Professional Documents
Culture Documents
In the case of Hodieng Concrete Products, Inc. v. Emilia30, Complainant Elpidio P. Tiong, an American Citizen, and his wife,
citing Samarca v. Arc-Men Industries, Inc.31, the Court has Ma. Elena T. Tiong, are real estate lessors in Baguio City. They
ruled thus: are likewise engaged in the assembly and repair of motor
vehicles in Paldit, Sison, Pangasinan. In 1991, they engaged the
"x x x. Absence must be accompanied by overt acts unerringly
services of respondent Atty. George M. Florendo not only as
pointing to the fact that the employee simply does not want to
legal counsel but also as administrator of their businesses
work anymore. And the burden of proof to show that there was
unjustified refusal to go back to work rests on the employer.
3
whenever complainant would leave for the United States of admitted the material allegations of the complaint but
America (USA). interposed the defense of pardon.
Sometime in 1993, complainant began to suspect that In the Resolution[4] dated September 20, 1995, the Court
respondent and his wife were having an illicit affair. His resolved to refer the case to the Integrated Bar of the
suspicion was confirmed in the afternoon of May 13, 1995 Philippines (IBP) for investigation and decision.
when, in their residence, he chanced upon a telephone
conversation between the two. Listening through the extension Finding merit in the complaint, the Commission on Bar
phone, he heard respondent utter the words "I love you, I'll call Discipline (CBD), through Commissioner Agustinus V. Gonzaga,
you later". When confronted, his wife initially denied any submitted its Report and Recommendation[5] dated September
amorous involvement with respondent but eventually broke 21, 2007 for the suspension of respondent from the practice of
down and confessed to their love affair that began in 1993. law for one (1) year, which was adopted and approved by the
Respondent likewise admitted the relationship. Subsequently, IBP Board of Governors in its Resolution[6] dated October 19,
at a meeting initiated by respondent and held at the Salibao 2007. Respondent's Motion for Reconsideration[7] therefrom
Restaurant in Burnham Park, Baguio City, respondent and was denied in the Resolution[8] dated June 26, 2011.
complainant's wife, Ma. Elena, confessed anew to their illicit
Hence, the instant petition on the sole issue - whether the
affair before their respective spouses.
pardon extended by complainant in the Affidavit dated May 15,
On May 15, 1995, the parties met again at the Mandarin 1995 is sufficient to warrant the dismissal of the present
Restaurant in Baguio City and, in the presence of a Notary disbarment case against respondent for gross immoral conduct.
Public, Atty. Liberato Tadeo, respondent and Ma. Elena
After due consideration, the Court resolves to adopt the
executed and signed an affidavit[2] attesting to their illicit
findings and recommendation of the IBP-CBD except as to the
relationship and seeking their respective spouses' forgiveness,
penalty imposed.
as follows:
The pertinent provisions in the Code of Professional
"WE, GEORGE M. FLORENDO, a resident of Baguio City and of
Responsibility provide, thus:
legal age and MA. ELENA T. TIONG, likewise a resident of Baguio
City, of legal age, depose and state:
"CANON 1 - A LAWYER SHALL UPHOLD THE CONSTITUTION,
OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR
We committed adultery against our spouses from May 1993 to
LAW AND LEGAL PROCESSES.
May 13, 1995 and we hereby ask forgiveness and assure our
spouses that this thing will never happen again with us or any
Rule 1.01. - A lawyer shall not engage in unlawful, dishonest,
other person. We assure that we will no longer see each other
immoral or deceitful conduct.
nor have any communication directly or indirectly. We shall
comply with our duties as husband and wife to our spouses and xxxx
assure that there will be no violence against them. That any
behaviour unbecoming a husband or wife henceforth shall give CANON 7 - A LAWYER SHALL AT ALL TIMES UPHOLD THE
rise to legal action against us; We shall never violate this INTEGRITY AND DIGNITY OF THE LEGAL PROFESSION AND
assurance; SUPPORT THE ACTIVITIES OF THE INTEGRATED BAR.
4
character, honesty, probity or good demeanor, is sufficient to Let copies of this Decision be entered in the personal record of
warrant his suspension or disbarment. respondent as a member of the Philippine Bar and furnished
the Office of the Bar Confidant, the Integrated Bar of the
In this case, respondent admitted his illicit relationship with a Philippines and the Court Administrator for circulation to all
married woman not his wife, and worse, that of his client. courts in the country.
Contrary to respondent's claim, their consortium cannot be
classified as a mere "moment of indiscretion"[10] considering 3. EVELINA C. BANAAG, Complainant, vs. OLIVIA C. ESPELETA,
that it lasted for two (2) years and was only aborted when Interpreter III, Branch 82, Regional Trial Court, Quezon City,
complainant overheard their amorous phone conversation on Respondent.
March 13, 1995.
"Can a man scoop fire into his lap without his clothes being
Respondent's act of having an affair with his client's wife burned? Can a man walk on hot coals without his feet being
manifested his disrespect for the laws on the sanctity of scorched?" So goes an early admonition against immorality
marriage and his own marital vow of fidelity. It showed his from the Holy Book that is as valuable today as it was
utmost moral depravity and low regard for the ethics of his thousands of years ago. In the judiciary, "moral integrity is
profession.[11] Likewise, he violated the trust and confidence more than a virtue; it is a necessity".1 A court employee who
reposed on him by complainant which in itself is prohibited has fallen short of the exacting standards of morality and
under Canon 17[12] of the Code of Professional Responsibility. decency has to face the consequences, even after the embers
Undeniably, therefore, his illicit relationship with Ma. Elena have died and the scars have faded.
amounts to a disgraceful and grossly immoral conduct
warranting disciplinary action from the Court.[13] Section 27, The Facts: The present administrative case originated from a
Rule 138 of the Rules of Court provides that an attorney may be letter-complaint2 dated May 3, 2009 filed by complainant
disbarred or suspended from his office by the Court for any Evelina C. Banaag before the Office of the Court Administrator
deceit, malpractice, or other gross misconduct in office, grossly (OCA) charging respondent Olivia C. Espeleta with Gross
immoral conduct, among others. Immorality and Conduct Prejudicial to the Best Interest of the
Service for engaging in an illicit and immoral relationship with
Respondent, however, maintains that he cannot be sanctioned her husband, Avelino C. Banaag.
for his questioned conduct because he and Ma. Elena had
already been pardoned by their respective spouses in the May Evelina met Olivia for the first time in October 2005 when the
15, 1995 Affidavit[14]. latter accompanied Gloria Tubtub to her house at JB Crystal
Building, Quirino Highway, Lagro, Quezon City, to request for
The Court disagrees. encashment of a check in the amount of ₱11,000.00. It turned
out that the check, which Evelina encashed out of pity for
It bears to stress that a case of suspension or disbarment is sui Gloria who was her "sister" in a Marriage Encounter group and
generis and not meant to grant relief to a complainant as in a who told her that she needed money for her grandchild who
civil case but is intended to cleanse the ranks of the legal was supposedly hospitalized, actually belonged to Olivia.
profession of its undesirable members in order to protect the According to Gloria, she did not intend to deceive her friend but
public and the courts. It is not an investigation into the acts of only wanted to help Olivia, who gave her a "small token" for the
respondent as a husband but on his conduct as an officer of the transaction.3
Court and his fitness to continue as a member of the Bar.[15]
Hence, the Affidavit dated March 15, 1995, which is akin to an At the same meeting, Olivia introduced herself as a court
affidavit of desistance, cannot have the effect of abating the interpreter in the Regional Trial Court (RTC) of Quezon City,
instant proceedings.[16] Branch 82. Believing that Olivia could assist her and her
husband in their pending cases before the court, Evelina
However, considering the circumstances of this case, the Court introduced Olivia to her husband who, after learning that they
finds that a penalty of suspension from the practice of law for both hail from Batangas, asked for Olivia's cellphone number.
six (6) months, instead of one (1) year as recommended by the Little did Evelina know that said casual meeting would
IBP-CBD, is adequate sanction for the grossly immoral conduct eventually blossom into an amorous relationship between
of respondent. Olivia and her husband.
WHEREFORE, respondent ATTY. GEORGE M. FLORENDO is Evelina claimed that she learned about the affair the following
hereby found GUILTY of Gross Immorality and is SUSPENDED year, 2006, when her husband asked to withdraw ₱180,000.00
from the practice of law for SIX (6) MONTHS effective upon from their joint bank account to lend to his brother, Reynaldo,
notice hereof, with a STERN WARNING that a repetition of the who was then confined in the hospital. She later found out
same or similar offense will be dealt with more severely. from the latter's wife, Ana Fe, that Avelino gave him (Reynaldo)
only ₱80,000.00. Ana Fe cautioned Evelina against releasing
5
more money to her husband who has a mistress working at the resolved on the basis of the record on file. Accordingly, the First
City Hall. Division issued the pertinent Resolution16 dated April 28, 2010,
which was, however, returned unserved with the notation "No
Upon investigation, Evelina learned that on two separate occupant at given address". It was served anew per
occasions in 2006, her husband had gone to Olivia’s house in Resolution17 dated August 16, 2010, but was likewise returned
San Jose Del Monte, Bulacan, accompanied by his friend, Engr. unserved for the reason "RTS-Moved".18 The Court thereafter
Pacifico "Jun" R. Sabigan. On both occasions, according to sent the case back to the OCA for evaluation, report and
Sabigan, they had some drinks, and Olivia danced. Avelino, recommendation.19
already tipsy, danced with her. Although Sabigan did not
witness any compromising exchanges between the two, Upon verification with the Office of Administrative Services
nonetheless, Avelino had confided to him that he and Olivia (OAS), it was found that Olivia had filed a letter20 of resignation
were seeing each other, and that he had been giving Olivia dated June 11, 2009, which was favorably endorsed21 both by
₱5,000.00 for her groceries.4 the Presiding Judge of Branch 82 and the Executive Judge of the
RTC. In a subsequent letter22 dated August 12, 2009, Presiding
Evelina confronted her husband right away. He was tight-lipped Judge Severino B. De Castro, Jr. informed the OCA that Olivia
at first, but he eventually admitted his romantic involvement had gone to the United States, and that it was not known
with Olivia. Worse, Evelina discovered that her husband, using whether she intended to return to the country. Hence, upon
their conjugal funds, had been depositing substantial amounts the recommendation23 of the OCA, the resignation was
of money to Olivia's Landbank account5 for three years accepted by this Court on February 26, 2010 without prejudice
spanning 2006 to 2009, as well as to the Metrobank account6 to the outcome of the instant administrative case.
of the latter's daughter, Ana Kharmela E. Rules. He also made
deposits to the Landbank accounts of Olivia's co-employees, On August 11, 2011, the OCA reported its findings24 on the
Pacencia Rodriguez7 and Olga Abesamis8 . When confronted, case and recommended that:
Olga allegedly confirmed that the deposits to her account were
for the benefit of Olivia who, at that time, had no ATM card. 1. The instant administrative matter be RE-DOCKETED as a
regular administrative complaint against Olivia C. Espeleta,
Evelina claimed that more than ₱3 Million had been deposited former Interpreter III. Regional Trial Court, Branch 82, Quezon
to Olivia's account but she was able to retain in her possession City; and
deposit slips amounting only to ₱1.429 Million, having lost the
others in a scuffle with her husband, who tore them to pieces 2. Respondent Olivia C. Espeleta be found GUILTY of Gross
and flushed them in the toilet. For a long time, Avelino was the Immoral Conduct, and be ORDERED to pay a FINE in the amount
administrator of the family-owned JB Crystal Building, which of ₱50,000.00, which may be deducted from whatever sums
earned rentals that he himself collected in cash. This, Evelina that are due her, as accrued leave credits, if sufficient.25
surmised, enabled her husband to support Olivia financially.
The Issue
To bolster her claims, Evelina attached to her letter-complaint
The only issue to be resolved is whether respondent Olivia C.
(1) photocopies9 of cash deposit slips evidencing Avelino's
Espeleta is guilty of immoral conduct.
deposits to Olivia's account wherein he indicated his
relationship to the latter as a "cousin", as well as to the
The Ruling of the Court
accounts of Olivia's daughter and co-employees; and (2)
summaries10 of unremitted rentals from their commercial After a careful evaluation of the records of the instant case, the
building and unauthorized withdrawals made by Avelino from Court finds respondent Olivia C. Espeleta guilty of Disgraceful
their bank account. She likewise submitted in evidence the and Immoral Conduct under Section 46(b)(5), Chapter 7,
affidavits executed by Gloria Tubtub11 and Engr. Sabigan12 Subtitle A, Title I, Book V of the Administrative Code of 1987
confirming the illicit relationship. which, as defined in Section 1 of CSC Resolution No. 100912
dated May 17, 2010 (Revised Rules on the Administrative
The Action and Recommendation of the OCA
Offense of Disgraceful and Immoral Conduct), is "an act which
violates the basic norm of decency, morality and decorum
The OCA directed respondent Olivia to comment on the letter-
abhorred and condemned by the society" and "conduct which
complaint within ten (10) days from receipt of its 1st
is willful, flagrant or shameless, and which shows a moral
Indorsement13 dated May 18, 2009. However, Olivia failed to
indifference to the opinions of the good and respectable
comply therewith. A similar notice14 was subsequently issued
members of the community."
by the OCA on August 19, 2009, to no avail. On January 21,
2010, the OCA reported15 the matter to this Court
Respondent's act of maintaining an illicit relationship with a
recommending that Olivia be directed for the last time to
married man comes within the purview of disgraceful and
submit her comment otherwise the case against her shall be
6
immoral conduct,26 which is classified as a grave offense professional and private conduct in order to preserve the good
punishable with suspension from the service for six (6) months name and integrity of courts of justice."35 This Court has thus
and one (1) day to one (1) year for the first offense, and consistently penalized court personnel who had been found
dismissal for the second offense.27 wanting of such standards, even if they have precipitately
resigned from their positions. Resignation should not be used
In Sealana-Abbu vs. Laurenciana-Huraño28 (2007), where two either as an escape or as an easy way out to evade an
court stenographers engaged in an illicit affair were suspended administrative liability or an administrative sanction.36
for one (1) year, the Court emphasized that "(i)t is morally
reprehensible for a married man or woman to maintain Had respondent not resigned from the service, she would have
intimate relations with another person of the opposite sex been suspended for six months and one day in accordance with
other than his or her spouse." In Elape vs. Elape29 (2008), a the prescribed penalty in the Uniform Rules on Administrative
process server of the RTC was suspended for six (6) months and Cases in the Civil Service37 , this being her first offense
one (1) day for cohabiting with his mistress, abandoning his involving immorality. Instead, the Court adopts the OCA's
family and depriving them of financial support. Another process recommended fine in the amount of ₱50,000.00 not exceeding
server was suspended for the same period in Regir vs. Regir30 respondent's six months' salary, which may be deducted from
(2009) for carrying on an illicit relationship with a woman not her accrued leave credits, if sufficient.
his wife, with whom he begot a child. Recently, in Babante-
Caples vs. Caples31 (2010), a utility worker in the MTC, who had WHEREFORE, respondent OLIVIA C. ESPELETA is found GUILTY
resigned, was nonetheless ordered to pay a fine for maintaining of Disgraceful and Immoral Conduct. In view of her resignation,
an illicit relationship with a woman not his wife. a FINE in the amount of ₱50,000.00 is imposed on respondent,
to be deducted from her accrued leave credits, if sufficient;
As in Babante-Caples, respondent herein was given the otherwise, she is ORDERED to pay the amount of the fine
opportunity to be heard and refute the charges against her; yet, directly to this Court.
she chose not to file any comment. Instead, as aptly pointed
out by the OCA, respondent rather hastily tendered her The Employees Leave Division, Office of Administrative Services
resignation on June 11, 2009, just a few days after receipt on of the Office of the Court Administrator, is DIRECTED to
June 2, 200932 of the 1st Indorsement specifically requiring her compute respondent’s accrued leave credits, if any, and deduct
to answer the letter-complaint. That respondent fully intended therefrom the amount representing the payment of the fine.
to run away from accountability for her indiscretions is
Let a copy of this Decision be filed in the personal record of
betrayed by her perfectly-timed departure for the United States
respondent.
of America shortly after her resignation. Respondent's
actuations when confronted with the charges against her are,
4. VASHDEO GAGOOMAL, Petitioner, vs.SPOUSES RAMON
thus, strongly indicative of guilt on her part.
