to enter
into an amicable settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and of documents.
The RTC, therefore, did not commit an error in allowing the petitioner herein to present its
evidence ex parte and rendering a judgment on the basis thereof. The CA, however, found an
error in the RTC’s admission of the evidence presented or offered by the petitioner. According to
the CA, there is no showing in the Transcript of Stenographic Notes (TSN) whatsoever that
Exhibits “EE” to “MM” were presented and identified by the petitioner’s witness during the
proceeding. Exhibits “EE” to “MM” were the basis of the RTC in awarding petitioner the amount
of P17,479,371.86 equivalent to the deficiency obligation of respondents as of July 31, 2001,
plus legal interest thereon from August 1, 2001, until fully paid, and attorney’s fees in the
amount of P50,000.00. By admitting those evidence that were not identified or testified to by the
petitioner’s witness, the CA ruled that the RTC did not follow the provisions of A.M. No. 03-1-
09-SC. This is a wrong interpretation.
The pertinent provisions of A.M. No. 03-1-09-SC, read as follows:
GUIDELINES TO BE OBSERVED BY TRIAL COURT
JUDGES AND CLERKS OF COURT IN THE CON-
DUCT OF PRETRIAL AND USE OF DEPOSITION-
DISCOVERY MEASURES
The use of pretrial and the deposition-discovery measures are undeniably important and
vital components of case management in trial courts. To abbreviate court proceedings,
ensure prompt disposition of cases and
569
VOL. 781, JANUARY 25, 2016 569
decongest court dockets, and to further implement the pretrial guidelines laid down in
Administrative Circular No. 3-99 dated January 15, 1999 and except as otherwise
specifically provided for in other special rules, the following guidelines are issued for the
observance and guidance of trial judges and clerks of court:
I. PRETRIAL
A. Civil Cases
1. Within one day from receipt of the complaint:
1.1 Summons shall be prepared and shall contain a reminder to defendant to

observe restraint in filing a motion to dismiss and instead allege the grounds thereof
as defenses in the Answer, in conformity with IBP-OCA Memorandum on Policy
Guidelines dated March 12, 2002. A copy of the summons is hereto attached as
Annex “A”; and
1.2 The court shall issue an order requiring the parties to avail of interrogatories to
parties under Rule 25 and request for admission by adverse party under Rule 26 or at
their discretion make use of depositions under Rule 23 or other measures under
Rules 27 and 28 within five days from the filing of the answer.
A copy of the order shall be served upon the defendant together with the summons and
upon the plaintiff.
Within five (5) days from date of filing of the reply, the plaintiff must promptly move ex
parte that the case be set for pretrial conference.
If the plaintiff fails to file said motion within the given period, the Branch COC shall issue
a notice of pretrial.
2. The parties shall submit, at least three (3) days before the pretrial, pretrial briefs
containing the following:
a. A statement of their willingness to enter into an amicable settlement indicating

the desired terms thereof or to submit the case to any of the alternative modes of
dispute resolution;
570
b. A summary of admitted facts and proposed stipulation of facts;
c. The issues to be tried or resolved;
d. The documents or exhibits to be presented, stating the purpose thereof. (No

evidence shall be allowed to be presented and offered during the trial in
support of a party’s evidence-in-chief other than those that had been earlier
identified and pre-marked during the pretrial, except if allowed by the court
for good cause shown). x x x11
Under the present case, it is as if there was no pretrial because the respondents did not appear nor
file their pretrial briefs despite due notice causing the RTC, on August 9, 2004 to allow
petitioner, after the latter filed its motion, to present its evidence ex parte in accordance with
Section 5, Rule 18 of the Rules of Court. In effect, the respondents were declared in default.
Respondents, therefore, filed their Motion for Reconsideration12 on the RTC’s Order allowing
petitioner to present its evidence ex parte but it was denied in an Order13 dated September 21,
2004. Respondents, thereafter, filed a petition for certiorari under Rule 65 of the Rules of Court
questioning the Orders dated August 9, 2004 and September 21, 2004 of the RTC. The CA, in its
Resolution14 dated January 12, 2005, dismissed the petition of the respondents. Meanwhile, an
ex parte hearing was conducted on August 24, 2004 and on September 7, 2004, petitioner filed
its Formal Offer of Evidence15 and the RTC, in its Order dated October 25, 2005 resolved the
formal offer stating as follows:
_______________
11 Emphasis ours.
12 Rollo, pp. 159-162.
13 Id., at p. 168.
14 Id., at pp. 169-171.
15 Id., at pp. 148-153.
571
VOL. 781, JANUARY 25, 2016 571
Acting on the plaintiff’s Formal Offer of Evidence, Exhibits “A to Z,” “AA to MM” their
sub-markings and the testimony of witness Irene Tan are admitted for the purposes for
which they are being offered.16
Clearly, from the above recital of the facts leading to the rendering of the RTC judgment on
March 8, 2006, the proper procedure was followed, to which the RTC, in its decision, narrated as
follows:
xxxx
Records further show that defendants did not file their pretrial brief and failed to appear
during the pretrial conference despite receipt of the Order of the Court. Hence, upon
motion, plaintiff was allowed to present evidence ex parte.
During the presentation of evidence, Irene Tan, Assistant Senior Manager of the plaintiff
bank, was presented as lone witness. Together with her testimony, Exhibits A to Z, AA to
MM, and their sub-markings were offered in evidence.
x x x17
The records, therefore, show that the documentary evidence being questioned by respondents in
its appeal before the CA (Exhibits “EE” to “MM”) were marked during the ex parte presentation
of evidence and were formally offered and admitted by the RTC before the latter rendered its
decision. Thus, the CA’s ruling that Exhibits “EE” to “MM” should not have been considered
simply because the TSN does not reflect that those evidence were presented and identified is
mind-boggling because they could not have been marked had they not been presented during the
ex parte hearing where the lone witness for the petitioner was able to testify. The fact that the
questioned pieces of evidence were formally offered and admitted by the RTC should be the
foremost consideration.
_______________
16 Id., at p. 173.
17 Id., at pp. 174-175.
572
Unfortunately, when respondents failed to appear during the pretrial despite due notice, they
have already acquired the risk of not being able to dispute the evidence presented ex parte by
petitioner. In The Philippine American Life & General Insurance Company v. Joseph Enario,18
this Court ruled that, “[t]he legal ramification of defendant’s failure to appear for pretrial is still
detrimental to him while beneficial to the plaintiff. The plaintiff is given the privilege to present
his evidence without objection from the defendant, the likelihood being that the court will decide
in favor of the plaintiff, the defendant having forfeited the opportunity to rebut or present its own
evidence.”19
WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
dated September 19, 2011 of petitioner Metropolitan Bank and Trust Company is GRANTED.
Consequently, the Decision dated May 17, 2011 and Resolution dated August 5, 2011 of the
Court of Appeals are REVERSED and SET ASIDE, and the Decision dated March 8, 2006 of
the Regional Trial Court, Makati City, Branch 59 is AFFIRMED in toto.
SO ORDERED.
Velasco, Jr. (Chairperson), Perez, Reyes and Jardeleza, JJ., concur.
Notes.—Failure to attend the pretrial does not result in the “default” of the defendant. Instead,
the failure of the defendant to attend shall be cause to allow the plaintiff to present his evidence
ex parte and the court to render judgment on the basis thereof. (Aguilar vs. Lightbringers Credit
Cooperative, 745 SCRA 203 [2015])
_______________
18 645 Phil. 166; 630 SCRA 607 (2010).
19 Id., at p. 175; p. 616.
573
VOL. 781, JANUARY 25, 2016 573
If the absent party at the pretrial is the plaintiff, then his case shall be dismissed. If it is the
defendant who fails to appear, then the plaintiff is allowed to present his evidence ex parte and
the court shall render judgment based on the evidence presented. (Salvador vs. Rabaja, 749
SCRA 654 [2015])
——o0o——
G.R. No. 198172. January 25, 2016.*
REGULUS DEVELOPMENT, INC., petitioner, vs. ANTONIO DELA CRUZ, respondent.
Pleadings and Practice; Verification; A defect in the verification does not necessarily render the
pleading fatally defective.—The lack of notarial seal in the notarial certificate is a defect in a
document that is required to be executed under oath. Nevertheless, a defect in the verification
does not necessarily render the pleading fatally defective. The court may order its submission or
correction, or act on the pleading if the attending circumstances are such that strict compliance
with the Rule may be dispensed with in order that the ends of justice may be served.
Same; Certification Against Forum Shopping; Noncompliance or a defect in a certification

against forum shopping, unlike in the case of a verification, is generally not curable by its
subsequent submission or correction, unless the covering Rule is relaxed on the ground of
“substantial compliance” or based on the presence of “special circumstances or compelling
reasons.”—Noncompliance or a defect in a certification against forum shopping, unlike in the
case of a verification, is generally not curable by its subsequent submission or correction, unless
the covering Rule is relaxed on the ground of
_______________
* SECOND DIVISION.
608
Regulus Development, Inc. vs. Dela Cruz
“substantial compliance” or based on the presence of “special circumstances or compelling

reasons.” Although the submission of a certificate against forum shopping is deemed obligatory,
it is not however jurisdictional.
Procedural Rules and Technicalities; Every party-litigant must be afforded ample opportunity
for the proper and just determination of his case, free from the unacceptable plea of
technicalities.—The rule is that courts should not be unduly strict on procedural lapses that do
not really impair the proper administration of justice. The higher objective of procedural rules is
to ensure that the substantive rights of the parties are protected. Litigations should, as much as
possible, be decided on the merits and not on technicalities. Every party-litigant must be afforded
ample opportunity for the proper and just determination of his case, free from the unacceptable
plea of technicalities.
Moot and Academic; A case or issue is considered moot and academic when it ceases to present
a justiciable controversy because of supervening events, rendering the adjudication of the case
or the resolution of the issue without any practical use or value.—A case or issue is considered
moot and academic when it ceases to present a justiciable controversy because of supervening
events, rendering the adjudication of the case or the resolution of the issue without any practical
use or value. Courts generally decline jurisdiction over such case or dismiss it on the ground of
mootness except when, among others, the case is capable of repetition yet evades judicial review.
Remedial Law; Civil Procedure; Jurisdiction; It is well-settled in jurisprudence that jurisdiction

is vested by law and cannot be conferred or waived by the parties.—It is well-settled in
jurisprudence that jurisdiction is vested by law and cannot be conferred or waived by the parties.
“Even on appeal and even if the reviewing parties did not raise the issue of jurisdiction, the
reviewing court is not precluded from ruling that the lower court had no jurisdiction over the
case.” Even assuming that the case has been rendered moot due to the respondent’s redemption
of the property, the CA may still entertain the jurisdictional issue since it poses a situation
capable of repetition yet evading judicial review.
609
VOL. 781, JANUARY 25, 2016 609
Same; Same; Same; “Appellate Jurisdiction” and “Equity Jurisdiction,” Distinguished.—The

appellate jurisdiction of courts is conferred by law. The appellate court acquires jurisdiction over
the subject matter and parties when an appeal is perfected. On the other hand, equity jurisdiction
aims to provide complete justice in cases where a court of law is unable to adapt its judgments to
the special circumstances of a case because of a resulting legal inflexibility when the law is
applied to a given situation. The purpose of the exercise of equity jurisdiction, among others, is
to prevent unjust enrichment and to ensure restitution. The RTC orders which allowed the
withdrawal of the deposited funds for the use and occupation of the subject units were issued
pursuant to the RTC’s equity jurisdiction, as the CA held in the petition docketed as C.A.-G.R.
S.P. No. 81277. The RTC’s equity jurisdiction is separate and distinct from its appellate
jurisdiction on the ejectment case. The RTC could not have issued its orders in the exercise of its
appellate jurisdiction since there was nothing more to execute on the dismissed ejectment case.
As the RTC orders explained, the dismissal of the ejectment case effectively and completely
blotted out and cancelled the complaint. Hence, the RTC orders were clearly issued in the
exercise of the RTC’s equity jurisdiction, not on the basis of its appellate jurisdiction.
Same; Jurisdiction; Execution of Judgments; Execution shall be applied for in the court of
origin, in accordance with Section 1, Rule 39 of the Rules of Court.—Execution shall be applied
for in the court of origin, in accordance with Section 1, Rule 39 of the Rules of Court. The court
of origin with respect to the assailed RTC orders is the court which issued these orders. The RTC
is the court with jurisdiction to order the execution of the issued RTC orders. Hence, the
petitioner correctly moved for the issuance of the writ of execution and levy of the respondent’s
real property before the RTC as the court of origin.
Esguerra & Blanco for petitioner.
Evaristo Velicaria for respondent.
610
BRION, J.:
Before us is a petition for review on certiorari filed by petitioner Regulus Development, Inc.
(petitioner) to challenge the November 23, 2010 decision1 and August 10, 2011 resolution2 of
the Court of Appeals (CA) in C.A.-G.R. S.P. No. 105290. CA Associate Justice Juan Q. Enriquez,
Jr. penned the rulings, concurred in by Associate Justices Ramon M. Bato, Jr. and Florito S.
Macalino.
Antecedent Facts
The petitioner is the owner of an apartment (San Juan Apartments) located at San Juan Street,
Pasay City. Antonio dela Cruz (respondent) leased two units (Unit 2002-A and Unit 2002-B) of
the San Juan Apartments in 1993 and 1994. The contract of lease for each of the two units
similarly provides a lease period of one (1) month, subject to automatic renewals, unless
terminated by the petitioner upon written notice.
The petitioner sent the respondent a letter to terminate the lease of the two subject units. Due to
the respondent’s refusal to vacate the units, the petitioner filed a complaint3 for ejectment before
the Metropolitan Trial Court (MTC) of Pasay City, Manila, on May 1, 2001.
The MTC resolved the case in the petitioner’s favor and ordered the respondent to vacate the
premises, and pay the rentals due until the respondent actually complies.4
The respondent appealed to the Regional Trial Court (RTC). Pending appeal, the respondent
consigned the monthly rentals to the RTC due to the petitioner’s refusal to receive the rentals.
_______________
1 Rollo, pp. 29-38.
2 Id., at pp. 39-40.
3 Id., at pp. 80-83.

4 Id., at pp. 99-102.
611
VOL. 781, JANUARY 25, 2016 611
The RTC affirmed5 the decision of the MTC in toto and denied the motion for reconsideration
filed by the respondent.
C.A.-G.R. S.P. No. 69504:

Dismissal of Ejectment Case
In a Petition for Review filed by the respondent, the CA reversed the lower courts’ decisions
and dismissed the ejectment case.6 On March 19, 2003, the dismissal of the case became final
and executory.7
Orders dated July 25, 2003

and November 28, 2003 for
payment of rentals due under
lease contracts
The petitioner filed a motion (to withdraw funds deposited by the defendant-appellant as lessee)8
praying for the withdrawal of the rentals consigned by the respondent with the RTC.
In an order dated July 25, 2003,9 the RTC granted the petitioner’s motion. The RTC explained
that the effect of the complaint’s dismissal would mean that there was no complaint filed at all.
The petitioner, however, is entitled to the amount of rentals for the use and occupation of the
subject units, as provided in the executed contracts of lease and on the basis of justice and equity.
The court denied the respondent’s motion for reconsideration10 in an order dated November
28, 2003.11
_______________
5 Id., at pp. 103-104.
6 Id., at pp. 110-120.
7 Id., at p. 121.
8 Id., at pp. 122-125.
9 Id., at pp. 126-127.
10 Id., at pp. 128-130.
11 Id., at p. 131.
612
On the petitioner’s motion, the RTC issued a writ of execution on December 18, 2003, to cause
the enforcement of its order dated July 25, 2003.12
C.A.-G.R. S.P. No. 81277:

Affirmed RTC Orders
The respondent filed a petition for certiorari under Rule 65 before the CA to assail the RTC
Orders dated July 25, 2003 and November 28, 2003 (RTC orders), which granted the petitioner’s
motion to withdraw funds.
The CA dismissed13 the petition and held that the assailed RTC Orders were issued pursuant to
its equity jurisdiction, in accordance with Section 5, Rule 39,14 and Rules 515
_______________
12 Id., at p. 141.
13 Id., at pp. 138, 140-144.
14 Section 5. Effect of reversal of executed judgment.—Where the executed judgment is

reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion,
issue such orders of restitution or reparation of damages as equity and justice may warrant under
the circumstances. (5a)
15 Section 5. Inherent powers of court.—Every court shall have power:
(a) To preserve and enforce order in its immediate presence;
(b) To enforce order in proceedings before it, or before a person or persons empowered to
conduct a judicial investigation under its authority;
(c) To compel obedience to its judgments, orders and processes, and to the lawful orders of a
judge out of court, in a case pending therein;
(d) To control, in furtherance of justice, the conduct of its ministerial officers, and of all other
persons in any manner connected with a case before it, in every manner appertaining thereto;
(e) To compel the attendance of persons to testify in a case pending therein;
(f) To administer or cause to be administered oaths in a case pending therein, and in all other
cases where it may be necessary in the exercise of its powers;
613
VOL. 781, JANUARY 25, 2016 613
and 616 of Rule 135 of the Rules of Court. The respondent’s motion for reconsideration was
similarly denied.
G.R. S.P. No. 171429: Affirmed

CA Ruling on RTC Orders
The respondent filed a petition for review on certiorari before this Court to assail the decision of
the CA in C.A.-G.R. S.P. No. 81277. In a resolution dated June 7, 2006,17 we denied the petition
for insufficiency in form and for failure to show any reversible error committed by the CA.
Our resolution became final and executory and an entry of judgment18 was issued.
Execution of RTC Orders
The petitioner returned to the RTC and moved for the issuance of a writ of execution to allow it
to proceed against the supersedeas bond the respondent posted, representing rentals for the
leased properties from May 2001 to October 2001, and to withdraw the lease payments deposited
by respondent from
_______________
(g) To amend and control its process and orders so as to make them conformable to law and
justice;
(h) To authorize a copy of a lost or destroyed pleading or other paper to be filed and used instead
of the original, and to restore, and supply deficiencies in its records and proceedings.
16 Section 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 comfortable to the spirit of the
said law or rules.
17 Rollo, p. 145.
18 Id., at p. 146.
614

November 2001 until August 2003.19 The RTC granted the motion.20
The RTC issued an Alias Writ of Execution21 dated April 26, 2007, allowing the withdrawal of
the rental deposits and the value of the supersedeas bond.
The petitioner claimed that the withdrawn deposits, supersedeas bond, and payments directly
made by the respondent to the petitioner, were insufficient to cover rentals due for the period of
May 2001 to May 2004. Hence, the petitioner filed a manifestation and motion22 dated October
23, 2007, praying that the RTC levy upon the respondent’s property covered by Transfer
Certificate of Title (TCT) No. 136829 to satisfy the judgment credit.
The RTC granted the petitioner’s motion in an order dated June 30, 2008.23 The respondent
filed a motion for reconsideration which was denied by the RTC in an order dated August 26,
2008.24
C.A.-G.R. S.P. No. 105290:

Assailed the levy of the re-
spondent’s property
On October 3, 2008, the respondent filed with the CA a Petition for Certiorari25 with
application for issuance of a temporary restraining order. The petition sought to nullify and set
aside the orders of the RTC directing the levy of the respondent’s real property. The CA
dismissed the petition. Thereaf-
_______________
19 Id., at pp. 147-151.
20 Id., at p. 161.
21 Id., at p. 162.
22 Id., at pp. 165-167.
23 Id., at pp. 192-193.
24 Id., at pp. 194-195.
25 Id., at pp. 202-221.

615
VOL. 781, JANUARY 25, 2016 615
ter, the respondent filed a motion for reconsideration26 dated November 3, 2008.
Pursuant to the order dated June 30, 2008, a public auction for the respondent’s property covered
by TCT No. 136829 was held on November 4, 2008,27 where the petitioner was declared highest
bidder. Subsequently, the Certificate of Sale28 in favor of the petitioner was registered.
Meanwhile, on January 7, 2010, the respondent redeemed the property with the RTC Clerk of
Court, paying the equivalent of the petitioner’s bid price with legal interest. The petitioner filed a
motion to release funds29 for the release of the redemption price paid. The RTC granted30 the
motion.
On February 12, 2010, the respondent filed a manifestation and motion31 before the CA to
withdraw the petition for the reason that the redemption of the property and release of the price
paid rendered the petition moot and academic.
Thereafter, the petitioner received the CA decision dated November 23, 2010, which reversed
and set aside the orders of the RTC directing the levy of the respondent’s property. The CA held
that while the approval of the petitioner’s motion to withdraw the consigned rentals and the
posted supersedeas bond was within the RTC’s jurisdiction, the RTC had no jurisdiction to levy
on the respondent’s real property.
The CA explained that the approval of the levy on the respondent’s real property could not be
considered as a case pending appeal, because the decision of the MTC had already become final
and executory. As such, the matter of execution of the judgment lies with the MTC where the
complaint for ejectment was originally filed and presented.
_______________
26 Id., at pp. 222-225.
27 Id., at p. 226.
28 Id., at pp. 227-228.

29 Id., at pp. 272-274.
30 Id., at p. 275.
31 Id., at pp. 276-278.
616
The CA ordered the RTC to remand the case to the MTC for execution. The petitioner filed its
motion for reconsideration which was denied32 by the CA.
The Petition
The petitioner filed the present petition for review on certiorari to challenge the CA ruling in
C.A.-G.R. S.P. No. 105290 which held that the RTC had no jurisdiction to levy on the
respondent’s real property.
The petitioner argues: first, that the RTC’s release of the consigned rentals and levy were ordered
in the exercise of its equity jurisdiction; second, that the respondent’s petition in C.A.-G.R. S.P.
No. 105290 was already moot and academic with the conduct of the auction sale and redemption
of the respondent’s real property; third, that the petition in C.A.-G.R. S.P. No. 105290 should
have been dismissed outright for lack of signature under oath on the Verification and
Certification against Forum Shopping.
The respondent duly filed its comment33 and refuted the petitioner’s arguments. On the first
argument, respondent merely reiterated the CA’s conclusion that the RTC had no jurisdiction to
order the levy on respondent’s real property as it no longer falls under the allowed execution
pending appeal. On the second argument, the respondent contended that the levy on execution
and sale at public auction were null and void, hence the CA decision is not moot and academic.
On the third argument, the respondent simply argued that it was too late to raise the alleged
formal defect as an issue.
The Issue
The petitioner poses the core issue of whether the RTC had jurisdiction to levy on the
respondent’s real property.
_______________
32 Id., at pp. 39-40.
33 Id., at pp. 300-310.
617
VOL. 781, JANUARY 25, 2016 617
Our Ruling
We grant the petition.
Procedural issue: Lack of notarial

seal on the Verification and Certi-
fication against Forum Shopping
is not fatal to the petition.
The petitioner alleged that the assailed CA petition should have been dismissed since the notary
public failed to affix his seal on the attached Verification and Certification against Forum
Shopping.
We cannot uphold the petitioner’s argument.
The lack of notarial seal in the notarial certificate34 is a defect in a document that is required to
be executed under oath.
Nevertheless, a defect in the verification does not necessarily render the pleading fatally
defective. The court may order its submission or correction, or act on the pleading if the
attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served.35
Noncompliance or a defect in a certification against forum shopping, unlike in the case of a

verification, is generally not curable by its subsequent submission or correction, unless the
covering Rule is relaxed on the ground of “substantial compliance” or based on the presence of
“special circumstances or
_______________
34 “Notarial Certificate” refers to the part of, or attachment to, a notarized instrument or
document that is completed by the notary public, bears the notary’s signature and seal, and states
the facts attested to by the notary public in a particular notarization as provided for by these
Rules. (Section 8, A.M. No. 02-8-13-SC, 2004 Rules on Notarial Practice)
35 Altres v. Empleo, G.R. No. 180986, December 10, 2008, 573 SCRA 583, 596.
618
compelling reasons.”36 Although the submission of a certificate against forum shopping is

deemed obligatory, it is not however jurisdictional.37
In the present case, the Verification and Certification against Forum Shopping were in fact
submitted. An examination of these documents shows that the notary public’s signature and
stamp were duly affixed. Except for the notarial seal, all the requirements for the verification and
certification documents were complied with.
The rule is that courts should not be unduly strict on procedural lapses that do not really impair
the proper administration of justice. The higher objective of procedural rules is to ensure that the
substantive rights of the parties are protected. Litigations should, as much as possible, be decided
on the merits and not on technicalities. Every party-litigant must be afforded ample opportunity
for the proper and just determination of his case, free from the unacceptable plea of
technicalities.38
The CA correctly refused to dismiss and instead gave due course to the petition as it substantially
complied with the requirements on the Verification and Certification against Forum Shopping.
An issue on jurisdiction prevents

the petition from becoming “moot
and academic.”
The petitioner claims that the assailed CA petition should have been dismissed because the
subsequent redemption of the property by the respondent and the release of the price paid to the
petitioner rendered the case moot and academic.
_______________
36 Id.
37 In-N-Out Burger, Inc. v. Sehwani, Incorporated, G.R. No. 179127, December 24, 2008, 575
SCRA 535, 536.
38 Heirs of Amada A. Zaulda v. Zaulda, G.R. No. 201234, March 17, 2014, 719 SCRA 308, 310.
619
VOL. 781, JANUARY 25, 2016 619
A case or issue is considered moot and academic when it ceases to present a justiciable
controversy because of supervening events, rendering the adjudication of the case or the
resolution of the issue without any practical use or value.39 Courts generally decline jurisdiction
over such case or dismiss it on the ground of mootness except when, among others, the case is
capable of repetition yet evades judicial review.40
The CA found that there is an issue on whether the RTC had jurisdiction to issue the orders
directing the levy of the respondent’s property. The issue on jurisdiction is a justiciable
controversy that prevented the assailed CA petition from becoming moot and academic.
It is well-settled in jurisprudence that jurisdiction is vested by law and cannot be conferred or

waived by the parties. “Even on appeal and even if the reviewing parties did not raise the issue of
jurisdiction, the reviewing court is not precluded from ruling that the lower court had no
jurisdiction over the case.”41
Even assuming that the case has been rendered moot due to the respondent’s redemption of the
property, the CA may still entertain the jurisdictional issue since it poses a situation capable of
repetition yet evading judicial review.
Under this perspective, the CA correctly exercised its jurisdiction over the petition.
Equity jurisdiction versus

appellate jurisdiction of the
RTC.
_______________
39 Peñafrancia Sugar Mill, Inc. v. Sugar Regulatory Administration, G.R. No. 208660, March 5,
2014, 718 SCRA 212.
40 Carpio v. Court of Appeals, G.R. No. 183102, February 27, 2013, 692 SCRA 162, 163.
41 Garcia v. Ferro Chemicals, Inc., G.R. No. 172505, October 1, 2014, 737 SCRA 252, 266.
620

The appellate jurisdiction of courts is conferred by law. The appellate court acquires jurisdiction
over the subject matter and parties when an appeal is perfected.42
On the other hand, equity jurisdiction aims to provide complete justice in cases where a court of
law is unable to adapt its judgments to the special circumstances of a case because of a resulting
legal inflexibility when the law is applied to a given situation. The purpose of the exercise of
equity jurisdiction, among others, is to prevent unjust enrichment and to ensure restitution.43
The RTC orders which allowed the withdrawal of the deposited funds for the use and occupation
of the subject units were issued pursuant to the RTC’s equity jurisdiction, as the CA held in the
petition docketed as C.A.-G.R. S.P. No. 81277.
The RTC’s equity jurisdiction is separate and distinct from its appellate jurisdiction on the
ejectment case. The RTC could not have issued its orders in the exercise of its appellate
jurisdiction since there was nothing more to execute on the dismissed ejectment case. As the
RTC orders explained, the dismissal of the ejectment case effectively and completely blotted out
and cancelled the complaint. Hence, the RTC orders were clearly issued in the exercise of the
RTC’s equity jurisdiction, not on the basis of its appellate jurisdiction.
This Court takes judicial notice44 that the validity of the RTC Orders has been upheld in a
separate petition before this
_______________
42 Trans International v. Court of Appeals, 348 Phil. 830, 831; 285 SCRA 49, 54 (1998).
43 Reyes v. Lim, 456 Phil. 1; 408 SCRA 560 (2003).
44 Rule 129, Section 1. Judicial notice, when mandatory.—A court shall take judicial notice,
without the introduction of evidence, of the existence and territorial extent of states, their
political history, forms of government and symbols of nationality, the law of nations, the
admiralty and maritime courts of the world and their seals, the political constitution and history
of the Philippines, the official acts of legislative, executive and judicial departments
621
VOL. 781, JANUARY 25, 2016 621

Court, under G.R. S.P. No. 171429 entitled Antonio Dela Cruz v. Regulus Development, Inc.
The levy of real property was

ordered by the RTC in the
exercise of its equity juris-
diction.
The levy of the respondent’s property was made pursuant to the RTC orders issued in the
exercise of its equity jurisdiction, independent of the ejectment case originally filed with the
MTC.
An examination of the RTC order dated June 30, 2008, directing the levy of the respondent’s real
property shows that it was based on the RTC order dated July 25, 2003. The levy of the
respondent’s property was issued to satisfy the amounts due under the lease contracts, and not as
a result of the decision in the ejectment case.
The CA erred when it concluded that the RTC exercised its appellate jurisdiction in the ejectment
case when it directed the levy of the respondent’s property.
Furthermore, the order to levy on the respondent’s real property was consistent with the first writ
of execution issued by the RTC on December 18, 2003, to implement the RTC orders. The writ
of execution states that:
x x x In case of [sic] sufficient personal property of the defendant cannot be found whereof
to satisfy the amount of the said judgment, you are directed to levy [on] the real
property of said defendant and to sell the same or so much thereof in the manner
provided by law for the satisfaction of the said judgment and to make return of your
proceedings together with this
_______________
of the Philippines, the laws of nature, the measure of time, and the geographical divisions.
622

Writ within sixty (60) days from receipt hereof. (emphasis supplied)
The subsequent order of the RTC to levy on the respondent’s property was merely a reiteration
and an enforcement of the original writ of execution issued.
Since the order of levy is clearly rooted on the RTC Orders, the only question that needs to be
resolved is which court has jurisdiction to order the execution of the RTC orders.
The RTC, as the court of origin,

has jurisdiction to order the
levy of the respondent’s real
property.
Execution shall be applied for in the court of origin, in accordance with Section 1,45 Rule 39 of
the Rules of Court.
The court of origin with respect to the assailed RTC orders is the court which issued these orders.
The RTC is the court with jurisdiction to order the execution of the issued RTC orders.
_______________
45 Section 1. Execution upon judgments or final orders.—Execution shall issue as a matter of

right, or motion, upon a judgment or order that disposes of the action or proceeding upon the
expiration of the period to appeal therefrom if no appeal has been duly perfected. (1a)
If the appeal has been duly perfected and finally resolved, the execution may forthwith be
applied for in the court of origin, on motion of the judgment obligee, submitting therewith
certified true copies of the judgment or judgments or final order or orders sought to be enforced
and of the entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when the interest of justice so requires,
direct the court of origin to issue the writ of execution. (n)
623
VOL. 781, JANUARY 25, 2016 623
Hence, the petitioner correctly moved for the issuance of the writ of execution and levy of the
respondent’s real property before the RTC as the court of origin.
WHEREFORE, we hereby GRANT the petition for review on certiorari. The decision dated
November 23, 2010, and the resolution dated August 10, 2011, of the Court of Appeals in C.A.-
G.R. S.P. No. 105290 are hereby REVERSED and SET ASIDE. The orders dated June 30,
2008, and August 26, 2008, of Branch 108 of the Regional Trial Court of Pasay City, are hereby
REINSTATED. Costs against respondent Antonio dela Cruz.
SO ORDERED.
Carpio (Chairperson), Del Castillo, Mendoza and Leonen, JJ., concur.
Notes.—Rule 42, Section 2 in relation to Rule 45, Section 4 of the Rules of Court mandates
petitioner to submit a Certification Against Forum Shopping and promptly inform this court
about the pendency of any similar action or proceeding before other courts or tribunals.
(Stronghold Insurance Company, Inc. vs. Stroem, 746 SCRA 598 [2015])
Any flaw in the verification, being only a formal, not a jurisdictional requirement, is not a fatal
defect. (Waterfront Cebu City Casino Hotel, Inc. vs. Ledesma, 754 SCRA 400 [2015])
——o0o——
G.R. No. 158622. January 27, 2016.*
SPOUSES ROBERT ALAN L. LIMSO and NANCY LEE LIMSO, petitioners, vs. PHILIPPINE
NATIONAL BANK and THE REGISTER OF DEEDS OF DAVAO CITY, respondents.
G.R. No. 169441. January 27, 2016.*

DAVAO SUNRISE INVESTMENT AND DEVELOPMENT CORPORATION and SPOUSES
ROBERT ALAN and NANCY LIMSO, petitioners, vs. HON. JESUS V. QUITAIN, in his
capacity as Presiding Judge of Regional Trial Court,
_______________
* SECOND DIVISION.
138
Limso vs. Philippine National Bank
Davao City, Branch 15 and PHILIPPINE NATIONAL BANK, respondents.
G.R. No. 172958. January 27, 2016.*
DAVAO SUNRISE INVESTMENT AND DEVELOPMENT CORPORATION represented by its

President ROBERT ALAN L. LIMSO, and SPOUSES ROBERT ALAN and NANCY LEE
LIMSO, petitioners, vs. HON. JESUS V. QUITAIN, in his capacity as Presiding Judge of
Regional Trial Court, Davao City, Branch 15 and PHILIPPINE NATIONAL BANK,
respondents.
G.R. No. 173194. January 27, 2016.*

PHILIPPINE NATIONAL BANK, petitioner, vs. DAVAO SUNRISE INVESTMENT AND
DEVELOPMENT CORPORATION and SPOUSES ROBERT ALAN LIMSO and NANCY LEE
LIMSO, respondents.
G.R. No. 196958. January 27, 2016.*
PHILIPPINE NATIONAL BANK, petitioner, vs. DAVAO SUNRISE INVESTMENT AND

DEVELOPMENT CORPORATION and SPOUSES ROBERT ALAN L. LIMSO and NANCY
LEE LIMSO, respondents.
G.R. No. 197120. January 27, 2016.*
DAVAO SUNRISE INVESTMENT AND DEVELOPMENT CORPORATION and SPOUSES

ROBERT ALAN and NANCY LEE LIMSO, petitioners, vs. PHILIPPINE NATIONAL BANK,
respondent.
G.R. No. 205463. January 27, 2016.*
IN THE MATTER OF THE PETITION EX PARTE FOR THE ISSUANCE OF THE WRIT OF
POSSESSION UNDER LRC
139
VOL. 782, JANUARY 27, 2016 139

RECORD NO. 12973, 18031 AND LRC RECORD NO. 317, PHILIPPINE NATIONAL BANK.
Remedial Law; Civil Procedure; Interlocutory Orders; The Resolutions denying Philippine
National Bank’s (PNB’s) applications were interlocutory orders since the Resolutions did not
dispose of the merits of the main case.—The Resolutions denying Philippine National Bank’s
applications were interlocutory orders since the Resolutions did not dispose of the merits of the
main case. C.A.-G.R. CV No. 79732-MIN originated from Civil Case No. 28,170-2000, which
involved the issues regarding the interest rates imposed by Philippine National Bank. Hence, the
denial of Philippine National Bank’s applications did not determine the issues on the interest
rates imposed by Philippine National Bank. The proper remedy for Philippine National Bank
would have been to file a petition for certiorari under Rule 65 or, in the alternative, to await the
outcome of the main case and file an appeal, raising the denial of its applications as an
assignment of error.
Same; Same; Forum Shopping; Philippine National Bank (PNB) did not commit forum shopping
when it filed an ex parte Petition for the issuance of a writ of possession and an application for
appointment as receiver.—Philippine National Bank did not commit forum shopping when it
filed an ex parte Petition for the issuance of a writ of possession and an application for
appointment as receiver. The elements of forum shopping are: (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. (Citation
omitted) There is no identity of parties because the party to the Petition for Issuance of Writ of
Possession is Philippine National Bank only, while there are two parties to application for
appointment as receiver: Philippine National Bank on one hand, and Spouses Limso and Davao
Sunrise on the other. The causes of action are also different. In the Petition for Issuance of Writ
of Possession, Philippine National Bank prays that it be granted a writ of possession over the
foreclosed properties because it is the winning bidder in the foreclosure sale. On the other hand,
Philippine National Bank’s application to be appointed as
140

receiver is for the purpose of preserving these properties pending the resolution of C.A.-G.R. CV
No. 79732. While the issuance of a writ of possession or the appointment as receiver would have
the same result of granting possession of the foreclosed properties to Philippine National Bank,
Philippine National Bank’s right to possess these properties as the winning bidder in the
foreclosure sale is different from its interest as creditor to preserve these properties.
Mutuality of Contracts; Escalation Clauses; Interest Rates; There is no mutuality of contracts

when the determination or imposition of interest rates is at the sole discretion of a party to the
contract. Further, escalation clauses in contracts are void when they allow the creditor to
unilaterally adjust the interest rates without the consent of the debtor.—There is no mutuality of
contracts when the determination or imposition of interest rates is at the sole discretion of a party
to the contract. Further, escalation clauses in contracts are void when they allow the creditor to
unilaterally adjust the interest rates without the consent of the debtor.
Same; The principle of mutuality of contracts dictates that a contract must be rendered void
when the execution of its terms is skewed in favor of one (1) party.—When there is no mutuality
between the parties to a contract, it means that the parties were not on equal footing when the
terms of the contract were negotiated. Thus, the principle of mutuality of contracts dictates that a
contract must be rendered void when the execution of its terms is skewed in favor of one party.
Civil Law; Contracts; Meeting of the minds between parties to a contract is manifested when the
elements of a valid contract are all present.—Meeting of the minds between parties to a contract
is manifested when the elements of a valid contract are all present. Article 1318 of the Civil Code
provides: Article 1318. There is no contract unless the following requisites concur: (1) Consent
of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause
of the obligation which is established. When one of the elements is wanting, no contract can be
perfected. In this case, no consent was given by Spouses Limso and Davao Sunrise as to the
increase in the interest rates. Consequently, the increases in the interest rates are not valid.
141
VOL. 782, JANUARY 27, 2016 141

Usury Law; Interest Rates; The suspension of the Usury Law did not give creditors an unbridled
right to impose arbitrary interest rates.—This court has held that while the Usury Law was
suspended by Central Bank Circular No. 905, Series of 1982, unconscionable interest rates may
be declared illegal. The suspension of the Usury Law did not give creditors an unbridled right to
impose arbitrary interest rates. To determine whether an interest rate is unconscionable, we are
guided by the following pronouncement: In determining whether the rate of interest is
unconscionable, the mechanical application of preestablished floors would be wanting. The
lowest rates that have previously been considered unconscionable need not be an impenetrable
minimum. What is more crucial is a consideration of the parties’ contexts. Moreover, interest
rates must be appreciated in light of the fundamental nature of interest as compensation to the
creditor for money lent to another, which he or she could otherwise have used for his or her own
purposes at the time it was lent. It is not the default vehicle for predatory gain. As such, interest
need only be reasonable. It ought not be a supine mechanism for the creditor’s unjust enrichment
at the expense of another.
Civil Law; Contracts; Escalation Clauses; Banco Filipino Savings and Mortgage Bank v. Judge
Navarro, 152 SCRA 346 (1987), defined an escalation clause as “one which the contract fixes a
base price but contains a provision that in the event of specified cost increases, the seller or
contractor may raise the price up to a fixed percentage of the base.”—Banco Filipino Savings
and Mortgage Bank v. Judge Navarro, 152 SCRA 346 (1987), defined an escalation clause as
“one which the contract fixes a base price but contains a provision that in the event of specified
cost increases, the seller or contractor may raise the price up to a fixed percentage of the base.”
This court has held that escalation clauses are not always void since they serve “to maintain
fiscal stability and to retain the value of money in long term contracts.”
Same; Loans; Interest Rates; Only the interest rate imposed is nullified; hence, it is deemed not
written in the contract. The agreement on payment of interest on the principal loan obligation
remains.—Only the interest rate imposed is nullified; hence, it is deemed not written in the
contract. The agreement on payment of interest on the principal loan obligation remains. It is a
basic rule that a contract is the law between contracting parties. In the original
142
loan agreement and the Conversion, Restructuring and Extension Agreement, Spouses Limso and
Davao Sunrise agreed to pay interest on the loan they obtained from Philippine National Bank.
Such obligation was not nullified by this court. Thus, their obligation to pay interest in their loan
obligation subsists.
Same; Same; Same; Compounded Interests; Spouses Abella v. Spouses Abella, 762 SCRA 221
(2015), cited Article 2212 of the Civil Code and the ruling in Nacar v. Gallery Frames, 703
SCRA 439 (2013), which both state that “interest due shall itself earn legal interest from the time
it is judicially demanded.”—Spouses Abella v. Spouses Abella, 762 SCRA 221 (2015), cited
Article 2212 of the Civil Code and the ruling in Nacar v. Gallery Frames, 703 SCRA 439 (2013),
which both state that “interest due shall itself earn legal interest from the time it is judicially
demanded”: [T]he interest due on conventional interest shall be at the rate of 12% per annum
from [date of judicial demand] to June 30, 2013. Thereafter, or starting July 1, 2013, this shall be
at the rate of 6% per annum. In this case, the Conversion, Restructuring and Extension
Agreement was executed on January 28, 1999. Thus, the applicable interest rate on the principal
loan obligation (conventional interest) is at 12% per annum. With regard to the interest due on
the conventional interest, judicial demand was made on August 21, 2000 when Philippine
National Bank filed a Petition for Extrajudicial Foreclosure of Real Estate Mortgage. Thus, from
August 21, 2000 to June 30, 2013, the interest rate on conventional interest shall be at 12%.
From July 1, 2013 until full payment, the applicable interest rate on conventional interest shall be
at 6%.
Same; Contracts; Void Contracts; Article 1409 of the Civil Code provides that void contracts
cannot be ratified.—Article 1409 of the Civil Code provides that void contracts cannot be
ratified. Hence, the void interest rate provisions in the original loan agreement could not have
been ratified by the execution of the Conversion, Restructuring and Extension Agreement.
Remedial Law; Civil Procedure; Redemption; Writ of Possession; A writ of possession may be
issued as a matter of right when the title has been consolidated in the buyer’s name due to
nonredemption by the mortgagor.—The rule under Section 7 of Act No. 3135 was restated in
Nagtalon v. United Coconut Planters Bank, 702 SCRA 615 (2013): During the one-year
redemption period, as contemplated
143
VOL. 782, JANUARY 27, 2016 143
by Section 7 of the above mentioned law, a purchaser may apply for a writ of possession by
filing an ex parte motion under oath in the registration or cadastral proceedings if the property is
registered, or in special proceedings in case the property is registered under the Mortgage Law.
In this case, a bond is required before the court may issue a writ of possession. On the other
hand, a writ of possession may be issued as a matter of right when the title has been consolidated
in the buyer’s name due to nonredemption by the mortgagor. Under this situation, the basis for
the writ of possession is ownership of the property.
Same; Same; Same; Act No. 3135 provides that the period of redemption is one (1) year after the
sale. On the other hand, Republic Act (RA) No. 8791 provides a shorter period of three (3)
months to redeem in cases involving juridical persons.—Act No. 3135 provides that the period
of redemption is one (1) year after the sale. On the other hand, Republic Act No. 8791 provides a
shorter period of three (3) months to redeem in cases involving juridical persons.
PETITIONS for review on certiorari of the resolutions of the Court of Appeals.
Chavez, Miranda and Aseoche Law Offices for DSIDC and Nancy Lee Limso.
Padlan, Sutton and Associates for PNB.
LEONEN, J.:
There is no mutuality of contract when the interest rate in a loan agreement is set at the sole
discretion of one party. Nor is there any mutuality when there is no reasonable means by which
the other party can determine the applicable interest rate. These types of interest rates stipulated
in the loan agreement are null and void. However, the nullity of the stipulated interest rate does
not automatically nullify the provision requiring payment of interest. Certainly, it does not
nullify the obligation to pay the principal loan obligation.
144
These consolidated cases arose from three related actions filed before the trial courts of Davao
City.
In 1993, Spouses Robert Alan L. Limso and Nancy Lee Limso (Spouses Limso)1 and Davao
Sunrise Investment and Development Corporation (Davao Sunrise) took out a loan secured by
real estate mortgages from Philippine National Bank.2
The loan was in the total amount of P700 million, divided into two (2) kinds of loan
accommodations: a revolving credit line of P300 million, and a seven-year long term loan of
P400 million.3
To secure the loan, real estate mortgages were constituted on four (4) parcels of land registered
with the Registry of Deeds of Davao City.4 The parcels of land covered by TCT Nos. T-147820,
T-151138, and T-147821 were registered in the name of Davao Sunrise, while the parcel of land
covered by TCT No. T-140122 was registered in the name of Spouses Limso.5
In 1995, Spouses Limso sold the parcel of land covered by TCT No. T-140122 to Davao
Sunrise.6
Spouses Limso and Davao Sunrise had difficulty in paying their loan. In 1999, they requested
that their loan be restructured. After negotiations, Spouses Limso, Davao Sunrise, and
_______________
1 Spouses Robert Alan L. Limso and Nancy Lee Limso were co-debtors in their personal
capacities and as officers of Davao Sunrise Investment and Development Corporation.
2 Rollo (G.R. No. 158622, Vol. I), p. 284, Amended Petition for Declaratory Relief docketed as
Civil Case No. 29,036-2002.
3 Id., at pp. 6-7, Petition for Review on Certiorari.
4 Id., at p. 7, Petition for Review on Certiorari, and pp. 423-446, Transfer Certificates of Title
with Memorandum of Encumbrances.
5 Rollo (G.R. No. 205463), p. 226, Credit Agreement.
6 Rollo (G.R. No. 158622, Vol. II), p. 133, Conveyance in Payment of Subscription to Increase
of Capital Stock of a Corporation.
145
VOL. 782, JANUARY 27, 2016 145

Philippine National Bank executed a Conversion, Restructuring and Extension Agreement.7
The principal obligation in the restructured agreement totalled P1.067 billion. This included
P217.15 million unpaid interest.8
The restructured loan was divided into two (2) parts. Loan I was for the principal amount of
P583.18 million, while Loan II was for the principal amount of P483.78 million.9 The
restructured loan was secured by the same real estate mortgage over four (4) parcels of land in
the original loan agreement. All the properties were registered in the name of Davao Sunrise.10
The terms of the restructured loan agreement state:
SECTION 1. TERMS OF THE CONVERSION,

RESTRUCTURING AND EXTENSION
1.01 The Conversion/Restructuring/Extension. Upon compliance by the Borrowers with the

conditions precedent provided herein, the Obligations shall be converted, restructured and/or its
term extended effective January 1, 1999 (the “Effectivity Date”) in the form of term loans (the
“Loans”) as follows:
(a) The Credit Line portion of the Obligations is hereby converted and restructured into a
Seven-Year Long Term Loan (the “Loan I”) in the principal amount of P583.18 Million;
(b) The original term of the Loan is hereby extended for another four (4) years (from
September 1, 2001 to December 31, 2005), and interest portion of the Obligations
(including the interest accruing on the Credit Line and Loan up to December 31,
_______________
7 Rollo (G.R. No. 158622, Vol. I), p. 7.
8 Rollo (G.R. No. 173194), p. 50, Petition for Review.
9 Id.
10 Rollo (G.R. No. 205463), p. 274, Conversion, Restructuring and Extension Agreement.
146
1998 estimated at P49.83 Million) are hereby capitalized. Accordingly, both the Loan and
Interest portions of the Obligations are hereby consolidated into a Term Loan (the “Loan
II”) in the aggregate principal amount of P483.78 Million;
SECTION 2. TERMS OF LOAN I
2.01 Amount of Loan I. Loan I shall be in the principal amount not exceeding PESOS:
FIVE HUNDRED EIGHTY-THREE MILLION ONE HUNDRED EIGHTY THOUSAND
(P583,180,000.00).
2.02 Promissory Note. Loan I shall be evidenced by a promissory note (the “Note I”) to

be issued by the Borrowers in favor of the Bank in form and substance satisfactory to the
Bank.
2.03 Principal Repayment. The Borrowers agree to repay Loan I within a period of

seven (7) years (inclusive of a one [1] year grace period) in monthly amortizations with the
first amortization to commence on January 2000 and a balloon payment on or before the
end of the 7th year on December 2005.
2.04 Interest. (a) The Borrowers agree to pay the Bank interest on Loan I from the
Effective Date, until the date of full payment thereof at the rate per annum to be set by the
Bank. The interest rate shall be reset by the Bank every month.
(b) The interest provided in clause (a) above shall be payable monthly in arrears to
commence on January, 1999.
SECTION 3. TERMS OF LOAN II
3.01 Amount of Loan II. Loan II shall be in the principal amount not exceeding PESOS:
FOUR HUNDRED EIGHTY-THREE MILLION SEVEN HUNDRED EIGHTY
THOUSAND (P483,780,000.00).
3.02 Promissory Note. Loan II shall be evidenced by a promissory note (the “Note II”)

to be issued by the Borrowers in favor of the Bank in form and substance satisfactory to
the Bank.
147
VOL. 782, JANUARY 27, 2016 147
3.03 Principal Repayment. The Borrowers agree to repay Loan II within a period of

seven (7) years (inclusive of a one [1] year grace period) in monthly amortizations with the
first amortization to commence on January 2000 and a balloon payment on or before
December 2005.
3.04 Interest. (a) The Borrowers agree to pay the Bank interest on Loan II from the
Bank. The interest rate shall reset by the Bank every month.
(b) The interest provided in clause (a) above shall be payable monthly in arrears to
commence on January 1999.11 (Emphasis provided)
Spouses Limso and Davao Sunrise executed promissory notes, both dated January 5, 1999, in
Philippine National Bank’s favor. The promissory notes bore the amounts of P583,183,333.34
and P483,811,798.93.12 The promissory note for Loan II includes interest charges because one
of the preambular clauses of the Conversion, Restructuring and Extension Agreement states that:
WHEREAS, the Borrowers acknowledge that they have outstanding obligations (the
“Obligations”) with the Bank broken down as follows:
(i) Credit Line – P583.18 Million (as of September 30, 1998);
(ii) Loan – P266.67 Million (as of September 30, 1998); and
(iii) Interest – P217.15 Million (as of December 31, 1998)[.]13
_______________
11 Rollo (G.R. No. 173194), pp. 93-94, Conversion, Restructuring and Extension Agreement.
12 Id., at pp. 51-52, Petition for Review.
13 Id., at p. 93, Conversion, Restructuring and Extension Agreement.
148
Spouses Limso and Davao Sunrise encountered financial difficulties. Despite the restructuring
of their loan, they were still unable to pay.14 Philippine National Bank sent demand letters. Still,
Spouses Limso and Davao Sunrise failed to pay.15
On August 21, 2000, Philippine National Bank filed a Petition for Extrajudicial Foreclosure of
Real Estate Mortgage before the Sheriff’s Office in Davao City.16 The Notice of Foreclosure
was published. The bank allegedly complied with all the other legal requirements under Act No.
3135.17 The auction sale was held on October 26, 2000. Ball Park Realty Corporation, through
its representative Samson G. To, submitted its bid in the amount of P1,521,045,331.49.18
Philippine National Bank’s bid was in the amount of P1,521,055,331.49. Thus, it was declared
the highest bidder.19
After the foreclosure sale, but before the Sheriff could issue the Provisional Certificate of Sale,20
Spouses Limso and Davao Sunrise filed a Complaint for Reformation or Annulment of contract
against Philippine National Bank, Atty. Marilou D. Aldevera, in her capacity as Ex Officio
Provincial Sheriff of Davao City, and the Register of Deeds of Davao City.21 The Complaint was
filed on October 30, 2000, raffled to Branch 17 of the Regional Trial Court of Davao City, and
docketed as Civil Case No. 28,170-2000.22 It prayed for:
_______________
14 Rollo (G.R. No. 158622, Vol. I), p. 8.
16 Id.
17 Id.
18 Id., at p. 209, Court of Appeals Decision in C.A.-G.R. S.P. No. 63351.
19 Id.
20 Rollo (G.R. No. 205463), p. 13, Petition for Review on Certiorari.
21 Rollo (G.R. No. 158622, Vol. I), p. 9.
22 Id.
149
VOL. 782, JANUARY 27, 2016 149
[the] declaration of nullity of unilateral imposition and increases of interest rates, crediting
of illegal interests collected to [Spouses Limso and Davao Sunrise’s] account; elimination
of all uncollected illegal interests; reimposition of new interest rates at 12% per annum
only from date of filing of Complaint, total elimination of penalties; elimination also of
attorney’s fees or its reduction; declaration of nullity of auction sale and the foreclosure
proceedings; reduction of both loan accounts; reformation or annulment of contract,
reconveyance, damages and injunction and restraining order.23
Immediately after the Complaint was filed, the Executive Judge24 of the Regional Trial Court of
Davao City issued a 72-hour restraining order preventing Philippine National Bank from taking
possession and selling the foreclosed properties.25
Spouses Limso subsequently filed an amended Complaint.26 The prayer in the amended
Complaint stated:
PRAYER
WHEREFORE, it is respectfully prayed that judgment issue in favor of plaintiffs and

against the defendants:
ON THE TEMPORARY
RESTRAINING ORDER
1. That, upon the filing of the above entitled case, a TEMPORARY RESTRAINING
ORDER be maintained enjoining the defendants from executing the provisional Certificate
of Sale and final Deed of Absolute Sale; con-
_______________
23 Id., at p. 106, Amended Complaint.
24 Rollo (G.R. No. 173194), p. 204, Court of Appeals Decision in C.A.-G.R. S.P. No. 63351.
The Executive Judge at that time was Hon. Virginia Hofileña-Europa.
25 Rollo (G.R. No. 158622, Vol. I), p. 241, Regional Trial Court Order in Civil Case No.
28,170-2000.
26 Id., at p. 10, Petition for Review on Certiorari.
150

firmation of such sale; taking immediate possession thereof and from selling to third
parties those properties covered by TCT Nos. T-147820, T-147821, T-246386 and T-
247012 and its improvements nor to mortgage or pledge the same prior to the final
outcome of the above entitled case, including other additional acts of foreclosure;
2. That, plaintiffs’ application for the issuance of the [Writ of Preliminary Injunction] be
concluded within the 20 days lifetime period of the [Temporary Restraining Order]; and
AFTER TRIAL ON THE MERITS
3. To declare the injunction as final;
4. Declaring that the unilateral increases of interest rates imposed by the defendant bank
over and above the stipulated interest rates provided for in the Promissory Notes, be also
considered as null and void and thereafter lowering the same to 12% per annum only, from
the date of the filing of the Complaint;
5. Declaring also that all illegally imposed interest rates and penalty charges be
considered eliminated and/or deducted from any account balance of plaintiffs;
6. Declaring also either the complete elimination of attorney’s fees, or in the alternative,
reducing the same to P500,000.00 only;
7. Declaring the reduction of the loan account balance to P827,012,149.50 only;
8. That subsequent thereto, ordering a complete reformation of the loan agreement and
Real Estate Mortgage which will now embody the lawful terms and conditions adjudicated
by this Honorable Court, or in the alternative, ordering its annulment, as may be warranted
under the provision of Article 1359 of the New Civil Code;
9. Ordering the defendant Register of Deeds to refrain from issuing a new title in favor
of third parties, and to execute the necessary documents necessary for the
151
VOL. 782, JANUARY 27, 2016 151
reconveyance of the properties now covered by TCT Nos. T-147820, T-147821, T-246386
and T-247012 from the defendant bank in favor of the plaintiffs upon payment of the
recomputed loan accounts;
10. Ordering also the defendant bank to pay to the plaintiffs the sum of at least
P500,000.00 representing business losses and loss of income by the later [sic] arising from
the improvident and premature institution of extrajudicial foreclosure proceedings against
the plaintiffs;
11. Ordering again the defendant bank to pay to the plaintiffs the sum of P400,000.00 as
attorney’s fees and the additional sum of P100,000.00 for expenses incident to litigation;
and
12. To pay the costs and for such other reliefs just and proper under the circumstances.27
(Underscoring in the original)
Through the Order28 dated November 20, 2000, Branch 17 of the Regional Trial Court of Davao
City denied Spouses Limso’s application for the issuance of a writ of preliminary injunction.29
Spouses Limso moved for reconsideration. On December 4, 2000, Branch 17 of the Regional
Trial Court of Davao City set aside its November 20, 2000 Order and issued a writ of
preliminary injunction.30
Philippine National Bank then moved for reconsideration of the trial court’s December 4, 2000
Order. The bank’s Mo-
_______________
27 Id., at pp. 10-11.
28 Rollo (G.R. No. 173194), pp. 149-156. The Order was issued by Judge Renato A. Fuentes of
Branch 17, Regional Trial Court, Davao City.
29 Id., at p. 156.
30 Id., at p. 164, Regional Trial Court Order in Civil Case No. 28,170-2000. The Order was
issued by Judge Renato A. Fuentes of Branch 17, Regional Trial Court, Davao City.
152
tion was denied on December 21, 2000. Hence, Philippine National Bank filed before the Court
of Appeals a Petition for Certiorari assailing the December 4, 2000 and December 21, 2000
Orders of the trial court. This was docketed as C.A.-G.R. S.P. No. 63351.31
In the meantime, Branch 17 continued with the trial of the Complaint for Reformation or
Annulment of Contract with Damages.32
On January 10, 2002, the Court of Appeals issued the Decision33 in C.A.-G.R. S.P. No. 63351
setting aside and annulling the Orders dated December 4, 2000 and December 21, 2000 and
dissolving the writ of preliminary injunction.34
Spouses Limso and Davao Sunrise moved for reconsideration of the Court of Appeals’ January 2,
2002 Resolution in C.A.-G.R. S.P. No. 63351 but the motion was denied.35 They then filed a
Petition for Review on Certiorari before this court.36 Their Petition was docketed as G.R. No.
152812, which was denied on procedural grounds.37
_______________
31 Rollo (G.R. No. 158622, Vol. I), pp. 11-12, Petition for Review on Certiorari.
32 Id., at p. 12.
33 Rollo (G.R. No. 173194), pp. 201-215. The Decision was penned by Associate Justice
Salvador J. Valdez, Jr. (Chair) and concurred in by Associate Justices Mercedes Gozo-Dadole
and Sergio L. Pestaño of the Fifteenth Division.
34 Rollo (G.R. No. 158622, Vol. I), p. 12, Petition for Review on Certiorari.
35 Id.
36 Id.
37 Rollo (G.R. No. 173194), p. 216. The Resolution states:

G.R. No. 152812 (Davao Sunrise Investment and Development Corporation v. Court of Appeals).
—The Court Resolves to DENY the motions of petitioner for second and third extensions
totalling thirty (30) days from May 7, 2002 within which to file a petition for review on
certiorari:
(a) considering that the first motion for extension of time to file the petition for review on
certiorari was granted with warning; and
153
VOL. 782, JANUARY 27, 2016 153
In view of the dissolution of the writ of preliminary injunction, Acting Clerk of Court and Ex
Officio Provincial Sheriff Rosemarie T. Cabaguio issued the Sheriff’s Provisional Certificate of
Sale dated February 4, 2002 in the amount of P1,521,055,331.49.38 However, the Sheriff’s
Provisional Certificate of Sale39 did not state the applicable redemption period and the
redemption price payable by the mortgagor or redemptioner.40
On the same date, Philippine National Bank presented the Sheriff’s Provisional Certificate of
Sale to the Register of Deeds of Davao City in order that the title to the foreclosed properties
could be consolidated and registered in Philippine National Bank’s name. The presentation was
recorded in the Primary Entry Book of Davao City’s Registry of Deeds under Act No. 496 and
entered as Entry Nos. 4762 to 4765.41
On February 5, 2002, the registration of the Certificate of Sale was elevated en consulta by Atty.
Florenda T. Patriarca (Atty. Patriarca), Acting Register of Deeds of Davao City, to
_______________
(b) for failing to submit proof of service of the motions (e.g., the affidavits of the party serving)
as required under Sec. 13, Rule 13, 1997 Rules of Civil Procedure.
The Court further Resolves to DENY the petition for review on certiorari of the decision and
resolution of the Court of Appeals dated January 10, 2002 and March 15, 2002, respectively, for
late filing in view of the denial of the motions for extensions of time to file the same.
38 Rollo (G.R. No. 158622, Vol. I), p. 12, Petition for Review on Certiorari; Rollo (G.R. No.
205463) p. 14, Petition for Review on Certiorari.
39 Rollo (G.R. No. 173194), pp. 220-227.
154
the Land Registration Authority in Manila. This was docketed as Consulta No. 3405.42
Acting on the consulta, the Land Registration Authority issued the Resolution dated May 21,
2002, which states:43
“WHEREFORE, in view of the foregoing, the Sheriff’s Provisional Certificate of Sale

dated February 4, 2002 is registrable on TCT Nos. T-147820, T-147386,
T-247012 provided all other registration requirements are complied with.”44
Meanwhile, on March 25, 2002, the Spouses Limso filed a Petition for Declaratory Relief with
Prayer for Temporary Restraining Order/Injunction on March 25, 2002 against Philippine
National Bank, Atty. Rosemarie T. Cabaguio, in her capacity as Ex Officio Provincial Sheriff, and
the Register of Deeds of Davao City (Petition for Declaratory Relief). The Sheriff’s Provisional
Certificate of Sale allegedly did not state any redemption price and period for redemption. This
case was raffled to Branch 14 of the Regional Trial Court of Davao City and docketed as Civil
Case No. 29,036-2002.45
The Petition for Declaratory Relief was filed while the Complaint for Reformation or Annulment
with Damages was still pending before Branch 17 of the Regional Trial Court of Davao City.
Spouses Limso subsequently filed an Amended Petition for Declaratory Relief, alleging:
6. That Petitioners with the continuing crisis and the unstable interest rates imposed by
respondent PNB admittedly failed to pay their loan, the demand letters
_______________
42 Id.
43 Id.
44 Id.
155
VOL. 782, JANUARY 27, 2016 155
were sent to both debtors-mortgagors separately, one addressed to the Petitioners and
another addressed to DSIDC, the last of which was dated April 12, 2000 x x x;
7. That on August 21, 200(0), respondent PNB filed a Petition for Extrajudicial
Foreclosure of the mortgaged properties against the petitioners-mortgagors-debtors and
DSIDC;
8. That on October 26, 2000, the mortgaged properties were auctioned with the
respondent PNB as the highest bidder;
9. That on February 4, 2002, a Sheriff’s Provisional Certificate of Sale was issued by

respondent Sheriff who certified x x x x;
10. That the said Sheriff’s Provisional Certificate of Sale did not contain a provision
usually contained in a regular Sheriff’s Provisional Certificate of Sale as regards the period
of redemption and the redemption price to be raised within the ONE (1) YEAR redemption
period in accordance with Act 3135, under which same law the extrajudicial petition for
sale was conducted as mentioned in the Certificate;
11. That the Sheriff’s Provisional Certificate of Sale has not yet been registered with the
office of respondent Register of Deeds yet; that petitioners and DSIDC are still in actual
possession of the subject properties;
12. That sometime in the middle part of year 2000, Republic Act No. 8791 otherwise
known as General Banking Laws of 2000 was approved and finally passed on April 12,
2000 and took effect sometime thereafter;
13. That among the provisions of the said law particularly, Section 47 dealt with
Foreclosure of Real Estate Mortgage, quoted verbatim hereunder as follows:
“Sec. 47. Foreclosure of Real Estate Mortgage.—In the event of foreclosure,

whether judicially or extrajudicially, or any mortgage on real estate which is security
for any loan or other credit accommodation
156
granted, the mortgagor or debtor whose real property has been sold for the full or
partial payment of his obligation shall have the right within one year after the sale of
the real estate, to redeem the property by paying the amount due under the mortgage
deed, with interest thereon at rate specified in the mortgage, and all the costs and
expenses incurred by the bank or institution from the sale and custody of said
property less the income derived therefrom. However, the purchaser at the auction
sale concerned whether in a judicial or extrajudicial foreclosure shall have the right
to enter upon and take possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in accordance with law.
Any petition in court to enjoin or restrain the conduct of foreclosure proceedings
instituted pursuant to this provision shall be given due course only upon the filing by
the petitioner of a bond in an amount fixed by the court conditioned that he will pay
all the damages which the bank may suffer by the enjoining or the restraint of the
foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant
to an extrajudicial foreclosure, shall have the right to redeem the property in
accordance with this provision until, but not after, the registration of the certificate
of foreclosure sale with the applicable Register of Deeds which in no case shall be
more than three (3) months after foreclosure, whichever is earlier. Owners of
property that has been sold in a foreclosure sale prior to the effectivity of this Act
shall retain their redemption rights until their expiration.”
14. That it is clear and evident that the absence of provisions as to redemption period and
price in the Sher-
157
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iff’s Provisional Certificate of Sale issued by respondent Sheriff, that respondent PNB and
Sheriff intended to apply the provisions of Section 47 of Republic Act No. 8791 which
reduced the period of redemption of a juridical person whose property is being sold
pursuant to an extrajudicial foreclosure sale until but not after the registration of the
Certificate of Sale with the applicable Register of Deeds which in no case shall be more
than three (3) months after foreclosure, whichever is earlier;
15. That Petitioners in this subject mortgage are Natural Persons who are principal
mortgagors-debtors and at the same time registered owners of some properties at the time
of the mortgage;
16. That the provisions of Republic Act No. 8791 do not make mention nor exceptions to
this situation where the Real Estate Mortgage is executed by both Juridical and Natural
Persons; hence, the need to file this instant case of Declaratory Relief under Rule 63 of the
Revised Rules of Court of the Philippines;
....
PRAYER
WHEREFORE, it is respectfully prayed that judgment in favor of petitioners and against
the respondent PNB:
1. That upon the filing of the above entitled case, a TEMPORARY

RESTRAINING INJUNCTION be issued immediately ordering a status quo,
enjoining the Register of Deeds and defendant PNB from registering the subject
Provisional Certificate of Sale from consolidating the title of the property covered
by Transfer Certificate of Title Nos. T-147820, T-147821, T-246386, T-24712 and
Land Improvement, etc.
2. That petitioners’ application of the issuance of the Writ of Preliminary

Injunctions be considered and granted within 20 days lifetime period of the TRO.
158
AFTER TRIAL ON THE MERITS
3. To declare the injunction as final.
4. Ordering the Register of Deeds to refrain from registering the Sheriff’s Certificate of
Sale and further from consolidating the titles of the said properties in its name and offering
to sell the same to interested buyers during the pendency of the above entitled case, while
setting the date of hearing on the propriety of the issuance of such Writ of Preliminary
Injunction.
ON THE MAIN CASE

5. To declare the petitioners’ right as principal mortgagors/owner jointly with a juridical
person to redeem within a period of 1 year the properties foreclosed by respondent PNB
still protected and covered by Act 3135.
6. To declare the provisions on Foreclosure of Real Estate Mortgage under Republic Act
8791 or General Banking Laws of 2000 discriminating and therefore unconstitutional.
OTHER RELIEFS AND REMEDIES are likewise prayed for.46
Branch 14 of the Regional Trial Court of Davao City issued a temporary restraining order47 on
April 10, 2002. This temporary restraining order enjoined the Register of Deeds from registering
the Sheriff’s Provisional Certificate of Sale.48
The temporary restraining order was issued without first hearing the parties to the case. Hence,
the temporary restraining order was recalled by the same trial court in the Order49 dated April
16, 2002.
_______________
46 Id., at pp. 13-17.
47 Id., at pp. 295-296. The temporary restraining order was issued by Presiding Judge William
M. Layague of Branch 14, Regional Trial Court, Davao City.
49 Id., at p. 297, Regional Trial Court Order in S.P. Civil Case No. 29,036-2002. The Order
states:
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VOL. 782, JANUARY 27, 2016 159
During the hearing for the issuance of a temporary restraining order in the Petition for
Declaratory Relief, Spouses Limso presented several exhibits, which included: Philippine
National Bank’s demand letter dated April 12, 2000; Philippine National Bank’s letter to the
Acting Register of Deeds of Davao City dated February 4, 2002 requesting the immediate
registration of the Sheriff’s Provisional Certificate of Sale; and the Notice of Foreclosure dated
September 5, 2000.50
Counsel for Philippine National Bank objected to the purpose of the presentation of the exhibits
and argued that since Spouses Limso were Davao Sunrise’s co-debtors, they “were notified as a
matter of formality[.]”51
On May 3, 2002, Branch 14 granted the prayer for the issuance of the writ of preliminary
injunction enjoining the registration of the Sheriff’s Provisional Certificate of Sale.52
Branch 14 reasoned as follows:
This Court finds no merit in the claims advanced by private respondent Bank for the
following reasons:
1. That the primary ground why the Court of Appeals dissolved the preliminary
injunction granted by Branch 17 of this Court was because the ground upon
_______________
“Considering that under Par. (d), Section 4 of the 1997 Rules of Civil Procedure which is based
on Administrative Circular No. 20-95 as interpreted by the Supreme Court in A.M. No. MTJ-00-
1250, February 28, 2001, the application for a Temporary Restraining Order can be acted upon
only after all parties are heard in a summary hearing which shall be conducted within twenty-
four (24) hours after the Sheriff’s Return of Service, the Temporary Restraining Order issued by
this Court dated April 10, 2002 pursuant to the first paragraph of Section 5 of the same Rules of
Civil Procedure is hereby RECALLED and set aside.”
51 Id., at p. 18.
52 Id., at p. 142, Regional Trial Court Order in S.P. Civil Case No. 29,036-2002.
160

which the same was issued was based on a pleading which was not verified;
2. That Civil Case No. 28,170-2000 and Civil Case No. 29,036-2002 while involving
substantially the same parties, the same do not involved [sic] the same issues as the former
involves nullity of unilateral imposition and increases of interest rates, etc. nullity of
foreclosure proceedings, reduction of both loan accounts, reformation or annulment of
contract, reconveyance and damages, whereas the issues raised in the instant petition
before this Court is the right and duty of the petitioners under the last paragraph of Sec. 47,
Republic Act No. 8791 and whether the said section of said law is applicable to the
petitioners considering that the mortgage contract was executed when Act No. 3135 was
the controlling law and was in fact made part of the contract;
3. That the petition, contrary to the claim of private respondent Bank, clearly states a
cause of action; and
4. That since petitioners are parties to the mortgage contract they, therefore, have locus
standi to file the instant petition.
If Section 7 of Republic Act 8791 were made to apply to the petitioners, the latter would
have a shorter period of three (3) months to exercise the right of redemption after the
registration of the Certificate of Sale, hence, the registration of the Sheriff’s Provisional
Certificate of Sale would cause great and irreparable injury to them as their rights to the
properties sold at public auction would be lost forever if the registration of the same is not
enjoined.53
Spouses Limso posted an injunction bond that was approved by the trial court in the Order dated
May 6, 2002. Thus, the writ of preliminary prohibitory injunction was issued.54
_______________
53 Id., at pp. 141-142.

161
VOL. 782, JANUARY 27, 2016 161
Philippine National Bank moved for reconsideration of the Orders dated May 3, 2002 and May
6, 2002.55
Around this time, Judge William M. Layague (Judge Layague), Presiding Judge of Branch 14,
was on leave.56 Philippine National Bank’s Motion for Reconsideration was granted by the
Pairing Judge, Judge Jesus V. Quitain (Judge Quitain),57 and the writ of preliminary prohibitory
injunction was dissolved in the Order dated May 23, 2002.58
On May 30, 2002, Philippine National Bank’s lawyers went to the Register of Deeds of Davao
City “to inquire on the status of the registration of the Sheriff’s Provisional Certificate of
Sale.”59
Philippine National Bank’s lawyers were informed that the documents they needed “could not be
found and that the person in charge thereof, Deputy Register of Deeds Jorlyn Paralisan, was
absent.”60
Philippine National Bank contacted Jorlyn Paralisan at her residence. She informed Philippine
National Bank that the documents they were looking for were all inside Atty. Patriarca’s
office.61
Subsequently, Atty. Patriarca informed the representatives of Philippine National Bank that the
Register of Deeds “would not honor certified copies of [Land Registration Authority] resolutions
even if an official copy of the [Land Regis-
_______________
55 Id.
57 Id.
60 Id.
61 Id.
162
tration Authority] Resolution was already received by that Office through mail.”62
On May 31, 2002, Philippine National Bank’s representatives returned to the Register of Deeds
of Davao City and learned that Atty. Patriarca, the Acting Register of Deeds, had not affixed her
signature, which was necessary to complete the registration of the Sheriff’s Certificate of Sale.63
Subsequently, Judge Layague reinstated the writ of preliminary prohibitory injunction in the
Order64 dated June 24, 2002.
Aggrieved, Philippine National Bank filed before the Court of Appeals a Petition for Certiorari,
Prohibition and Mandamus with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction, both Prohibitory and Mandatory, docketed as C.A.-G.R. S.P. No. 71527.
The Petition assailed the June 24, 2002 Order of Branch 14 of the Regional Trial Court, which
reinstated the writ of preliminary prohibitory injunction.65
On July 3, 2002, Philippine National Bank inspected the titles and found that correction fluid had
been applied over Atty. Patriarca’s signature on the titles.66
Also on July 3, 2002, Philippine National Bank filed before the Regional Trial Court of Davao
City a Petition for Issuance of the Writ of Possession under Act No. 3135, as amended,
_______________
62 Id.
63 Id.
64 Rollo (G.R. No. 158622, Vol. I), pp. 144-150, Regional Trial Court Order in S.P. Civil Case
No. 29,036-2002.
65 Id., at pp. 21-22, Petition for Review on Certiorari. C.A.-G.R. S.P. No. 71527 was brought
up to this court under Rule 45 and was docketed as G.R. No. 158622 (id., at p. 3).
163
VOL. 782, JANUARY 27, 2016 163
and Section 47 of Republic Act No. 8791.67 This was docketed as Other Case No. 124-2002 and
raffled to Branch 15 of the Regional Trial Court of Davao City, presided by Judge Quitain.68
Davao Sunrise filed a Motion to Expunge and/or Dismiss Petition for Issuance of Writ of
Possession dated July 12, 2002.69 In the Motion to Expunge, Davao Sunrise pointed out that
Branch 1470 (in the Petition for Declaratory Relief docketed as Civil Case No. 29,036-2002)
issued a writ of preliminary injunction “enjoining the Provincial Sheriff, the Register of Deeds of
Davao City[,] and [Philippine National Bank] from registering the Sheriff’s Provisional
Certificate of Sale and, if registered, enjoining [Philippine National Bank] to refrain from
consolidating the title of the said property in its name and/or offering to sell the same to
interested buyers during the pendency of the case.”71
On July 18, 2002, Spouses Limso filed a Motion to Intervene72 in Other Case No. 124-2002.73
_______________
67 Id., at pp. 10 and 16. The Petition for Issuance of the Writ of Possession is entitled In the
Matter of the Petition Ex-Parte for the Issuance of Writ of Possession under L.R.C. Record No.
12973; 18031; and LRC Cadastral Record No. 317, Philippine National Bank.
69 Id., at p. 17.
70 The Petition docketed as G.R. No. 169441 states Branch 17, but it may be deemed a
typographical error as Civil Case No. 29,036-2002 was raffled to Branch 14 of the Regional Trial
Court of Davao City.
71 Rollo (G.R. No. 169441), pp. 17-18, Petition for Review.
72 Rollo (G.R. No. 169441), pp. 752-756.
73 Rollo (G.R. No. 169441), p. 18, Petition for Review; Rollo (G.R. No. 205463), p. 112,
Omnibus Motion for Leave to Intervene; to File/Admit herein attached Comment-in-
Intervention; and to Consolidate Cases, and p. 128, Regional Trial Court Order in Other Case
No. 124-2002.
164
In the Resolution dated August 13, 2002, the Court of Appeals granted the temporary restraining
order prayed for by Philippine National Bank (in C.A.-G.R. S.P. No. 71527) enjoining the
implementation of Judge Layague’s Orders dated May 3, 2002 and June 24, 2002. These Orders
pertained to the writ of preliminary injunction enjoining the registration of the Sheriff’s
Provisional Certificate of Sale.74
Spouses Limso filed a Motion for Reconsideration with Prayers for the Dissolution of Temporary
Restraining Order and to Post Counter Bond.75
The Court of Appeals granted Philippine National Bank’s Petition for Certiorari in the
Decision76 dated December 11, 2002. The dispositive portion of the Decision states:
WHEREFORE, premises considered, the writ prayed for in the herein petition is
GRANTED and the assailed Orders of respondent judge dated May 3 and June 24, 2002
granting the writ of preliminary injunction are SET ASIDE. Civil Case No. 29,036-2002 is
hereby ordered DISMISSED and respondent Register of Deeds of Davao City is hereby
ordered to register petitioner PNB’s Sheriff’s Provisional Certificate of Sale and cause its
annotation on TCT Nos. T-147820, T-147821, T-246386 and T-247012.77
Spouses Limso filed a Motion to Reconsider Decision and To Call Case For Hearing on Oral
Argument, which was op-
_______________
75 Id., at pp. 22-23.
76 Id., at pp. 75-95. The Decision was penned by Associate Justice Eubulo G. Verzola (Chair)
and concurred in by Associate Justices Eugenio S. Labitoria and Candido V. Rivera of the
Special Third Division.
165
VOL. 782, JANUARY 27, 2016 165
posed by Philippine National Bank.78 Oral arguments were conducted on March 19, 2003.79
On June 10, 2003, the Court of Appeals denied Spouses Limso’s Motion for Reconsideration.80
Spouses Limso then filed a Petition for Review on Certiorari81 before this court, questioning the
Decision in C.A.-G.R. S.P. No. 71527, which ordered the Register of Deeds to register the
Sheriff’s Provisional Certificate of Sale. This was docketed as G.R. No. 158622.82
With regard to the Complaint for Reformation or Annulment of Contract with Damages, Branch
17 of the Regional Trial Court of Davao City promulgated its Decision83 on June 19, 2002.
Branch 17 ruled in favor of Spouses Limso and Davao Sunrise. It found the interest rate
provisions in the loan agreement to be unreasonable and unjust because the imposable interest
rates were to be solely determined by Philippine National Bank. The arbitrary imposition of
interest rates also had the effect of increasing the total loan obligation of Spouses Limso and
Davao Sunrise to an amount that would be beyond their capacity to pay.84
The dispositive portion of the Decision in the Complaint for Reformation or Annulment with
Damages states:
_______________
78 Id.
79 Id.
80 Id., at p. 105, Court of Appeals Resolution in C.A.-G.R. S.P. No. 71527. The Resolution was
penned by Associate Justice Eugenio S. Labitoria (Chair) and concurred in by Associate Justices
Andres B. Reyes, Jr. and Regalado E. Maambong of the Fifth Division.
81 Id., at pp. 3-71.
82 Id., at p. 3.
83 Id., at pp. 787-804. The Decision was penned by Presiding Judge Renato A. Fuentes of
84 Id., at pp. 791-803.
166
WHEREFORE, finding the evidence of plaintiffs corporation through counsel, more than
sufficient, to constitute a preponderance to prove the various unilateral impositions of
increased interest rates by defendant bank, such usurious, unreasonable, arbitrary,
unilateral imposition of interest rates, are declared, null and void.
Accordingly, decision is issued in favor of the defendant bank, in a reduced amount based
on the following:
1. The amount of One Hundred Twenty-Seven Million, One Hundred Fifty

Thousand (P127,150,000.00)
Pesos, representing illegal interest rate, the amount of One Hundred Seventy-Six
Million, Ninety Eight Thousand, Forty-Five and 95/100 (P176,098,045.95) Pesos,
representing illegal penalty charges and the amount of One Hundred Thirty-Six
Million, Nine Hundred Thousand, Nine Hundred Twenty-Eight and 85/100
(P136,900,928.85) Pesos, as unreasonable 10% Attorney’s fees or in the total
amount of Four Hundred Forty Million, One Hundred Forty-Eight Thousand, Nine
Hundred Seventy-Four and 79/100 (P440,148,974.79) Pesos, are declared null and
void, rescending [sic] and/or altering the loan agreement of parties, on the ground of
fraud, collusion, mutual mistake, breach of trust, misconduct, resulting to gross
inadequacy of consideration, in favor of plaintiffs corporation, whose total reduced
and remaining principal loan obligation with defendant bank, shall only be the
amount of Eight Hundred Eighty-Two Million, Twelve Thousand, One Hundred
Forty-Nine and 50/100 (P882,012,149.50) Pesos, as outstanding remaining loan
obligation of plaintiffs corporation, with defendant bank, to be deducted from the
total payments so far paid by plaintiffs corporation with defendant bank as already
stated in this decision.
2. That thereafter, the above amount as ordered reduced, shall earn an interest of
12% per annum, the lawful rate of interest that should legitimately be imposed by
defendant bank to the outstanding re-
167
VOL. 782, JANUARY 27, 2016 167
maining reduced principal loan obligation of plaintiffs corporation.
3. Notwithstanding, defendant bank, is entitled to a reduced Attorney’s fees of Five

Hundred Thousand (P500,000.00) Pesos, as a reasonable Attorney’s fees, subject to
subsequent pronouncement as to the real status of defendant bank, on whether or
not, said institution is now a private agency or still a government instrumentality in
its capacity to be entitled or not of the said Attorney’s fees.
4. The prayer of defendant bank for award of moral damages and exemplary
damages, are denied, for lack of factual and legal basis.

Philippine National Bank moved for reconsideration of the Decision, while Spouses Limso and
Davao Sunrise filed a Motion for partial clarification of the Decision.86
Branch 17 of the Regional Trial Court of Davao City subsequently issued the Order87 dated
August 13, 2002 clarifying the correct amount of Spouses Limso and Davao Sunrise’s obligation,
thus:
WHEREFORE, finding the motion for reconsideration of defendant bank through

counsel, to the decision of the court, grossly bereft of merit, merely a reiteration and
rehash of the arguments already set forth during the hearing, including therein matters not
proved during the trial on the merits, and considered admitted, is denied.
_______________
85 Id., at pp. 803-804.
86 Id., at p. 805, Regional Trial Court Order in Civil Case No. 28,170-2000.
87 Rollo (G.R. No. 158622, Vol. I), pp. 805-810. The Order was issued by Presiding Judge
Renato A. Fuentes of Branch 17, Regional Trial Court, Davao City.
168
To provide a clarification of the decision of this court, relative to plaintiffs motion for
partial clarification with comment of defendant bank through counsel, the correct
remaining balance of plaintiffs account with defendant bank, pursuant to the decision of
this court, in pages 17 and 18, dated June 19, 2002, is Two Hundred Five Million Eighty-
Four Thousand Six Hundred Eighty-Two Pesos & 61/100 (P205,084,682.61), as above
clarified.
SO ORDERED.88
Philippine National Bank appealed the Decision and Order in the Complaint for Reconstruction
or Annulment with Damages by filing a Notice of Appeal on August 16, 2002.89 The Notice of
Appeal was approved by the trial court in the Order dated September 25, 2002.90 The appeal
was docketed as C.A.-G.R. CV No. 79732.91
On August 20, 2002,92 Spouses Limso and Davao Sunrise filed, in Other Case No. 124-2002
(Petition for Issuance of Writ of Possession), a Motion to Inhibit the Presiding Judge (referring to
Judge Quitain, before whom the Petition for Issuance of Writ of Possession was pending)
because his wife, Gladys Isla Quitain, was a long-time Philippine National Bank employee who
had retired.93 Spouses Limso and Davao Sunrise also heard rumors that Gladys Isla Quitain had
been serving as consultant for Philippine National Bank even after retirement.94 Davao Sunrise
also filed a Motion to Expunge and/or Dismiss Petition and argued that the person who signed
for Philippine National Bank was not authorized be-
_______________
88 Id., at p. 810.
90 Id.
92 The Petition in G.R. No. 169441 states August 20, 2003, but it may be deemed a
typographical error. Based on the allegations in the Petition, the proper date would be August 20,
2002.
94 Id.
169
VOL. 782, JANUARY 27, 2016 169

cause no Board Resolution was attached to the Verification and Certification against Forum
Shopping.
In the Order95 dated March 21, 2003, Judge Quitain denied three motions:
(1) The Motion to Intervene filed by Spouses Robert Alan Limso and Nancy Limso;
(2) The Motion to Expunge and/or Dismiss Petition for the Issuance of Writ of Possession
filed by Davao Sunrise Investment and Development Corporation; and
(3) The Motion for Voluntary Inhibition filed by Davao Sunrise Investment and
Development Corporation.96
Judge Quitain denied the Motion to Inhibit on the ground that the allegations against him were
mere suspicions and conjectures.97 The Motion to Intervene was denied on the ground that
Spouses Limso have no interest in the case, not being the owners of the property.98
The Motion to Expunge and/or Dismiss filed by Davao Sunrise was also denied for lack of merit.
Judge Quitain ruled that “PNB Vice President Leopoldo is clearly clothed with authority to
represent and sign in behalf of the petitioner [referring to Philippine National Bank] as shown by
the Verification and Certification of the said petition as well as the Secretary’s Certificate.”99
_______________
95 Id., at pp. 824-826.
96 Id., at pp. 824-825.
97 Id., at p. 20, Petition for Review. The Order states: “There is no basis for the Presiding Judge
to inhibit himself considering that the allegation of bias and partiality is based merely on
suspicion and conjecture.”
98 Id., at pp. 824-825.
99 Id., at p. 825.
170
Spouses Limso and Davao Sunrise filed a Motion for Reconsideration100 of the Order dated
March 21, 2003. Judge Quitain denied the Motion for Reconsideration in an Order dated
September 1, 2003, only with regard to the Motion to Intervene and Motion for Voluntary
Inhibition. The Motion to Expunge and/or Dismiss was not mentioned in the September 1, 2003
Order.101
Spouses Limso and Davao Sunrise questioned the denial of the Motion for Inhibition by filing a
Petition for Certiorari before the Court of Appeals on September 26, 2003. This was docketed as
C.A.-G.R. S.P. No. 79500.102 Spouses Limso and Davao Sunrise subsequently filed a
Supplemental Petition for Certiorari before the Court of Appeals on October 3, 2003.103
In the meantime, Other Case No. 124-2002 (Petition for Issuance of Writ of Possession) was set
for an ex parte hearing on October 10, 2003.104
However, on October 8, 2003, the Court of Appeals granted the prayer for the issuance of a
temporary restraining order in C.A.-G.R. S.P. No. 79500 “enjoining public respondent Judge
Quitain from proceeding with Other Case No. 124-2002 for a period of sixty (60) days from
receipt by respondents thereof.”105
The temporary restraining order was effective from October 10, 2003 to December 9, 2003.106
On December 12, 2003, Judge Quitain issued the Order allowing Philippine National Bank to
present evidence ex parte on December 18, 2003 despite the pendency of other incidents to be
resolved.107
_______________
100 Id., at pp. 827-852.
101 Id.
102 Id., at p. 22.
103 Id.
104 Id.
105 Id., at p. 23.

106 Id.
107 Id.
171
VOL. 782, JANUARY 27, 2016 171
Spouses Limso and Davao Sunrise filed an Urgent Motion for Cancellation of the December 18,
2003 hearing due to the pendency of C.A.-G.R. S.P. No. 79500.108
Judge Quitain reset the hearing for Other Case No. 124-2002 to January 23, 2004. The hearing
was subsequently reset to January 30, 2004. In the January 30, 2004 hearing, Judge Quitain
heard the arguments of parties regarding the Urgent Motion to Cancel Hearing.109
In the Order dated March 12, 2004, Judge Quitain “resolved the pending Urgent Motion to
Cancel Hearing and [Davao Sunrise’s] Motion to Reschedule Newly Scheduled Hearing
Date.”110
The March 12, 2004 Order also stated that “the Spouses Limso have no right to intervene
because they are no longer owners of the subject foreclosed property.”111
Spouses Limso treated the March 12, 2004 Order as a denial of their Motion for Reconsideration
regarding their Motion to Intervene. Thus, they, together with Davao Sunrise, filed a Petition for
Certiorari before the Court of Appeals, which was docketed as C.A.-G.R. S.P. No. 84279.112
C.A.-G.R. S.P. No. 84279 was denied by the Court of Appeals in the Decision113 dated
September 20, 2004.
Spouses Limso and Davao Sunrise filed a Motion for Reconsideration114 dated September 13,
2004, which was denied
_______________
108 Id.
109 Id., at p. 24.