AND NATIVIDAD VILLACORTA, Respondents.
The deposit slips indicating various amounts credited both
Assailed in this Petition for Review on Certiorari under Rule 45
directly and indirectly to respondent's account indubitably
of the Rules of Court is the Decision1 of the Court of Appeals
prove the allegation that she had been receiving substantial
("CA") dated March 8, 2010 in CA-G.R. SP No. 109004, as well as
amounts of money from complainant's husband, in callous
the Resolution2 dated July 7, 2010 denying the motion for
disregard of the heartache and financial dislocation of the
reconsideration thereof. The dispositive portion of the assailed
latter's family. There could thus not be any serious doubt that
Decision reads:
respondent was indeed in an intimate relationship with Avelino,
a married man.1avvphi1 "WHEREFORE, premises considered, the petition is GRANTED.
The assailed Orders dated August 5, 2008 and March 20, 2009
In administrative proceedings, only substantial evidence, i.e.,
issued by Hon. Danilo S. Cruz of the Regional Trial Court, Branch
that amount of relevant evidence that a reasonable mind might
152, Pasig City are hereby REVERSED and SET ASIDE and
accept as adequate to support a conclusion, is required.33 The
another one entered, the Motion to Quash Writ of Possession
standard of substantial evidence is satisfied when there is
filed by spouses Ramon and Natividad Villacorta in Civil Case
reasonable ground to believe that respondent is responsible for
No. 67381 is GRANTED. ACCORDINGLY, the Writ of Possession
the misconduct complained of, even if such evidence might not
issued in Civil Case No. 67381 is ordered QUASHED.
be overwhelming or even preponderant.34
SO ORDERED."
"It cannot be overstressed that the image of a court of justice is
mirrored in the conduct, official and otherwise, of the The Facts
personnel who work thereat, from the judge to the lowest of its
personnel. Court employees have been enjoined to adhere to Albert Zeñarosa ("Zeñarosa") was the registered owner of a
the exacting standards of morality and decency in their parcel of land located in Ayala Alabang Village, Alabang,
7
Muntinlupa City, covered by Transfer Certificate of Title (TCT) Lorenzo for ₱9,034,166.00 and the Certificate of Sale was
No. 170213. He mortgaged the same in favor of BPI Family annotated on TCT No. 10206 on January 30, 2004, giving
Savings Bank ("BPI") which was duly annotated on the title on Zeñarosa until January 29, 2005 within which to redeem the
June 7, 1990. property.
Subsequently, Zeñarosa obtained a loan in the amount of Subsequently, or on April 30, 2004, the RTC rendered judgment
$300,000.00 from RAM Holdings Corporation ("RAM"), secured in favor of RAM in Civil Case No. 67381 for sum of money.8
by a second mortgage3 over the property and a Promissory Pending Zeñarosa's appeal to the CA, docketed as CA-G.R. CV
Note4 . The parties likewise executed a Memorandum of No. 84523, RAM filed a motion for execution pending appeal,
Agreement5 ("MOA") dated March 2, 1995 whereby Zeñarosa, which was granted.9 On December 14, 2004, the property
through an Irrevocable Special Power of Attorney, authorized subject of notice of lis pendens was sold at public auction to
RAM, among others, to sell the subject property in case of his petitioner, the successor-in-interest of RAM, for
failure to pay. ₱19,793,500.00.10 The certificate of sale was annotated on
Tan's TCT No. 10206 on December 17, 2004.
Zeñarosa failed to settle his obligations prompting RAM to file a
Complaint6 for collection of sum of money with damages On January 29, 2005, in view of Zeñarosa's failure to redeem
against him and BPI before the RTC of Pasig City, Branch 152, the property from Lorenzo, the title over the subject property
docketed as Civil Case No. 67381. RAM also caused the was consolidated in the latter's name. A writ of possession was
annotation of a notice of lis pendens on TCT No. 170213 on issued in favor of Lorenzo, who subsequently sold the property
June 11, 1999. to Natividad Villacorta, one of the respondents herein, for
₱6,000,000.00. Immediately after purchasing the property,
Pending Civil Case No. 67381, Zeñarosa failed to pay his respondents took possession thereof.
obligation to BPI resulting in the foreclosure of the subject
property. The certificate of sale was annotated on TCT No. Meanwhile, Zeñarosa's appeal in CA-G.R. CV No. 84523 was
170213 on March 24, 2000. dismissed, and the decision in favor of RAM became final and
executory on October 7, 2005. With a sale annotated in its
Meanwhile, RAM sold its rights and interests over the subject favor, and without Zeñarosa exercising his right of redemption,
property to New Summit International, Inc., represented by its a final Deed of Sale was issued in favor of petitioner, the
President, Vashdeo Gagoomal, herein petitioner. The successor-in-interest of RAM, on December 14, 2005. By virtue
assignment was annotated on TCT No. 170213 on October 16, of a writ of possession11 issued by the RTC on February 1, 2007
2000. in Civil Case No. 67381, petitioner divested the respondents of
possession of the disputed property.
On August 29, 2002, one Luis P. Lorenzo, Jr. ("Lorenzo") filed a
complaint for recovery of sum of money with application for a The foregoing developments prompted the respondents to file
writ of preliminary attachment against Zeñarosa before the RTC a Motion to Quash Writ of Possession12 in Civil Case No. 67381
of Makati City, Branch 64, docketed as Civil Case No. 02-1038. A before the RTC of Pasig City, Branch 152, on March 20, 2007.
writ of preliminary attachment was issued on September 20, They also filed a case for quieting of title and recovery of
2002, pursuant to which the Branch Sheriff of Makati City possession before the RTC of Muntinlupa City, Branch 276,
attached the subject property. The lien was annotated on TCT docketed as Civil Case No. 08-011.
No. 170213 on September 30, 2002.
On August 5, 2008, the RTC of Pasig City, Branch 152, issued an
On the other hand, Zeñarosa redeemed the foreclosed property Order13 in Civil Case No. 67381 denying respondents' Motion
from BPI on March 23, 2003.1âwphi1 Thereafter, he sold the to Quash Writ of Possession. It also directed the Registry of
property to a certain Patricia A. Tan ("Tan") in whose favor TCT Deeds of Muntinlupa City to issue a new transfer certificate of
No. 102067 was issued on April 4, 2003. The annotations of the title in the name of petitioner Vashdeo Gagoomal. The motion
notice of lis pendens in Civil Case No. 67381, as well as the for reconsideration14 thereof was similarly denied.15
notice of levy on attachment in Civil Case No. 02-1038, were
carried over to her title. Aggrieved, the respondents filed a petition for certiorari with
prayer for injunctive relief16 before the CA, ascribing grave
In the meantime, in Civil Case No. 02-1038, Lorenzo obtained a abuse of discretion on the part of the RTC in directing the
favorable decision which had become final and executory. A "transfer of title over the subject property" to petitioner; in
notice of levy and execution on the subject attached property denying their motion to quash the writ of possession; and in
was issued and annotated on the title. On January 15, 2004, the refusing to restore to them the possession of the subject
property was sold at public auction to property.
8
In its assailed Decision, the CA granted respondents' petition, the writ of possession had already been implemented, then it
ratiocinating as follows: can no longer be quashed.
"Records show that spouses Villacorta derived their rights in The Issues
the subject property from their predecessor-in-interest,
Lorenzo, who purchased the same in a sale on execution on Hence, this petition advancing the following issues for Our
January 15, 2004. The title to the subject property was resolution, to wit:
consolidated in favor of Lorenzo on January 29, 2005 and said
"I. RESPONDENTS DO NOT HAVE A RIGHTFUL CLAIM TO THE
annotation was reflected on the certificate of title. Gagoomal,
PROPERTY.
on his part, maintains that he has a superior right over Lorenzo
because his predecessor-in-interest, Ram, was able to cause the
II. RESPONDENTS HAD NO BASIS TO ASK FOR THE QUASHAL OF
annotation of lis pendens ahead of Lorenzo's writ of
THE WRIT OF POSSESSION.
attachment.
III. THE PASIG REGIONAL TRIAL COURT CAN RULE ON TRANSFER
The fact that the notice of lis pendens regarding to [sic] Civil
OF TITLE.
Case No. 67381 was annotated ahead of the attachment of the
subject property in Civil Case No. 02-1038 is of no moment. IV.PETITIONER'S RIGHTS ARE SUPERIOR TO THAT OF
Hence, We agree with spouses Villacorta that Gagoomal did not RESPONDENT'S.
acquire any title to the property since what he purchased
during the public auction on October 14, 2004 was only the V. THE HONORABLE COURT OF APPEALS' DECISION
remaining right of redemption of Zeñarosa. OVERSTEPPED ISSUES."18
In the present case, the annotation of Ram of the lis pendens The petition is bereft of merit.
was improper because the case filed by Ram against Zeñarosa
was purely a personal action. Civil Case No. 67381, entitled Ram A writ of possession is an order by which the sheriff is
Holdings Corporation vs. Albert Zeñarosa, et. al., is for commanded to place a person in possession of a real or
Collection of Sum of Money with Damages. It has been held personal property. We clarified in the case of Motos v. Real
that the doctrine of lis pendens has no application to a Bank (A Thrift Bank), Inc.19 that a writ of possession may be
proceeding in which the only object sought is the recovery of a issued under any of the following instances: (a) land
money judgment, though the title or right of possession to registration proceedings under Section 17 of Act No. 49620 ; (b)
property may be affected. It is essential that the property be judicial foreclosure, provided the debtor is in possession of the
directly affected, as where the relief sought in the action or suit mortgaged realty and no third person, not a party to the
includes the recovery of possession, or the enforcement of a foreclosure suit, had intervened; and (c) extrajudicial
lien, or an adjudication between conflicting claims of title, foreclosure of a real estate mortgage under Section 7 of Act No.
possession, or right of possession to specific property, or 3135 as amended by Act No. 411821 .
requiring its transfer or sale [citation omitted]"17
Corollary thereto, Section 33, Rule 39 of the Rules of Court
Essentially, the CA concluded that the RTC committed grave provides:
abuse of discretion when it ordered the Register of Deeds to
"SEC. 33. Deed and possession to be given at expiration of
transfer to petitioner the title and possession of the subject
redemption period; by whom executed or given. - If no
property notwithstanding unrebutted evidence that Zeñarosa,
redemption be made within one (1) year from the date of the
the judgment debtor in Civil Case No. 67381, was no longer its
registration of the certificate of sale, the purchaser is entitled to
owner and had only the remaining right of redemption at the
a conveyance and possession of the property; or, if so
time the property was sold at public auction to petitioner on
redeemed whenever sixty (60) days have elapsed and no other
December 14, 2004.
redemption has been made, and notice thereof given, and the
Corollary thereto, the CA held that the power of the RTC to time for redemption has expired, the last redemptioner is
execute its judgment extends only to property belonging to the entitled to the conveyance and possession; but in all cases the
judgment debtor in Civil Case No. 67381, Zeñarosa in this case, judgment obligor shall have the entire period of one (1) year
and did not include the respondents. The CA likewise refused to from the date of the registration of the sale to redeem the
give merit to petitioner's contentions that the respondents can property. The deed shall be executed by the officer making the
no longer ask for the modification or abrogation of the decision sale or by his successor in office, and in the latter case shall
of the RTC which had already attained finality, and that since have the same validity as though the officer making the sale
had continued in office and executed it.
9
Upon the expiration of the right of redemption, the purchaser action. Said notice shall contain the names of the parties and
or redemptioner shall be substituted to and acquire all the the object of the action or defense, and a description of the
rights, title, interest and claim of the judgment obligor to the property in that province affected thereby. Only from the time
property as of the time of the levy. The possession of the of filing such notice for record shall a purchaser, or
property shall be given to the purchaser or last redemptioner encumbrancer of the property affected thereby, be deemed to
by the same officer unless a third party is actually holding the have constructive notice of the pendency of the action, and
property adversely to the judgment obligor." only of its pendency against the parties designated by their real
names.