110 Id.
111 Id., at p. 25.
112 Id.
113 Id., at pp. 1129-1162. The Decision was penned by Associate Justice Teresita Dy-Liacco
Flores (Chair) and concurred in by Associate Justices Romulo V. Borja and Rodrigo F. Lim, Jr. of
the Twenty-Third Division.
114 Id., at pp. 1163-1193.
172
in the Resolution115 dated July 8, 2005.
Spouses Limso and Davao Sunrise then filed a Petition for Review on Certiorari dated July 26,
2005 before this court. This was docketed as G.R. No. 168947.116
Despite the pendency of Spouses Limso and Davao Sunrise’s Motion for Reconsideration of the
Order denying Davao Sunrise’s Motion to Expunge and/or Dismiss, Philippine National Bank
filed a Motion for Reception of Evidence and/or Resume Hearing dated March 30, 2004 in Other
Case No. 124-2002.117
Judge Quitain granted the Motion “and set the hearing for reception of petitioner’s evidence on
06 April 2004 at 2:00 p.m.”118
Spouses Limso and Davao Sunrise filed an Extremely Urgent Manifestation and Motion dated
April 5, 2004. They prayed for the cancellation of the hearing for the reason that the March 12,
2004 Order was not yet final and that Davao Sunrise had a pending Motion for Reconsideration
of the Order denying its Motion to Expunge and/or Dismiss.119
Judge Quitain cancelled the April 6, 2004 hearing due to the Manifestation and Motion filed by
Spouses Limso and Davao Sunrise.120
_______________
115 Id., at p. 1197. The Resolution was penned by Associate Justice Teresita Dy-Liacco Flores
(Chair) and concurred in by Associate Justices Romulo V. Borja and Rodrigo F. Lim, Jr. of the
Former Twenty-Third Division.
116 Id., at p. 26, Petition for Review. Upon checking with the Judgment Division, G.R. No.
168947 was dismissed on August 17, 2005 for failure to show reversible error on the part of the
Court of Appeals. Entry of Judgment was made on April 27, 2006.
117 Id.
118 Id.
119 Id.
120 Id., at p. 27.
173
VOL. 782, JANUARY 27, 2016 173
Spouses Limso filed a Motion for Reconsideration of the March 12, 2004 Order because it
addressed issues other than those raised in the Motion for Intervention.121
On April 20, 2004, Judge Quitain issued the Order and reset the case for hearing to May 7, 2004,
even though the Motion for Reconsideration of the Order denying the Motion to Expunge and/or
Dismiss had not been acted upon.122
During the May 7, 2004 hearing, counsel for Spouses Limso and Davao Sunrise pointed out to
Judge Quitain the pendency of the Motion for Reconsideration of the Order denying the Motion
to Expunge and/or Dismiss.123
Judge Quitain issued the Order dated July 5, 2004 denying Spouses Limso and Davao Sunrise’s
Motion for Reconsideration to the March 12, 2004 Order (referring to the denial of Spouses
Limso’s Motion to Intervene). Judge Quitain also set hearing dates on August 4 and 5, 2004 for
the reception of Philippine National Bank’s evidence. Once again, the hearings were scheduled
even though the Motion to Expunge and/or Dismiss had yet to be resolved.124
Davao Sunrise then filed a Motion to Transfer Case or in the Alternative to Dismiss the Same on
July 30, 2004. Davao Sunrise reiterated the arguments in its Motion to Expunge and/or
Dismiss.125
Subsequently, Spouses Limso and Davao Sunrise filed an Extremely Urgent Manifestation and
Motion dated August 3, 2004 asking that the hearings scheduled for August 4 and 5, 2004 be
cancelled, considering that Davao Sunrise’s Motion to Dismiss/Expunge the Petition was still
unresolved.126
_______________
121 Id.
122 Id.
123 Id.
124 Id., at pp. 27-28.
125 Id., at p. 28.
126 Id.
174
On August 4, 2004, Judge Quitain took cognizance of the Extremely Urgent Manifestation and
Motion dated August 3, 2004 and a Very Urgent Motion for Intervention filed by a third party.
Thus, Judge Quitain cancelled the hearings scheduled on August 4 and 5, 2004, reset the hearing
to August 11, 2004, and “impressed upon the parties that he would be able to resolve all pending
incidents by that time.”127
Spouses Limso and Davao Sunrise alleged that the pending incidents were hastily acted upon by
Judge Quitain, as follows:
[O]n 11 August 2004, at around 11:45 a.m., petitioners’ counsel was furnished a copy of
public respondent’s Order allegedly dated 06 August 2004 which declared as submitted for
resolution the following incidents, to wit: (a) petitioner DSIDC’s Motion to Transfer the
Case to Branch 17; (b) Petitioner DSIDC’s Motion to Postpone Hearing; (c) Motion for
Intervention filed by a certain Karlan Lou Ong; (d) petitioners’ (DSIDC and Spouses
Limso) Extremely Urgent Manifestation and Motion; and (e) Petitioner DSIDC’s
Manifestation.
. . . And then, at around 2:10 p.m. of the same day, 11 August 2004, when petitioners’
counsel was already in court for the said hearing, he was furnished by a staff of public
respondent Judge Quitain a copy of an Order dated 11 August 2004 and consisting of two
(2) pages, the dispositive portion of which reads as follows:
“WHEREFOREM(sic), the Court hereby resolves the following motions: 1)

DSIDC’s motion to transfer case to Branch 17 or dismiss the same is denied for lack
of merit. 2) DSIDC’s (sic) motion to postpone the hearing is denied for lack of
merit. 3) The motion of Karla Ong to intervene is denied for lack of
_______________
127 Id., at pp. 28-29.
175
VOL. 782, JANUARY 27, 2016 175
merit. 4) The August 5 manifestation of DSIDC is noted.”128 (Emphasis in the original)
Spouses Limso and Davao Sunrise also claimed that the Order dated August 11, 2004 was done
hastily so that Philippine National Bank would be able to present its evidence without
objection.129
Spouses Limso and Davao Sunrise alleged that the August 11, 2004 Order contained factual
findings not supported by the record. When counsel for Spouses Limso and Davao Sunrise
pointed out the errors, Judge Quitain acknowledged the mistake and reset the August 11, 2004
hearing to August 27, 2004.130
Because of Judge Quitain’s actions, Spouses Limso and Davao Sunrise filed a Motion for
Compulsory Disqualification on the ground that Judge Quitain was biased in Philippine National
Bank’s favor.131
In the Order132 dated March 10, 2005, Judge Quitain denied the Motion for Compulsory
Disqualification.
Spouses Limso and Davao Sunrise moved for reconsideration of the March 10, 2005 Order,
while Philippine National Bank filed an Opposition to the Motion for Reconsideration.133
The August 11, 2004 Order also denied Davao Sunrise’s Motion to Transfer Case to Branch 17 or
Dismiss the Same. Since the Motion to Transfer is a rehash of Davao Sunrise’s Motion to
Expunge and/or Dismiss Petition, the denial of the Motion to Transfer is tantamount to the denial
of Davao Sun-
_______________
128 Id., at pp. 29-30.
129 Id., at p. 30.
130 Id., at pp. 30-31.
131 Id., at p. 32.
132 Id., at p. 1447. The Order was issued by Judge Jesus V. Quitain of Branch 15, Regional Trial
Court, Davao City.
133 Id., at p. 32, Petition for Review.
176

rise’s Motion to Expunge and/or Dismiss.134 The August 11, 2004 Order did not specifically
state that Spouses Limso and Davao Sunrise’s Motion for Reconsideration dated March 28, 2003
was denied, but since the issues raised in the Motion to Reconsideration were also raised in the
Motion to Expunge, the August 11, 2004 Order also effectively denied the Motion for
Reconsideration.135
Thus, Spouses Limso and Davao Sunrise filed a Petition136 for Certiorari before the Court of
Appeals, which was docketed as C.A.-G.R. S.P. No. 85847.137 Spouses Limso and Davao
Sunrise assailed the March 21, 2003 Order denying Davao Sunrise’s Motion to Expunge and/or
Dismiss Petition for Issuance of Writ of Possession, as well as the August 11, 2004 Order
denying Davao Sunrise’s Motion to Dismiss.138
On September 1, 2004, the Court of Appeals promulgated its Decision139 in C.A.-G.R. S.P. No.
79500140 denying Spouses Limso and Davao Sunrise’s Petition, which assailed Judge Quitain’s
denial of their Motion to Inhibit.141 The Court of Appeals ruled that Judge Quitain’s reversal of
Judge Layague’s Orders “may constitute an error of judgment . . . but it is not necessarily an
evidence of bias and partiality.”142
_______________
134 Id.
135 Id.
136 Id., at pp. 1465-1514.
138 Id., at pp. 1465-1466, Petition docketed as C.A.-G.R. S.P. No. 85847.
139 Id., at pp. 63-70. The Decision was penned by Associate Justice Mariflor P. Punzalan-
Castillo (Chair) and concurred in by Associate Justices Sesinando E. Villon and Edgardo A.
Camello of the Special Twenty-Second Division.
140 Id., at p. 64. C.A.-G.R. S.P. No. 79500 is a Petition for Certiorari questioning the trial
court’s denial of the Motion for Inhibition.
177
VOL. 782, JANUARY 27, 2016 177
Spouses Limso and Davao Sunrise moved for reconsideration on September 23, 2004. The
Motion was denied in the Resolution143 dated August 11, 2005.144
While the cases between Spouses Limso, Davao Sunrise, and Philippine National Bank were
pending, Philippine National Bank, through counsel, filed administrative145 and criminal
complaints146 against Atty. Patriarca.
_______________
143 Id., at pp. 72-73. The Resolution was penned by Associate Justice Edgardo A. Camello and
concurred in by Associate Justices Teresita Dy-Liacco Flores (Chair) and Myrna Dimaranan-
Vidal of the Twenty-First Division.
145 Rollo (G.R. No. 205463), p. 87, Land Registration Authority’s Resolution in Adm. Case No.
02-13. The administrative case was for Grave Misconduct and Conduct Unbecoming of a Public
Official. The complaints against Atty. Patriarca were filed in 2002. The Resolution of the Land
Registration Authority in the administrative case against Atty. Patriarca states that in a directive
dated July 31, 2002, she was directed to show cause why disciplinary action should not be taken
against her.
146 Id., at p. 16, Petition for Review on Certiorari. The criminal Complaint was filed before the
Office of the Ombudsman-Mindanao for violation of Rep. Act No. 3019, Sec. 3(f), which
provides:
SECTION 3. Corrupt practices of public officers.—In addition to acts or omissions of public

officers already penalized by existing law, the following shall constitute corrupt practices of any
public officer and are hereby declared to be unlawful:
....
(f) Neglecting or refusing, after due demand or request, without sufficient justification, to act
within a reasonable time on any matter pending before him for the purpose of obtaining, directly
or indirectly, from any person interested in the matter some pecuniary or material benefit or
advantage, or for the purpose of favoring his own interest or giving undue advantage in favor of
or discriminating against any other interested party.
178
The administrative case against Atty. Patriarca was docketed as Administrative Case No. 02-
13.147
In the Resolution148 dated January 12, 2005, the Land Registration Authority found Atty.
Patriarca guilty of grave misconduct and dismissed her from the service.149 Included in the
Resolution are the following pronouncements:
The registration of these documents became complete when respondent affixed her
signature below these annotations. Whatever information belatedly gathered thereafter
relative to the circumstances as to the registrability of these documents, respondent cannot
unilaterally take judicial notice thereof and proceed to lift at her whims and caprices what
has already been officially in force and effective, by erasing thereon her signature. With
her years of experience in the Registry, not to mention her being a lawyer, respondent
should have taken the appropriate steps in filing a query to this Authority regarding the
matter or should have consulted Section 117 of PD 1529 in relation to Section 12 of Rule
43. The deplorable act of Respondent was fraught with partiality to favor the DSIDC and
Sps. Limso.150
Atty. Asteria E. Cruzabra (Atty. Cruzabra) replaced Atty. Patriarca as Register of Deeds of Davao
City.151 Philippine National Bank wrote a letter to Atty. Cruzabra, arguing “that the Sheriff’s
Provisional Certificate of Sale was already validly registered[,]”152 and the unauthorized
application of cor-
_______________
147 Id., at p. 16, Petition for Review on Certiorari. The administrative case against Atty.
Patriarca was entitled Ma. L. Pesayco v. Florenda F.T. Patriarca.
148 Id., at pp. 87-90.
149 Id., at p. 90.
151 Id.
152 Id.
179
VOL. 782, JANUARY 27, 2016 179
rection fluid153 to cover the original signature of the Acting Register of Deeds “did not deprive
the Bank of its rights under the registered documents.”154
Meanwhile, on February 10, 2005, as C.A.-G.R. CV No. 79732, which was an appeal from Civil
Case No. 28,170-2000 (Petition for Reformation and Annulment of Contract with Damages), was
still pending, Philippine National Bank filed the following applications before the Court of
Appeals Nineteenth Division:155
a. Application to Hold Davao Sunrise Investment and Development Corporation, the

Spouses Robert Alan L. Limso and Nancy Lee Limso and Wellington Insurance Company,
Inc. Jointly and Severally liable for Damages on the Injunction Bond; and
b. Application for the Appointment of PNB as Receiver[.]156

Spouses Limso and Davao Sunrise filed their opposition to Philippine National Bank’s
application on March 29, 2005.157 Philippine National Bank filed its Reply to the Opposition on
May 5, 2005.158
On March 2, 2006, the Court of Appeals denied Philippine National Bank’s applications,
reasoning that:
It is a settled rule that the procedure for claiming damages on account of an injunction
wrongfully issued
_______________
153 The parties used the term “snowpake.” “Snowpake” is a colloquial term describing the
white correction fluid used to cover errors written or printed on paper. In this case, a signature
was erased using correction fluid.
155 Rollo (G.R. No. 173194), pp. 262 and 317.
157 Id., at pp. 58-59.
158 Id., at p. 59.
180
shall be the same as that prescribed in Section 20 of Rule 57 of the Revised Rules of
Court. Section 20 provides:
Sec. 20. Claim for damages on account of improper, irregular or excessive

attachment.—An application for damages on account of improper, irregular or
excessive attachment must be filed before the trial or before appeal is perfected or
before the judgment becomes executory, with due notice to the attaching obligee or
his surety or sureties, setting forth the facts showing his right to damages and the
amount thereof. Such damages may be awarded only after proper hearing and shall
be included in the judgment on the main case.
If the judgment of the appellate court be favorable to the party against whom the
attachment was issued, he must claim damages sustained during the pendency of the
appeal by filing an application in the appellate court with notice to the party in
whose favor the attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may allow the
application to be heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the attachment was
issued from recovering in the same action the damages awarded to him from any
property of the attaching obligee not exempt from execution should the bond or
deposit given by the latter be insufficient or fail to fully satisfy the award.
Records show that when this Court annulled the RTC’s order of injunction, Davao Sunrise
thereafter elevated the matter to the Supreme Court. On July 24, 2002, the Supreme Court
denied its petition for having been filed out of time and an Entry of Judgment was issued
on Sept. 11, 2002.
181
VOL. 782, JANUARY 27, 2016 181
PNB’s instant application however was filed only on February 17, 2005 and/or in the
course of its appeal on the main case — about two (2) years and five (5) months after the
judgment annulling the injunction order attained finality.
Clearly, despite that it already obtained a favorable judgment on the injunction matter,
PNB failed to file (before the court a quo) an application for damages against the bond
before judgment was rendered in the main case by the court a quo. Thus, even for this
reason alone, Davao Sunrise and its bondsman are relieved of further liability
thereunder.159 (Citations omitted)
The Court of Appeals also denied Philippine National Bank’s application to be appointed as
receiver for failure to fulfill the requirements to be appointed as receiver and for failure to prove
the grounds for receivership.160 It discussed that to appoint Philippine National Bank as receiver
would violate the rule that “neither party to a litigation should be appointed as receiver without
the consent of the other because a receiver should be a person indifferent to the parties and
should be impartial and disinterested.”161 The Court of Appeals noted that Philippine National
Bank was not an impartial and disinterested party, and Davao Sunrise objected to Philippine
National Bank’s appointment as receiver.162
_______________
159 Id., at pp. 79-80, Court of Appeals Resolution in C.A.-G.R. CV No. 79732.
160 Id., at pp. 80-81.
161 Id., at p. 80, citing Commodities Storage & Ice Plant Corporation v. Court of Appeals, 340
Phil. 551, 559; 274 SCRA 439, 447-448 (1997) [Per J. Puno, Second Division].
162 Id.
182
In addition, Rule 59, Section 1(a)163 of the 1997 Rules of Court requires that the “property or
fund involved is in danger of being lost, removed, or materially injured.” The Court of Appeals
found that the properties involved were “not in danger of being lost, removed[,] or materially
injured.”164 Further, Philippine National Bank’s application was premature since the loan
agreement was still pending appeal and “a receiver should not be appointed to deprive a party
who is in possession of the property in litigation.”165
The dispositive portion of the Court of Appeals’ Resolution166 states:

WHEREFORE, above premises considered, the Philippine National Bank’s Application to
Hold Davao Sunrise Investment and Development Corporation, the Spouses Robert Alan
L. Limso and Nancy Lee Limso and
_______________
163 Rules of Court, Rule 59, Sec. 1(a) provides:
Rule 59. Receivership
SECTION 1. Appointment of Receiver.—Upon a verified application, one or more receivers of

the property subject of the action or proceeding may be appointed by the court where the action
is pending, or by the Court of Appeals or by the Supreme Court, or a member thereof, in the
following cases:
(a) When it appears from the verified application, and such other proof as the court may
require, that the party applying for the appointment of a receiver has an interest in the
property or fund which is the subject of the action or proceeding, and that such property or
fund is in danger of being lost, removed, or materially injured unless a receiver be
appointed to administer and preserve it[.]
164 Rollo (G.R. No. 173194), p. 81, Court of Appeals Resolution in C.A.-G.R. CV No. 79732.
165 Id.
166 Id., at pp. 77-82. The Resolution was penned by Associate Justice Normandie B. Pizarro and
was concurred in by Associate Justices Edgardo A. Camello (Chair) and Ricardo R. Rosario of
the Twenty-Third Division.
183
VOL. 782, JANUARY 27, 2016 183
Wellington Insurance Company, Inc. Jointly and Severally Liable for Damages on the
Injunction Bond and its Application for the Appointment of PNB as Receiver are hereby
both DENIED. And, for the reasons above set forth, the Plaintiff-Appellees’ Motion to
Dismiss is likewise DENIED.
With the filing of the Appellants’ and the Appellees’ respective Brief(s), this case is
considered SUBMITTED for Decision and ORDERED re-raffled to another justice for
study and report.
SO ORDERED.167
Philippine National Bank filed a Motion for Reconsideration on March 28, 2006, which was
denied in the Resolution168 dated May 26, 2006.169
Thus, on July 21, 2006, Philippine National Bank filed before this court a Petition for Review170
on Certiorari questioning the Court of Appeals’ denial of its applications.171 This was docketed
as G.R. No. 173194.172
On February 16, 2007, Philippine National Bank’s Ex-Parte Petition for Issuance of a Writ of
Possession docketed as Other Case No. 124-2002 was dismissed173 based on the following
grounds:
_______________
167 Id., at p. 82.
was concurred in by Associate Justices Edgardo A. Camello (Chair) and Ramon R. Garcia of the
Special Twenty-Third Division.
170 Id., at pp. 45-75.
171 Id., at p. 59.
172 Id., at p. 45.
173 Id., at pp. 558-561. Other Case No. 124-2002 was re-raffled to Branch 16 of the Regional
Trial Court of Davao City. The Order was issued by Presiding Judge Emmanuel C. Carpio.
184

(1) For purposes of the issuance of the writ of possession, Petitioner should complete the entire
process in extrajudicial foreclosure . . .
(2) The records disclose the [sic] contrary to petitioner’s claim, the Certificate of Sale covering
the subject properties has not been registered with the Registry of Deeds of Davao City as the
Court finds no annotation thereof. As such, the sale is not considered perfected to entitled
petitioner to the writ of possession as a matter of rights [sic].174
Philippine National Bank filed a Motion for Reconsideration with Motion for Evidentiary
Hearing.175
Acting on the Motion for Reconsideration, the trial court required the Registry of Deeds to
comment on the matter.176
The trial court eventually denied the Motion for Reconsideration.177
Philippine National Bank appealed the trial court Decision dismissing the Petition for Issuance of
a Writ of Possession by filing a Rule 41 Petition before the Court of Appeals, which was
docketed as C.A.-G.R. CV No. 01464-MIN.178
Meanwhile, when C.A.-G.R. CV No. 79732 was re-raffled,179 it was re-docketed as C.A.-G.R.
CV No. 79732-MIN.180
_______________
174 Rollo (G.R. No. 205463), p. 19, Petition for Review on Certiorari; Rollo (G.R. No.
173194), p. 561, Order in Other Case No. 124-2002.
176 Id., at p. 21.
177 Id., at p. 23.
178 Id., Petition for Review on Certiorari, and p. 55, Court of Appeals Decision in C.A.-G.R.
CV No. 01464-MIN.
180 Rollo (G.R. No. 196958), p. 98, Court of Appeals Decision in C.A.-G.R. CV No. 79732-
MIN.
185
VOL. 782, JANUARY 27, 2016 185
In C.A.-G.R. CV No. 79732-MIN, the Court of Appeals resolved the issue of “whether or not
there has been mutuality between the parties, based on their essential equality, on the subject
imposition of interest rates on plaintiff-appellees’ loan obligation, i.e., the original loan and the
restructured loan.”181
On August 13, 2009, the Court of Appeals promulgated its Decision182 in C.A.-G.R. CV No.
79732-MIN. It held that there was no mutuality between the parties because the interest rates
were unilaterally determined and imposed by Philippine National Bank.183
The Court of Appeals further explained that the contracts between Spouses Limso and Davao
Sunrise, on one hand, and Philippine National Bank, on the other, did not specify the applicable
interest rates. The contracts merely stated the interest rate to be “at a rate per annum that is
determined by the bank”[;]184 “at the rate that is determined by the Bank to be the Bank’s prime
rate in effect at the Date of Drawdown”[;]185 and “at the rate per annum to be set by the Bank.
The interest rate shall be reset by the Bank every month.”186 In addition, the interest rate would
depend on the prime rate, which was “to be determined by the bank[.]”187 It was also discussed
that:
_______________
MIN.
182 Id., at pp. 98-127. The Decision was penned by Associate Justice Ruben C. Ayson,
concurred in by Associate Justices Romulo V. Borja (Chair) and Edgardo A. Camello, and
dissented from by Associate Justices Rodrigo F. Lim, Jr. and Michael P. Elbinias of the Special
Division of Five, Mindanao Station. Associate Justice Camello penned a Concurring Opinion.
Associate Justice Lim, Jr. penned a Separate Dissenting Opinion.
183 Id., at pp. 111-114.

184 Id., at p. 111, citing par. 1.04 of the original revolving credit line agreement.
185 Id., at p. 112, citing par. 1.03 of the original loan agreement.
186 Id., citing par. 2.04 of the interest provision of Loan I.
187 Id., at p. 118.
186
But it even gets worse. After appellant bank had unilaterally determined the imposable
interest on plaintiffs-appellees loans and after the latter had been notified thereof, appellant
bank unilaterally increased the interest rates. Further aggravating the matter, appellant
bank did not increase the interest rate only once but on numerous occasions. Appellant
bank unilaterally and arbitrarily increased the already arbitrarily imposed interest rate
within intervals of only seven (7) days and/or one (1) month.
....
The interests imposed under the Conversion, Restructuring and Extension Agreement, is
not a valid imposition. DSIDC and Spouses Limso have no choice except to assent to the
conditions therein as they are heavily indebted to PNB. In fact, the possibility of the
foreclosure of their mortgage securities is right in their doorsteps. Thus it cannot be
considered “contracts” between the parties, as the borrower’s participation thereat has
been reduced to an unreasonable alternative that is to “take it or leave it.” It has been used
by PNB to raise interest rates to levels which have enslaved appellees or have led to a
hemorrhaging of the latter’s assets. Hence, for being an exploitation of the weaker party,
the borrower, the alleged letter-contracts should also be struck down for being violative of
the principle of mutuality of contracts under Article 1308.188 (Emphasis in the original)
Thus, the Court of Appeals nullified the interest rates imposed by Philippine National Bank:
We reiterate that since the unilateral imposition of rates of interest by appellant bank is not
only violative of the principle of mutuality of contracts, but also were found to be
unconscionable, iniquitous and unreasonable, it is as if there was no express contract
thereon. Thus,
_______________
188 Id., at pp. 119-120.
187
VOL. 782, JANUARY 27, 2016 187
the interest provisions on the (a) revolving credit line in the amount of three hundred (300)
million pesos, (b) seven-year long term loan in the amount of four hundred (400) million
pesos; and (c) Conversions, Restructuring and Extension Agreement, Real Estate
Mortgage, promissory notes, and all other loan documents executed contemporaneous with
or subsequent to the execution of the said agreements are hereby declared null and void.
Such being the case, We apply the ruling of the Supreme Court in the case of United
Coconut Planters Bank v. Spouses Samuel and Odette Beluso which stated:
“We see, however, sufficient basis to impose a 12% legal interest in favor of
petitioner in the case at bar, as what we have voided is merely the stipulated rate of
interest and not the stipulation that the loan shall earn interest.”189 (Citation
omitted)
As to the trial court’s reduction of the penalty charges and attorney’s fees, the Court of Appeals
affirmed the trial court’s ruling and stated that Article 1229190 of the Civil Code allows for the
reduction of penalty charges that are unconscionable.191 The Court of Appeals discussed that:
The penalties imposed by PNB are clearly unconscionable. Any doubt as to this fact can be
removed by simply glancing at the penalties charged by defendant-appellant which . . .
already amounted to an incredibly huge amount of P176,098,045.94 despite payments that
already exceeded the amount of the loan as of 1998.
_______________
189 Id., at p. 124.
190 Civil Code, Art. 1229 provides:
Article 1229. The judge shall equitable reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. Even if there has been no performance,
the penalty may also be reduced by the courts if it is iniquitous or unconscionable.
191 Rollo (G.R. No. 196958), pp. 125-126.
188
With respect to attorney’s fees, the Supreme Court had consistently and invariably ruled
that even with the presence of an agreement between the parties, the court may
nevertheless reduce attorney’s fees though fixed in the contract when the amount thereof
appears to be unconscionable or unreasonable. Again, the fact that the attorney’s fees
imposed by PNB are unconscionable and unreasonable can clearly be seen. The attorney’s
fees imposed similarly points to an incredibly huge sum of P136,900,928.85 as of October
30, 2000. Therefore, its reduction in the assailed decision is well-grounded.192 (Citation
omitted)
The dispositive portion of the Court of Appeals’ Decision states:

WHEREFORE, the assailed Decision dated June 19, 2002 and Order dated August 13,
2002 of the Regional Trial Court of Davao City, Branch 17 in Civil Case No. 28,170-2000
declaring the unilateral imposition of interest rates by defendant-appellant PNB as null and
void appealed from are AFFIRMED with the MODIFICATION that the obligation of
plaintiff-appellees arising from the Loan and Revolving Credit Line and subsequent
Conversion, Restructuring and Extension Agreement as Loan I and Loan II shall earn
interest at the legal rate of twelve percent (12%) per annum computed from September 1,
1993, until fully paid and satisfied.
Philippine National Bank moved for reconsideration on September 3, 2009,194 arguing that the
interest rates were “mutually agreed upon”[;]195 that Spouses Limso and Davao
_______________
192 Id.
193 Id., at pp. 126-127.
195 Id., at p. 154, Court of Appeals Resolution in C.A.-G.R. CV No. 79732-MIN.
189
VOL. 782, JANUARY 27, 2016 189
Sunrise “never questioned the . . . interest rates”[;]196 and that they “acknowledged the total
amount of their debt (inclusive of loan principal and accrued interest) to [Philippine National
Bank] in the Conversion, Restructuring and Extension Agreement which restructured their
obligation to [Philippine National Bank] in the amount of P1.067 Billion[.]”197
Spouses Limso and Davao Sunrise moved for partial reconsideration on September 9, 2009,198
pointing out that their obligation to Philippine National Bank was only P205,084,682.61, as
stated in the trial court’s Order dated August 13, 2002 in Civil Case No. 28,170-2000.199
Both Motions were denied by the Court of Appeals in the Resolution200 dated May 18, 2011.
The Court of Appeals held that Philippine National Bank’s Motion for Reconsideration raised
issues that were a mere rehash of the issues already ruled upon.201
With regard to Spouses Limso and Davao Sunrise’s Motion for Partial Reconsideration, the
Court of Appeals ruled that:
Since the appellees did not appeal from the decision of the lower court, they are not
entitled to any award of affirmative relief. It is well-settled that an appellee who has not
himself appealed cannot obtain from the appellate court any affirmative relief other than
those granted
_______________
196 Id.
197 Id.
199 Id., at p. 160, Court of Appeals Resolution in C.A.-G.R. CV No. 79732-MIN.
200 Id., at pp. 153-168. The Resolution was penned by Associate Justice Romulo V. Borja
(Chair), concurred in by Associate Justices Edgardo A. Camello and Zenaida Galapate Laguilles,
and dissented from by Associate Justices Rodrigo F. Lim, Jr. and Edgardo T. Lloren of the
Special Former Special Twenty-Second Division, Mindanao Station. Associate Justice Lim, Jr.
penned a Dissenting Opinion.
201 Id., at p. 160.
190

in the decision of the court below. The appellee can only advance any argument that he may
deem necessary to defeat the appellant’s claim or to uphold the decision that is being disputed. . .
. Thus, the lower court’s finding that the appellees have an unpaid obligation with PNB, and not
the other way around, should stand. It bears stressing that appellees even acknowledged their
outstanding indebtedness with the PNB when they filed their “Urgent Motion for Execution
Pending Appeal” of the August 13, 2002 Order of the lower court decreeing that appellees’
remaining obligation with PNB is P205,084,682.61. They cannot now claim that PNB is the one
indebted to them in the amount of P15,915,588.89.202
Philippine National Bank filed a Petition for Review on Certiorari203 assailing the Decision in
C.A.-G.R. CV No. 79732-MIN. Philippine National Bank argues that there was mutuality of
contracts between the parties, and that the interest rates imposed were valid in view of the
escalation clauses in their contract.204 Philippine National Bank’s Petition for Review was
docketed as G.R. No. 196958.205
Spouses Limso and Davao Sunrise also filed a Petition for Review206 on Certiorari questioning
the ruling of the Court of Appeals in C.A.-G.R. CV No. 79732-MIN that their outstanding
obligation was P803,185,411.11.207 Spouses Limso and Davao Sunrise argue that they “made
overpayments in the amount of P15,915,588.89.”208 This was docketed as G.R. No. 197120.209
On January 21, 2013, the Court of Appeals dismissed Philippine National Bank’s appeal
docketed as C.A.-G.R. CV No.
_______________
202 Id., at p. 167.
203 Id., at pp. 8-96.
204 Id., at pp. 56-75.
205 Id., at p. 8.
206 Rollo (G.R. No. 197120), pp. 3-39.
207 Id., at p. 4.
208 Id.
209 Id., at p. 3.
191
VOL. 782, JANUARY 27, 2016 191
01464-MIN (referring to the Petition for the Issuance of a Writ of Possession) on the ground that
Philippine National Bank availed itself of the wrong remedy.210 What the Philippine National
Bank should have filed was a “petition for review under Rule 45 and not an appeal under Rule
41[.]”211
On March 15, 2013, the Philippine National Bank filed a Petition for Review on Certiorari212
before this court, assailing the dismissal of its appeal before the Court of Appeals and praying
that the Decision of the trial court — that the Sheriff’s Provisional Certificate of Sale was not
signed by the Register of Deeds and was not registered — be reversed and set aside. The Petition
was docketed as G.R. No. 205463.213
G.R. No. 158622 was filed on July 1, 2003;214 G.R. No. 169441 was filed on September 14,
2005;215 G.R. No. 172958 was filed on June 26, 2006;216 G.R. No. 173194 was filed on July
21, 2006;217 G.R. No. 196958 was filed on June 17, 2011;218 G.R. No. 197120 was filed on
June 22, 2011;219 and G.R. No. 205463 was filed on March 15, 2013.220
_______________
210 Rollo (G.R. No. 205463), pp. 65-66, Court of Appeals Decision in C.A.-G.R. CV No.
01464-MIN.
212 Id., at pp. 8-52.
213 Id., at p. 8.

192
_______________
221 Rollo (G.R. No. 158622, Vol. I), p. 205, Regional Trial Court Order in S.P. Civil Case No.
29,036-2002.
223 Rollo (G.R. No. 169441), pp. 640-647.
225 Id., at pp. 18-20 and 22.
226 Rollo (G.R. No. 169441), pp. 640-647.