In this case, the writ of possession was issued and executed in
favor of petitioner under the foregoing provision. However, a The notice of lis pendens hereinabove mentioned may be
punctilious review of the records will show that its grant and cancelled only upon order of the court, after proper showing
enforcement against the subject property, over which the that the notice is for the purpose of molesting the adverse
respondents – third parties to Civil Case No. 67381 – claim an party, or that it is not necessary to protect the rights of the
adverse interest, are devoid of legal basis. party who caused it to be recorded." [emphasis ours]
It is a basic principle of law that money judgments are The filing of a notice of lis pendens has a dual effect: (1) to keep
enforceable only against property incontrovertibly belonging to the property subject matter of the litigation within the power
the judgment debtor, and if property belonging to any third of the court until the entry of the final judgment in order to
person is mistakenly levied upon to answer for another man’s prevent the defeat of the final judgment by successive
indebtedness, such person has all the right to challenge the levy alienations; and (2) to bind a purchaser, bona fide or otherwise,
through any of the remedies provided for under the Rules of of the property subject of the litigation to the judgment that
Court. Section 1622 , Rule 39 thereof specifically provides that a the court will subsequently promulgate.25
third person may avail himself of the remedies of either
terceria, to determine whether the sheriff has rightly or Relative thereto, a notice of lis pendens is proper in the
wrongly taken hold of the property not belonging to the following actions and their concomitant proceedings:
judgment debtor or obligor, or an independent "separate
"(a) an action to recover possession of real estate;
action" to vindicate their claim of ownership and/or possession
over the foreclosed property.23 However, "a person other than
(b) an action to quiet title thereto;
the judgment debtor who claims ownership or right over the
levied properties is not precluded from taking other legal (c) an action to remove clouds thereon;
remedies to prosecute his claim".24
(d) an action for partition; and
In the present case, respondents filed a motion to quash the
writ of possession substantiating their preferential rights over (e) any other proceedings of any kind in Court directly affecting
the subject property which they had purchased from Lorenzo. the title to the land or the use or occupation thereof or the
As earlier stated, Lorenzo, in Civil Case No. 02-1038, caused the buildings thereon."26
annotation of a writ of preliminary attachment on September
30, 2002 and thereafter, a notice of levy and execution, finally Thus, a notice of lis pendens is only valid and effective when it
acquiring the property in a public auction sale on January 30, affects title over or right of possession of a real property.
2004. Similarly, respondents have instituted a separate civil
In this case, it cannot be denied that Civil Case No. 67381,
action for quieting of title and recovery of property before the
which RAM, predecessor-in-interest of petitioner, instituted
RTC of Muntinlupa City, Branch 276, docketed as Civil Case No.
against Zeñarosa was for collection of sum of money with
08-011.
damages – a purely personal action. Hence, the notice of lis
Petitioner's argument that he acquired a superior right over the pendens in favor of RAM annotated on the cancelled TCT No.
subject property by virtue of the earlier annotation of a notice 170213 and carried over to Tan's TCT No. 10206 conferred
of lis pendens on June 11, 1999 by his predecessor-in-interest upon it no rights over the subject property and, as a necessary
RAM on the same title cannot be given credence. consequence, upon petitioner, its successor-in-interest.
Section 14, Rule 13 of the Rules of Court provides: To be sure, in Atlantic Erectors, Inc. v. Herbal Cove Realty
Corporation27 , We have previously explained that the doctrine
"Sec. 14. Notice of lis pendens. - In an action affecting the title of lis pendens has no application to a proceeding in which the
or the right of possession of real property, the plaintiff and the only object sought is the recovery of a money judgment, though
defendant, when affirmative relief is claimed in his answer, may the title or right of possession to property be incidentally
record in the office of the registry of deeds of the province in affected. It is essential that the property be directly affected
which the property is situated a notice of the pendency of the such as when the relief sought in the action or suit includes the
10
recovery of possession, or the enforcement of a lien, or an deserves scant consideration. Unquestionably, the RTC has a
adjudication between conflicting claims of title, possession, or general supervisory control over the entire execution process,
the right of possession to specific property, or requiring its and such authority carries with it the right to determine every
transfer or sale. Even if a party initially avails of a notice of lis question which may be invariably involved in the execution.31
pendens upon the filing of a case in court, such notice is Respondents invoked this supervisory power when they ought
rendered nugatory if the case turns out to be a purely personal the quashal of the writ of possession.
action. In such event, the notice of lis pendens becomes functus
officio. Finally, considering the circumstances of this case, We cannot
uphold the RTC's directive to transfer the title over the subject
Accordingly, petitioner has not created a superior right over the property from respondents to petitioner, for utter lack of legal
subject property as against respondents by reason of the prior basis. To emphasize, apart from the motion to quash the writ of
annotation in 1999 of the notice of lis pendens by his possession, respondents have instituted a case for quieting of
predecessor RAM. Hence, the subsequent levy on execution on title and recovery of possession before the RTC of Muntinlupa
October 14, 2004 arising from the final money judgment in City, docketed as Civil Case No. 08-011.
favor of petitioner cannot prevail over the earlier annotated
attachment made by Lorenzo on September 30, 2002 and its In sum, We find that the RTC erred in implementing the writ of
subsequent notice of levy on execution and sale of the property execution against the subject property which does not
to respondents on January 30, 2004, who then took possession. irrefutably belong to Zeñarosa, the judgment debtor in Civil
On October 14, 2004, what petitioner merely levied upon on Case No. 67381. Hence, the writ of possession issued relative
execution was the remaining redemption rights of Zeñarosa thereto was likewise improper and must necessarily be
until January 29, 2005 which period expired without any quashed, as correctly ruled by the CA. Accordingly, since the
redemption having been made. Consequently, the writ of respondents were unduly deprived of possession of the subject
possession issued as a result of a wrongful execution was not property, they must be immediately restored into its
proper and cannot be enforced against the respondents who possession, without prejudice to the result of Civil Case No. 08-
are third parties in possession of and claiming an adverse 011.
interest on the property in controversy.
WHEREFORE, the instant petition is DENIED. The assailed
It bears to stress that the court issuing the writ of execution Decision and Resolution of the Court of Appeals are hereby
may enforce its authority only over properties or rights of the AFFIRMED.
judgment debtor, and the sheriff acts properly only when he
5. NENITA GONZALES, SPOUSES GENEROSA GONZALES and
subjects to execution property undeniably belonging to the
RODOLFO FERRER, SPOUSES FELIPE GONZALES and CAROLINA
judgment debtor. Should the sheriff levy upon the assets of a
SANTIAGO, SPOUSES LOLITA GONZALES and GERMOGENES
third person in which the judgment debtor has not even the
GARLITOS, SPOUSES DOLORES GONZALES and FRANCISCO
remotest interest, then he is acting beyond the limits of his
COSTIN, SPOUSES CONCHITA GONZALES and JONATHAN
authority. A judgment can only be executed or issued against a
CLAVE, and SPOUSES BEATRIZ GONZALES and ROMY CORTES,
party to the action, not against one who has not yet had his day
REPRESENTED BY THEIR ATTORNEY-IN-FACT and CO-
in court.28
PETITIONER NENITA GONZALES, Petitioners, vs. MARIANO
Neither can We affirm petitioner's contention that in seeking BUGAAY AND LUCY BUGAAY, SPOUSES ALICIA BUGAAY AND
the quashal of the writ of possession, the respondents were, in FELIPE BARCELONA, CONEY "CONIE" BUGAAY, JOEY GATAN,
effect, asking the RTC to abrogate its decision, which had LYDIA BUGAAY, SPOUSES LUZVIMINDA BUGAAY AND REY
already attained finality. As correctly observed29 by the CA, the PAGATPATAN AND BELEN BUGAAY, Respondents.
quashal of a writ of possession does not have the effect of
Assailed in this Petition for Review on Certiorari under Rule 45
modifying or abrogating the judgment of the RTC. "The settled
is the Decision1 of the Court of Appeals (CA) dated March 23,
rule is that a judgment which has acquired finality becomes
2006 in CA-G.R. SP No. 91381 as well as the Resolution2 dated
immutable and unalterable, and hence may no longer be
June 2, 2006 dismissing petitioners' motion for reconsideration.
modified in any respect except only to correct clerical errors or
The CA reversed and set aside the assailed Orders3 of the
mistakes – all the issues between the parties being deemed
Regional Trial Court (RTC) of Lingayen, Pangasinan, Branch 39,
resolved and laid to rest."30 To reiterate, however, the court's
dated April 13, 2005 and August 8, 2005, respectively, in Civil
power with regard to execution of judgments extends only to
Case No. 16815, denying the demurrer to evidence filed by
properties irrefutably belonging to the judgment debtor, which
herein respondents and instead dismissed petitioners'
does not obtain in this case.
complaint.
Therefore, petitioner's contention that the writ of possession
The Facts
had already been enforced and can no longer be quashed
11
The deceased spouses Bartolome Ayad and Marcelina Tejada issued an Order which reads: "in the event that within a period
("Spouses Ayad") had five (5) children: Enrico, Encarnacion, of one (1) month from today, they have not yet settled the
Consolacion, Maximiano and Mariano. The latter, who was case, it is understood that the motion for reconsideration
single, predeceased his parents on December 4, 1943. and/or new trial is submitted for resolution without any further
Marcelina died in September 1950 followed by Bartolome much hearing."8
later on February 17, 1964.
Without resolving the foregoing motion, the RTC, noting the
Enrico has remained single. Encarnacion died on April 8, 1966 failure of the parties to submit a project of partition, issued a
and is survived by her children, Nenita Gonzales, Generosa writ of execution9 on February 17, 2003 giving them a period of
Gonzales, Felipe Gonzales, Lolita Gonzales, Dolores Gonzales, 15 days within which to submit their nominees for
Conchita Gonzales and Beatriz Gonzales, the petitioners in this commissioner, who will partition the subject estate.
case. Consolacion, meanwhile, was married to the late Imigdio
Bugaay. Their children are Mariano Bugaay, Alicia Bugaay, Subsequently, the RTC, through then Acting Presiding Judge
Amelita Bugaay, Rodolfo Bugaay, Letecia Bugaay, Lydia Bugaay, Emilio V. Angeles, discovered the pendency of the motion for
Luzviminda Bugaay and Belen Bugaay, respondents herein. reconsideration and/or new trial and set the same for hearing.
Maximiano died single and without issue on August 20, 1986. In the Order10 dated August 29, 2003, Judge Angeles granted
The spouses of petitioners, except Nenita, a widow, and those respondents' motion for reconsideration and/or new trial for
of the respondents, except Lydia and Belen, were joined as the specific "purpose of receiving and offering for admission
parties in this case. the documents referred to by the [respondents]."11
In their Amended Complaint4 for Partition and Annulment of However, instead of presenting the documents adverted to,
Documents with Damages dated February 5, 1991 against consisting of the documents sought to be annulled,
Enrico, Consolacion and the respondents, petitioners alleged, respondents demurred12 to petitioners' evidence on December
inter alia, that the only surviving children of the Spouses Ayad 6, 2004 which the RTC, this time through Presiding Judge
are Enrico and Consolacion, and that during the Spouses Ayad's Dionisio C. Sison, denied in the Order13 dated April 13, 2005 as
lifetime, they owned several agricultural as well as residential well as respondents' motion for reconsideration in the August
properties. 8, 2005 Order.14
Petitioners averred that in 1987, Enrico executed fraudulent Aggrieved, respondents elevated their case to the CA through a
documents covering all the properties owned by the Spouses petition for certiorari, imputing grave abuse of discretion on the
Ayad in favor of Consolacion and respondents, completely part of the RTC in denying their demurrer notwithstanding
disregarding their rights. Thus, they prayed, among others, for petitioners' failure to present the documents sought to be
the partition of the Spouses Ayad's estate, the nullification of annulled. On March 23, 2006, the CA rendered the assailed
the documents executed by Enrico, and the award of actual, Decision reversing and setting aside the Orders of the RTC
moral and exemplary damages, as well as attorney's fees. disposing as follows:
As affirmative defenses5 , Enrico, Consolacion and respondents "WHEREFORE, the instant petition is hereby GRANTED.
claimed that petitioners had long obtained their advance Accordingly, the assailed Orders of the trial court dated April
inheritance from the estate of the Spouses Ayad, and that the 13, 2006 and August 8, 2005 are hereby both SET ASIDE and in
properties sought to be partitioned are now individually titled lieu thereof, another Order is hereby issued DISMISSING the
in respondents' names. Complaint, as amended.
After due proceedings, the RTC rendered a Decision6 dated No pronouncement as to costs.
November 24, 1995, awarding one-fourth (¼) pro-indiviso share
SO ORDERED."15
of the estate each to Enrico, Maximiano, Encarnacion and
Consolacion as the heirs of the Spouses Ayad, excluding
In dismissing the Amended Complaint, the appellate court
Mariano who predeceased them. It likewise declared the Deed
ratiocinated in the following manner:
of Extrajudicial Settlement and Partition executed by Enrico and
respondents, as well as all other documents and muniments of "In the light of the foregoing where no sufficient evidence was
title in their names, as null and void. It also directed the parties presented to grant the reliefs being prayed for in the complaint,
to submit a project of partition within 30 days from finality of more particularly the absence of the documents sought to be
the Decision. annulled as well as the properties sought to be partitioned,
common sense dictates that the case should have been
On December, 13, 1995,7 respondents filed a motion for
dismissed outright by the trial court to avoid unnecessary waste
reconsideration and/or new trial from the said Decision. On
of time, money and efforts."16
November 7, 1996, the RTC, through Judge Eugenio Ramos,
12
Subsequently, the CA denied petitioners' motion for insufficiency of evidence. The demurrer to evidence was clearly
reconsideration in its Resolution17 dated June 2, 2006. no longer an available remedy to respondents and should not
have been granted, as the RTC had correctly done.
The Issues
WHEREFORE, the petition is GRANTED. The assailed Decision
In this petition for review, petitioners question whether the and Resolution of the CA are SET ASIDE and the Orders of the
CA's dismissal of the Amended Complaint was in accordance RTC denying respondents' demurrer are REINSTATED. The
with law, rules of procedure and jurisprudence. Decision of the RTC dated November 24, 1995 STANDS.
14
Clearly, the members of the House of Representatives are of copies of the registry return receipt25 , as well as the
two kinds: (1) members who shall be elected from legislative envelope26 containing the Resolution; the Letter27 of Pasig
districts; and (2) those who shall be elected through a party-list City Central Post Office Postmaster VI Erlina M. Pecante; the
system of registered national, regional, and sectoral parties or Certification28 dated November 2, 2010 of the Postmaster of
organizations.18 In this case, Buhay Party-List was entitled to Pasig City Post Office; and the Affidavit of Service29 of
two seats in the House that went to its first two nominees, COMELEC Bailiff Arturo F. Forel dated August 13, 2010.
Mariano Michael DM. Velarde, Jr. and William Irwin C. Tieng. Consequently, the COMELEC deemed Layug to have received a
On the other hand, Brother Mike, being the fifth nominee, did copy of the Resolution on June 23, 2010, the date the
not get a seat and thus had not become a member of the House postmaster made his first attempt to serve it. There being no
of Representatives. Indubitably, the HRET has no jurisdiction motion for reconsideration filed, the COMELEC issued an
over the issue of Brother Mike's qualifications. Order30 on July 26, 2010 declaring the Resolution final and
executory, which thereafter became the basis for the issuance
Neither does the HRET have jurisdiction over the qualifications of the assailed COMELEC En Banc’s NBC Resolution31 No. 10-
of Buhay Party-List, as it is vested by law, specifically, the Party- 034 dated July 30, 2010.
List System Act, upon the COMELEC. Section 6 of said Act states
that "the COMELEC may motu proprio or upon verified From the fact alone that the address which Layug furnished the
complaint of any interested party, remove or cancel, after due COMELEC was incorrect, his pretensions regarding the validity
notice and hearing, the registration of any national, regional or of the proceedings and promulgation of the Resolution dated
sectoral party, organization or coalition xxx." Accordingly, in the June 15, 2010 for being in violation of his constitutional right to
case of Abayon vs. HRET,19 We ruled that the HRET did not due process are doomed to fail.32 His refusal to rectify the
gravely abuse its discretion when it dismissed the petitions for error despite knowledge thereof impels Us to conclude that he
quo warranto against Aangat Tayo party-list and Bantay party- deliberately stated an inexistent address with the end in view of
list insofar as they sought the disqualifications of said party- delaying the proceedings upon the plea of lack of due process.
lists. As the COMELEC aptly pointed out, Layug contemptuously
made a mockery of election laws and procedure by appearing
Thus, it is the Court, under its power to review decisions, before the Commission by himself or by different counsels
orders, or resolutions of the COMELEC provided under Section when he wants to, and giving a fictitious address to ensure that
7, Article IX-A of the 1987 Constitution20 and Section 1, Rule 37 he does not receive mails addressed to him.33 He cannot thus
of the COMELEC Rules of Procedure21 that has jurisdiction to be allowed to profit from his own wrongdoing. To rule
hear the instant petition. otherwise, considering the circumstances in the instant case,
would place the date of receipt of pleadings, judgments and
II. Layug was not denied due process.
processes within Layug's power to determine at his pleasure.
This, We cannot countenance.
A party may sue or defend an action pro se.22 Under Section 3,
Rule 7 of the Rules of Court, "(e)very pleading must be signed
It bears stressing that the finality of a decision or resolution is a
by the party or counsel representing him, stating in either case
jurisdictional event which cannot be made to depend on the
his address which should not be a post office box."
convenience of a party.34 Decisions or resolutions must attain
finality at some point and its attainment of finality should not
A judicious perusal of the records shows that Layug filed pro se
be made dependent on the will of a party.
both the Petition to Disqualify23 and his Position Paper24
before the COMELEC Second Division. In the Petition to
In sum, the Court finds no grave abuse of discretion amounting
Disqualify, he stated his address as #70 Dr. Pilapil Street,
to lack or excess of jurisdiction attributable to the COMELEC in
Barangay San Miguel, Pasig City. While Atty. Rustico B. Gagate
issuing NBC Resolution No. 10-034 dated July 30, 2010
appeared as counsel for Layug during the hearing conducted on
proclaiming Buhay Party-List as a winner in the May 10, 2010
April 20, 2010, he nonetheless failed to provide either his or his
elections on the basis of the final and executory Resolution
client's complete and correct address despite the manifestation
dated June 15, 2010 denying the petition to disqualify private
that counsel for private respondents could not personally serve
respondents.
the Answer on Layug due to the inexistence of the given
address. Neither did the Position Paper that was subsequently III. Mandamus does not lie to compel the COMELEC En Banc to
filed pro se on April 23, 2010 indicate any forwarding address. rule on Layug’s Motion for Reconsideration.
It should be stressed that a copy of the Resolution dated June Mandamus, as a remedy, is available to compel the doing of an
15, 2010 was mailed to Layug at his stated address at #70 Dr. act specifically enjoined by law as a duty.1âwphi1 It cannot
Pilapil Street, Barangay San Miguel, Pasig City, which however compel the doing of an act involving the exercise of discretion
was returned to sender (COMELEC) after three attempts due to one way or the other.35 Section 3, Rule 65 of the Rules of Court
insufficiency of said address, as evidenced by certified true clearly provides:
15
SEC. 3. Petition for mandamus — When any tribunal, For resolution is the petition for judicial clemency filed by Judge
corporation, board, officer or person unlawfully neglects the Irma Zita V. Masamayor, Executive and Presiding Judge of the
performance of an act which the law specifically enjoins as a Regional Trial Court, Branch 52, Talibon, Bohol in connection
duty resulting from an office, trust, or station, or unlawfully with her application for lateral transfer to the Regional Trial
excludes another from the use and enjoyment of a right or Courts (RTCs) of Tagbilaran City.
office to which such other is entitled, and there is no other
plain, speedy and adequate remedy in the ordinary course of Petitioner claims that on January 24, 2012, she received a letter
law, the person aggrieved thereby may file a verified petition in from the Judicial and Bar Council (JBC) informing her that she
the proper court, alleging the facts with certainty and praying was not included in the list of nominees for RTC, Branch 2 or 4,
that judgment be rendered commanding the respondent, Tagbilaran City.1 She attributes her disqualification to her
immediately or at some other time to be specified by the court, previous administrative record of gross inefficiency in 1999 and
to do the act required to be done to protect the rights of the 2000 for belatedly filing her motions for extension of time to
petitioner, and to pay the damages sustained by the petitioner resolve the following cases then pending before her sala, to wit:
by reason of the wrongful acts of the respondent. (Emphasis Criminal Case No. 96-185 entitled "People v. Jaime Cutanda
supplied) alias 'Jimmy'"; Civil Case No. 0020 entitled "Alejandro Tutor, et
al. v. Benedicto Orevillo, et al."; Criminal Case
In this case, the COMELEC En Banc cannot be compelled to
resolve Layug’s Motion for Reconsideration36 of the Resolution No. 98-384 entitled "People v. Celso Evardo"; and Criminal Case
dated June 15, 2010 that was filed on July 28, 2010 after said No. 96-251 entitled "Gil Sajuña y Cagasin." Thus, she was
Resolution had already attained finality. In fact, the COMELEC ordered to pay a fine of ₱5,000.00 in A.M. No. 99-1-16-RTC2 ;
Second Division denied the same Motion in its Order37 dated ₱10,000.00 in A.M. No. 98-12-381-RTC3 ; and ₱12,000.00 in
August 4, 2010 precisely for the reason that it was filed out of A.M. No. 99-2-79-RTC.4 She was likewise earlier fined
time. ₱5,000.00 for a similar violation of Canon 3, Rule 3.05 of the
Code of Judicial Conduct in A.M. No. 98-10-338-RTC.5
It should likewise be pointed out that the aforesaid Motion for
Reconsideration was filed without the requisite notice of Section 5, Rule 4 of the Rules of the JBC provides:
hearing. We have held time and again that the failure to comply
"SEC. 5. Disqualification. - The following are disqualified from
with the mandatory requirements under Sections 438 and 539
being nominated for appointment to any judicial post or as
of Rule 15 of the Rules of Court renders the motion defective.
Ombudsman or Deputy Ombudsman:
As a rule, a motion without a notice of hearing is considered
pro forma.40 None of the acceptable exceptions obtain in this
1. Those with pending criminal or regular administrative cases;
case.
2. Those with pending criminal cases in foreign courts or
Moreover, the Motion was filed by a new counsel – Evasco,
tribunals; and
Abinales and Evasco Law Offices – without a valid substitution
or withdrawal of the former counsel. Thus said the COMELEC: 3. Those who have been convicted in any criminal case; or in an
administrative case, where the penalty imposed is at least a
5. In spite of the finding that petitioner's given address '#70 Dr.
fine of more than P10,000, unless he has been granted judicial
Pilapil St., Barangay San Miguel, Pasig City' cannot be found, a
clemency."
new counsel, 'Evasco Abinales and Evasco Law Offices' filed on
July 20, 2010, an 'ENTRY OF APPEARANCE AS COUNSEL (for Considering petitioner's previous record, she is indeed
petitioner Layug) WITH MANIFESTATION', at the bottom of disqualified from being further nominated for appointment to
which appear the name and signature of petitioner Roland D. any judicial post, unless she be accorded judicial clemency.
Layug expressing his conforme, with his given (sic) at the same Notwithstanding, however, she was
'#70 Dr. Pilapil St., Barangay San Miguel, Pasig City;' it is noted
that the entry of appearance of a new counsel is without the previously nominated by the JBC for lateral transfer to the RTC
benefit of the withdrawal of the former counsel.41 of Tagbilaran City in 2005.6
Considering, therefore, Layug's utter disregard of the rules of In A.M. No. 07-7-17-SC (Re: Letter of Judge Augustus C. Diaz,
procedure for which he deserves no empathy, the Court finds Metropolitan Trial Court of Quezon City, Branch 37, Appealing
that the COMELEC exercised its discretion within the bounds of for Clemency),7 the Court laid down the following guidelines in
the law thus warranting the dismissal of the instant case. resolving requests for judicial clemency, thus:
7. RE: PETITION FOR JUDICIAL CLEMENCY OF JUDGE IRMA ZITA "1. There must be proof of remorse and reformation. These
V. MASAMAYOR shall include but should not be limited to certifications or
testimonials of the officer(s) or chapter(s) of the Integrated Bar
16
of the Philippines, judges or judges associations and prominent ACCORDINGLY, the Court hereby GRANTS petitioner judicial
members of the community with proven integrity and probity. clemency for her past administrative offenses.
A subsequent finding of guilt in an administrative case for the
same or similar misconduct will give rise to a strong 8. CRESENCIO BAO AND HEIRS OF THE DECEASED AMANCIO
presumption of non-reformation. ASUMBRADO, NAMELY: ROSALINDA ASUMBRADO, VICENTE
ASUMBRADO, ROEL ASUMBRADO, ANNALYN ASUMBRADO,
2. Sufficient time must have lapsed from the imposition of the ARNIEL ASUMBRADO, ALFIE ASUMBRADO and RUBELYN
penalty to ensure a period of reform. ASUMBRADO Petitioners,- versus - BACHELOR EXPRESS, INC./
CERES LINER, INC. and WENIFREDO SALVAA, Respondents.
3. The age of the person asking for clemency must show that he
still has productive years ahead of him that can be put to good This petition for review under Rule 45 of the Rules of Court
use by giving him a chance to redeem himself. assails the February 20, 2009 Decision1 and February 9, 2010
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
4. There must be a showing of promise (such as intellectual 00190, which reduced the amount of damages awarded to
aptitude, learning or legal acumen or contribution to legal petitioners by the Regional Trial Court (RTC) of Tagum City,
scholarship and the development of the legal system or Branch 30 in its June 30, 2004 Decision.3
administrative and other relevant skills), as well as potential for
public service. The Facts
5. There must be other relevant factors and circumstances that In the early afternoon of November 6, 1993, respondent
may justify clemency." Wenifredo Salvaa (Salvaa) was driving the bus owned by
respondent Bachelor Express, Inc./Ceres Liner, Inc. with plate
Applying the foregoing standards to this case, the Court finds number LVD-273 and body number 4042 (Bus 4042) along the
merit in petitioner's request. national highway at Magdum, Tagum City bound for Davao City.
At about 1:20 in the afternoon, he overtook a Lawin PUJ
A review of the records reveals that petitioner has exhibited
jeepney while negotiating a blind curve in a descending road at
remorse for her past misdeeds, which occurred more than ten
Km. 60, causing him to intrude into the opposite lane and bump
(10) years ago. While she was found to have belatedly filed her
the 10-wheeler Hino dump truck of petitioner Cresencio Bao
motions for additional time to resolve the aforecited cases, the
(Bao) running uphill from the opposite direction. The collision
Court noted that she had disposed of the same within the
resulted in damage to both vehicles, the subsequent death of
extended period sought, except in A.M. No. 99-2-79-RTC where
the truck driver, Amancio Asumbrado (Asumbrado), and serious
she submitted her compliance beyond the approved 45-day
physical injuries to bus driver Salvaa.
extended period.8 Nevertheless, petitioner has subsequently
shown diligence in the performance of her duties and has not On March 11, 1994, Bao and the heirs of Asumbrado
committed any similar act or omission.9 In the Memorandum of (collectively called petitioners) filed a complaint4 for quasi-
the Office of the Court Administrator, her prompt compliance delict, damages and attorney's fees against respondents,
with the judicial audit requirements of pending cases was accusing Salvaa of negligently driving Bus 4042 causing it to
acknowledged and she was even commended for her good collide with the dump truck.
performance in the effective management of her court and in
the handling of court records.10 Respondents denied liability, claiming that prior to the collision,
Bus 4042 was running out of control because of a problem in
Moreover, the Integrated Bar of the Philippines (IBP) Bohol the steering wheel system which could not have been avoided
Chapter has shown its high regard for petitioner per the letter despite their maintenance efforts. Instead, they claimed that
of support11 signed by a number of its members addressed to Asumbrado had the last clear chance to avoid the collision had
the IBP dated October 15, 1999 during the pendency of her he not driven the dump truck at a very fast speed.
administrative cases and the IBP Resolution No. 11, Series of
200912 endorsing her application for lateral transfer to the RTC The RTC Decision
of Tagbilaran City.1âwphi1
After due proceedings, the RTC found that the immediate and
Petitioner's dedicated service of 23 years to the judiciary, proximate cause of the accident was the reckless negligence of
having been first appointed as Municipal Circuit Trial Court the bus driver, Salvaa, in attempting to overtake a jeepney
judge in 1989,13 merits compassion from the Court. It bears to along a descending blind curve and completely invading the
note that petitioner does not seek for promotion to a higher opposite lane. The photographs taken immediately after the
position but only a lateral transfer to a place of work near her collision, the Traffic Accident and Investigation Report, and the
residence.14 Sketch all showed the dump truck at the shoulder of its proper
17
lane while the bus was positioned diagonally in the same lane The CA RulingOn appeal, the CA affirmed the RTC's findings on
with its right side several feet from the center line. respondents' negligence and liability for damages, but deleted
the separate awards of exemplary damages in favor of
Having established the negligence of its employee, the petitioners for their failure to prove that respondents acted
presumption of fault or negligence on the part of the employer, with gross negligence.
respondent Bachelor Express, Inc./Ceres Liner, Inc., arose,
which it failed to rebut by evidence that it exercised due Similarly, the appellate court deleted the awards for the value
diligence in the selection and supervision of its bus driver of and lost income from the dump truck for lack of sufficient
Salvaa. The RTC thus disposed of the case as follows: basis, awarding in their stead temperate damages in the sums
of P100,000.00 and P200,000.00, respectively. The CA also
In View Of All The Foregoing, judgment is hereby rendered in deleted the award of moral damages to Bao for the damage to
favor of the plaintiffs and against the defendants; ordering the his property.
defendants to solidarily pay:
With respect to petitioner Heirs, the CA reduced the RTC's
1. To plaintiff Cresencio Bao - awards of actual damages representing the hospital and funeral
expenses from P20,268.45 to P19,136.90; loss of earning
(a) P700,000.00, as payment for his Hino dump truck which was
capacity from P576,000.00 to P415,640.16; and moral damages
rendered a total wreck;
from P100,000.00 to P50,000.00.