227 Rollo (G.R. No. 172958), pp. 131-149. The Decision was penned by Associate Justice
Edgardo A. Camello and concurred in by Associate Justices Teresita Dy-Liacco Flores (Chair)
and Myrna Dimaranan-Vidal of the Twenty-First Division.
193
VOL. 782, JANUARY 27, 2016 193
_______________
228 Id., at pp. 150-156. The Resolution was penned by Associate Justice Edgardo A. Camello
and concurred in by Associate Justices Teresita Dy-Liacco Flores (Chair) and Myrna Dimaranan-
Vidal of the Former Twenty-First Division.
230 Rollo (G.R. No. 173194), pp. 131-148, Amended Complaint in Civil Case No. 28,170-2000.
concurred in by Associate Justices Edgardo A. Camello (Chair) and Ricardo R. Rosario of the
Twenty-Third Division.
194

_______________
concurred in by Associate Justices Edgardo A. Camello (Chair) and Ramon R. Garcia of the
Special Twenty-Third Division.
234 Id., at pp. 98-127, Court of Appeals Decision in C.A.-G.R. CV No. 79732-MIN. The
Decision was penned by Associate Justice Ruben C. Ayson, concurred in by Associate Justices
Romulo V. Borja (Chair) and Edgardo A. Camello, and dissented from by Associate Justices
Rodrigo F. Lim, Jr. and Michael P. Elbinias of the Special Division of Five, Mindanao Station.
Associate Justice Camello penned a Concurring Opinion. Associate Justice Lim, Jr. penned a
Separate Dissenting Opinion. The dispositive portion of the Court of Appeals decision stated:
Wherefore, the assailed Decision dated June 19, 2002 and Order dated August 13, 2002 of
the Regional Trial Court of Davao City, Branch 17 in Civil Case No. 28,170-2000
void appealed from are affirmed with the modification that the obligation of plaintiff-
appellees arising from the Loan
195
VOL. 782, JANUARY 27, 2016 195
_______________
and Revolving Credit Line and subsequent Conversion, Restructuring and Extension
Agreement as Loan I and Loan II should earn interest at the legal rate of twelve percent
(12%) per annum computed from September 1, 1993 until fully paid and satisfied.
235 Id., at pp. 153-168, Court of Appeals Resolution in C.A.-G.R. CV No. 79732-MIN. The
Resolution was penned by Associate Justice Romulo V. Borja (Chair), concurred in by Associate
Justices Edgardo A. Camello and Zenaida Galapate Laguilles, and dissented from by Associate
Justices Rodrigo F. Lim, Jr. and Edgardo T. Lloren of the Special Former Special Twenty-Second
Division, Mindanao Station. Associate Justice Lim, Jr. penned a Dissenting Opinion. The
dispositive portion of the Resolution states:
Wherefore, the Motion for Reconsideration dated September 3, 2009 filed by defendant-
appellant, Philippine National Bank and the Motion for Partial Reconsideration dated
September 4, 2009 filed by plaintiffs-appellees Davao Sunrise Investment and
Development Corporation and Spouses Robert Alan L. Limso and Nancy Lee Limso, are
BOTH DENIED for lack of merit.
SO ORDERED.
236 Rollo (G.R. No. 196958), pp. 98-127.
237 Id., at pp. 153-168.
238 Id., at p. 98.
196
_______________
239 Rollo (G.R. No. 197120), pp. 235-252.
240 Id., at pp. 44-73. The Decision was penned by Associate Justice Ruben C. Ayson, concurred
in by Associate Justices Romulo V. Borja (Chair) and Edgardo A. Camello, and dissented from
by Associate Justices Rodrigo F. Lim, Jr. and Michael P. Elbinias of the Special Division of Five,
Mindanao Station. Associate Justice Camello penned a Concurring Opinion. Associate Justice
Lim, Jr. penned a Separate Dissenting Opinion.
241 Id., at pp. 99-114. The Resolution was penned by Associate Justice Romulo V. Borja
(Chair), concurred in by Associate Justices Edgardo A. Camello and Zenaida Galapate Laguilles,
and dissented from by Associate Justices Rodrigo F. Lim, Jr. and Edgardo T. Lloren of the
Special Former Special Twenty-Second Division, Mindanao Station. Associate Justice Lim, Jr.
penned a Dissenting Opinion.
197
VOL. 782, JANUARY 27, 2016 197
In the Manifestation and Motion245 dated May 26, 2006, Davao Sunrise prayed that it be
allowed to withdraw G.R. No. 169441 since the issues in the Petition had become moot and
academic.
In the Resolution246 dated August 7, 2006, this court consolidated G.R. Nos. 172958, 173194,
and 169441, with G.R. No. 158622 as the lowest-numbered case.
Davao Sunrise’s Manifestation and Motion dated May 26, 2006, which prayed that it be allowed
to withdraw G.R. No. 169441, was granted in the Resolution247 dated October 16, 2006. Thus,
G.R. No. 169441 was deemed closed and terminated as of October 16, 2006.248
In the Resolution249 dated March 7, 2007 in G.R. No. 173194, this court required respondents
Spouses Limso and Davao Sunrise to file their comment.
_______________
MIN.
244 Id., at pp. 55-66. The Decision was penned by Associate Justice Romulo V. Borja and
concurred in by Associate Justices Ma. Luisa Quijano-Padilla and Marie Christine Azcarraga-
Jacob of the Twenty-First Division.
245 Rollo (G.R. No. 169441), pp. 3000-3003.
246 Rollo (G.R. No. 158622, Vol. I), pp. 1422-1423.
247 Rollo (G.R. No. 169441), pp. 1775-1776.
248 Id., at p. 1776.
249 Rollo (G.R. No. 173194), pp. 470A-470B.
198
In the Resolution250 dated July 4, 2011, G.R. No. 197120 was consolidated with G.R. No.
196958.
On May 17, 2012, counsel for Spouses Limso and Davao Sunrise notified this court of the death
of Robert Alan L. Limso.251
On October 9, 2013, Spouses Limso and Davao Sunrise filed a Motion to Withdraw Petitions in
G.R. Nos. 172958, 169441 and 158622.252 Davao Sunrise and Spouses Limso, through counsel,
explained that G.R. No. 169441 had been mooted by Judge Quitain’s voluntary inhibition from
hearing and deciding Other Case No. 124-2002.253
After Judge Quitain had inhibited, Other Case No. 124-2002 was re-raffled to Branch 16 of the
Regional Trial Court of Davao City.254 Other Case No. 124-2002 was dismissed in the Order255
dated February 16, 2007. Since Other Case No. 124-2002 was dismissed, G.R. No. 172958 was
mooted as well.256
With regard to G.R. No. 158622, counsel for Spouses Limso and Davao Sunrise explained:
It is clear, however, that the ruling of the Regional Trial Court of Davao City in Civil Case
No. 28,170-2000 and the Court of Appeals in C.A.-G.R. CV No. 79732 already rendered
Civil Case No. 29,036-2002 moot and academic.
_______________
250 Rollo (G.R. No. 197120), pp. 565-566.
251 Rollo (G.R. No. 196958), pp. 381-382, Notice of Death.
252 Rollo (G.R. No. 158622, Vol. II), pp. 1140-1149.
253 Id., at pp. 1142-1143.
254 Id., at p. 1158, Regional Trial Court Order in Other Case No. 124-2002.
255 Id., at pp. 1158-1160. The Order was penned by Presiding Judge Emmanuel C. Carpio of
256 Id., at pp. 1143-1144, Spouses Limso and Davao Sunrise’s Motion to Withdraw Petitions in
G.R. Nos. 172958, 169441, and 158622.
199
VOL. 782, JANUARY 27, 2016 199
Under the premises, there is no need for this Honorable Court to rule on the propriety of
the dismissal of the said action for Declaratory Relief as the loan agreements — from
which the entire case stemmed — had already been declared NULL AND VOID.257
In the Resolution258 dated March 12, 2014, this court granted the Motion to Withdraw Petitions
with regard to G.R. Nos. 172958 and 158622. The prayer for the withdrawal of G.R. No. 169441
was noted without action since G.R. No. 169441 was deemed closed and terminated in this
court’s Resolution dated October 16, 2006.259
On April 2, 2014, Spouses Limso and Davao Sunrise filed an “Omnibus Motion for Leave [1] To
Intervene; [2] To File/ Admit Herein Attached Comment-in-Intervention; and [3] To Consolidate
Cases”260 in G.R. No. 205463.
Spouses Limso and Davao Sunrise argue that they were allowed to participate in Other Case No.
124-2002, and that Philippine National Bank was in bad faith when it did not furnish Nancy
Limso and Davao Sunrise copies of the Petition for Review it had filed.261
In the Resolution262 dated April 2, 2014, this court gave due course to the Petition and required
the parties to submit their memoranda.
On April 15, 2014, Spouses Limso and Davao Sunrise filed a Motion to Dismiss the Petition in
G.R. No. 173194 on the ground that the issues raised by Philippine National Bank are moot and
academic. Spouses Limso and Davao Sunrise
_______________
257 Id., at p. 1147.
258 Rollo (G.R. No. 205463), p. 1087.
259 Id.
260 Id., at pp. 111-125.
261 Id., at pp. 113-114.
262 Id., at pp. 108-109.
200

also reiterated that Philippine National Bank availed of the wrong remedy.263
In the Resolution264 dated July 9, 2014, this court recommended the consolidation of G.R. No.
205463 with G.R. Nos. 158622, 169441, 172958, 173194, 196958, and 197120.
In the Resolution265 dated October 13, 2014, this court noted and granted the Omnibus Motion
for Leave to Intervene filed by counsel for Nancy Limso and Davao Sunrise.266 This court also
noted the memoranda filed by counsel for Philippine National Bank, the Office of the Solicitor
General, and counsel for Spouses Limso and Davao Sunrise.267
The remaining issues for resolution are those raised in G.R. Nos. 173194, 196958, 197120, and
205463, which are:
First, whether the Philippine National Bank’s Petition for Review on Certiorari in G.R. No.
173194 is the wrong remedy to assail the March 2, 2006 Court of Appeals’ Resolution,268 which
denied Philippine National Bank’s (1) Application to Hold [Spouses Limso and Davao Sunrise]
and the Surety Bond Company Jointly and Severally Liable for Damages on the Injunction Bond,
and (2) Application for the Appointment of [Philippine National Bank] as Receiver;
Second, whether Philippine National Bank committed forum shopping when it filed an ex parte
Petition for the Issuance of a Writ of Possession and an Application to be Appointed as Receiver;
_______________
263 Id., at pp. 983-1005.
264 Id., at pp. 968-969.
265 Id., at pp. 972-973.
266 Id., at p. 972.
267 Id., at p. 973.
concurred in by Associate Justices Edgardo A. Camello (Chair) and Ricardo R. Rosario of the
Twenty-Third Division.
201
VOL. 782, JANUARY 27, 2016 201

Third, whether the Court of Appeals erred in ruling that the interest rates imposed by Philippine
National Bank were usurious and unconscionable;
Fourth, whether the Conversion, Restructuring and Extension Agreement executed in 1999
novated the original Loan and Credit Agreement executed in 1993;
Fifth, whether the Court of Appeals erred in dismissing the appeal under Rule 41 filed by
Philippine National Bank, which assailed the Court of Appeals Decision dated January 21, 2013
in C.A.-G.R. CV No. 01464-MIN, for being the wrong remedy;
Sixth, whether the Sheriff’s Provisional Certificate of Sale should be considered registered in
view of the entry made by the Register of Deeds in the Primary Entry Book; and
Lastly, whether Philippine National Bank is entitled to a writ of possession.
The Petition for Review in G.R. No. 173194 should be denied.
The Petition docketed as G.R. No. 173194, filed by Philippine National Bank, questions the
Court of Appeals’ Resolutions in C.A.-G.R. CV No. 79732-MIN dated March 2, 2006 and May
26, 2006, which denied Philippine National Bank’s applications for damages on the injunction
bond and to be appointed as receiver.269
The assailed Resolutions in G.R. No. 173194 are interlocutory orders and are not appealable.
Rule 41, Section 1270 of the Rules of Court provides:
_______________
269 Id., at pp. 1001-1002.
270 As amended by A.M. 07-7-12-SC.

202
SECTION 1. Subject of Appeal.—An appeal may be taken from a judgment or final

order that completely disposes of the case, or of a particular matter therein when declared
by these Rules to be appealable.
No appeal may be taken from:
....
(b) An interlocutory order;
....
In any of the foregoing circumstances, the aggrieved party may file an appropriate special
civil action as provided in Rule 65.
In addition, Rule 45, Section 1 of the Rules of Court provides:
SECTION 1. Filing of Petition with Supreme Court.—A party desiring to appeal by

certiorari from a judgment, final order or resolution of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts,
whenever authorized by law, may file with the Supreme Court a verified petition for
review on certiorari[.] (Emphasis supplied)
The difference between an interlocutory order and a final order was discussed in United
Overseas Bank (formerly Westmont Bank) v. Judge Ros:271
The word interlocutory refers to something intervening between the commencement and
the end of the suit which decides some point or matter but is not a final decision of the
whole controversy. This Court had the occasion to distinguish a final order or resolution
from an interlocutory one in the case of Investments, Inc. v. Court of Appeals, thus:
_______________
271 556 Phil. 178; 529 SCRA 334 (2007) [Per J. Chico-Nazario, Third Division].
203
VOL. 782, JANUARY 27, 2016 203
x x x A “final” judgment or order is one that finally disposes of a case, leaving nothing
more to be done by the Court in respect thereto, e.g., an adjudication on the merits which,
on the basis of the evidence presented on the trial, declares categorically what the rights
and obligations of the parties are and which party is in the right; or a judgment or order
that dismisses an action on the ground, for instance, of res judicata or prescription. Once
rendered, the task of the Court is ended, as far as deciding the controversy or determining
the rights and liabilities of the litigants is concerned. Nothing more remains to be done by
the Court except to await the parties’ next move (which among others, may consist of the
filing of a motion for new trial or reconsideration, or the taking of an appeal) and
ultimately, of course, to cause the execution of the judgment once it becomes “final” or, to
use the established and more distinctive term, “final and executory.”
x x x x x x x x x
Conversely, an order that does not finally dispose of the case, and does not end the Court’s
task of adjudicating the parties’ contentions and determining their rights and liabilities as
regards each other, but obviously indicates that other things remain to be done by the
Court, is “interlocutory” e.g., an order denying motion to dismiss under Rule 16 of the
Rules, or granting of motion on extension of time to file a pleading, or authorizing
amendment thereof, or granting or denying applications for postponement, or production
or inspection of documents or things, etc. Unlike a “final” judgment or order, which is
appealable, as above pointed out, an “interlocutory” order may not be questioned on
appeal except only as part of an appeal that may eventually be
204
taken from the final judgment rendered in the case.272 (Citations omitted)
The Resolutions denying Philippine National Bank’s applications were interlocutory orders since
the Resolutions did not dispose of the merits of the main case.
C.A.-G.R. CV No. 79732-MIN originated from Civil Case No. 28,170-2000, which involved the
issues regarding the interest rates imposed by Philippine National Bank. Hence, the denial of
Philippine National Bank’s applications did not determine the issues on the interest rates
imposed by Philippine National Bank.
The proper remedy for Philippine National Bank would have been to file a petition for certiorari
under Rule 65 or, in the alternative, to await the outcome of the main case and file an appeal,
raising the denial of its applications as an assignment of error.
In any case, we continue to resolve the arguments raised in G.R. No. 173194.
Philippine National Bank argues in its Petition for Review docketed as G.R. No. 173194 that its
application to hold the injunction bond liable for damages was filed on time. It points out that the
phrase “before the judgment becomes executory” found in Section 20273 of Rule 57 refers to the
judgment in the
_______________
272 Id., at pp. 188-189; pp. 343-344.
273 Rules of Court, Rule 57, Sec. 20 provides:
SECTION 20. Claim for Damages on Account of Improper, Irregular or Excessive

Attachment.—An application for damages on account of improper, irregular or excessive
attachment must be filed before the trial or before appeal is perfected or before the judgment
becomes executory, with due notice to the attaching party and his surety or sureties, setting forth
the facts showing his right to damages and the amount thereof. Such damages may be awarded
only after proper hearing and shall be included in the judgment on the main case[.]
205
VOL. 782, JANUARY 27, 2016 205
main case, which, in this case, refers to C.A.-G.R. CV No. 79732.274
Philippine National Bank also argues that the Court of Appeals erred in denying its application to
be appointed as receiver because although the Sheriff’s Provisional Certificate of Sale was not
registered, the Certificate of Sale “provides the basis for [Philippine National Bank] to claim
ownership over the foreclosed properties.”275 As the highest bidder, Philippine National Bank
had the right to receive the rental income of the foreclosed properties.276
Spouses Limso and Davao Sunrise filed their Comment,277 countering that the Court of Appeals
did not err in denying Philippine National Bank’s applications to hold the injunction bond liable
for damages and to be appointed as receiver.278 They cite San Beda College v. Social Security
System,279 where this court ruled that “the claim for damages for wrongful issuance of
injunction must be filed before the finality of the decree dissolving the questioned writ.”280
They highlight Philippine National Bank’s admission that the writ of preliminary injunction was
dissolved in January 2002, and that the Decision281 dissolving the writ attained finality on
September 11, 2002.282
Spouses Limso and Davao Sunrise further point out that while C.A.-G.R. CV No. 79732 was still
pending before the
_______________
274 Rollo (G.R. No. 173194), p. 65, Petition for Review. Note that C.A.-G.R. CV No. 79732
was subsequently re-docketed as C.A.-G.R. CV No. 79732-MIN.
275 Id., at p. 67.

276 Id., at pp. 67-68.
277 Id., at pp. 471-498.
278 Id., at pp. 477-481.
279 144 Phil. 143; 33 SCRA 190 (1970) [Per J. J.B.L. Reyes, En Banc].
280 Rollo (G.R. No. 173194), p. 479, Comment.
281 This Decision refers to that in G.R. No. 152812.
282 Rollo (G.R. No. 173194), pp. 478-479, Comment.
206
Court of Appeals, “the decree dissolving the questioned Writ of Preliminary Injunction had
already become final.”283 Thus, Philippine National Bank filed its application out of time.284
They argue that in any case, Philippine National Bank cannot claim damages on the injunction
bond since it was unable to secure a judgment in its favor in Civil Case No. 28,170-2000.285
They further argue that the Court of Appeals was correct in denying Philippine National Bank’s
application to be appointed as receiver on the ground that Philippine National Bank is a party to
the case and hence, it cannot be appointed as receiver.286
Spouses Limso and Davao Sunrise then allege that Philippine National Bank is guilty of forum
shopping. They argue that Philippine National Bank’s ex parte Petition for the issuance of a writ
of possession, docketed as Other Case No. 124-2002, and the application to be appointed as
receiver have the same purpose: to obtain possession of the properties.287
Philippine National Bank, through counsel, filed its Reply, countering that San Beda College was
decided when the 1964 Rules of Court was still in effect.288 It argues that the cited case is no
longer applicable because the 1964 Rules was superseded by the 1997 Rules of Civil
Procedure.289 The applicable case is Hanil Development Co., Ltd. v. Intermediate Appellate
Court,290 where this court ruled that “the judgment against
_______________
283 Id., at p. 480.
284 Id., at pp. 480-481.
285 Id., at p. 481.
286 Id., at p. 488.
287 Id., at p. 492.
288 Id., at p. 666, Reply.
289 Id., at p. 667.
290 228 Phil. 529; 144 SCRA 557 (1986) [Per J. Gutierrez, Jr., Second Division].
207
VOL. 782, JANUARY 27, 2016 207
the attachment bond could be included in the final judgment of the main case.”291
Philippine National Bank also argued that under the 1997 Rules of Civil Procedure, the applicant
for damages does not have to be the winning party.292
Philippine National Bank further argues that it did not commit forum shopping since “there is no
identity of parties between C.A.-G.R. CV No. 79732 . . . and Other Case No. 124-2002.”293 The
causes of action and reliefs sought in the two cases are different.294 It points out that its
application to be appointed as receiver is a provisional remedy under Rule 59 of the 1997 Rules
of Civil Procedure, while its prayer for the issuance of a writ of possession in Other Case No.
124-2002 is based on its right to possess the properties involved.295
We rule that the Court of Appeals properly denied Philippine National Bank’s application to hold
the injunction bond liable for damages and be appointed as receiver. We also rule that no forum
shopping was committed by Philippine National Bank. However, the Court of Appeals erred in
ruling that Philippine National Bank filed its application to hold the injunction bond liable for
damages out of time.
The Court of Appeals, in its Resolution dated March 2, 2006, explained:
Records show that when this Court annulled the RTC’s order of injunction, Davao Sunrise
thereafter elevated the matter to the Supreme Court. On July 24, 2002, the Supreme Court
denied its petition for having been filed out of time and an Entry of Judgment was issued
on Sept[ember] 11, 2002.
_______________
291 Rollo (G.R. No. 173194), p. 667, Reply.
292 Id., at pp. 671-674.
293 Id., at p. 683.
294 Id., at p. 684.
295 Id.
208
PNB’s instant application however was filed only on February 17, 2005 and/or in the
course of its appeal on the main case — about two (2) years and five (5) months after the
judgment annulling the injunction order attained finality.
Clearly, despite that it already obtained a favorable judgment on the injunction matter,
PNB failed to file (before the court a quo) an application for damages against the bond
before judgment was rendered in the main case by the court a quo. Thus, even for this
reason alone, Davao Sunrise and its bondsman are relieved of further liability
thereunder.296 (Citations omitted)
The Petition referred to by the Court of Appeals in the quoted Resolution was docketed as G.R.
No. 152812 and was entitled Davao Sunrise Investment and Development Corporation, et al. v.
Court of Appeals, et al.297 G.R. No. 152812 originated from C.A.-G.R. S.P. No. 63351.298
C.A.-G.R. S.P. No. 63351 was a Petition for Certiorari filed by Philippine National Bank, which
questioned the issuance of a writ of preliminary injunction in Civil Case No. 28,170-2000.299
In the Decision300 dated January 10, 2002, the Court of Appeals granted Philippine National
Bank’s Petition for Certiorari and held that:
_______________
296 Id., at pp. 79-80, Court of Appeals Resolution in C.A.-G.R. CV No. 79732. The injunction
referred to is the writ of preliminary injunction issued in Civil Case No. 28,170-2000.
297 Id., at p. 216, Supreme Court Resolution.
299 Id., at pp. 201-202, Court of Appeals Decision in C.A.-G.R. S.P. No. 63351.
300 Id., at pp. 201-215. The Decision was penned by Associate Justice Salvador J. Valdez, Jr.
(Chair) and concurred in by Associate Justices Mercedes Gozo-Dadole and Sergio L. Pestaño of
the Fifteenth Division.
209
VOL. 782, JANUARY 27, 2016 209
In the case at bar, respondents’ claim to a right to preliminary injunction based on PNB’s
purported unilateral imposition of interest rates and subsequent increases thereof, is not a
right warranting the issuance of an injunction to halt the foreclosure proceedings. On the
contrary, it is petitioner bank which has proven its right to foreclose respondents’
mortgaged properties, especially since respondents have admitted their indebtedness to
PNB and merely questioning the interest rates imposed by the bank. . . .
....
Above all, the core and ultimate issue raised in the main case below is the interest
stipulation in the loan agreements between the petitioner and private respondents, the
validity of which is still to be determined by the lower court. Injunctive relief cannot be
made to rest on the assumption that said interest stipulation is void as it would preempt the
merits of the main case.
WHEREFORE, premises considered, the assailed Orders of respondent judge dated

December 4 and 21, 2000 are hereby ANNULLED and SET ASIDE, and the Order dated
November 20, 2000 denying private respondents prayer for the issuance of a writ of
preliminary injunction is REINSTATED.
SO ORDERED.301
Spouses Limso and Davao Sunrise assailed the Decision in C.A.-G.R. S.P. No. 63351 and filed
before this court a Petition for Review, docketed as G.R. No. 152812. However, the Petition for
Review was denied in the Resolution302 dated July 24, 2002 for being filed out of time, and
Entry of Judgment303 was made on September 11, 2002.
_______________
301 Id., at pp. 212-215, Court of Appeals Decision in C.A.-G.R. S.P. No. 63351.
302 Id., at pp. 216-217.
303 Id., at p. 218.
210

The issuance of the writ of preliminary injunction in Civil Case No. 28,170-2000 was an
interlocutory order, and was properly questioned by Philippine National Bank through a Petition
for Certiorari.
However, the Court of Appeals erred in ruling that Philippine National Bank’s application was
filed out of time.
Section 20 of Rule 57 of the Rules of Civil Procedure provides:
SECTION 20. Claim for Damages on Account of Improper, Irregular or Excessive

Attachment.—An application for damages on account of improper, irregular or excessive
attachment must be filed before the trial or before appeal is perfected or before the
judgment becomes executory, with due notice to the attaching party and his surety or
sureties, setting forth the facts showing his right to damages and the amount thereof. Such
damages may be awarded only after proper hearing and shall be included in the judgment
on the main case.
If the judgment of the appellate court be favorable to the party against whom the
attachment was issued, he must claim damages sustained during the pendency of the
appeal by filing an application in the appellate court, with notice to the party in whose
favor the attachment was issued or his surety or sureties, before the judgment of the
appellate court becomes executory. The appellate court may allow the application to be
heard and decided by the trial court.
Nothing herein contained shall prevent the party against whom the attachment was issued
from recovering in the same action the damages awarded to him from any property of the
attaching party not exempt from execution should the bond or deposit given by the latter
be insufficient or fail to fully satisfy the award.
211
VOL. 782, JANUARY 27, 2016 211
The judgment referred to in Section 20 of Rule 57 should mean the judgment in the main case. In
Carlos v. Sandoval:304
Section 20 essentially allows the application to be filed at any time before the judgment
becomes executory. It should be filed in the same case that is the main action, and cannot
be instituted separately. It should be filed with the court having jurisdiction over the case at
the time of the application. The remedy provided by law is exclusive and by failing to file
a motion for the determination of the damages on time and while the judgment is still
under the control of the court, the claimant loses his right to damages.305 (Citations
omitted)
In this case, Philippine National Bank filed its application306 during the pendency of the appeal
before the Court of Appeals. The application was dated January 12, 2005,307 while the appeal in
the main case, docketed as C.A.-G.R. CV No. 79732-MIN, was decided on August 13, 2009.308
Hence, Philippine National Bank’s application to hold the injunction bond liable for damages
was filed on time.
The Court of Appeals properly denied Philippine National Bank’s application to be appointed as
a receiver.
Rule 59, Section 1 provides the grounds when a receiver may be appointed:
SECTION 1. Appointment of Receiver.—Upon a verified application, one or more receivers of

the property subject of the action or proceeding may be appointed by the court where the action
is pending, or by the Court of
_______________
304 508 Phil. 260; 471 SCRA 266 (2005) [Per J. Tinga, Second Division].
305 Id., at pp. 277-278; pp. 282-283.
306 Rollo (G.R. No. 173194), pp. 262-272.
307 Id., at p. 271.
MIN.
212
Appeals or by the Supreme Court, or a member thereof, in the following cases:
(a) When it appears from the verified application, and such other proof as the court
may require, that the party applying for the appointment of a receiver has an interest
in the property or fund which is the subject of the action or proceeding, and that
such property or fund is in danger of being lost, removed, or materially injured
unless a receiver be appointed to administer and preserve it;
(b) When it appears in an action by the mortgagee for the foreclosure of a mortgage
that the property is in danger of being wasted or dissipated or materially injured, and
that its value is probably insufficient to discharge the mortgage debt, or that the
parties have so stipulated in the contract of mortgage;
(c) After judgment, to preserve the property during the pendency of an appeal, or to
dispose of it according to the judgment, or to aid execution when the execution has
been returned unsatisfied or the judgment obligor refuses to apply his property in
satisfaction of the judgment, or otherwise to carry the judgment into effect;
(d) Whenever in other cases it appears that the appointment of a receiver is the most
convenient and feasible means of preserving, administering, or disposing of the
property in litigation.
During the pendency of an appeal, the appellate court may allow an application for the
appointment of a receiver to be filed in and decided by the court of origin and the receiver
appointed to be subject to the control of said court.
213
VOL. 782, JANUARY 27, 2016 213

In Commodities Storage & Ice Plant Corporation v. Court of Appeals:309
The general rule is that neither party to a litigation should be appointed as receiver without
the consent of the other because a receiver should be a person indifferent to the parties and
should be impartial and disinterested. The receiver is not the representative of any of the
parties but of all of them to the end that their interests may be equally protected with the
least possible inconvenience and expense.310 (Citations omitted)
The Court of Appeals cited Spouses Limso and Davao Sunrise’s objection to Philippine National
Bank’s application to be appointed as receiver as one of the grounds why the application should
fail.311
Also, the Court of Appeals found that the mortgaged properties of Spouses Limso and Davao
Sunrise were earning approximately P12,000,000.00 per month. This proves that the properties
were being administered properly and did not require the appointment of a receiver. Also, to
appoint Philippine National Bank as receiver would be premature since the trial court’s Decision
was pending appeal.312
Philippine National Bank did not commit forum shopping when it filed an ex parte Petition for
the issuance of a writ of possession and an application for appointment as receiver.
The elements of forum shopping are:
(a) identity of parties, or at least such parties as represent the same interests in both
actions;
_______________
309 Supra note 161.
310 Id., at p. 559; pp. 447-448.
312 Id., at pp. 33-34.

214
(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.313 (Citation omitted)
There is no identity of parties because the party to the Petition for Issuance of Writ of Possession
is Philippine National Bank only, while there are two parties to application for appointment as
receiver: Philippine National Bank on one hand, and Spouses Limso and Davao Sunrise on the
other.
The causes of action are also different. In the Petition for Issuance of Writ of Possession,
Philippine National Bank prays that it be granted a writ of possession over the foreclosed
properties because it is the winning bidder in the foreclosure sale.314 On the other hand,
Philippine National Bank’s application to be appointed as receiver is for the purpose of
preserving these properties pending the resolution of C.A.-G.R. CV No. 79732.315 While the
issuance of a writ of possession or the appointment as receiver would have the same result of
granting possession of the foreclosed properties to Philippine National Bank, Philippine National
Bank’s right to possess these properties as the winning bidder in the foreclosure sale is different
from its interest as creditor to preserve these properties.
_______________
313 Ortigas & Company Limited Partnership v. Velasco, G.R. No. 109645, January 21, 2015,
746 SCRA 378, 431 [Per J. Leonen, Second Division].
314 Rollo (G.R. No. 173194), p. 682, Philippine National Bank’s Reply.
315 Id., at pp. 337-340, Application for the Appointment of PNB as Receiver.
215
VOL. 782, JANUARY 27, 2016 215
II
There is no mutuality of contracts when the determination or imposition of interest rates is at the
sole discretion of a party to the contract. Further, escalation clauses in contracts are void when
they allow the creditor to unilaterally adjust the interest rates without the consent of the debtor.
The Petitions docketed as G.R. Nos. 196958 and 197120 assail the Decision in C.A.-G.R. CV
No. 79732-MIN.316
Philippine National Bank argues that the principle of mutuality of contracts was not violated
because Spouses Limso and Davao Sunrise were notified as to the applicable interest rates, and
their consent was obtained before the effectivity of the agreement.317 There was no unilateral
imposition of interest rates since the rates were dependent on the prevailing market rates.318
Philippine National Bank also argues that Spouses Limso and Davao Sunrise were regularly
informed by Philippine National Bank of the interest rates imposed on their loan, as shown by
Robert Alan L. Limso’s signatures on the letters sent by Philippine National Bank.319
Philippine National Bank further argues that loan agreements with escalation clauses, by their
nature, “would not indicate the exact rate of interest applicable to a loan precisely because it is
made to depend by the parties to external factors such as market indicators and/or government
regulations affecting the cost of money.”320
Philippine National Bank cites Solidbank Corp., (now Metropolitan Bank and Trust Company) v.
Permanent Homes,
_______________
316 Rollo (G.R. No. 196958), p. 13, Petition for Review; Rollo (G.R. No. 197120), p. 4, Petition
for Review.

318 Id., at p. 61.
319 Id., at pp. 53-56.
320 Id., at p. 63.
216
Incorporated,321 where this court held that “contracts with escalation clause do not violate the
principle of mutuality of contracts.”322
Philippine National Bank contends that the Conversion, Restructuring and Extension Agreement
novated the previous contracts with Spouses Limso and Davao Sunrise. In addition, the alleged
infirmities in the previous contracts were set aside upon the execution of the Conversion,
Restructuring and Extension Agreement.323
On the other hand, Spouses Limso and Davao Sunrise argue that the Court of Appeals did not err
in ruling that the interest rates were imposed unilaterally. Spouses Limso and Davao Sunrise
allege that the interest rates were not stipulated in writing, in violation of Article 1956 of the
Civil Code.324 Also, the Court of Appeals did not err in reducing the penalties and attorney’s
fees since Article 2227 of the Civil Code states:325
Article 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall

be equitably reduced if they are iniquitous or unconscionable.
Spouses Limso and Davao Sunrise add that the letters sent by Philippine National Bank to Davao
Sunrise were not agreements but mere notices that the interest rates were increased by Philippine
National Bank.326 Moreover, the letters were received by Davao Sunrise’s employees who were
_______________
321 639 Phil. 289; 625 SCRA 275 (2010) [Per J. Carpio, Second Division].
323 Id., at pp. 78-79.
325 Id., at pp. 321-322.
326 Id., at pp. 297-298.
217
VOL. 782, JANUARY 27, 2016 217
not authorized to receive such letters.327 Some of the letters did not even appear to have been
received by anyone at all.328
Spouses Limso and Davao Sunrise allege that Philippine National Bank admitted that the
penalties stated in the agreements were in the nature of liquidated damages.329 Nevertheless,
Spouses Limso and Davao Sunrise question the Court of Appeals’ ruling insofar as it held that
their remaining obligation to Philippine National Bank is P803,185,411.11 as of September 1,
2008. According to Spouses Limso and Davao Sunrise, they have overpaid Philippine National
Bank in the amount of P15,915,588.89.330
Philippine National Bank counters that Davao Sunrise and Spouses Limso’s promissory notes
had a provision stating:
[T]he rate of interest shall be set at the start of every Interest Period. For this purpose, I/We
agree that the rate of interest herein stipulated may be increased or decreased for the
subsequent Interest Periods, with PRIOR NOTICE TO THE BORROWER in the event
of changes in the interest rate prescribed by law or the Monetary Board of Central Bank of
the Philippines or in the Bank’s overall cost of funds. I/We hereby agree that IN THE
EVENT I/WE ARE NOT AGREEABLE TO THE INTEREST RATE FIXED FOR
ANY INTEREST PERIOD, I/WE HAVE THE OPTION TO PREPAY THE LOAN
OR CREDIT FACILITY WITHOUT PENALTY within ten (10) calendar days from the
Interest Setting Date.331 (Emphasis in the original)
As to the letters sent by Philippine National Bank, these letters were received by the Chief
Finance Officer, Chairman, and President of Davao Sunrise. In addition, assuming that
_______________
327 Id., at pp. 298-300.
328 Id., at pp. 300-301.
329 Id., at p. 322.
330 Id., at p. 292.
331 Id., at p. 365, Reply.
218
the employees who allegedly received the letters were not authorized to do so, the unauthorized
acts were ratified by Spouses Limso and Davao Sunrise when they used the proceeds of the
loan.332
We rule that there was no mutuality of contract between the parties since the interest rates
imposed were based on the sole discretion of Philippine National Bank.333 Further, the
escalation clauses in the real estate mortgage “[did] not specify a fixed or base interest[.]”334
Thus, the interest rates are invalid.
The principle of mutuality of contracts is stated in Article 1308 of the Civil Code as follows:
Article 1308. The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.
The importance of the principle of mutuality of contracts was discussed in Juico v. China
Banking Corporation:335
The binding effect of any agreement between parties to a contract is premised on two
settled principles: (1) that any obligation arising from contract has the force of law
between the parties; and (2) that there must be mutuality between the parties based on their
essential equality. Any contract which appears to be heavily weighed in favor of one of the
parties so as to lead to an unconscionable result is void. Any stipulation regarding the
validity or compliance of the contract which is left solely to the will of one of the parties,
is likewise, invalid.336 (Citation omitted)
_______________
332 Id., at pp. 367-368.
334 Id., at p. 314.
335 G.R. No. 187678, April 10, 2013, 695 SCRA 520 [Per J. Villarama, Jr., First Division].
336 Id., at p. 531.
219
VOL. 782, JANUARY 27, 2016 219
When there is no mutuality between the parties to a contract, it means that the parties were not
on equal footing when the terms of the contract were negotiated. Thus, the principle of mutuality
of contracts dictates that a contract must be rendered void when the execution of its terms is
skewed in favor of one party.337
The Court of Appeals also noted that since the interest rates imposed were at the sole discretion
of Philippine National Bank, and that Spouses Limso and Davao Sunrise were merely notified
when there were changes in the interest rates, Philippine National Bank violated the principle of
mutuality of contracts.338 The Court of Appeals ruled that:
We cannot subscribe to appellant bank’s allegation that plaintiffs-appellees agreed to these

interest rates by receiving various letters from PNB. Those letters cannot be construed as
agreements as a simple reading of those letters would show that they are mere notices
informing plaintiffs-appellees that the bank, through its top management, had already
imposed interest rates on their loan. The uniform wordings of the said letters go this way:
This refers to your existing credit facility in the principal amount of P850.0 MM
granted by the Philippine National Bank by and under the terms and conditions of
that Credit Agreement dated 12.2.97 (Renewal of Credit Facility).
We wish to advise you that the top management has approved an interest rate of
20.756% which will be used in computing the interest due on your existing peso and
redenominated availments against the credit fa-
_______________
337 Allied Banking Corporation v. Court of Appeals, 348 Phil. 382, 390; 284 SCRA 357, 363-
364 (1998) [Per J. Bellosillo, First Division].
MIN.
cility for the period July 20 to August 19, 1998.
If you are amenable to this arrangement, please signify your conformity on the space
provided below and return to us the original copy of the document. If we receive no
written objection by the end of 10 days from date of receipt of this letter, we will
take it to mean that you agree to the new interest rate we quote. On the other hand, if
you disagree with the quoted rate, you will have to pay the loan in full within the
same ten-day period otherwise, the entire loan will be considered due and
demandable.339 (Citation omitted)
The contents of the letter quoted by the Court of Appeals show that there was no room for
negotiation among Philippine National Bank, Spouses Limso, and Davao Sunrise when it came
to the applicable interest rate. Since there was no room for negotiations between the parties with
regard to the increases of the rates of interest, the principle of mutuality of contracts was
violated. There was no meeting of the minds between Spouses Limso, Davao Sunrise, and
Philippine National Bank because the increases in the interest rates were imposed on them
unilaterally.
Meeting of the minds between parties to a contract is manifested when the elements of a valid
contract are all present.340 Article 1318 of the Civil Code provides:
_______________
339 Id., at pp. 121-122.
340 Clemente v. Court of Appeals, G.R. No. 175483, October 14, 2015, 772 SCRA 339, 350-351
[Per J. Jardeleza, Third Division]. See also Heirs of Dr. Mario S. Intac and Angelina Mendoza-
Intac v. Court of Appeals, 697 Phil. 373, 383; 684 SCRA 88, 96 (2012) [Per J. Mendoza, Third
Division].
221
VOL. 782, JANUARY 27, 2016 221
Article 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.

When one of the elements is wanting, no contract can be perfected.341 In this case, no consent
was given by Spouses Limso and Davao Sunrise as to the increase in the interest rates.
Consequently, the increases in the interest rates are not valid.
Even the promissory notes contained provisions granting Philippine National Bank the sole
discretion to set the interest rate:
[Promissory Note] NO. 0015138516350115 . . .
....
. . . I/We, jointly and severally, promise to pay to the order of the Philippine National Bank
(the ‘Bank’) at its office in cm recto avenue davao city [sic], Philippines, the sum of
PHILIPPINE PESOS: 583,183,333.34 (P583,183,333.34) together with interest thereon
for the current Interest Period at a rate of to be set by mgt. [management]. Interest Period
shall mean the period commencing on the date hereof and having a duration not exceeding
monthly ( ) days and each similar period thereafter commencing upon the expiry of the
immediately preceding Interest Period. The rate of interest shall be set at the start of every
Interest Period. For this purpose, I/We agree that the rate of interest herein stipulated may
be increased or decreased for the subsequent Interest Periods, with prior notice to the
Borrower in the event of changes in interest rate prescribed by law or the Monetary Board
of the Central Bank of the Philippines,
_______________
341 Clemente v. Court of Appeals, id.
222
or in the Bank’s overall cost of funds. I/We hereby agree that in the event I/We are not
agreeable to the interest rate fixed for any Interest Period, I/we shall have the option to
prepay the loan or credit facility without penalty within ten (10) calendar days from the
Interest Setting Date.342
Promissory Note No. 0015138516350116343 contained the same provisions, differing only as to
the amount of the obligation.
Assuming that Davao Sunrise and Spouses Limso agreed to the increase in interest rates, the
interest rates are still null and void for being unreasonable.344
This court has held that while the Usury Law was suspended by Central Bank Circular No. 905,
Series of 1982, unconscionable interest rates may be declared illegal.345 The suspension of the
Usury Law did not give creditors an unbridled right to impose arbitrary interest rates. To
determine whether an interest rate is unconscionable, we are guided by the following
pronouncement:
In determining whether the rate of interest is unconscionable, the mechanical application

of preestablished floors would be wanting. The lowest rates that have previously been
considered unconscionable need not be an impenetrable minimum. What is more crucial is
a consideration of the parties’ contexts. Moreover, interest rates must be appreciated in
light of the fundamental nature of interest as compensation to the creditor for money lent
to another, which he or she could otherwise have used for his or her own purposes at the
time it was lent. It is not the default vehicle for predatory gain. As such,
_______________
342 Rollo (G.R. No. 173194), p. 102.
343 Id., at p. 103.
345 Castro v. Tan, 620 Phil. 239, 247; 605 SCRA 231, 237-238 (2009) [Per J. Del Castillo,
Second Division].
223
VOL. 782, JANUARY 27, 2016 223

interest need only be reasonable. It ought not be a supine mechanism for the creditor’s
unjust enrichment at the expense of another.346
A reading of the interest provisions in the original agreement and the Conversion, Restructuring
and Extension Agreement shows that the interest rates imposed by Philippine National Bank
were usurious and unconscionable.
In the original credit and loan agreements executed in 1993, the interest provisions provide:
CREDIT AGREEMENT
....
1.04 Interest on Availments. (a) The Borrowers agree to pay interest on each availment

from date of each availment up to, but not including the date of full payment thereof at a
rate per annum that is determined by the Bank to be equivalent to the Bank’s prime rate
less 1.0% in effect as of the date of the relevant Availment, subject to quarterly review and
to maintenance of deposits with ADB of at least 5% of the amount availed in its savings
and current account. Noncompliance of ADB requirement shall subject the credit line to
regular interest rate which is the prime rate plus applicable spread.347
LOAN AGREEMENT
....
1.03 Interest. (a) The Borrowers hereby agree to pay interest on the loan from the date
of Drawdown up to Repayment Date at the rate that is determined by the Bank to be the
Bank’s prime rate in effect at the Date of Drawdown less 1.0% and which shall be reset
every 90 days to coincide with interest payments.
_______________
346 Abella v. Abella, G.R. No. 195166, July 8, 2015, 762 SCRA 221, 240 [Per J. Leonen,
Second Division].
347 Rollo (G.R. No. 197120), pp. 139-140, Credit Agreement.
224
(b) The determination by the Bank of the amount of interest due and payable hereunder
shall be conclusive and binding on the borrower in the absence of manifest error in the
computation.348 (Emphasis supplied, underscoring in the original)
In the Conversion, Restructuring and Extension Agreement, the interest provisions state:
....
2.04 Interest. (a) The Borrowers agree to pay the Bank interest on Loan I from the
Bank. The interest rate shall be reset by the Bank every month.
....
....
3.04 Interest. (a) The Borrowers agree to pay the Bank interest on Loan II from the
Bank. The interest rate shall be reset by the Bank every month.349 (Emphasis supplied,
underscoring in the original)
From the terms of the loan agreements, there was no way for Spouses Limso and Davao Sunrise
to determine the interest rate imposed on their loan because it was always at the discretion of
Philippine National Bank.
_______________
348 Id., at pp. 143-144, Loan Agreement.
349 Id., at p. 181, Conversion, Restructuring and Extension Agreement.
225
VOL. 782, JANUARY 27, 2016 225
Nor could Spouses Limso and Davao Sunrise determine the exact amount of their obligation
because of the frequent changes in the interest rates imposed.
As found by the Court of Appeals, the loan agreements merely stated that interest rates would be
imposed. However, the specific interest rates were not stipulated, and the subsequent increases in
the interest rates were all at the discretion of Philippine National Bank.350
Also invalid are the escalation clauses in the real estate mortgage and promissory notes. The
escalation clause in the real estate mortgage states:
(k) INCREASE OF INTEREST RATE:
“The rate of interest charged on the obligation secured by this mortgage as well as the
interest on the amount which may have been advanced by the mortgagee, in accordance
with the provisions hereof shall be subject during the life of this contract to such an
increase within the rate allowed by law, as the Board of Directors of the MORTGAGEE
may prescribe for its debtors.”351
The escalation clause in the promissory notes352 states:

For this purpose, I/We agree that the rate of interest herein stipulated may be increased or
decreased for the subsequent Interest Periods, with prior notice to the Borrower in the
event of changes in interest rate prescribed by law or the Monetary Board or the Central
Bank of the Philippines, or in the Bank’s overall cost of funds.353
_______________
MIN.
351 Id., at pp. 313-314, Comment.
352 Id., at p. 314. The promissory notes are dated January 5, 1999.
353 Id.
226
Banco Filipino Savings and Mortgage Bank v. Judge Navarro354 defined an escalation clause as
“one which the contract fixes a base price but contains a provision that in the event of specified
cost increases, the seller or contractor may raise the price up to a fixed percentage of the
base.”355
This court has held that escalation clauses are not always void since they serve “to maintain
fiscal stability and to retain the value of money in long term contracts.”356 However:
[A]n escalation clause “which grants the creditor an unbridled right to adjust the interest
independently and upwardly, completely depriving the debtor of the right to assent to an
important modification in the agreement” is void. A stipulation of such nature violates the
principle of mutuality of contracts. Thus, this Court has previously nullified the unilateral
determination and imposition by creditor banks of increases in the rate of interest provided
in loan contracts.
....
. . . [W]e hold that the escalation clause is . . . void because it grants respondent the power
to impose an increased rate of interest without a written notice to petitioners and their
written consent. Respondent’s monthly telephone calls to petitioners advising them of the
prevailing interest rates would not suffice. A detailed billing statement based on the new
imposed interest with corresponding computation of the total debt should have been
provided by the respondent to enable petitioners to make an informed decision. An
appropriate form must also be signed by the petitioners to indicate their conformity to the
new rates. Compliance with these requisites is essential to preserve the mutuality of
contracts. For indeed, one-sided impositions do not have the force of law be-
_______________
354 236 Phil. 370; 152 SCRA 346 (1987) [Per J. Melencio-Herrera, En Banc].
356 Juico v. China Banking Corporation, supra note 335 at p. 531.
227
VOL. 782, JANUARY 27, 2016 227
tween the parties, because such impositions are not based on the parties’ essential
equality.357 (Citations omitted)
The interest rate provisions in Philippine National Bank’s loan agreements and real estate
mortgage contracts have been nullified by this court in several cases. Even the escalation clauses
in Philippine National Bank’s contracts were noted to be violative of the principle of mutuality of
contracts.358
The original loan agreement in this case was executed in 1993. Prior to the execution of the
original loan agreement, this court promulgated a Decision in 1991 ruling that “the unilateral
action of the [Philippine National Bank] in increasing the interest rate on the private respondent’s
loan, violated the mutuality of contracts ordained in Article 1308 of the Civil Code[.]”359
In Philippine National Bank v. Court of Appeals,360 the interest rate provisions were nullified
because these allowed Philippine National Bank to unilaterally increase the interest rate.361 The
nullified interest rate provisions were worded as follows:
_______________
357 Id., at pp. 531-539.
358 Philippine National Bank v. Court of Appeals, 273 Phil. 789, 798-799; 196 SCRA 536, 545
(1991) [Per J. Griño-Aquino, First Division]; Philippine National Bank v. Court of Appeals, G.R.
No. 107569, November 8, 1994, 238 SCRA 20, 26 [Per J. Puno, Second Division]; Philippine
National Bank v. Court of Appeals, 328 Phil. 54, 60-61; 258 SCRA 549, 556 (1996) [Per J.
Mendoza, Second Division]; Philippine National Bank v. Manalo, G.R. No. 174433, February
24, 2014, 717 SCRA 254, 269-270 [Per J. Bersamin, First Division]; Silos v. Philippine National
Bank, G.R. No. 181045, July 2, 2014, 728 SCRA 617, 643-655 [Per J. Del Castillo, Second
Division].
359 Philippine National Bank v. Court of Appeals, id., at p. 798; p. 544.
360 Philippine National Bank v. Court of Appeals, supra.
361 Id., at pp. 26-27.
228
The Credit Agreement provided inter alia, that —
‘(a) The BANK reserves the right to increase the interest rate within the limits
allowed by law at any time depending on whatever policy it may adopt in the future:
Provided, that the interest rate on this accommodation shall be correspondingly
decreased in the event that the applicable maximum interest is reduced by law or by
the Monetary Board. In either case, the adjustment in the interest rate agreed upon
shall take effect on the effectivity date of the increase or decrease in the maximum
interest rate.’
The Promissory Note, in turn, authorized the PNB to raise the rate of interest, at any time
without notice, beyond the stipulated rate of 12% but only ‘within the limits allowed by
law.’
The Real Estate Mortgage contract likewise provided that —
‘(k) INCREASE OF INTEREST RATE: The rate of interest charged on the

obligation secured by this mortgage as well as the interest on the amount which may
have been advanced by the MORTGAGEE, in accordance with the provision hereof,
shall be subject during the life of this contract to such an increase within the rate
allowed by law, as the Board of Directors of the MORTGAGEE may prescribe for
its debtors.’362
This court explained that:
Similarly, contract changes must be made with the consent of the contracting parties. The minds
of all the parties must meet as to the proposed modification, especially when it affects an
important aspect of the agreement. In the case of loan contracts, it cannot be gainsaid that the
rate of interest is always a vital component, for it can make or break a capital venture. Thus, any
change
_______________
362 Id., at p. 22.
229
VOL. 782, JANUARY 27, 2016 229

must be mutually agreed upon, otherwise, it is bereft of any binding effect.363
In a subsequent case364 also involving Philippine National Bank, this court likewise nullified the
interest rate provisions of Philippine National Bank and discussed:
In this case no attempt was made by PNB to secure the conformity of private respondents
to the successive increases in the interest rate. Private respondents’ assent to the increases
cannot be implied from their lack of response to the letters sent by PNB, informing them
of the increases. For as stated in one case, no one receiving a proposal to change a contract
is obliged to answer the proposal.365 (Citation omitted)
However, only the interest rate imposed is nullified; hence, it is deemed not written in the
contract. The agreement on payment of interest on the principal loan obligation remains. It is a
basic rule that a contract is the law between contracting parties.366 In the original loan
agreement and the Conversion, Restructuring and Extension Agreement, Spouses Limso and
Davao Sunrise agreed to pay interest on the loan they
_______________
363 Id., at p. 26.
364 Philippine National Bank v. Court of Appeals, supra note 358 at p. 63; p. 555. In this case,
the assailed interest rate provision in the real estate mortgage stated:
“(k) INCREASE OF INTEREST RATE:
The rate of interest charged on the obligation secured by this mortgage as well as the interest on
the amount which may have been advanced by the MORTGAGEE, in accordance with the
provision hereof, shall be subject during the life of this contract to such an increase within the
rate allowed bylaw, as the Board of Directors of the MORTGAGEE may prescribe for its
debtors.” (Id., at p. 57; p. 551)
365 Id., at p. 63; p. 557.
366 Mallari v. Prudential Bank (now Bank of the Philippine Islands), G.R. No. 197861, June 5,
2013, 697 SCRA 555, 566 [Per J. Peralta, Third Division].
230
obtained from Philippine National Bank. Such obligation was not nullified by this court. Thus,
their obligation to pay interest in their loan obligation subsists.367
Spouses Abella v. Spouses Abella368 involved a simple loan with an agreement to pay interest.
Unfortunately, the applicable interest rate was not stipulated by the parties. This court discussed
that in cases where the parties fail to specify the applicable interest rate, the legal rate of interest
applies. This court also discussed that the applicable legal rate of interest shall be the prevailing
rate at the time when the agreement was entered into:369
This is so because interest in this respect is used as a surrogate for the parties’ intent, as
expressed as of the time of the execution of their contract. In this sense, the legal rate of
interest is an affirmation of the contracting parties’ intent; that is, by their contract’s silence
on a specific rate, the then prevailing legal rate of interest shall be the cost of borrowing
money. This rate, which by their contract the parties have settled on, is deemed to persist
regardless of shifts in the legal rate of interest. Stated otherwise, the legal rate of interest,
when applied as conventional interest, shall always be the legal rate at the time the
agreement was executed and shall not be susceptible to shifts in rate.370
Further, Spouses Abella cited Article 2212371 of the Civil Code
_______________
367 See Andal v. Philippine National Bank, G.R. No. 194201, November 27, 2013, 711 SCRA
15, 28 [Per J. Perez, Second Division].
368 Supra note 346.
369 Id., at p. 236.
370 Id. The term “conventional interest” was defined in the case as “interest as the cost of
borrowing money.” (Id., at p. 232)
Article 2212. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point.
231
VOL. 782, JANUARY 27, 2016 231
and the ruling in Nacar v. Gallery Frames,372 which both state that “interest due shall itself earn
legal interest from the time it is judicially demanded”:373
[T]he interest due on conventional interest shall be at the rate of 12% per annum from
[date of judicial demand] to June 30, 2013. Thereafter, or starting July 1, 2013, this shall
be at the rate of 6% per annum.374
In this case, the Conversion, Restructuring and Extension Agreement was executed on January
28, 1999. Thus, the applicable interest rate on the principal loan obligation (conventional
interest) is at 12% per annum. With regard to the interest due on the conventional interest,
judicial demand was made on August 21, 2000 when Philippine National Bank filed a
Petition375 for Extrajudicial Foreclosure of Real Estate Mortgage.376 Thus, from August 21,
2000 to June 30, 2013, the interest rate on conventional interest shall be at 12%. From July 1,
2013 until full payment, the applicable interest rate on conventional interest shall be at 6%.
III
The Conversion, Restructuring and Extension Agreement novated the original agreement
executed in 1993. However,
_______________
372 G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J. Peralta, En Banc], specifically:
“1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.” (Id., at pp. 457-458).
374 Id.
375 Rollo (G.R. No. 173194), pp. 106-112.
232
the nullified interest rate provisions in the original loan agreement cannot be deemed as having
been legitimized, ratified, or set aside.
Philippine National Bank argues that the Conversion, Restructuring and Extension Agreement
novated the original loan agreement and that the novation effectively set aside the infirmities in
the original loan agreement.377
The Civil Code provides that:
Article 1292. In order that an obligation may be extinguished by another which

substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the
old and the new obligations be on every point incompatible with each other.
Novation has been defined as:
Novation may either be express, when the new obligation declares in unequivocal terms
that the old obligation is extinguished, or implied, when the new obligation is on every
point incompatible with the old one. The test of incompatibility lies on whether the two
obligations can stand together, each one with its own independent existence.
For novation, as a mode of extinguishing or modifying an obligation, to apply, the

following requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract.378
(Citations omitted)
_______________
377 Rollo (G.R. No. 196958), pp. 78-79, Petition for Review.
378 St. James College of Parañaque v. Equitable PCI Bank, 641 Phil. 452, 462; 627 SCRA 328,
339-340 (2010) [Per J. Velasco, Jr., First Division].
233
VOL. 782, JANUARY 27, 2016 233
The original Credit Agreement379 was executed on September 1, 1993,380 while the
Conversion, Restructuring and Extension Agreement381 was executed on January 28, 1999.382
Pertinent portions of the Conversion, Restructuring and Extension Agreement state:
WITNESSETH: That —
....
WHEREAS, the Borrowers [referring to DSIDC and spouses Limso] acknowledge that
they have outstanding obligations (the “Obligations”) with the Bank broken down as
follows:
(i) Credit Line – P583.18 Million (as of September 30, 1998);
(ii) Loan – P266.67 Million (as of September 30, 1998); and
(iii) Interest – P217.15 Million (as of December 31, 1998);
WHEREAS, at the request of the Borrowers, the Bank has approved (a) the conversion
and restructuring of the Credit Line portion of the Obligations into a term loan, (b) the
extension of the term of the Loan for another four (4) years, (c) the capitalization on
accrued interest (up to December 31, 1998) on the Obligations, (d) the waiver of the
penalties charges (if any) accruing on the Obligations, and (e) the partial release of chattel
mortgage on stock inventories, subject to the terms and conditions hereinafter set forth;
....
_______________
379 Rollo (G.R. No. 205463), pp. 221-224.
380 Id., at p. 223.
381 Id., at pp. 272-277.
382 Id., at p. 276.
234

2.01 Amount of Loan I. Loan I shall be in the principal amount not exceeding PESOS:
FIVE HUNDRED EIGHTY-THREE MILLION ONE HUNDRED EIGHTY THOUSAND
(P583,180,000.00)
....
3.01 Amount of Loan II. Loan II shall be in the principal amount not exceeding

PESOS: FOUR HUNDRED EIGHTY-THREE MILLION SEVEN HUNDRED EIGHTY
THOUSAND (P483,780,000.00).383
In this case, the previous valid obligation of Spouses Limso and Davao Sunrise was the payment
of a loan in the total amount of P700 million, plus interest.
Upon the request of Spouses Limso and Davao Sunrise, Philippine National Bank agreed to
restructure the original loan agreement.384
Philippine National Bank summarized the Conversion, Restructuring and Extension Agreement
as follows:
(a) The conversion of the Revolving Credit Line into a Term Loan in the principal amount
of 583.18 Million and denominated as “Loan I”;
(b) The Extension for another four (4) years of the original long term loan (from 01
September 2001 to 31 December 2005);
(c) The capitalization of the accrued interest on both the Revolving Credit Line and the
Long Term Loan up to 31 December 1998;
_______________
383 Id., at pp. 272-273.
MIN.
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VOL. 782, JANUARY 27, 2016 235
(d) The consolidation of the accrued interest and the outstanding obligation of the original
Long Term Loan to form “Loan 2” with the total principal amount of P483.82 Million;
(e) Waiver of penalty charges;
(f) Partial release of chattel mortgage on the stock inventories;
(g) Both “Loan I” and “Loan II” were made payable within seven (7) years in monthly
amortization and a balloon payment on or before December 2005.385
When the loan agreement was restructured, the principal obligation of Spouses Limso and Davao
Sunrise became P1.067 billion.
The Conversion, Restructuring and Extension Agreement novated the original credit agreement
because the principal obligation itself changed.
Important provisions of the original agreement were altered. For example, the penalty charges
were waived and the terms of payment were extended.
Further, the preambular clauses of the Conversion, Restructuring and Extension Agreement show
that Spouses Limso and Davao Sunrise sought to change the terms of the original agreement and
that they themselves acknowledged their obligation to be P1.067 billion. They are now estopped
from claiming that their obligation should be based on the original agreement when it was
through their own actions that the loan was restructured.
Thus, the Court of Appeals in C.A.-G.R. CV No. 79732-MIN erred in not declaring that the
Conversion, Restructuring and Extension Agreement novated the original agreement and in
computing Spouses Limso and Davao Sunrise’s obligation based on the original agreement.
_______________
236
Since the Conversion, Restructuring and Extension Agreement novated the original credit
agreement, we modify the Court of Appeals’ Decision in that the outstanding obligation of
Spouses Limso and Davao Sunrise should be computed on the basis of the Conversion,
Restructuring and Extension Agreement.
In the Court of Appeals’ Decision dated August 13, 2009:
Computing the interest at 12% per annum on the principal amount of 700 Million Pesos,
the interest should be 84 Million Pesos per annum. Multiplying 84 Million Pesos by 15
years from September 1, 1993 to September 1, 2008, the interest for the 15-year period
would be One Billion Two Hundred Sixty Million Pesos (P1,260,000,000.00). Then, by
adding the interest of P1,260,000,000.00 to the principal amount of 700 Million Pesos, the
total obligation of plaintiffs-appellees would be One Billion Nine Hundred Sixty Million
Pesos (P1,960,000,000.00) by September 1, 2008. And since plaintiffs-appellees has paid a
total amount of One Billion One Hundred Fifty-Six Million Eight Hundred Fourteen
Thousand Five Hundred Eighty-Eight Pesos and 89/100 (P1,156,814,588.89) to appellant
PNB as of December 5, 1998, as per PNB’s official computation of payments per official
receipts, then, plaintiffs-appellees would still have an outstanding balance of about Eight
Hundred Three Million One Hundred Eighty-Five
Thousand Four Hundred Eleven and 11/100 Pesos (P803,185,411.11) as of September 1,
2008. The amount of P803,185,411.11 will earn interest at the legal rate of 12% per
annum from September 1, 2008 until fully paid.
....
WHEREFORE, the assailed Decision dated June 19, 2002 and Order dated August 13,
2002 of the Regional Trial Court of Davao City, Branch 17 in Civil Case No. 28,170-2000
void appealed from are AFFIRMED with the MODIFICATION that the obligation of
plaintiffs-appellees arising
237
VOL. 782, JANUARY 27, 2016 237
from the Loan and Revolving Credit Line and subsequent Conversion, Restructuring and
Extension Agreement as Loan I and Loan II shall earn interest at the legal rate of twelve
percent (12%) per annum computed from September 1, 1993, until fully paid and satisfied.
SO ORDERED.386
Notably, in the body of the Court of Appeals’ Decision, Spouses Limso and Davao Sunrise’s
obligation was computed on the basis of the original loan agreement, while in the dispositive
portion, the Court of Appeals cited both the original loan agreement and the Conversion,
The general rule is that:
Where there is a conflict between the dispositive part and the opinion of the court
contained in the text or body of the decision, the former must prevail over the latter on the
theory that the dispositive portion is the final order, while the opinion is merely a
statement ordering nothing.387 (Citation omitted)
To avoid confusion, we also rule that the interest rate provisions and the escalation clauses in the
Conversion, Restructuring and Extension Agreement are nullified insofar as they allow
Philippine National Bank to unilaterally determine and increase the imposable interest rates.
Article 1409388 of the Civil Code provides that void contracts cannot be ratified. Hence, the
void interest rate provisions in
_______________
386 Id., at pp. 125-127, Court of Appeals Decision in C.A.-G.R. CV No. 79732-MIN.
387 PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 833; 370 SCRA 155, 166 (2001)
[Per J. Panganiban, Third Division].
Article 1409. The following contracts are inexistent and void from the beginning:
238
the original loan agreement could not have been ratified by the execution of the Conversion,
IV
The proper remedy to assail a decision on pure questions of law is to file a petition for review on
certiorari under Rule 45, not an appeal under Rule 41 of the 1997 Rules of Civil Procedure.
One of the issues raised by Philippine National Bank in G.R. No. 205463 is the dismissal of its
appeal under Rule 41 by the Court of Appeals in its Decision dated January 21, 2013.389
Philippine National Bank, through counsel, argues that Rule 41 is the proper remedy because its
Petition raises questions of fact and of law.390 For example, the issue of whether there is an
annotation of encumbrance on the titles of the mortgaged properties is a question of fact.391
_______________
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.
390 Id., at pp. 25-26.
391 Id., at p. 30.
239
VOL. 782, JANUARY 27, 2016 239

Denying Philippine National Bank’s appeal under Rule 41, the Court of Appeals stated that:
[Philippine National Bank] simply takes issue against the conclusions made by the court a
quo which pertains to the matter of whether mere entry in the Primary Entry Book, sans
the signature of the registrar, already completes registration. It does not question the
weight and probative value of the fact that the signature of Atty. Patriarcha [sic] was
previously entered in the records then revoked by her. What PNB seeks, therefore, is a
review of the decision of the court a quo dismissing its petition, without delving into the
weight of the evidence, but on the correctness of the court a quo’s conclusions based on
the evidence presented before it. This is clearly a question of law.
....
To the mind of this Court, PNB seeks to harp repeatedly on the issue of the court a quo’s
failure to consider that the certificate of sale has been duly registered on February 4, 2002
upon mere entry in the Primary Entry Book, even without the signature of the then register
of deeds. Though couched in different creative presentations, all the errors assigned by
PNB point to one vital question: What completes registration? To answer it, this Court is
not asked to calibrate the evidence presented, or gauge the truth or falsity, but to apply the
appropriate law to the situation. This is clearly a question of law.392 (Emphasis in the
original)
In Land Bank of the Philippines v. Yatco Agricultural Enterprises,393 this court discussed the
difference between questions of law and questions of fact:
_______________
392 Id., at pp. 64-65, Court of Appeals Decision in C.A.-G.R. CV No. 01464-MIN.
393 G.R. No. 172551, January 15, 2014, 713 SCRA 370 [Per J. Brion, Second Division].
240

As a general rule, the Court’s jurisdiction in a Rule 45 petition is limited to the review of
pure questions of law. A question of law arises when the doubt or difference exists as to
what the law is on a certain state of facts. Negatively put, Rule 45 does not allow the
review of questions of fact. A question of fact exists when the doubt or difference arises as
to the truth or falsity of the alleged facts.
The test in determining whether a question is one of law or of fact is “whether the
appellate court can determine the issue raised without reviewing or evaluating the
evidence, in which case, it is a question of law[.]” Any question that invites calibration of
the whole evidence, as well as their relation to each other and to the whole, is a question of
fact and thus proscribed in a Rule 45 petition.394 (Citations omitted)
Based on the foregoing, there was no error on the part of the Court of Appeals when it dismissed
Philippine National Bank’s Petition for being the wrong remedy. Indeed, Philippine National
Bank was not questioning the probative value of the evidence. Instead, it was questioning the
conclusion of the trial court that registration had not been perfected based on the evidence
presented.
The registration of the Sheriff’s Provisional Certificate of Sale was completed.
Philippine National Bank argues that the registration was completed, and restates the doctrine in
National Housing Authority v. Basa, Jr., et al.:395
_______________
394 Id., at pp. 378-379.
395 632 Phil. 471, 494; 618 SCRA 461, 478 (2010) [Per J. Leonardo-De Castro, First Division].
241
VOL. 782, JANUARY 27, 2016 241
Once the Certificate of Sale is entered in the Primary Book of Entry of the Registry of
Deeds with the registrant having paid all the required fees and accomplished all that is
required of him under the law to cause registration, the registration is complete.396
Philippine National Bank further argues that “[t]he records of all the transactions are recorded in
the Primary Entry Book and the annotation on the titles of the transaction do not control
registration. It is the recording in the Primary Entry Book which controls registration.”397
Philippine National Bank adds that though the annotation of a certificate of sale at the back of
the certificates of title is immaterial in the perfection of registration, the evidence shows that the
Certificate of Sale was annotated.398
Philippine National Bank alleges that registration was completed because Atty. Patriarca, the
Register of Deeds at that time, affixed her signature but would later erase it.399
Philippine National Bank cites Atty. Cruzabra’s Comment, which alleges that the Sheriff’s
Provisional Certificate of Sale and other documents relative to the sale were registered in the
Primary Entry Book of the Registry of Deeds of Davao City.400 The Comment also states that:
3. The Sheriff’s Provisional Certificate of Sale was annotated at the back of the
aforementioned titles but it does not bear the signature of the former Registrar of Deeds.
Noted however is that the portion below the annotation of the Provisional Sheriff’s [sic]
Certificate of Sale there appears to be erasures (“snowpake”), and [Atty.
_______________
397 Id., at p. 39.
398 Id.
399 Id., at p. 906, Philippine National Bank’s Memorandum.
400 Id., at p. 930.