(b) P296,601.50 per month, as loss of earning of the Hino dump
Finally, the appellate court deleted the award of litigation
truck, to be computed from November 6, 1993 with legal
expenses and reduced the award of attorney's fees from 25% of
interest thereon until the P700,000.00 mentioned in the next
petitioners' claims to P50,000.00.
preceding number will be fully paid by the defendants to
plaintiff Cresencio Bao; The Issues Before The Court
(c) P100,000.00 and P50,000.00, as moral damages and In the instant petition, petitioners posit that respondent Salvaa
exemplary damages, respectively; was grossly negligent in continuing to drive the bus even after
he had discovered the malfunction in its steering wheel. They
2. To the Heirs of the late Amancio Asumbrado -
further averred that the CA erred in reducing the amounts of
damages awarded by the RTC despite sufficient evidence.
(a) P50,000.00, as civil indemnity for the death of Amancio
Asumbrado;
The Court's Ruling
(b) P20,268.45, as reimbursement for the medicines,
While the courts a quo, in their respective decisions, have
hospitalization and funeral expenses incurred by the late
concurred that the proximate cause of the collision was the
Amancio Asumbrado;
negligence of the bus driver, Salvaa, in overtaking the jeepney
in front as the bus traversed a curve on the highway, they,
(c) P576,000.00, as loss of earning capacity of the late Amancio
however, imputed varied degrees of negligence on him. Thus,
Asumbrado;
although the issue of negligence is basically factual,6 the Court
(d) P100,000.00 and P50,000.00, as moral damages and may properly pass upon this question under Rule 45 of the
exemplary damages, respectively; Rules of Court.
18
place. Having thus encroached on the opposite lane in the (d) P50,000.00 as moral damages; and
process of overtaking the jeepney, without ascertaining that it
was clear of oncoming traffic that resulted in the collision with (e) P50,000.00 as exemplary damages.
the approaching dump truck driven by deceased Asumbrado,
(2) petitioner Cresencio Bao:
Salvaa was grossly negligent in driving his bus. He was remiss in
his duty to determine that the road was clear and not to
(a) P400,000.00 as temperate damages for his damaged dump
proceed if he could not do so in safety.8
truck;
Consequently, the CA erred in deleting the awards of exemplary
(b) P200,000.00 as lost income of the said truck; and
damages, which the law grants to serve as a warning to the
public and as a deterrent against the repetition of similar (c) P50,000.00 as exemplary damages.
deleterious actions. However, the award should be tempered
as it is not intended to enrich one party or to impoverish (3) attorney's fees of P100,000.00 to petitioners collectively.
another.9 Thus, the Court reinstates the separate awards of
exemplary damages to petitioners in the amount of P50,000.00. 9. SUZETTE DEL MUNDO, Complainant, vs.ATTY. ARNEL C.
CAPISTRANO, Respondent.
With respect to Bao, the award of moral damages for the loss
of his dump truck was correctly deleted since the damage to his Before the Court is an administrative complaint1 for
vehicle was not shown to have been made willfully or disbarment filed by complainant Suzette Del Mundo (Suzette)
deliberately.10 However, the Court finds the grant of charging respondent Atty. Arnel C. Capistrano (Atty. Capistrano)
P100,000.00 as temperate damages for the damaged vehicle to of violating the Code of Professional Responsibility.
be insufficient considering its type as a 10-wheeler dump truck
The Facts
and its good running condition at the time of the incident.
Instead, the Court finds the amount of P400,000.00 as fair and On January 8, 2005, Suzette and her friend Ricky S. Tuparan
reasonable under the circumstances. With respect to the (Tuparan) engaged the legal services of Atty. Capistrano to
adjudged lost income from the dump truck, the Court sustains, handle the judicial declaration of nullity of their respective
for being just and equitable, the award of temperate damages marriages allegedly for a fee of PhP140,000.00 each. On the
in the sum of P200,000.00. same date, a Special Retainer Agreement2 was entered into by
and between Suzette and Atty. Capistrano which required an
On the other hand, the Court upholds the grant to petitioner
acceptance fee of PhP30,000.00, appearance fee of
Heirs of P19,136.90 as actual damages corresponding to the
PhP2,500.00 per hearing and another PhP2,500.00 per
pecuniary loss that they have actually sustained, P50,000.00 as
pleading. In addition, Atty. Capistrano allegedly advised her to
death indemnity, the reduced awards of P50,000.00 as moral
prepare amounts for the following expenses:
damages and P415,640.16 as loss of earning capacity of the
deceased Asumbrado, which are all in conformity with For every payment that Suzette made, she would inquire from
prevailing jurisprudence.11 Atty. Capistrano on the status of her case. In response, the
latter made her believe that the two cases were already filed
Finally, the attorney's fees of P50,000.00 as awarded by the CA
before the Regional Trial Court of Malabon City and awaiting
is increased to P100,000.00 considering the length of time that
notice of hearing. Sometime in July 2005, when she could
this case has been pending, or a period of about 18 years since
hardly reach Atty. Capistrano, she verified her case from the
the complaint a quo was filed on March 11, 1994.
Clerk of Court of Malabon and discovered that while the case of
WHEREFORE, the assailed February 20, 2009 Decision and Tuparan had been filed on January 27, 2005, no petition has yet
February 9, 2010 Resolution of the Court of Appeals are been filed for her.
AFFIRMED with MODIFICATIONS. Respondents are ordered to
Hence, Suzette called for a conference, which was set on July
solidarily pay:
28, 2005, where she demanded the refund of the total amount
(1) petitioner Heirs of Amancio Asumbrado: of PhP78,500.00, but Atty. Capistrano instead offered to return
the amount of PhP63,000.00 on staggered basis claiming to
(a) P19,136.90 as actual damages representing hospital and have incurred expenses in the filing of Tuparan’s case, to which
funeral expenses; she agreed. On the same occasion, Atty. Capistrano handed to
her copies of her unfiled petition,3 Tuparan’s petition4 and his
(b) P415,640.16 as loss of earning capacity of the deceased Withdrawal of Appearance5 in Tuparan’s case with instructions
Asumbrado; to file them in court, as well as a list6 containing the expenses
he incurred and the schedule of payment of the amount of
(c) P50,000.00 as death indemnity;
PhP63,000.00, as follows:
19
However, Atty. Capistrano only returned the amount of year and Ordered to Return the amount of One Hundred Forty
PhP5,000.00 on August 15, 2005 and thereafter, refused to Thousand Pesos (P140,000.00) to complainant with thirty (30)
communicate with her, prompting the institution of this days from receipt of notice.
administrative complaint on September 7, 2005.
The Issue
In his Comment/Answer7 dated November 14, 2005, Atty.
Capistrano acknowledged receipt of the amount of The sole issue before the Court is whether Atty. Arnel C.
PhP78,500.00 from Suzette and his undertaking to return the Capistrano violated the Code of Professional Responsibility.
agreed sum of PhP63,000.00. He also admitted responsibility
The Ruling of the Court
for his failure to file Suzette’s petition and cited as justification
his heavy workload and busy schedule as then City Legal Officer
After a careful perusal of the records, the Court concurs with
of Manila and lack of available funds to immediately refund the
the findings and recommendation of the IBP-CBD but takes
money received.
exception to the amount of PhP140,000.00 recommended to be
returned to Suzette.
In the Resolution8 dated January 18, 2006, the Court resolved
to refer the case to the Integrated Bar of the Philippines (IBP)
Indisputably, Atty. Capistrano committed acts in violation of his
for investigation, report and recommendation.
sworn duty as a member of the bar. In his Manifestation and
Petition for Review,12 he himself admitted liability for his
The Action and Recommendation of the IBP
failure to act on Suzette’s case as well as to account and return
For failure of respondent Atty. Capistrano to appear at the the funds she entrusted to him. He only pleaded for the
mandatory conference set by Commissioner Lolita A. mitigation of his penalty citing the lack of intention to breach
Quisumbing of the IBP Commission on Bar Discipline (IBP-CBD), his lawyer’s oath; that this is his first offense; and that his
the conference was terminated without any admissions and profession is the only means of his and his family’s livelihood.
stipulations of facts and the parties were ordered to file their He also prayed that the adjudged amount of PhP140,000.00 be
respective position papers to which only Atty. Capistrano reduced to PhP73,500.00 representing the amount of
complied. PhP78,500.00 he received less his payment of the sum of
PhP5,000.00. Consequently, Commissioner Quisumbing and the
In the Report and Recommendation9 dated April 11, 2007, the IBP-CBD Board of Governors correctly recommended the
IBP-CBD, through Commissioner Quisumbing, found that Atty. appropriate penalty of one year suspension from the practice of
Capistrano had neglected his client’s interest by his failure to law for violating the pertinent provisions of the Canons of
inform Suzette of the status of her case and to file the agreed Professional Responsibility, thus:
petition for declaration of nullity of marriage. It also concluded
that his inability to refund the amount he had promised Suzette CANON 16 – A LAWYER SHALL HOLD IN TRUST ALL MONEYS
showed deficiency in his moral character, honesty, probity and AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS
good demeanor. Hence, he was held guilty of violating Rule POSSESSION.
18.03, and Rule 18.04, Canon 18 of the Code of Professional
RULE 16.01 – A lawyer shall account for all money or property
Responsibility and recommended the penalty of suspension for
collected or received for or from the client.
two years from the practice of law.
RULE 16.02 – A lawyer shall keep the funds of each client
On September 19, 2007, the IBP Board of Governors adopted
separate and apart from his own and those of others kept by
and approved the report and recommendation of
him.
Commissioner Quisumbing through Resolution No. XVIII-2007-
9810 with modification ordering the return of the sum of
xxx
PhP140,000.00 attorney’s fees to Suzette.
CANON 18 – A LAWYER SHALL SERVE HIS CLIENT WITH
However, upon Atty. Capistrano’s timely motion for
COMPETENCE AND DILIGENCE.
reconsideration, the IBP Board of Governors passed Resolution
No. XIX-2011-26311 on May 14, 2011 reducing the penalty of xxx
suspension from two years to one year, to wit:
RULE 18.03 – A lawyer shall not neglect a legal matter
RESOLVED to PARTIALLY GRANT Respondent’s Motion for entrusted to him, and his negligence in connection therewith
Reconsideration, and unanimously MODIFY as it is hereby shall render him liable.
MODIFIED Resolution No. XVIII-2007-98 dated 19 September
2007 and REDUCED the penalty against Atty. Arnel C.
Capistrano to SUSPENSION from the practice of law for one (1)
20
RULE 18.04 – A lawyer shall keep the client informed of the Let copies of this Decision be entered in the personal record of
status of his case and shall respond within a reasonable time to respondent as a member of the Philippine Bar and furnished
the client’s request for information. the Office of the Bar Confidant, the Integrated Bar of the
Philippines and the Court Administrator for circulation to all
Indeed, when a lawyer takes a client’s cause, he covenants that courts in the country.
he will exercise due diligence in protecting the latter’s rights.
Failure to exercise that degree of vigilance and attention 10. ANICETO BANGIS substituted by his heirs, namely:
expected of a good father of a family makes the lawyer RODOLFO B. BANGIS, RONNIE B. BANGIS, ROGELIO B. BANGIS,
unworthy of the trust reposed on him by his client and makes RAQUEL B. QUILLO, ROMULO B. BANGIS, ROSALINA B. PARAN,
him answerable not just to his client but also to the legal ROSARIO B. REDDY, REYNALDO B. BANGIS, and REMEDIOS B.
profession, the courts and society.13 His workload does not LASTRE, Petitioners, vs. HEIRS OF SERAFIN AND SALUD
justify neglect in handling one’s case because it is settled that a ADOLFO, namely: LUZ A. BANNISTER, SERAFIN ADOLFO, JR.,
lawyer must only accept cases as much as he can efficiently and ELEUTERIO ADOLFO rep. by his Heirs, namely: MILAGROS,
handle.14 JOEL, MELCHOR, LEA, MILA, NELSON, JIMMY and MARISSA, all
surnamed ADOLFO, Respondents.
Moreover, a lawyer is obliged to hold in trust money of his
client that may come to his possession. As trustee of such Assailed in this Petition for Review on Certiorari under Rule 45
funds, he is bound to keep them separate and apart from his of the Rules of Court is the March 30, 2009 Decision1 of the
own. Money entrusted to a lawyer for a specific purpose such Court of Appeals Mindanao Station (CA) and its December 2,
as for the filing and processing of a case if not utilized, must be 2009 Resolution2 in CA-G.R. CV No. 00722-MIN which declared
returned immediately upon demand. Failure to return gives rise that the transaction between the parties was a mortgage, not a
to a presumption that he has misappropriated it in violation of sale, and ordered petitioners to surrender the possession of the
the trust reposed on him. And the conversion of funds disputed lot upon respondents' full payment of their
entrusted to him constitutes gross violation of professional indebtedness.
ethics and betrayal of public confidence in the legal
profession.15 THE ANTECEDENT FACTS
To stress, the practice of law is a privilege given to lawyers who The spouses Serafin, Sr. and Saludada3 Adolfo were the original
meet the high standards of legal proficiency and morality, registered owners of a 126,622 square meter lot covered by
including honesty, integrity and fair dealing. They must perform Original Certificate of Title (OCT) No. P-489 issued on December
their fourfold duty to society, the legal profession, the courts 15, 1954 (derived from Homestead Patent No. V-34974),
and their clients, in accordance with the values and norms of located in Valencia, Malaybalay, Bukidnon. This property was
the legal profession as embodied in the Code of Professional mortgaged to the then Rehabilitation Finance Corporation (now
Responsibility.16 Falling short of this standard, the Court will Development Bank of the Philippines or DBP) on August 18,
not hesitate to discipline an erring lawyer by imposing an 1955,4 and upon default in the payment of the loan obligation,
appropriate penalty based on the exercise of sound judicial was foreclosed and ownership was consolidated in DBP's name
discretion in consideration of the surrounding facts. under Transfer Certificate of Title (TCT) No. T-1152.5 Serafin
Adolfo, Sr., however, repurchased the same and was issued TCT
With the foregoing disquisition and Atty. Capistrano’s No. 63136 on December 1, 1971, a year after his wife died in
admission of his fault and negligence, the Court finds the 1970.
penalty of one year suspension from the practice of law, as
recommended by the IBP-CBD, sufficient sanction for his Sometime in 1975, Serafin Adolfo, Sr. (Adolfo) allegedly
violation. However, the Court finds proper to modify the mortgaged the subject property for the sum of P12,500.00 to
amount to be returned to Suzette from PhP140,000.00 to Aniceto Bangis (Bangis) who immediately took possession of
PhP73,500.00. the land.7 The said transaction was, however, not reduced into
writing.8
WHEREFORE, respondent Atty. Arnel C. Capistrano, having
clearly violated Canons 16 and 18 of the Code of Professional When Adolfo died, his heirs, namely, Luz Adolfo Bannister,
Responsibility, is SUSPENDED from the practice of law for one Serafin Adolfo, Jr. and Eleuterio Adolfo (Heirs of Adolfo),
year with a stern warning that a repetition of the same or executed a Deed of Extrajudicial Partition dated December 24,
similar acts shall be dealt with more severely. He is ORDERED to 1997 covering the subject property and TCT No. T-651529 was
return to Suzette Del Mundo the full amount of PhP73,500.00 issued to them. On May 26, 1998, the said property was
within 30 days from notice hereof and DIRECTED to submit to subdivided and separate titles were issued in names of the
the Court proof of such payment. Heirs of Adolfo, as follows: TCT Nos. T-66562 and T-66563 for
Luz Adolfo Banester10 ; TCT Nos. T-66560 and T-66561 in the
21
name of Serafin Adolfo, Jr.; and TCT Nos. T-66564 and T-66565 Absolute Deed of Sale dated December 30, 197122 for the
in favor of Eleuterio Adolfo.11 purpose of proving the sale of the subject lot by Adolfo and his
heirs in favor of his predecessors-in-interest, Aniceto Bangis
In June 1998, the Heirs of Adolfo expressed their intention to and Segundino Cortel, for the sum of ₱13,000.00. He also
redeem the mortgaged property from Bangis but the latter presented a Promissory Note23 of even date purportedly
refused, claiming that the transaction between him and Adolfo executed by Bangis and Segundino Cortel undertaking to pay
was one of sale. During the conciliation meetings in the the balance of the purchase price in the amount of
barangay, Bangis' son, Rudy Bangis, showed them a copy of a ₱1,050.00.24 Both documents were notarized by Atty. Valentin
deed of sale and a certificate of title to the disputed lot.12 The Murillo who testified to the fact of their execution.25 Rodolfo
parties having failed to amicably settle their differences, a Bangis likewise testified that they have been paying the taxes
certificate to file action13 was issued by the barangay. due on the property and had even used the same as collateral
for a loan with a bank.26
THE PROCEEDINGS BEFORE THE RTC
On rebuttal, one of the Heirs of Adolfo, Luz Adolfo Bannister,
On July 26, 2000, the Heirs of Adolfo filed a complaint14 before
denied the due execution and genuineness of the foregoing
the Regional Trial Court (RTC) for annulment of deed of sale and
Extra-Judicial Settlement with Absolute Deed of Sale alleging
declaration of the purported contract of sale as antichresis,
forgery.27
accounting and redemption of property and damages against
Bangis, docketed as Civil Case No. 2993-00. The complaint was On December 29, 2005, the RTC rendered a Decision28 in favor
amended on September 11, 2001 to include a prayer for the of the Heirs of Adolfo, the dispositive portion of which reads:
cancellation of TCT No. T-10567 and the tax declarations in the
name of Bangis in view of the manifestation15 filed by Ex- WHEREFORE, the preponderance of evidence being strongly in
Officio Register of Deeds, Atty. Phoebe Loyola Toribio of the favor of the plaintiffs and against the defendants, decision is
Registry of Deeds, Malaybalay City which states that the said hereby rendered:
title was of "dubious" origin since there was no deed of
conveyance upon which the said transfer certificate of title was 1. Declaring the contract between the plaintiffs and defendants
based and that its derivative title, TCT No. T-10566, does not as a mere mortgage or antichresis and since the defendants
exist in the files of the Registry of Deeds.16 On November 12, have been in the possession of the property in 1975 up to the
2001, the complaint was again amended to reflect the other present time enjoying all its fruits or income, the mortgaged
certificates of titles issued in the names of the Heirs of Adolfo loan of P12,000.00 is deemed fully paid;
and the amount of ₱12,500.00 representing the mortgage
2. Ordering the defendants to deliver the possession of the
debt,17 followed by another amendment on October 13, 2003
property in question and all the improvements thereon to the
to include the allegation that they have partitioned the subject
plaintiffs peacefully;
lot on December 24, 1997 and that no copy of the supposed
deed of sale in favor of Bangis can be found in the records of
3. Declaring TCT No. 10567 in the name of Aniceto Bangis as
the Provincial Assessor's Office and the Registrar of Deeds. They
NULL AND VOID AB INITIO and directing the Office of the
further prayed, in the alternative, to be allowed to redeem the
Register of Deeds to cause its cancellation from its record to
subject lot under the Homestead Law and that Bangis be
avoid confusion regarding the ownership thereof; and
ordered to indemnify them: (a) ₱50,000.00 each as moral
damages; (b) 20% of the value of the property as attorney's 4. Declaring all the transfer certificates of title issued in favor of
fees; and (c) ₱50,000.00 as litigation expenses as well as the the plaintiffs namely, Luz Adolfo-Bannister, Serafin Adolfo, Jr.
costs of suit.18 and Eleuterio Adolfo, as above-mentioned as the ones valid and
issued in accordance with PD 1529.
In his Answer with Counterclaim,19 Bangis claimed to have
bought the subject property from Adolfo for which TCT No. T- SO ORDERED.
1056720 was issued. He also alleged to have been in open and
adverse possession of the property since 1972 and that the Aggrieved, the Heirs of Bangis appealed the foregoing
cause of action of the Heirs of Adolfo has prescribed. On disquisition to the Court of Appeals (CA).
November 11, 2001, Bangis died and was substituted in this suit
by his heirs, namely, Rodolfo B. Bangis, Ronie B. Bangis, Rogelio THE CA RULING
B. Bangis, Raquel B. Quillo, Romulo B. Bangis, Rosalina B. Paran,
In its assailed Decision, the CA affirmed the RTC finding that the
Rosario B. Reddy, Reynaldo B. Bangis and Remedios B. Lastre
contract between the parties was a mortgage, not a sale. It
(Heirs of Bangis).21
noted that while Bangis was given possession of the subject
During the trial, one of the Heirs of Bangis, Rodolfo Bangis, property, the certificate of title remained in the custody of
presented a photocopy of an Extra-Judicial Settlement with Adolfo and was never cancelled. The CA also ordered the Heirs
22
of Adolfo to pay the Heirs of Bangis the mortgage debt of Nonetheless, the Court perused the records and found
₱12,500.0029 with twelve (12%) percent interest reckoned substantial evidence supporting the factual findings of the RTC,
from 1975 until 1998 and to deliver to them the possession of as affirmed by the CA, that the nature of the transaction
the property upon full payment.30 It, however, deleted the RTC between the parties' predecessors-in-interest was a mortgage
order directing the Register of Deeds to cancel TCT No. T-10567 and not a sale. Thus, the maxim that factual findings of the trial
in the name of Bangis for being a collateral attack proscribed court when affirmed by the CA are final and conclusive on the
under PD 1529.31 Court39 obtains in this case.
Dissatisfied, the Heirs of Bangis filed a Motion for THERE WAS NEITHER AN ANTICHRESIS NOR SALE
Reconsideration32 arguing that the CA erred in disregarding
their testimonial and documentary evidence, particularly, the For the contract of antichresis to be valid, Article 2134 of the
Extra-Judicial Settlement with Absolute Deed of Sale (Exh. 2) Civil Code requires that "the amount of the principal and of the
which purportedly established the sale in favor of their interest shall be specified in writing; otherwise the contract of
predecessor-in-interest, Aniceto Bangis. The said motion was, antichresis shall be void." In this case, the Heirs of Adolfo were
however, denied in the Resolution33 dated December 2, 2009. indisputably unable to produce any document in support of
their claim that the contract between Adolfo and Bangis was an
THE ISSUE BEFORE THE COURT antichresis, hence, the CA properly held that no such
relationship existed between the parties. 40
Hence, the instant petition for review on certiorari based on the
lone assignment of error34 that the transaction between the On the other hand, the Heirs of Bangis presented an Extra-
parties was one of sale and not a mortgage or antichresis. In Judicial Settlement with Absolute Deed of Sale dated December
support, petitioner Heirs of Bangis maintain that the CA erred in 30, 197141 to justify their claimed ownership and possession of
not giving probative weight to the Extra-Judicial Settlement the subject land. However, notwithstanding that the subject of
with Absolute Deed of Sale35 which supposedly bolsters their inquiry is the very contents of the said document, only its
claim that their father, Aniceto Bangis, bought the subject photocopy42 was presented at the trial without providing
parcel of land from Adolfo. Hence, the corresponding title, TCT sufficient justification for the production of secondary
No. T-10567, issued as a consequence should be respected. evidence, in violation of the best evidence rule embodied under
Section 3 in relation to Section 5 of Rule 130 of the Rules of
On their part, respondent Heirs of Adolfo averred that no Court, to wit:
reversible error was committed by the CA in upholding that no
sale transpired between the parties' predecessors-in-interest. SEC. 3. Original document must be produced; exceptions. -
Moreover, petitioners' TCT No. T-10567 was not offered in When the subject of inquiry is the contents of a document, no
evidence and worse, certified as of dubious origin per the evidence shall be admissible other than the original document
Manifestation of the Registrar of Deeds.36 itself, except in the following cases:
THE COURT'S RULING (1) When the original has been lost or destroyed, or cannot be
produced in court, without bad faith on the part of the offeror;
The petition must fail.
(2) When the original is in the custody or under the control of
At the outset, it should be emphasized that a petition for the party against whom the evidence is offered, and the latter
review on certiorari under Rule 45 of the Rules of Court fails to produce it after reasonable notice;
involves only questions of law and not of facts. A question of
law exists when there is doubt as to what the law is on a given (3) When the original consists of numerous accounts or other
set of facts while a question of fact arises when there is doubt documents which cannot be examined in court without great
as to the truth or falsity of the alleged facts.37 loss of time and the fact sought to be established from them is
only the general result of the whole; and
The Heirs of Bangis, in insisting that both the RTC and the CA
erroneously disregarded the evidence of sale they presented, (4) When the original is a public record in the custody of a
are effectively asking the Court to re-evaluate factual issues public officer or is recorded in a public office.
which is proscribed under Rule 45. "Such questions as to
whether certain items of evidence should be accorded SEC. 5. When original document is unavailable. - When the
probative value or weight, or rejected as feeble or spurious, or original document has been lost or destroyed, or cannot be
whether or not the proofs on one side or the other are clear produced in court, the offeror, upon proof of its execution or
and convincing and adequate to establish a proposition in issue, existence and the cause of its unavailability without bad faith
are without doubt questions of fact."38 on his part, may prove its contents by a copy, or by a recital of
23
its content in some authentic document, or by the testimony of Certificate of Title No. T-1152 was issued in the name of
witnesses in the order stated. Development Bank of the Philippines. From the Development
Bank of the Philippines a Deed of Sale was executed by the
The bare testimony of one of the Heirs of Bangis, Rodolfo Development Bank of the Philippines in favor of Serafin Adolfo
Bangis, that the subject document was only handed43 to him and Transfer Certificate of Title No. T-6313 marked annex "B-1"
by his father, Aniceto, with the information that the original was issued in the name of Serafin Adolfo.
thereof "could not be found"44 was insufficient to justify its
admissibility. Moreover, the identification made by Notary An Extrajudicial Settlement was now [sic] by the Heirs of Serafin
Public Atty. Valentin Murillo45 that he notarized such Adolfo and Transfer Certificate of Title Nos. T-65152 annex "B-
document cannot be given credence as his conclusion was not 2", T-66560 annex "B-3", T-66561 annex "B-4", T-66562 annex
verified against his own notarial records.46 Besides, the Heirs of "B-5", T-66563 annex "B-6", T-66564 annex "B-7", and T-66565
Bangis could have secured a certified copy of the deed of sale annex "B-8" were issued to the Heirs.
from the Assessor's Office47 that purportedly had its custody in
compliance with Section 7, Rule 13048 of the Rules of Court. The titles issued to the Heirs of Serafin Adolfo were legitimately
issued by this office after all its [sic] requirements and
In sum, the Heirs of Bangis failed to establish the existence and supporting documents were submitted and proper annotations
due execution of the subject deed on which their claim of were reflected at the back of the title of Serafin Adolfo.
ownership was founded. Consequently, the RTC and CA were
correct in affording no probative value to the said document.49 Transfer Certificate of Title No. T-10567 as shown on the title
was derived from Transfer Certificate of Title No. T-10566 but
TCT NO. T-10567 IN THE NAME OF ANICETO BANGIS CANNOT [sic] title is not existing in this office.