242
Cruzabra] is not in a position to conclude as to the circumstances [relative to said

erasures], for lack of personal knowledge as to what transpired at that time.401 (Citation
omitted)
Philippine National Bank also cites the Decision in Administrative Case No. 02-13 dated January
12, 2005, which was the case against Atty. Patriarca for Grave Misconduct and Conduct
Unbecoming of a Public Official. In the Decision, the Land Registration Authority found that:
Respondent herein likewise admits that she finally signed the PNB transaction annotated
on the subject titles when she was informed that the motion for reconsideration was denied
by this Authority, but she subsequently erased her signature when she subsequently found
out that an appeal was filed by the Limso spouses.
....
The registration of these documents became complete when respondent affixed her
signature below these annotations. Whatever information belatedly gathered thereafter
relative to the circumstances as to the registrability of these documents, respondent can not
unilaterally take judicial notice thereof and proceed to lift at her whims and caprices what
has already been officially in force and effective, by erasing thereon her signature.402
In addition, Philippine National Bank argues that the erasure of Atty. Patriarca’s signature using
correction fluid could not have revoked, cancelled, or annulled the registration since under
Section 108 of Presidential Decree 1529, only a court order can revoke registration.403
Philippine National Bank alleges that it has complied with the requirements under Section 7 of
Act No. 3135 and Section 47
_______________
401 Id.
402 Id., at p. 89.
of Republic Act No. 8791.404 Thus, it is entitled to a writ of possession.405
The Office of the Solicitor General filed its Comment,406 quoting the dispositive portion of the
Land Registration Authority’s Consulta No. 3405 dated May 21, 2002:407
WHEREFORE, in view of the foregoing, the Sheriff’s Provisional Certificate of Sale dated
February 04, 2002 is registerable on TCT Nos. T-147820, T-147386, and T-247012,
provided all other registration requirements are complied with.408 (Emphasis supplied)
The Office of the Solicitor General also quotes the dispositive portion of the Land Registration
Authority’s Resolution in the Motion for Reconsideration:409
WHEREFORE, in view of the foregoing[,] the Sheriff’s Provisional Certificate of Sale

dated February 4, 2002 is registrable on TCT Nos. T-147820, T-147821,
T-147386 and T-247012, provided all other registration requirements are complied
with.410 (Emphasis supplied)
The Office of the Solicitor General then cites National Housing Authority and Autocorp Group
and Autographics, Inc. v. Court of Appeals411 and discusses that when all the requirements for
registration of annotation has been complied with, it is ministerial upon the Register of Deeds to
register
_______________
404 General Banking Law of 2000.
405 Rollo (G.R. No. 205463), pp. 44-48, Petition for Review on Certiorari.
406 Id., at pp. 79-84.
407 Id., at p. 80.
408 Id.
409 Id., at pp. 80-81.
410 Id., at p. 81.
411 481 Phil. 298; 437 SCRA 678 (2004) [Per J. Puno, Second Division].
244
the annotation.412 The Register of Deeds is not authorized “to make an appraisal of proofs
outside of the documents sought to be registered.”413
For the Office of the Solicitor General, the Register of Deeds’ refusal to affix the annotation on
the foreclosed properties’ titles “should not preclude the completion of the registration of any
applicant who has complied with the requirements of the law to register its right or interest in
registered lands.”414
Spouses Limso and Davao Sunrise, as intervenors-oppositors, filed a Memorandum.415 They

cite Section 117416 of Presidential
_______________
412 Rollo (G.R. No. 205463), pp. 81-82, Office of the Solicitor General’s Comment.
413 Id., at p. 82.
414 Id., at p. 951, Office of the Solicitor General’s Memorandum.
415 Id., at pp. 860-897.
416 Pres. Decree No. 1529 (1978), Sec. 117 provides:
SECTION 117. Procedure.—When the Register of Deeds is in doubt with regard to the proper
step to be taken or memorandum to be made in pursuance of any deed, mortgage or other
instrument presented to him for registration, or where any party in interest does not agree with
the action taken by the Register of Deeds with reference to any such instrument, the question
shall be submitted to the Commissioner of Land Registration by the Register of Deeds, or by the
party in interest thru the Register of Deeds.
Where the instrument is denied registration, the Register of Deeds shall notify the interested
party in writing, setting forth the defects of the instrument or legal grounds relied upon, and
advising him that if he is not agreeable to such ruling, he may, without withdrawing the
documents from the Registry, elevate the matter by consulta within five days from receipt of
notice of the denial of registration to the Commissioner of Land Registration upon payment of a
consulta fee in such amount as shall be prescribed by the Commissioner of Land Registration.
The Register of Deeds shall make a memorandum of the pending consulta on the certificate of
title which shall be cancelled motu proprio by the Register of Deeds after final resolution or
decision thereof, or before resolution, if withdrawn by petitioner.
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VOL. 782, JANUARY 27, 2016 245
Decree No. 1529417 and argue that registration of the Certificate of Sale in the Primary Entry
Book is a preliminary step in registration.418 Since Philippine National Bank withdrew the
documents it submitted to the Register of Deeds of Davao City, the Sheriff’s Provisional
Certificate of Sale was not registered.419
Further, Philippine National Bank’s argument that “entry . . . in the Primary Entry Book is
equivalent to registration”420 is not in accordance with Section 56421 of Presidential
_______________
The Commissioner of Land Registration, considering the consulta and the records certified to
him after notice to the parties and hearing, shall enter an order prescribing the step to be taken or
memorandum to be made. His resolution or ruling in consultas shall be conclusive and binding
upon all Registers of Deeds, provided, that the party in interest who disagrees with the final
resolution, ruling or order of the Commissioner relative to consultas may appeal to the Court of
Appeals within the period and in the manner provided in Republic Act No. 5434.
417 Rollo (G.R. No. 205463), pp. 881-882, Spouses Limso and Davao Sunrise’s Memorandum.
418 Id., at pp. 883-884.
419 Id., at p. 881. Although the records do not show whether DSIDC and Spouses Limso were
allowed to intervene, a copy of the Resolution requiring the parties to submit their respective
memoranda was sent to counsel for DSIDC and Spouses Limso.
420 Id., at p. 884.
421 Pres. Decree No. 1529 (1978), Sec. 56 provides:
SECTION 56. Primary Entry Book; Fees; Certified Copies.—Each Register of Deeds shall

keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of
their reception, all instruments including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note in such book the date,
hour and minute of reception of all instruments, in the order in which they were received. They
shall be regarded as registered from the time so noted, and the memorandum of each instrument,
when made on the certificate of title to which it refers, shall bear the same date: Provided, that
245
VOL. 782, JANUARY 27, 2016 245
Decree No. 1529.422 Moreover, “[t]he signature of the Register of Deeds is crucial to the
completeness of the registration process.”423
Spouses Limso and Davao Sunrise posit that Philippine National Bank admitted that the
Certificate of Sale is not registered in various hearings.424 These admissions are judicial
admissions that should be binding on Philippine National Bank.425
Spouses Limso and Davao Sunrise allege that during the oral arguments held on March 19, 2003
at the Court of Appeals in C.A.-G.R. S.P. No. 71527, counsel for Philippine National Bank
stated:426
_______________
the national government as well as the provincial and city governments shall be exempt from the
payment of such fees in advance in order to be entitled to entry and registration.
Every deed or other instrument, whether voluntary or involuntary, so filed with the Register of
Deeds shall be numbered and indexed and endorsed with a reference to the proper certificate of
title. All records and papers relative to registered land in the office of the Register of Deeds shall
be open to the public in the same manner as court records, subject to such reasonable regulations
as the Register of Deeds, under the direction of the Commissioner of Land Registration, may
prescribe.
All deeds and voluntary instruments shall be presented with their respective copies and shall be
attested and sealed by the Register of Deeds, endorsed with the file number, and copies may be
delivered to the person presenting them.
Certified copies of all instruments filed and registered may also be obtained from the Register of
Deeds upon payment of the prescribed fees.
422 Property Registration Decree (1978).
423 Rollo (G.R. No. 205463), p. 885, Nancy Limso and Davao Sunrise’s Memorandum.
424 Id., at pp. 886-888.
425 Id., at pp. 887-888.
426 Id., at pp. 886-887.
247
VOL. 782, JANUARY 27, 2016 247

ATTY. [BENILDA A.] TEJADA:
Yes, we can show the documents which we are going to file your Honors.
We would like to state also your Honors the fact of why no registration was ever made in
this case. Counsel forgot to mention that the fact of no registration is simply because the
Register of Deeds refused to register our Certificate of Sale. We have a pending case
against them Sir before the LRA and before the Ombudsman fore [sic] refusal to register
our Certificate of Sale. Now, we have filed this case because inspite [sic] of the fact the
Register of Deeds addressed a consulta to the Land Registration Authority on the
registerity of the Certificate of Sale your Honors[,] [i]t was at their instance that there was
a consulta.
And then, the Land Registration Authority has already rendered its opinion that the
document is registrable. Despite that your Honors, the document has never been registered.
So that was the subject of our case against them. We do not understand the intransigencies
we do not understand the refusal.427
In addition, the Court of Appeals correctly dismissed Philippine National Bank’s appeal because
the issue raised involved a question of law, specifically “whether or not mere entry in the
Primary Entry Book is considered as registration of the subject Certificate of Sale.”428
Section 56 of Presidential Decree No. 1529 states:
SECTION 56. Primary Entry Book; Fees; Certified Copies.—Each Register of Deeds

shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in
the order of their reception, all instruments including copies of writs and processes filed
with him relating to registered land. He shall, as a preliminary process in registration, note
in such book the date, hour and
_______________
427 Id., at p. 887.
428 Id., at p. 894.

248
minute of reception of all instruments, in the order in which they were received. They shall
be regarded as registered from the time so noted, and the memorandum of each instrument,
when made on the certificate of title to which it refers, shall bear the same date: Provided,
that the national government as well as the provincial and city governments shall be
exempt from the payment of such fees in advance in order to be entitled to entry and
registration. (Emphasis supplied)
In this case, Philippine National Bank filed the Sheriff’s Provisional Certificate of Sale, which
was duly approved by the Executive Judge, before the Registry of Deeds of Davao City. Entries
were made in the Primary Entry Book. Hence, the Sheriff’s Provisional Certificate of Sale should
be considered registered.
Autocorp Group and Autographics, Inc. involved an extrajudicial foreclosure of mortgaged

property and the registration of a Sheriff’s Certificate of Sale. Autocorp sought the issuance of a
writ of injunction “to prevent the register of deeds from registering the subject certificate of
sale[.]”429
This court explained that a Sheriff’s Certificate of Sale is an involuntary instrument and that a
writ of injunction will no longer lie because of the following reasons:
[F]or the registration of an involuntary instrument, the law does not require the
presentation of the owner’s duplicate certificate of title and considers the annotation of
such instrument upon the entry book, as sufficient to affect the real estate to which it
relates. . . .
....
It is a ministerial duty on the part of the Register of Deeds to annotate the instrument on
the certificate of sale after a valid entry in the primary entry book. P.D. No. 1524 provides:
_______________
429 Autocorp Group and Autographics, Inc. v. Court of Appeals, supra note 411 at p. 312; pp.
688-689.
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VOL. 782, JANUARY 27, 2016 249
SEC. 63. Foreclosure of Mortgage.—x x x
(b) If the mortgage was foreclosed extrajudicially, a certificate of sale executed by

the officer who conducted the sale shall be filed with the Register of Deeds who
shall make a brief memorandum thereof on the certificate of title.
In fine, petitioner’s prayer for the issuance of a writ of injunction, to prevent the register of
deeds from registering the subject certificate of sale, had been rendered moot and
academic by the valid entry of the instrument in the primary entry book. Such entry is
equivalent to registration.430 (Emphasis supplied, citation omitted)
Based on the records of this case, the Sheriff’s Certificate of Sale filed by Philippine National
Bank was already recorded in the Primary Entry Book.
The refusal of the Register of Deeds to annotate the registration on the titles of the properties
should not affect Philippine National Bank’s right to possess the properties.
As to the argument that Philippine National Bank admitted in open court that the Certificate of
Sale was not registered, it is evident from Spouses Limso and Davao Sunrise’s Memorandum
that Philippine National Bank immediately explained that the non-registration was due to the
Register of Deeds’ refusal. Thus, the alleged non-registration was not due to Philippine National
Bank’s fault.
It appears on record that Philippine National Bank already complied with the requirements for
registration. Thus, there was no reason for the Register of Deeds to persistently refuse the
registration of the Certificate of Sale.
At any rate, the Land Registration Authority stated in its Resolution in Administrative Case No.
02-13 that Atty. Patriarca herself admitted that she already affixed her signature
_______________
430 Id., at pp. 311-312; pp. 687-689.
250
on the annotation at the back of the certificate of titles, and that she subsequently erased her
signature.431 This finding of fact in the administrative case supports the argument of Philippine
National Bank and the opinion of the Office of the Solicitor General that the Certificate of Sale
should be considered registered.
With regard to the issue of whether Philippine National Bank is entitled to a writ of possession,
the trial court in Other Case No. 124-2002 denied the application for the writ of possession and
explained:
Portion of Sec. 47 of RA No. 8791 is quoted:
x x x the purchaser at the auction sale concerned whether in a judicial or

extrajudicial foreclosure shall have the right to enter upon and take possession
of such property immediately after the date of the confirmation of the auction
sale and administer the same in accordance with law x x x.
From the quoted provision, one can readily conclude that before the sale is confirmed, it is
not considered final or perfected to entitle the purchaser at the auction sale to the writ of
possession as a matter of right. . . .
In extrajudicial foreclosure, there is technically no confirmation of the auction sale in the

manner provided for by Sec. 7 of Rule 68. The process though involves an application,
preparation of the notice of extrajudicial sale, the extrajudicial foreclosure sale, issuance of
the certificate of sale, approval of the Executive Judge or in the latter’s absence, the Vice
Executive Judge and the registration of the certificate of sale with the Register of Deeds.
While it may be true that as found by the CA in the case earlier cited that DSIDC had only
until January 24,
_______________
431 Rollo (G.R. No. 205463), p. 89, Land Registration Authority’s Resolution.
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VOL. 782, JANUARY 27, 2016 251
2001 to redeem its properties and that the registration of the certificate of foreclosure sale
is no longer relevant in the reckoning of the redemption period, for purposes of the
issuance of the writ of possession, petitioner to this Court’s belief should complete the
entire process in extrajudicial foreclosure. Otherwise the sale may not be considered
perfected and the application for writ of possession may be denied.
The records disclose that contrary to petitioner’s claim, the Certificate of Sale covering the
subject properties has not been registered with the Registry of Deeds of Davao City as the Court
finds no annotation thereof. As such, the sale is not considered perfected to entitle petitioner to
the writ of possession as a matter of right.
Accordingly, for reason stated, the petition is DISMISSED. With the dismissal of the petition,
PNB’s Motion for Reception and Admission of PNB’s Ex-parte Testimonial and Documentary
Evidence is DENIED.
SO ORDERED.432
However, Philippine National Bank is applying for the writ of possession on the ground that it is
the winning bidder during the auction sale, and not because it consolidated titles in its name. As
such, the applicable provisions of law are Section 47 of Republic Act No. 8791433 and Section 7
of Act No. 3135.434
Section 47 of Republic Act No. 8791 provides:
SECTION 47. Foreclosure of Real Estate Mortgage.—In the event of foreclosure,

whether judicially or extrajudicially, of any mortgage on real estate which is security for
any loan or other credit accommodation granted, the mortgagor or debtor whose real
property has
_______________
432 Rollo (G.R. No. 173194), pp. 560-561, Regional Trial Court Order in Other Case No. 124-
2002.
433 The General Banking Law of 2000.
434 An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to
Real Estate Mortgages (1924).
252
been sold for the full or partial payment of his obligation shall have the right within one
year after the sale of the real estate, to redeem the property by paying the amount due
under the mortgage deed, with interest thereon at the rate specified in the mortgage, and all
the costs and expenses incurred by the bank or institution from the sale and custody of said
property less the income derived therefrom. However, the purchaser at the auction sale
concerned whether in a judicial or extrajudicial foreclosure shall have the right to enter
upon and take possession of such property immediately after the date of the confirmation
of the auction sale and administer the same in accordance with law. Any petition in court
to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this
provision shall be given due course only upon the filing by the petitioner of a bond in an
amount fixed by the court conditioned that he will pay all the damages which the bank
may suffer by the enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an
extrajudicial foreclosure, shall have the right to redeem the property in accordance with
this provision until, but not after, the registration of the certificate of foreclosure sale with
the applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure
sale prior to the effectivity of this Act shall retain their redemption rights until their
expiration. (Emphasis supplied)
Section 7 of Act No. 3135 provides:
SECTION 7. In any sale made under the provisions of this Act, the purchaser may
petition the Court of First Instance of the province or place where the property or any part
thereof is situated, to give him possession thereof during the redemption period, furnishing
bond in an amount equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without violating the
253
VOL. 782, JANUARY 27, 2016 253
mortgage or without complying with the requirements of this Act. Such petition shall be
made under oath and filed in form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in the case of property
registered under the Mortgage Law or under Section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage duly
registered in the office of any register of deeds in accordance with any existing law, and in
each case the clerk of the court shall, upon the filing of such petition, collect the fees
specified in paragraph eleven of Section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six,
and the court shall, upon approval of the bond, order that a writ of possession issue,
addressed to the sheriff of the province in which the property is situated, who shall execute
said order immediately.
The rule under Section 7 of Act No. 3135 was restated in Nagtalon v. United Coconut Planters
Bank:435
During the one-year redemption period, as contemplated by Section 7 of the above

mentioned law, a purchaser may apply for a writ of possession by filing an ex parte motion
under oath in the registration or cadastral proceedings if the property is registered, or in
special proceedings in case the property is registered under the Mortgage Law. In this case,
a bond is required before the court may issue a writ of possession.436
On the other hand, a writ of possession may be issued as a matter of right when the title has been
consolidated in the buyer’s name due to non-redemption by the mortgagor. Under
_______________
435 G.R. No. 172504, July 31, 2013, 702 SCRA 615 [Per J. Brion, Second Division].
436 Id., at p. 623.
254
this situation, the basis for the writ of possession is ownership of the property.437
The Sheriff’s Provisional Certificate of Sale should be deemed registered. However, Philippine
National Bank must still file a bond before the writ of possession may be issued.
VI
To fully dispose of all the issues in these consolidated cases, this court shall also rule on one of
the issues raised in G.R. No. 158622.
In G.R. No. 158622, Spouses Limso and Davao Sunrise allege that the Sheriff’s Provisional
Certificate of Sale does not state the appropriate redemption period; thus, they filed a Petition for
Declaratory Relief, which was docketed as Civil Case No. 29,036-2002.438
In the loan agreement, natural and juridical persons are codebtors, while the properties
mortgaged to secure the loan are owned by Davao Sunrise.
Act No. 3135 provides that the period of redemption is one (1) year after the sale.439 On the
other hand, Republic Act No.
_______________
437 Tolosa v. United Coconut Planters Bank, G.R. No. 183058, April 3, 2013, 695 SCRA 138,
146 [Per J. Perez, Second Division].
438 Rollo (G.R. No. 158622, Vol. I), pp. 13-17, Petition for Review on Certiorari.
439 Act No. 3135 (1924), Sec. 6, as amended by Act No. 4118 (1933), Sec. 1, provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors-in-interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold, may redeem the same at any time
within the term of one year from and after the date of the sale; and such redemption shall be
governed by the provisions of Sections four hundred and sixty-four to four hundred and
255
VOL. 782, JANUARY 27, 2016 255
8791 provides a shorter period of three (3) months to redeem in cases involving juridical
persons.440
We rule that the period of redemption for this case should be not more than three (3) months in
accordance with Section 47 of Republic Act No. 8791. The mortgaged properties are all owned
by Davao Sunrise. Section 47 of Republic Act No. 8791 states: “the mortgagor or debtor whose
real property has been sold” and “juridical persons whose property is being sold[.]” Clearly, the
law itself provides that the right to redeem belongs to the owner of the property mortgaged. As
the mortgaged properties all belong to Davao Sunrise, the shorter period of three (3) months is
the applicable redemption period.
The policy behind the shorter redemption period was explained in Goldenway Merchandising
Corporation v. Equitable PCI Bank:441
The difference in the treatment of juridical persons and natural persons was based on the
nature of the properties foreclosed — whether these are used as residence, for which the
more liberal one-year redemption period is retained, or used for industrial or commercial
purposes, in which case a shorter term is deemed necessary to reduce the period of
uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of
these acquired assets. It must be underscored that the General Banking Law of 2000,
crafted in the aftermath of the 1997 Southeast Asian financial crisis, sought to reform the
General Banking Act of 1949 by fashioning a legal framework for maintaining a safe and
sound banking system. In this context, the amendment introduced by Section 47 embodied
one of such safe and sound practices
_______________
sixty-six, inclusive, of the Code of Civil Procedure, insofar as these are not inconsistent with the
provisions of this Act.
440 Rep. Act No. 8791 (2000), Sec. 47.
441 G.R. No. 195540, March 13, 2013, 693 SCRA 439 [Per J. Villarama, Jr., First Division].
256

aimed at ensuring the solvency and liquidity of our banks.442 (Citation omitted)
To grant a longer period of redemption on the ground that a codebtor is a natural person defeats
the purpose of Republic Act No. 8791. In addition, the real properties mortgaged by Davao
Sunrise appear to be used for commercial purposes.443
WHEREFORE, the Petition for Review on Certiorari in G.R. No. 173194 is DENIED.
The Petition docketed as G.R. No. 196958 is PARTIALLY GRANTED, while the Petition
docketed as G.R. No. 197120 is DENIED. The Decision of the Court of Appeals in C.A.-G.R.
CV No. 79732-MIN is AFFIRMED with MODIFICATION.
The Conversion, Restructuring and Extension Agreement executed in 1999 is deemed to have
novated the Credit Agreement and Loan Agreement executed in 1993. Thus, the principal loan
obligation of Davao Sunrise Investment and Development Corporation and Spouses Robert Alan
and Nancy Limso shall be computed on the basis of the amounts indicated in the Conversion,
Interest on the principal loan obligation shall be at the rate of 12% per annum and computed
from January 28, 1999, the date of the execution of the Conversion, Restructuring and Extension
Agreement. Interest rate on the conventional interest shall be at the rate of 12% per annum from
August 21, 2000, the date of judicial demand, to June 30, 2013. From July 1, 2013 until full
satisfaction, the interest rate on the
_______________
442 Id., at p. 453.
443 Rollo (G.R. No. 173194), pp. 106-111, Petition for Extrajudicial Foreclosure of Real Estate
Mortgage.
257
VOL. 782, JANUARY 27, 2016 257

conventional interest shall be computed at 6% per annum in view of this court’s ruling in Nacar
v. Gallery Frames.444
_______________
444 Nacar v. Gallery Frames, supra note 372 at pp. 457-458. In Nacar, this court held: “To
recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping
Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under
Title XVIII on ‘Damages’ of the Civil Code govern in determining the measure of recoverable
damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan
or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest

on the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall
begin
258

This case is ordered REMANDED to Branch 17 of the Regional Trial Court of Davao City for
the computation of the total amount of Davao Sunrise Investment and Development Corporation
and Spouses Robert Alan and Nancy Limso’s remaining obligation.
The Petition docketed as G.R. No. 205463 is PARTIALLY GRANTED. The Sheriff’s
Provisional Certificate of Sale is deemed to have been registered. In view of the facts of this
case, the applicable period of redemption shall be three (3) months as provided under Republic
Act No. 8791.
In case the final computation shows that Davao Sunrise Investment and Development
Corporation and Spouses Robert Alan and Nancy Limso overpaid Philippine National Bank,
Philippine National Bank must return the excess amount.
The writ of possession prayed for by Philippine National Bank may only be issued after all the
requirements for the issuance of a writ of possession are complied with.
SO ORDERED.
_______________
to run only from the date the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6%
per annum from such finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July 1,
2013, shall not be disturbed and shall continue to be implemented applying the rate of interest
fixed therein.” (Emphasis in the original, citation omitted)
259
VOL. 782, JANUARY 27, 2016 259

Carpio (Chairperson), Brion, Peralta** and Del Castillo, JJ., concur.
Petition in G.R. No. 173194 denied; petition in G.R. No. 196958 partially granted; while petition
in G.R. No. 197120 denied. Judgment of Court of Appeals in C.A.-G.R. CV No. 79732-MIN
affirmed with modification. Petition in G.R. No. 205463 partially granted.
Notes.—An interlocutory order may be assailed by certiorari or prohibition only when it is

shown that the court acted without or in excess of jurisdiction or with grave abuse of discretion,
Court however generally frowns upon this remedial measure as regards interlocutory orders.
(University of Mindanao, Inc. vs. Court of Appeals, 643 SCRA 562 [2011])
Escalation clauses are generally valid and do not contravene public policy. (Philippine Savings
Bank vs. Castillo, 649 SCRA 527 [2011])
——o0o——
G.R. No. 217694. January 27, 2016.*
FAIRLAND KNITCRAFT CORPORATION, petitioner, vs. ARTURO LOO PO, respondent.
Remedial Law; Special Civil Actions; Unlawful Detainer; A complaint sufficiently alleges a
cause of action for unlawful detainer if it recites the following: (1) initially, possession of the
property by the defendant was by contract with or by tolerance of the plaintiff; (2) eventually,
such possession became illegal upon notice by the plaintiff to the defendant of the termination of
the latter’s right of possession; (3) thereafter, the defendant remained in possession of the
property, and deprived the plaintiff of the enjoyment thereof; and (4) within one (1) year from the
last demand on defendant to vacate the property, the plaintiff instituted the complaint for
ejectment.—Stated differently, unlawful detainer is a summary action for the recovery of
possession of real property. This action may be filed by a lessor, vendor, vendee, or other person
from 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. The
possession of the defendant was originally legal, as his possession was permitted by the plaintiff
on account of an express or implied contract between them. The defendant’s possession,
however, became illegal when the plaintiff demanded that the defendant vacate the subject
property due to the expiration or termination of the right to possess under the contract, and the
defendant refused to heed such demand. A case for unlawful detainer must be instituted one year
from the unlawful withholding of possession. A complaint sufficiently alleges a cause of action
for unlawful detainer if it recites the following: (1) initially, possession of the property by the
defendant was by contract with or by tolerance of the plaintiff; (2) eventually, such possession
became illegal upon notice by the plaintiff to the defendant of the termination of the latter’s right
of possession; (3) thereafter, the defendant remained in possession of the property, and deprived
the plaintiff of the enjoyment thereof; and (4) within one (1) year from the last demand on
defendant to vacate the property, the plaintiff instituted the complaint for ejectment.
_______________
* SECOND DIVISION.
466
Fairland Knitcraft Corporation vs. Loo Po
Same; Same; Same; Forcible Entry; Under Section 7, Rule 70 of the Rules of Court, which
governs the rules for forcible entry and unlawful detainer, if the defendant fails to answer the
complaint within the period provided, the court has no authority to declare the defendant in
default. Instead, the court, motu proprio or on motion of the plaintiff, shall render judgment as
may be warranted by the facts alleged in the complaint and limited to what is prayed for.—
Section 6 is clear that in case the defendant failed to file his answer, the court shall render
judgment, either motu proprio or upon plaintiff’s motion, based solely on the facts alleged in
the complaint and limited to what is prayed for. The failure of the defendant to timely file his
answer and to controvert the claim against him constitutes his acquiescence to every allegation
stated in the complaint. Logically, there is nothing to be done in this situation except to render
judgment as may be warranted by the facts alleged in the complaint. Similarly, under Section 7,
Rule 70 of the Rules of Court, which governs the rules for forcible entry and unlawful detainer, if
the defendant fails to answer the complaint within the period provided, the court has no authority
to declare the defendant in default. Instead, the court, motu proprio or on motion of the plaintiff,
shall render judgment as may be warranted by the facts alleged in the complaint and limited to
what is prayed for.
Same; Same; Same; Same; Summary Procedure; Forcible entry and unlawful detainer cases are
summary proceedings designed to provide for an expeditious means of protecting actual
possession or the right to possession of the property involved; Thus, as a consequence of the
defendant’s failure to file an answer, the court is simply tasked to render judgment as may be
warranted by the facts alleged in the complaint and limited to what is prayed for therein.—These
specific provisions under the Rules of Summary Procedure which are also reflected in Rule 70 of
the Rules of Court, serve their purpose to immediately settle ejectment proceedings. “Forcible
entry and unlawful detainer cases are summary proceedings designed to provide for an
expeditious means of protecting actual possession or the right to possession of the property
involved. It does not admit of a delay in the determination thereof. It is a ‘time procedure’
designed to remedy the situation.” Thus, as a consequence of the defendant’s failure to file an
answer, the court is simply tasked to render judgment as may be warranted by the facts alleged in
the complaint and limited to what is prayed for therein.
467
VOL. 782, JANUARY 27, 2016 467

Same; Judicial Affidavit Rule; In the Judicial Affidavit Rule (JAR), the attachments of
documentary or object evidence to the affidavits is required when there would be a pretrial or
preliminary conference or the scheduled hearing.—The Court deems it proper to discuss the
relevance of the Judicial Affidavit Rule or A.M. No. 12-8-8-SC, where documentary or object
evidence are required to be attached. To begin with, the rule is not applicable because such
evidence are required to be attached to a judicial affidavit, not to a complaint. Moreover, as the
rule took effect only on January 1, 2013, it cannot be required in this case because this was
earlier filed on December 12, 2012. Granting that it can be applied retroactively, the rule being
essentially remedial, still it has no bearing on the ruling of this Court. In the Judicial Affidavit
Rule, the attachments of documentary or object evidence to the affidavits is required when there
would be a pretrial or preliminary conference or the scheduled hearing. As stated earlier,
where a defendant fails to file an answer, the court shall render judgment, either motu proprio or
upon plaintiff’s motion, based solely on the facts alleged in the complaint and limited to what is
prayed for. Thus, where there is no answer, there is no need for a pretrial, preliminary conference
or hearing.
Arturo S. Santos for petitioner.
Marcelino B. Lomoya for respondent.
MENDOZA, J.:
This is a petition for review on certiorari1 seeking to reverse and set aside the October 31, 2014
Decision2 and the
_______________
1 Rollo, pp. 3-14.
2 Id., at pp. 16-21. Penned by Associate Justice Japar B. Dimaampao, with Associate Justices Elihu A.
Ybañez and Carmelita S. Manahan, concurring.
468
March 6, 2015 Resolution3 of the Court of Appeals (CA), in C.A.-G.R. S.P. No. 134701 which
affirmed the September 16, 2013 Decision4 of the Regional Trial Court of Pasig City, Branch 67
(RTC) in SCA Case No. 3831. The RTC decision, in turn, sustained the March 21, 2013
Decision5 of the Metropolitan Trial Court, Branch 72, Pasig City (MeTC), which dismissed the
unlawful detainer case filed by petitioner Fairland Knitcraft Corporation (Fairland) against
respondent Arturo Loo Po (Po) for failure to prove its case by preponderance of evidence.
The Antecedents
In a complaint6 for unlawful detainer, docketed as Civil Case No. 19429, filed before the MeTC,
Fairland alleged that it was the owner of Condominium Unit No. 205 in Cedar Mansion II on
Ma. Escriba Street, Pasig City. The said unit was leased by Fairland to Po by verbal agreement,
with a rental fee of P20,000.00 a month, to be paid by Po at the beginning of each month. From
March 2011, Po had continuously failed to pay rent. For said reason, Fairland opted not to renew
the lease agreement anymore.
On January 30, 2012, Fairland sent a formal letter7 to Po demanding that he pay the amount of
P220,000.00, representing the rental arrears, and that he vacate the leased premises within fifteen
(15) days from the receipt of the letter. Despite receipt of the demand letter and the lapse of the
said 15-day period to comply, Po neither tendered payment for the unpaid rent nor vacated the
premises. Thus, on December 12, 2012,
_______________
3 Id., at pp. 23-24.
4 Id., at pp. 62-63. Penned by Presiding Judge Amorfina Cerrado-Cezar.
5 Id., at pp. 42-44. Penned by Presiding Judge Joy N. Casihan-Dumlao.
6 Id., at pp. 25-28.