PREVAIL OVER THE TITLES OF THE HEIRS OF ADOLFO
As held in the case of Top Management Programs Corporation
Records reveal that TCT No. T-10567 purportedly secured as a v. Luis Fajardo and the Register of Deeds of Las Piñas City:52 "if
consequence of the deed of sale executed by Adolfo and his two certificates of title purport to include the same land,
heirs in favor of Bangis was not offered in evidence. A perusal whether wholly or partly, the better approach is to trace the
of its copy, however, shows that it was a transfer from TCT No. original certificates from which the certificates of titles were
T-10566,50 which title the Heirs of Bangis unfortunately failed derived."
to account for, and bore no relation at all to either OCT No. P-
489 (the original title of the Spouses Adolfo) or TCT No. T-6313 Having, thus, traced the roots of the parties' respective titles
(issued to Adolfo when he repurchased the same property from supported by the records of the Register of Deeds of
DBP). The Manifestation51 of the Register of Deeds of Malaybalay City, the courts a quo53 were correct in upholding
Malaybalay City regarding the doubtful origin of TCT No. T- the title of the Heirs of Adolfo as against TCT No. T-10567 of
10567 and the regularity of the titles of the Heirs of Adolfo are Bangis, notwithstanding its earlier issuance on August 18,
insightful, thus: 197654 or long before the Heirs of Adolfo secured their own
titles on May 26, 1998. To paraphrase the Court's ruling in
That the verification from the office of the original copy of Mathay v. Court of Appeals:55 where two (2) transfer
Transfer Certificate of Title No. T-10567 in the name of Anecito certificates of title have been issued on different dates, the one
Bangis is existing in the office. Machine copy of the said title is who holds the earlier title may prevail only in the absence of
hereto attached as annex "A" but nothing in the title whether any anomaly or irregularity in the process of its registration,
annotated or attached, any Deed of Conveyance or other which circumstance does not obtain in this case.
Documents by which said title was issued or transferred in the
name of Anecito Bangis. CANCELLATION OF TCT NO. T-10567
That for the information and guidance of the court attached The Court cannot sustain the CA's ruling56 that TCT No. T-
herewith is a machine copies [sic] Original Certificate of Title 10567 cannot be invalidated because it constitutes as a
No. P-489 in the name of Serafin Adolfo, marked as annex "B" collateral attack which is contrary to the principle of
which supposedly the mother title of Transfer Certificate of indefeasibility of titles.
Title No. T-10567 as to how this title was transferred in the
It must be noted that Bangis interposed a counterclaim in his
name of Anecito Bangis. Nothing will show which will validly
Answer seeking to be declared as the true and lawful owner of
supports [sic] the said transfer, in other words the said title is
the disputed property and that his TCT No. T-10567 be declared
dubious.
as superior over the titles of the Heirs of Adolfo.57 Since a
This Original Certificate of Title No. P-489 in the name of Serafin counterclaim is essentially a complaint58 then, a determination
Adolfo was mortgage to the Development Bank of the of the validity of TCT No. T-10567 vis-a-vis the titles of the Heirs
Philippines and then it was consolidated and Transfer
24
of Adolfo can be considered as a direct, not collateral, attack on relation to Article 448 of the Civil Code. Thus, the order for
the subject titles.59 them to surrender the possession of the disputed land together
with all its improvements was properly made.
In Pasiño v. Monterroyo, the Court has ruled, thus:
LIABILITY FOR THE PAYMENT OF INTEREST
It is already settled that a counterclaim is considered an original
complaint and as such, the attack on the title in a case originally Finally, it is undisputed that the Heirs of Bangis made no judicial
for recovery of possession cannot be considered as a collateral or extrajudicial demand on the Heirs of Adolfo to pay the
attack on the title. Development Bank of the Philippines v. mortgage debt. Instead, it was the latter who signified their
Court of Appeals is similar to the case before us insofar as intent to pay their father's loan obligation, admittedly in the
petitioner in that case filed an action for recovery of possession amount of ₱12,500.00,63 which was refused. The mortgage
against respondent who, in turn, filed a counterclaim claiming contract therefore continued to subsist despite the lapse of a
ownership of the land. In that case, the Court ruled: considerable number of years from the time it was constituted
in 1975 because the mortgage debt has not been satisfied.
Nor is there any obstacle to the determination of the validity of
TCT No. 10101. It is true that the indefeasibility of torrens title Following the Court's ruling in the iconic case of Eastern
cannot be collaterally attacked. In the instant case, the original Shipping Lines, Inc. v. Court of Appeals,64 the foregoing
complaint is for recovery of possession filed by petitioner liability, which is based on a loan or forbearance of money, shall
against private respondent, not an original action filed by the be subject to legal interest of 12% per annum from the date it
latter to question the validity of TCT No. 10101 on which was judicially determined by the CA on March 30, 2009 until
petitioner bases its right. To rule on the issue of validity in a the finality of this Decision, and not from 1975 (the date of the
case for recovery of possession is tantamount to a collateral constitution of the mortgage); nor from 1998 (when an attempt
attack. However, it should not [b]e overlooked that private to pay was made) or in 2000 at the time the complaint was
respondent filed a counterclaim against petitioner, claiming filed, because it was the Heirs of Adolfo and not Bangis who
ownership over the land and seeking damages. Hence, we could filed the instant suit65 to collect the indebtedness. Thereafter,
rule on the question of the validity of TCT No. 10101 for the the judgment award inclusive of interest shall bear interest at
counterclaim can be considered a direct attack on the same. ‘A 12% per annum until its full satisfaction.66
counterclaim is considered a complaint, only this time, it is the
original defendant who becomes the plaintiff... It stands on the WHEREFORE, premises considered, the instant petition for
same footing and is to be tested by the same rules as if it were review on certiorari is DENIED and the assailed Decision dated
an independent action.’ x x x (Citations omitted) 60 March 30, 2009 of the Court of Appeals Mindanao Station (CA)
and its Resolution dated December 2, 2009 in CA-G.R. CV No.
Besides, the prohibition against collateral attack does not apply 00722-MIN are AFFIRMED with MODIFICATION: (1) cancelling
to spurious or non-existent titles, which are not accorded TCT No. T-10567; and (2) ordering respondent Heirs of Adolfo
indefeasibility,61 as in this case. to pay petitioner Heirs of Bangis the sum of ₱12,500.00 with
legal interest of 12% per annum reckoned from March 30, 2009
THE PRESENT ACTION HAS NOT PRESCRIBED until the finality of this Decision and thereafter, 12% annual
interest until its full satisfaction.
The claim of the Heirs of Bangis that since they have been in
possession of the subject land since 1972 or for 28 years The rest of the Decision stands.
reckoned from the filing of the complaint in 2000 then, the
present action has prescribed is untenable.1âwphi1 It bears to 11. THE PEOPLE OF THE PHILIPPINES, Plaintiff-appellee,
note that while Bangis indeed took possession of the land upon vs.JOVER MATIAS y DELA FUENTE, Accused-appellant.
its alleged mortgage, the certificate of title (TCT No. 6313)
remained with Adolfo and upon his demise, transferred to his This resolves the appeal from the August 19, 2008 Decision1 of
heirs, thereby negating any contemplated transfer of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02781 filed by
ownership. Settled is the rule that no title in derogation of that appellant Jover Matias y Dela Fuente which affirmed his
of the registered owner can be acquired by prescription or conviction for the crime of "rape" under Sec. 5 (b), Article III of
adverse possession.62 Moreover, even if acquisitive Republic Act (RA) No. 7610.2
prescription can be appreciated in this case, the Heirs of Bangis'
The Factual Antecedents
possession being in bad faith is two years shy of the requisite
30-year uninterrupted adverse possession required under
Appellant Jover Matias y Dela Fuente and private complainant
Article 1137 of the Civil Code.1âwphi1
AAA3 were neighbors at Sto. Niño St., Barangay San Antonio,
Quezon City. In the evening of June 6, 2004, AAA, a minor,
Consequently, the Heirs of Bangis cannot validly claim the rights
having been born on April 23, 1991, was on her way to the
of a builder in good faith as provided for under Article 449 in
25
vegetable stall ("gulayan") of a certain "Manuela" to buy incident and that it was impossible for him to be there or within
something when, all of a sudden, appellant pulled her towards its immediate vicinity at the time of the commission of the
a house that was under construction. There, he forced her to lie crime. The CA ruled that it is highly unlikely for a young girl to
on a bamboo bed ("papag"), removed her shorts and fabricate a story that would destroy her reputation and her
underwear, and inserted first, his finger, and then his penis into family’s life and endure the discomforts of trial.
her vagina. Appellant threatened to kill her if she should report
the incident to anyone. Issue Before The Court
When AAA arrived home, she narrated to her mother and aunt The sole issue to be resolved in this appeal is whether the CA
what appellant did to her.1âwphi1 Together, they proceeded to committed reversible error in affirming in toto the Decision of
the barangay to report the incident and, thereafter, to the Baler the RTC, which convicted appellant of "rape" under Sec. 5 (b),
District Police Station to file a complaint. A physical Article III of RA 7610.
examination was conducted by Police Chief Inspector Pierre
The Court's Ruling
Paul Figeroa Carpio upon AAA, who was found to have "[d]eep-
healed lacerations at 3 and 7 o’clock positions" and was in a
Sec. 5 (b), Article III of RA 7610 provides:
non-virgin state physically at the time of examination.
Subsequently, appellant was charged with rape under Article Section 5. Child Prostitution and Other Sexual Abuse. - Children,
266-A of the Revised Penal Code (RPC) in an Amended whether male or female, who for money, profit, or any other
Information4 dated July 16, 2004. consideration or due to the coercion or influence of any adult,
syndicate or group, indulge in sexual intercourse or lascivious
In defense, appellant claimed that in the evening of the
conduct, are deemed to be children exploited in prostitution
incident, he and his uncle, Romeo Matias, were doing
and other sexual abuse.
construction work at the house of his aunt, also located at Sto.
Nino St., Barangay San Antonio, Quezon City. He was therefore The penalty of reclusion temporal in its medium period to
surprised when two policemen arrested him at around 6:30 in reclusion perpetua shall be imposed upon the following:
the evening of even date and detained him at the Baler Police
Station. (a) x x x
The RTC Ruling (b) Those who commit the act of sexual intercourse or
lascivious conduct with a child exploited in prostitution or
In its April 19, 2007 Decision,5 the RTC convicted appellant for subject to other sexual abuse; xxx7
"rape" under Sec. 5 (b), Article III of RA 7610 and imposed the
penalty of reclusion perpetua. The RTC likewise directed him to In the case of People v. Pangilinan,8 which affirmed the
pay AAA the amount of ₱50,000 as civil indemnity and ₱30,000 doctrines enunciated in the cases of People v. Dahilig9 and
as moral damages. People v. Abay,10 the Court explained:
In convicting appellant, the RTC gave full credence to AAA's Under Section 5 (b), Article III of RA 7610 in relation to RA 8353,
testimony, which was straightforward and positive. On the if the victim of sexual abuse is below 12 years of age, the
other hand, it found appellant’s defenses of denial and alibi as offender should not be prosecuted for sexual abuse but for
weak, taking into consideration that his aunt's house where he statutory rape under Article 266-A(1)(d) of the Revised Penal
was allegedly doing construction work was just a few meters Code and penalized with reclusion perpetua. On the other
away from the vegetable stall, clearly making it possible for him hand, if the victim is 12 years or older, the offender should be
to be at the locus criminis at the time of the incident. charged with either sexual abuse under Section 5(b) of RA 7610
or rape under Article 266-A (except paragraph 1[d]) of the
The CA Ruling Revised Penal Code. However, the offender cannot be accused
of both crimes for the same act because his right against double
In its assailed Decision,6 the CA affirmed the RTC Decision in
jeopardy will be prejudiced. A person cannot be subjected
toto, finding no compelling reason to depart from its findings
twice to criminal liability for a single criminal act. Likewise, rape
and conclusions. The appellate court held that if the RTC found
cannot be complexed with a violation of Section 5(b) of RA
AAA's testimony to be credible, logical and consistent, then it
7610. Under Section 48 of the Revised Penal Code (on complex
should be given great respect, as the RTC had the ability to
crimes), a felony under the Revised Penal Code (such as rape)
observe firsthand the demeanor and deportment of the
cannot be complexed with an offense penalized by a special
witnesses on stand.
law.
Moreover, for appellant's alibi to prosper, he should be able to
In this case, the RTC, as affirmed by the CA, convicted appellant
show that he was a great distance away from the place of the
for "rape" under Sec. 5 (b), Article III of RA 7610 and sentenced
26
him to reclusion perpetua, upon a finding that AAA was a minor This Petition for Review on Certiorari1 assails the August 18,
below 12 years old at the time of the commission of the offense 2006 Decision2 and May 18, 2007 Resolution3 of the Court of
on June 6, 2004. However, a punctilious scrutiny of the records Appeals (CA) in CA-G.R. SP No. 75133, which set aside the
shows that AAA was born on April 23, 1991, which would make October 8, 2002 Decision4 of the Regional Trial Court of
her 13 years old at the time of the commission of the offense Bayugan, Agusan del Sur, Branch 7 (RTC) and rendered a new
on June 6, 2004. Thus, appellant can be prosecuted and judgment fixing the just compensation due to respondent at
convicted either under Sec. 5 (b), Article III of RA 7610 for ₱4,615,194.00 and deleting the award of attorney's fees.
sexual abuse, or under Article 266-A of the RPC, except for rape
under paragraph 1(d).11 It bears pointing out that the penalties The Factual Antecedents
under these two laws differ: the penalty for sexual abuse under
Respondent Montinola-Escarilla and Co., Inc. (MECO) is the
Sec. 5 (b), Article III of RA 7610 is reclusion temporal medium to
owner of a parcel of agricultural land situated in Esperanza,
reclusion perpetua, while rape under Article 266-A of the RPC is
Agusan del Sur covered by Original Certificate of Title (OCT) No.
penalized with reclusion perpetua.