7 Id., at p. 29.
469
VOL. 782, JANUARY 27, 2016 469
Fairland was constrained to file the complaint for unlawful detainer before the MeTC. Po had
until January 7, 2013 to file his answer but he failed to do so. Hence, on February 6, 2013,
Fairland filed a motion to render judgment.8
In its February 21, 2013 Order,9 the MeTC considered the case submitted for decision.
On March 1, 2013, Po’s counsel filed his Entry of Appearance with Motion for Leave of Court to
file Comment/Opposition to Motion to Render Judgment.10 In the attached
Comment/Opposition, Po denied the allegations against him and commented that there was no
supporting document that would show that Fairland owned the property; that there was no lease
contract between them; that there were no documents attached to the complaint which would
show that previous demands had been made and received by him; that the alleged unpaid rental
was P220,000.00, but the amount of damages being prayed for was P440,000.00; that the issue in
the case was one of ownership; and that it was the RTC which had jurisdiction over the case.
The MeTC treated the comment/opposition as Po’s answer to the complaint. Considering,
however, that the case fell under the Rules of Summary Procedure, the same was deemed filed
out of time. Hence, the motion was denied.11
The Ruling of the Metropolitan Trial Court
In its March 21, 2013 Decision, the MeTC dismissed the complaint for lack of merit due to
Fairland’s failure to prove its claim by preponderance of evidence. The MeTC explained that
although the complaint sufficiently alleged a cause of action, Fairland failed to prove that it was
entitled to the
_______________
8 Id., at pp. 32-33.
9 Id., at p. 35.
10 Id., at p. 36.
11 Id., at p. 39.
470
possession of the subject property. There was no evidence presented to support its claim against
Po either.
Aggrieved, Fairland seasonably filed its appeal before the RTC under Rule 40 of the Rules of
Court. Being an appealed case, the RTC required the parties to submit their respective
memoranda.
In its memorandum,12 Fairland argued that an unlawful detainer case was a special civil action
governed by summary procedure. In cases where a defendant failed to file his answer, there was
no need for a declaration of default. Fairland claimed that the Rules stated that in such cases,
judgment should be based on the “facts alleged in the complaint,”13 and that there was no
requirement that judgment must be based on facts proved by preponderance of evidence.
Considering that the presentation of evidence was not required when a defendant in an ejectment
case failed to appear in a preliminary conference, the same should be applied when no answer
had been filed.
Fairland continued that the failure to file an answer in an ejectment case was tantamount to an
admission by the defendant of all the ultimate facts alleged in the complaint. There was no more
need for evidence in such a situation as every allegation of ultimate facts in the complaint was
deemed established by the defendant’s acquiescence.
On July 18, 2013, Po filed his memorandum14 and countered that there was no merit in
Fairland’s insistence that evidence was unnecessary when no answer had been filed. The facts
stated in the complaint did not warrant a rendition of judgment in the plaintiff’s favor. The court
had the discretion to rule on the pleadings based on its evaluation of the allegation of facts.
_______________
12 Id., at pp. 47-52.
13 Section 6, Rules on Summary Procedure.
14 Id., at pp. 53-61.
471
VOL. 782, JANUARY 27, 2016 471
Further, all the statements in the complaint were mere allegations which were not substantiated
by any competent evidence. Po asserted that there was no proof presented to show that the
subject property was indeed owned by Fairland; that there was no lease contract between the
parties; that he never received the demand letter, dated January 30, 2012; and that the amount
stated in the prayer of the complaint did not coincide with the amount of unpaid rent. Po also
reiterated that the case involved an issue of ownership over the condominium unit he was
occupying.
The Ruling of the Regional Trial Court
On September 16, 2013, the RTC affirmed the MeTC ruling and agreed that Fairland failed to
establish its case by preponderance of evidence. There was nothing on record that would
establish Fairland’s right over the property subject of the complaint. Though it had been
consistently ruled that the only issue for resolution in an ejectment case was the physical or
material possession of the property involved, independent of any claim of ownership by any of
the party-litigants, the court may go beyond the question of physical possession provisionally.
The RTC concluded that even assuming that Po was not the lawful owner, his actual physical
possession of the subject property created the presumption that he was entitled to its possession
thereof.
Fairland filed a motion for reconsideration15 attaching its condominium certificate of title16
over the subject property, but it was denied by the RTC in its Order,17 dated February 24, 2014.
_______________
15 Id., at pp. 64-66.
16 Id., at pp. 67-70.
17 Id., at pp. 78-80.
472
Undaunted, Fairland filed a petition for review18 under Rule 42 of the Rules of Court before the
CA.
The Ruling of the Court of Appeals
In the assailed Decision, dated October 31, 2014, the CA dismissed the petition and ruled that an
action for unlawful detainer would not lie against Po. Notwithstanding the abbreviated
proceeding it ordained and the limited pleadings it allowed, the Rules on Summary Procedure
did not relax the rules on evidence. In order for an action for recovery of possession to prosper, it
was indispensable that he who brought the action should prove not only his ownership but also
the identity of the property claimed. The CA concluded, however, that Fairland failed to
discharge such bounden duty.
Fairland filed its motion for reconsideration, but it was denied by the CA in its assailed
Resolution, dated March 6, 2015.
Hence, this petition.

Arguments/Discussions
IN AN EJECTMENT CASE WHEREIN NO ANSWER WAS SEASONABLY FILED,

IT IS AN ERROR OF LAW TO BASE JUDGMENT ON PREPONDERANCE OF
EVIDENCE.
II
HOLDING THAT EVIDENCE IN AN EJECTMENT CASE SHOULD HAVE BEEN

ATTACHED TO THE COMPLAINT IS AN ERROR OF LAW.19
_______________
18 Id., at pp. 81-91.
19 Id., at pp. 6-9.
473
VOL. 782, JANUARY 27, 2016 473
Fairland argues that in ejectment cases, presentation of evidence was undertaken through the
submission of position papers but the same was dispensed with when the defendant failed to file
an answer or when either party failed to appear during the preliminary conference. In an
ejectment case, the scope of inquiry should be limited to the sufficiency of the cause of action
stated in the complaint when no seasonable answer was filed. The attachment of documentary
evidence to the Complaint was not a requirement and was even proscribed by law.
In his Comment,20 Po countered that the present petition raised a question of fact. Although
couched in different words, the issues raised here were substantially the same as the issues raised
before the CA. There was no legal basis in Fairland’s assertion that evidence was dispensed with
when no answer to the complaint had been filed. Such argument would undermine the inherent
authority of the courts to resolve legal issues based on the facts of the case and on the rules on
evidence. Contrary to Fairland’s position, the court decided the case on the basis of the complaint
which was found wanting in preponderance of evidence.
In its Reply,21 Fairland posited that the petition did not raise mere questions of fact but one of
law as what was being sought for review was the erroneous dismissal of the ejectment case for
lack of preponderance of evidence. Since no answer was filed and the complaint sufficiently
alleged a cause of action for unlawful detainer, it became the duty of the MeTC to decide the
case in its favor.
The petition is meritorious.
_______________
20 Id., at pp. 141-158.
21 Id., at p. 171.
474
Complaint has a valid
cause of action for
Unlawful Detainer
Section 1 of Rule 70 of the Rules of Court lays down the requirements for filing a complaint for
unlawful detainer, to wit:
Section 1. Who may institute proceedings, and when.—Subject to the provision 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.
Stated differently, unlawful detainer is a summary action for the recovery of possession of real
property. This action may be filed by a lessor, vendor, vendee, or other person from 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. The possession of the
defendant was originally legal, as his possession was permitted by the plaintiff on account of an
express or implied contract between them. The defendant’s possession, however, became illegal
when the plaintiff demanded that the defendant vacate the subject property due to the expiration
or termination of the right to possess under the contract, and the defendant refused to heed such
demand. A
475
VOL. 782, JANUARY 27, 2016 475
case for unlawful detainer must be instituted one year from the unlawful withholding of
possession.22
A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:
(1) initially, possession of the property by the defendant was by contract with or by tolerance of
the plaintiff; (2) eventually, such possession became illegal upon notice by the plaintiff to the
defendant of the termination of the latter’s right of possession; (3) thereafter, the defendant
remained in possession of the property, and deprived the plaintiff of the enjoyment thereof; and
(4) within one (1) year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.23
There is no question that the complaint filed by Fairland adequately alleged a cause of action for
unlawful detainer. The pertinent portion of the said complaint reads:
xxx
3. Plaintiff is the owner of, and had been leasing to the defendant, the premises
mentioned above as the residence of the latter;
4. There is no current written lease contract between plaintiff and the defendant, but the
latter agreed to pay the former the amount of Php20,000.00 as rent at the beginning of each
month. Thus, the term of the lease agreement is renewable on a month-to-month basis;
5. Since March 2011, defendant has not been paying the aforesaid rent despite plaintiff’s
repeated demands;
6. Due to defendant’s continuous failure to pay rent, plaintiff reached a decision not to
renew the lease agreement. It sent a formal letter, x x x demanding defendant to pay the
amount of Php220,000.00, representing defendant’s twelve-month rental arrears beginning
January
_______________
22 Jose v. Alfuerto, 699 Phil. 307, 316; 686 SCRA 323, 334 (2012).
23 Zacarias v. Anacay, G.R. No. 202354, September 24, 2014, 736 SCRA 508, 516.
476

2011, and to vacate the leased premises, both within fifteen (15) days from receipt of said
letter;
7. Despite receipt of the aforesaid demand letter and lapse of the fifteen-day period given
to comply with plaintiff’s demand, defendant neither tendered payment for the unpaid rent
nor vacated the leased premises. Worse, defendant has not been paying rent up to now.
x x x 24
The above cited portions of the complaint sufficiently alleged that Fairland was the owner of the
subject property being leased to Po by virtue of an oral agreement. There was a demand by
Fairland for Po to pay rent and vacate before the complaint for unlawful detainer was instituted.
The complaint was seasonably filed within the one-year period prescribed by law. With all the
elements present, there was clearly a cause of action in the complaint for unlawful detainer.
Under the Rules of Summary
Procedure, the weight of
evidence is not considered
when a judgment is rendered
based on the complaint
The question now is whether the MeTC correctly dismissed the case for lack of preponderance of
evidence. Fairland posits that judgment should have been rendered in its favor on the basis of the
complaint itself and not on its failure to adduce proof of ownership over the subject property.
The Court agrees with Fairland’s position.
The summons, together with the complaint and its annexes, was served upon Po on December
28, 2012. This presupposes that the MeTC found no ground to dismiss the ac-
_______________
24 Rollo, pp. 25-26.
477
VOL. 782, JANUARY 27, 2016 477
tion for unlawful detainer.25 Nevertheless, Po failed to file his answer on time and the MeTC
had the option to render judgment motu proprio or on motion of the plaintiff. In relation thereto,
Sections 5 and 6 of the Rules on Summary Procedure provide:
Sec. 5. Answer.—Within ten (10) days from service of summons, the defendant shall file
his answer to the complaint and serve a copy thereof on the plaintiff. Affirmative and
negative defenses not pleaded therein shall be deemed waived, except for lack of
jurisdiction over the subject matter. Cross-claims and compulsory counterclaims not
asserted in the answer shall be considered barred. The answer to counterclaims or cross-
claims shall be filed and served within ten (10) days from service of the answer in which
they are pleaded.
Sec. 6. Effect of failure to answer.—Should the defendant fail to answer the complaint

within the period above provided, the court, motu proprio or on motion of the plaintiff,
shall render judgment as may be warranted by the facts alleged in the complaint and
limited to what is prayed for therein. The court may in its discretion reduce the amount
of damages and attorney’s fees claimed for being excessive or otherwise unconscionable,
without prejudice to the applicability of Section 4, Rule 18 of the Rules of Court, if there
are two or more defendants.
[Emphasis supplied]
Section 6 is clear that in case the defendant failed to file his answer, the court shall render
judgment, either motu proprio or upon plaintiff’s motion, based solely on the facts alleged in
the complaint and limited to what is prayed for. The failure of the defendant to timely file his
answer and to controvert the claim against him constitutes his acquiescence to every allegation
stated in the complaint. Logically,
_______________
25 Section 4, Rules of Summary Procedure.
478
there is nothing to be done in this situation26 except to render judgment as may be warranted by
the facts alleged in the complaint.27
Similarly, under Section 7, Rule 70 of the Rules of Court, which governs the rules for forcible
entry and unlawful detainer, if the defendant fails to answer the complaint within the period
provided, the court has no authority to declare the defendant in default. Instead, the court, motu
proprio or on motion of the plaintiff, shall render judgment as may be warranted by the facts
alleged in the complaint and limited to what is prayed for.28
This has been enunciated in the case of Don Tino Realty and Development Corporation v.
Florentino,29 citing Bayog v. Natino,30 where the Court held that there was no provision for an
entry of default under the Rules of Summary Procedure if the defendant failed to file his answer.
In this case, Po failed to file his answer to the complaint despite proper service of summons. He
also failed to provide a sufficient justification to excuse his lapses. Thus, as no answer was filed,
judgment must be rendered by the court as may be warranted by the facts alleged in the
complaint.
Failure to attach annexes is not
fatal if the complaint alleges a
sufficient cause of action; evi-
_______________
26 Luceres, Bernardo M., Revised Rule of Summary Procedure, 1st ed., p. 14 (2011).
27 Section 6, Resolution of the Court En Banc, dated October 15, 1991, providing for the Revised Rule
on Summary Procedure for Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial
Courts and Municipal Circuit Trial Courts.
28 Riano, Willard, Civil Procedure, The Bar Lecture Series, Volume II, pp. 456-457 (2012).
29 372 Phil. 882; 314 SCRA 197 (1999).
30 327 Phil. 1019; 258 SCRA 378 (1996).
479
VOL. 782, JANUARY 27, 2016 479
dence need not be attached to
the complaint
The lower courts erroneously dismissed the complaint of Fairland simply on the ground that it
failed to establish by preponderance of evidence its ownership over the subject property. As can
be gleaned above, the rules do not compel the plaintiff to attach his evidence to the complaint
because, at this inception stage, he only has to file his complaint to establish his cause of action.
Here, the court was only tasked to determine whether the complaint of Fairland alleged a
sufficient cause of action and to render judgment thereon.
Also, there was no need to attach proof of ownership in the complaint because the allegations
therein constituted a sufficient cause of action for unlawful detainer. Only when the allegations in
the complaint are insufficient to form a cause of action shall the attachment become material in
the determination thereof. Even under Section 4 of the Rules of Summary Procedure,31 it is not
mandatory to attach annexes to the complaint.
In the case of Lazaro v. Brewmaster International, Inc.32 (Lazaro), where judgment was
rendered based on the complaint due to the failure of the defendant to file an answer under the
Rules of Summary Procedure, it was written that:
x x x To determine whether the complaint states a cause of action, all documents attached
thereto may, in fact, be considered, particularly when referred to in the
_______________
31 Sec. 4. Duty of court.—After the court determines that the case falls under summary procedure,
it may, from an examination of the allegations therein and such evidence as may be attached thereto,
dismiss the case outright on any of the grounds apparent therefrom for the dismissal of a civil action. If no
ground for dismissal is found it shall forthwith issue summons which shall state that the summary
procedure under this Rule shall apply.
32 642 Phil. 710; 628 SCRA 574 (2010).
480
complaint. We emphasize, however, that the inquiry is into the sufficiency, not the
veracity of the material allegations in the complaint. Thus, consideration of the
annexed documents should only be taken in the context of ascertaining the sufficiency
of the allegations in the complaint.
[Emphasis supplied]
In Lazaro, the assailed invalid invoices attached to the complaint were not considered because
the complaint already alleged a sufficient cause of action for collection of sum of money. Those
assailed documents were not the bases of the plaintiff’s action for sum of money, but were only
attached to the complaint to provide evidentiary details on the alleged transactions.
Similarly, in the case at bench, there was no need for documentary attachments to prove
Fairland’s ownership over the subject property. First, the present action is an action for unlawful
detainer wherein only de facto or material possession is required to be alleged. Evidently, the
attachment of any deed of ownership to the complaint is not indispensable because an action for
unlawful detainer does not entirely depend on ownership.
Second, Fairland sufficiently alleged ownership and superior right of possession over the subject
property. These allegations were evidently manifest in the complaint as Fairland claimed to have
orally agreed to lease the property to Po. The Court is of the view that these allegations were
clear and unequivocal and did not need supporting attachments to be considered as having
sufficiently established its cause of action. Even the MeTC conceded that the complaint of
Fairland stated a valid cause of action for unlawful detainer.33 It must be stressed that inquiry
into the attached documents in the
_______________
33 Rollo, p. 42.
481
VOL. 782, JANUARY 27, 2016 481
complaint is for the sufficiency, not the veracity, of the material allegations in the complaint.
Third, considering that Po failed to file an answer within the prescribed period, he was deemed to
have admitted all the allegations in the complaint including Fairland’s claim of ownership. To
reiterate, the failure of the defendant to timely file his answer and controvert the claim against
him constituted his acquiescence to every allegation stated in the complaint.
In the Entry of Appearance with Motion for Leave of Court to file Comment/Opposition to
Motion to Render Judgment, which was belatedly filed and so was denied by the MeTC, Po
merely denied the allegations against him without even bothering to aver why he claimed to have
a superior right of possession of the subject property.34
Fourth, it is only at the later stage of the summary procedure when the affidavits of witnesses
and other evidence on factual issues shall be presented before the court. Sections 8 and 9 of the
Rules on Summary Procedure state:
Sec. 8. Record of preliminary conference.—Within five (5) days after the termination of
the preliminary conference, the court shall issue an order stating the matters taken up
therein. x x x
Sec. 9. Submission of affidavits and position papers.—Within ten (10) days from receipt
of the order mentioned in the next preceding section, the parties shall submit the affidavits
of their witnesses and other evidence on the factual issues defined in the order, together
_______________
34 Id., at pp. 36-38. Though unnecessary and even not sanctioned by the Rule, Fairland, nevertheless,
attached the Condominium Certificate of Title (id., at p. 67) under its name to its motion for
reconsideration with the RTC to remove and doubt as to its ownership of the subject property. The said
certificate was entered into the books of the registry as early as October 13, 2005.
482
with their position papers setting forth the law and the facts relied upon by them.
[Emphasis supplied]
Again, it is worth stressing that these provisions are exactly Sections 9 and 10 under Rule 70 of
the Rules of Court.
Accordingly, it is only at this part of the proceedings that the parties will be required to present
and offer their evidence before the court to establish their causes and defenses. Before the
issuance of the record of preliminary conference, the parties are not yet required to present their
respective evidence.
These specific provisions under the Rules of Summary Procedure which are also reflected in
Rule 70 of the Rules of Court, serve their purpose to immediately settle ejectment proceedings.
“Forcible entry and unlawful detainer cases are summary proceedings designed to provide for an
expeditious means of protecting actual possession or the right to possession of the property
involved. It does not admit of a delay in the determination thereof. It is a ‘time procedure’
designed to remedy the situation.”35 Thus, as a consequence of the defendant’s failure to file an
answer, the court is simply tasked to render judgment as may be warranted by the facts alleged in
the complaint and limited to what is prayed for therein.
As the complaint contains
a valid cause of action, a
judgment can already be
rendered
In order to achieve an expeditious and inexpensive determination of unlawful detainer cases, a

remand of this case to the lower courts is no longer necessary and the case can be determined on
its merits by the Court.
_______________
35 Don Tino Realty and Development Corporation v. Florentino, supra note 29.
483
VOL. 782, JANUARY 27, 2016 483
To recapitulate, as Po failed to file his answer on time, judgment shall be rendered based only on
the complaint of Fairland without the need to consider the weight of evidence. As discussed
above, the complaint of Fairland had a valid cause of action for unlawful detainer.
Consequently, there is no more need to present evidence to establish the allegation of Fairland of
its ownership and superior right of possession over the subject property. Po’s failure to file an
answer constitutes an admission of his illegal occupation due to his nonpayment of rentals, and
of Fairland’s rightful claim of material possession. Thus, judgment must be rendered finding that
Fairland has the right to eject Po from the subject property.
The Judicial Affidavit Rule
On a final note, the Court deems it proper to discuss the relevance of the Judicial Affidavit Rule
or A.M. No. 12-8-8-SC, where documentary or object evidence are required to be attached. To
begin with, the rule is not applicable because such evidence are required to be attached to a
judicial affidavit, not to a complaint. Moreover, as the rule took effect only on January 1, 2013, it
cannot be required in this case because this was earlier filed on December 12, 2012.
Granting that it can be applied retroactively, the rule being essentially remedial, still it has no
bearing on the ruling of this Court.
In the Judicial Affidavit Rule, the attachments of documentary or object evidence to the
affidavits is required when there would be a pretrial or preliminary conference or the
scheduled hearing. As stated earlier, where a defendant fails to file an answer, the court shall
render judgment, either motu proprio or upon plaintiff’s motion, based solely on the facts alleged
in the complaint and limited to what is prayed for. Thus, where there is no answer, there is no
need for a
484
pretrial, preliminary conference or hearing. Section 2 of the Judicial Affidavit Rule reads:
Section 2. Submission of Judicial Affidavits and Exhibits in lieu of direct testimonies.—

(a) The parties shall file with the court and serve on the adverse party, personally or by
licensed courier service, not later than five days before pretrial or preliminary conference
or the scheduled hearing with respect to motions and incidents, the following:
(1) The judicial affidavits of their witnesses, which shall take the place of such
witnesses’ direct testimonies; and
(2) The parties’ documentary or object evidence, if any, which shall be attached to
the judicial affidavits and marked as Exhibits A, B, C, and so on in the case of the
complainant or the plaintiff, and as Exhibits 1, 2, 3, and so on in the case of the
respondent or the defendant.
(b) Should a party or a witness desire to keep the original document or object evidence in
his possession, he may, after the same has been identified, marked as exhibit, and
authenticated, warrant in his judicial affidavit that the copy or reproduction attached to
such affidavit is a faithful copy or reproduction of that original. In addition, the party or
witness shall bring the original document or object evidence for comparison during the
preliminary conference with the attached copy, reproduction, or pictures, failing which the
latter shall not be admitted.
This is without prejudice to the introduction of secondary evidence in place of the original
when allowed by existing rules.
WHEREFORE, the petition is GRANTED. The October 31, 2014 Decision and the March 6,
2015 Resolution of the Court of Appeals in C.A.-G.R. S.P. No. 134701 are hereby REVERSED
and SET ASIDE. Respondent Arturo Loo Po is
485
VOL. 782, JANUARY 27, 2016 485
ORDERED TO VACATE Condominium Unit No. 205 located in Cedar Mansion II on Ma.
Escriba Street, Pasig City.
Respondent Po is further ORDERED TO PAY the rentals-in-arrears, as well as the rentals

accruing in the interim until he vacates the property. The unpaid rentals shall incur a legal
interest of six percent (6%) per annum from January 30, 2012, when the demand to pay and to
vacate was made, up to the finality of this decision. Thereafter, an interest of six percent (6%)
per annum shall be imposed on the total amount due until full payment is made.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Leonen, JJ., concur.
Notes.—Section 2(a) of the Judicial Affidavit Rule (JAR) provides that judicial affidavits are
mandatorily filed by parties to a case except in small claims cases. These judicial affidavits take
the place of direct testimony in court. (Ng Meng Tam vs. China Banking Corporation, 765 SCRA
471 [2015])
Under Section 10, parties are to be penalized if they do not conform to the provisions of the
Judicial Affidavit Rule (JAR). (Id.)
——o0o——

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G.R. No. 178501. January 11, 2016.

NILO S. RODRIGUEZ, FRANCISCO T. ALISANGCO, BENJAMIN T. ANG, VICENTE P.

G.R. No. 178510. January 11, 2016.*

PHILIPPINE AIRLINES, INC., petitioner, vs. NILO S. RODRIGUEZ, FRANCISCO T.

VOL. 778, JANUARY 11, 2016 335

336 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

VOL. 778, JANUARY 11, 2016 337

Rodriguez vs. Philippine Airlines, Inc.

The facts are stated in the opinion of the Court.

PAL Legal Affairs Department for Philippine Airlines, Inc.

338 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

VOL. 778, JANUARY 11, 2016 339

Rodriguez vs. Philippine Airlines, Inc.

The relevant facts of the case are as follows:

2 Rollo (G.R. No. 178510), p. 177.

3 Art. 263. Strikes, picketing, and lockouts.—x x x (g) When, in his opinion, there exists a

340 SUPREME COURT REPORTS ANNOTATED

WHEREFORE, FOEGOING PREMISES CONSIDERED, all striking officers and members of

5 Rollo (G.R. No. 178510), pp. 152-154.

6 Id., at pp. 159-160. Issued by former DOLE Secretary Cresenciano B. Trajano.

8 Id., at pp. 175-176.

VOL. 778, JANUARY 11, 2016 341

Rodriguez vs. Philippine Airlines, Inc.

WHEREFORE, PREMISES CONSIDERED, this Office hereby:

b. DECLARES the strike conducted by ALPAP on June 5, 1998 and thereafter

10 Id., at pp. 209-212.

13 Rollo (G.R. No. 178510), pp. 258-264.

342 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

c. DISMISSES the complaint for illegal lockout for lack of merit.14

15 Id., at pp. 265-267.

16 Id., at pp. 269-283.

18 Id., at p. 287. Entry of Judgment.

19 The 21 captains are: Nilo S. Rodriguez, Efren S. Alcañeses, Francisco T. Alisangco,

VOL. 778, JANUARY 11, 2016 343

Rodriguez vs. Philippine Airlines, Inc.

A. ILLEGAL DISMISSAL in that [PAL] terminated the employment of the above

(i) Complainants EFREN S. ALCAÑESES, VICENTE P. ANG, BENJAMIN T.

(ii) Complainants GLADYS L. JADIE and BEN T. MATURAN, having been on

20 CA Rollo, pp. 122-133.

344 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

(iii) Complainants EDMUNDO M. DELOS REYES, JR., BALTAZAR B.

(iv) Complainants NILO S. RODRIGUEZ, RUDERICO C. BAQUIRAN,

(v) Complainant FRANCISCO T. ALISANGCO was serving a seven-day sus-

VOL. 778, JANUARY 11, 2016 345

Rodriguez vs. Philippine Airlines, Inc.

B. NONPAYMENT OF SALARIES AND OTHER BENEFITS

6. Pilots Occupational Disability Fund

10. Trip leave

11. Trip passes

346 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

21 Id., at pp. 130-131.

VOL. 778, JANUARY 11, 2016 347

Rodriguez vs. Philippine Airlines, Inc.

348 SUPREME COURT REPORTS ANNOTATED

Rodriguez vs. Philippine Airlines, Inc.

VOL. 778, JANUARY 11, 2016 349

Rodriguez vs. Philippine Airlines, Inc.

350 SUPREME COURT REPORTS ANNOTATED