T-70, out of which 159.0881 hectares5 (has.) were acquired by
On this score, it is worth noting that in its April 19, 2007 the government in 1995 under Republic Act (R.A.) No. 6657
Decision,12 the RTC concluded that AAA was the "victim of (Comprehensive Agrarian Reform Law of 1988).
sexual abuse labeled 'rape',"13 considering the established fact
Petitioner Land Bank of the Philippines (LBP) initially valued the
that there was sexual intercourse between him and AAA. Thus,
subject land at ₱823,204.086 but respondent rejected the
appellant's conviction was clearly under Sec. 5 (b), Article III of
valuation. Pending summary administrative proceedings for
RA 7610 or sexual abuse and not for rape under Article 266-A of
determination of just compensation before the DAR Regional
the RPC.
Agrarian Reform Adjudicator (RARAD),7 MECO filed a complaint
In the light of all the foregoing, there is a need to modify the for determination of just compensation before the RTC, which
penalty imposed upon appellant.1âwphi1 Following the constituted a four-member Board of Commissioners (Board of
pronouncement in the case of Malto v. People14 for sexual Commissioners) to evaluate and appraise the just
abuse, and in the absence of any mitigating or aggravating compensation for the subject property covering 4.4825 has. of
circumstances, the Court finds it appropriate to impose the rainfed rice land and 154.6056 has. of idle land.8 Meanwhile,
penalty of reclusion temporal in its maximum period, which has the RARAD rendered a Decision dated December 29, 1998 fixing
the range of 17 years, 4 months and 1 day to 20 years. the just compensation at ₱823,204.08.
Applying the Indeterminate Sentence Law,15 therefore, the On the other hand, the Board of Commissioners was not able to
maximum term of the indeterminate penalty shall be that come up with a unified valuation of the subject property. One
which could be properly imposed under the law, which is 17 commissioner adopted the findings and recommendation of
years, 4 months and 1 day to 20 years of reclusion temporal, MECO's appraiser, Asian Appraisal Co., Inc. (Asian), while
while the minimum term shall be within the range next lower in another commissioner adopted the valuation of petitioner
degree, which is prision mayor in its medium period to LBP.1âwphi1 The remaining two commissioners submitted their
reclusion temporal in its minimum period, or a period ranging Commissioners' Report9 recommending the amount of
from 8 years and 1 day to 14 years and 8 months. Similarly, the ₱4,615,194.0010 as the "just and fair market value of the land
award of moral damages is increased from ₱30,000.00 to subject of the case considering that the land was cleared,
₱50,000.00, pursuant to the Malto case. worked and cultivated by the farmers and/or parents of the
farmers-beneficiaries as early as 1980 and introduced valuable
WHEREFORE, the appeal is DISMISSED. The August 19, 2008 improvements thereon such as coconuts, falcattas, bananas,
Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 02781 corn and other agricultural crops."11
finding appellant Jover Matias y Dela Fuente guilty beyond
reasonable doubt of sexual abuse under Section 5 (b), Article III The RTC Ruling
of Republic Act No. 7610 is AFFIRMED with MODIFICATIONS as
On October 8, 2002, the RTC, rendered a Decision12 fixing the
to penalty and the amount of damages awarded. Appellant is
just compensation of the property at ₱7,927,660.6013
sentenced to suffer the penalty of 12 years of prision mayor as
computed as follows:
minimum to 17 years, 4 months and 1 day of reclusion
temporal as maximum, and ordered to pay the private
Cornland (3rd class) – 143.5528 has @ P52,000/ha. – P
complainant the amount of ₱50,000.00 as moral damages. The
7,464,745.60
rest of the assailed Decision stands.
Cocoland (3rd class) – 15.4305 has. @ P30,000/ha. – P
12. LAND BANK OF THE PHILIPPINES, Petitioner,
462,915.00
vs.MONTINOLA-ESCARILLA and CO., INC., Respondent.
27
Total ---------------------------- P 7,927,660.60 Section 17. Determination of Just Compensation. – In
determining just compensation, the cost of acquisition of the
The reclassification of the acquired property from rainfed land, the current value of like properties, its nature, actual use
riceland, bushland and bushland rolling to cornland and and income, the sworn valuation by the owner, the tax
cocoland was allegedly "supported by plaintiff's evidence,"14 declarations, and the assessment made by government
which was not particularly identified. Nonetheless, while the assessors shall be considered. The social and economic benefits
RTC gave more credence to the Appraisal Report submitted by contributed by the farmers and the farmworkers and by the
Asian, it did not adopt its valuation of ₱11,395,000.00 and Government to the property as well as the non-payment of
instead fixed lower values but higher than those recommended taxes or loans secured from any government financing
by the Board of Commissioners at ₱4,615,194.00. It likewise institution on the said land shall be considered as additional
awarded 5% attorney's fees in consonance with Article 2208 of factors to determine its valuation.18
the Civil Code, holding that the plaintiff was compelled to
litigate due to defendant's acts. The potential use of the expropriated property is only
considered in cases where there is a great improvement in the
Petitioner LBP and the DAR Secretary filed separate motions for general vicinity of the expropriated property, but should never
reconsideration which were both denied in the Order15 dated control the determination of just compensation.19
December 27, 2002.
In the present case, while the Amended Complaint20 described
LBP appealed to the CA, averring that the RTC erred in the acquired property as:
disregarding R.A. No. 6657 and its implementing guidelines,
DAR Administrative Order (A.O.) No. 6, Series of 1992, as which coincided with its physical characteristics21 as indicated
amended, in valuing the subject land. It contended that the in LBP's Field Investigation Report22 dated September 28, 1994,
valuation heavily banked on present considerations or future both the RTC and the CA considered its actual use at the time of
potentials of the subject property instead of its value at the appraisal, and reclassified the property, as follows: 143.5528
time of taking. It likewise assailed the propriety of the award of has. of 3rd class cornland and 15.4305 has. of 3rd class
attorney's fees. cocoland. The RTC and the CA ignored the fact that, as
indicated in the aforementioned report, at the time of the
The CA Ruling ocular inspection in September 1994, a substantial portion of
the subject property was idle and abandoned, but the farmer-
In the Decision16 dated August 18, 2006, the CA set aside the
beneficiaries "were already starting to cultivate their
RTC's valuation for failure to give due consideration to the
designated area of occupancy as evidenced by the cutting of
factors enumerated in Section 17 of R.A. No. 6657. While it
trees and some has (sic) already started to plant corn, bananas
observed that LBP considered some factors, not all the factors
and other crops."23 Under DAR A.O. No. 11, Series of 1994,
were taken into account and substantiated. It thereby adopted
"(t)he landowner shall not be compensated or paid for
the Commissioners' Report submitted by the two
improvements introduced by third parties such as the
commissioners as the only unbiased determination of just
government, farmer-beneficiaries or others." Hence, it was
compensation. However, it deleted the award of attorney's fees
erroneous to reclassify the acquired property into cornland and
for being improper.
cocoland "based on plaintiff's (MECO) evidence"24 considering
that the improvements were introduced by the farmer-
In the instant petition for review, LBP contends that the CA
beneficiaries. At most, they may be considered only as
erred in adopting the valuation in the Commissioners' Report
economic benefits contributed by the farmers and farmworkers
which did not state the basis thereof, and was based on the fair
to the property in determining its valuation pursuant to Section
market value approach instead of the basic formula prescribed
17 of R.A. No. 6657.
by DAR A.O. No. 6, Series of 1992, as amended by DAR A.O. No.
11, Series of 1994. Moreover, the classification of the acquired
Consequently, there is a need to remand the case to the court a
property into coconut and corn lands was misleading because
quo for reception of evidence and final determination of just
at the time of actual taking, 154.6055 has. were idle and
compensation taking into account the factors under Section 17
abandoned and 4.4825 has. consisted of rainfed riceland.
of R.A. No. 6657.
The Court's Ruling
WHEREFORE, the assailed August 18, 2006 Decision and May
18, 2007 Resolution rendered by the CA in CA-G.R. SP No.
For purposes of determining just compensation, the fair market
75133 are hereby SET ASIDE. The records of the case are
value of an expropriated property is determined by its
remanded to the court a quo which is directed to determine
character and price at the time of taking.17 In the
with dispatch the proper just compensation for the subject
implementation of R.A. No. 6657, Section 17 provides the
property considering the factors set forth under Section 17 of
manner by which just compensation is determined, thus:
R.A. No. 6657.
28
12. RE: REPORT ON THE JUDICIAL AUDIT CONDUCTED IN THE information that the periods of delay in deciding cases were
REGIONAL TRIAL COURT, BRANCHES 72 AND 22, NARVACAN, minimal, save for a few cases.
ILOCOS SUR.
On April 29, 2011, Judge Buenavista filed a Manifestation6
This administrative case arose from the judicial audit and respectfully submitting the case for resolution on the basis of
inventory of cases conducted in Branches 72 and 22 of the the pleadings and/or records already on file.
Regional Trial Court (RTC) of Narvacan, Ilocos Sur, prior to the
retirement of Presiding Judge Arturo B. Buenavista (Judge The Issue
Buenavista) on May 20, 2006.
The sole issue before the Court is whether Judge Buenavista
The Facts should be imposed the penalty as recommended by the OCA for
his failure to assiduously perform his official duties.
The report1 of the judicial audit team of the Office of the Court
Administrator (OCA) revealed that as of the last day of the audit The Court’s Ruling
on April 5, 2006, Branch 72, the regular court of Judge
After a careful perusal of the records, the Court agrees with the
Buenavista, had a caseload of 333 cases (126 civil cases and 207
findings and recommendation of the OCA, and resolves to
criminal cases) while Branch 22, where he acted as pairing
adopt the same in its entirety.
judge, had 302 cases (106 civil cases and 196 criminal cases).
Judges have the sworn duty to administer justice without
The audit team noted that Judge Buenavista had several cases
undue delay, for justice delayed is justice denied.7 They have
submitted for decision beyond the 90-day reglementary period,
always been exhorted to observe strict adherence to the rule
with minimal periods of delay in some cases. While he was able
on speedy disposition of cases,8 as delay in case disposition is a
to dispose many of the cases submitted for decision in both
major culprit in the erosion of public faith and confidence in the
branches, and even decided six (6) cases2 after the conduct of
judicial system.
the judicial audit, most of them were resolved beyond the
reglementary period. The audit team likewise disclosed that
Under the 1987 Constitution, trial judges are mandated to
there were cases where no action had been taken since their
decide and resolve cases within 90 days from
filing,3 and others did not progress for unreasonable periods of
submission.1âwphi1 Corollary to this constitutional mandate,
time – some as early as 2000 – for various reasons.4
Section 5, Canon 6 of the New Code of Judicial Conduct for the
Philippine Judiciary requires judges to perform all judicial duties
In connection with these findings, Judge Buenavista explained
efficiently, fairly, and with reasonable promptness.
that the death of his wife a year prior to the audit and his
slowly failing eyesight, compounded by his designation as
In Office of the Court Administrator v. Javellana,9 the Court
pairing judge of Branch 22, contributed to the dismal state of
held that a judge cannot choose his deadline for deciding cases
his case docket.
pending before him. Without an extension granted by the
Court, the failure to decide even a single case within the
After the inventory and audit, the team concluded that Judge
required period constitutes gross inefficiency that merits
Buenavista failed to assume a more active and steadfast control
administrative sanction. If a judge is unable to comply with the
over the cases which resulted in the unreasonable delay in their
period for deciding cases or matters, he can, for good reasons,
disposition and the consequent clogging of the court dockets.
ask for an extension.
The Action and Recommendation of the OCA
An inexcusable failure to decide a case within the prescribed
The OCA, in its Memorandum5 dated August 10, 2006, 90-day period constitutes gross inefficiency,10 warranting the
recommended that Judge Buenavista be fined in the amount of imposition of administrative sanctions such as suspension from
P10,000.00 for failing to decide twelve (12) cases and resolve office without pay or fine11 on the defaulting judge. The fines
the incidents in seven (7) cases within the reglementary period, imposed vary in each case, depending chiefly on the number of
and for his failure to effectively manage the court dockets in cases not decided within the reglementary period and other
RTC Branches 72 and 22, Narvacan, Ilocos Sur. factors, such as the presence of aggravating or mitigating
circumstances, the damage suffered by the parties as a result of
In arriving at its recommendation, the OCA took into account the delay, the health and age of the judge, and other analogous
the demise of Judge Buenavista’s wife the year preceding the circumstances.
audit; his failing eyesight; the fact that he presided over two (2)
RTC branches for almost four (4) years; his diligence in In this case, records are bereft of showing that Judge
disposing twenty-five (25) cases before he retired; and the Buenavista sought for an extension of time to decide and
resolve most of the cases pending before him, save only for one
instance. Having therefore failed to decide cases and resolve
29
incidents within the required period constituted gross Telecommunications Center, Inc. (TCI), a wholly-owned PHC
inefficiency, warranting the imposition of a fine of P10,000.00 subsidiary to which PHC funds had been allegedly advanced
which the Court finds reasonable under the circumstances. without the appropriate accountability reports given to PHC
and PHILCOMSAT.4
WHEREFORE, a fine of ₱10,000.00 is imposed upon Judge
Arturo B. Buenavista for his failure to effectively manage the On February 20, 2006, in view of the losses that the
court dockets in RTC Branches 72 and 22, Narvacan, Ilocos Sur, government continued to incur and in order to protect its
resulting in the unreasonable delay in the disposition of cases. interests in POTC, PHILCOMSAT and PHC, Senator Miriam
Defensor Santiago, during the Second Regular Session of the
Thirteenth Congress of the Philippines, introduced Proposed
Senate Resolution (PSR) No. 4555 directing the conduct of an
13. PHILCOMSAT HOLDINGS CORPORATION, ENRIQUE L.
inquiry, in aid of legislation, on the anomalous losses incurred
LOCSIN AND MANUEL D. ANDAL, Petitioners, vs. SENATE OF
by POTC, PHILCOMSAT and PHC and the mismanagement
THE REPUBLIC OF THE PHILIPPINES, SENATE COMMITTEE ON
committed by their respective board of directors. PSR No. 455
GOVERNMENT CORPORATIONS AND PUBLIC ENTERPRISES,
was referred to respondent Committee on Government
SENATE COMMITTEE ON PUBLIC SERVICES, HON. SEN.
Corporations and Public Enterprises, which conducted eleven
RICHARD GORDON AND HON. SEN. JUAN PONCE ENRILE,
(11) public hearings6 on various dates. Petitioners Locsin and
Respondents.
Andal were invited to attend these hearings as "resource
persons."
This original Petition for Certiorari and Prohibition assails and
seeks to enjoin the implementation of and nullify Committee
On June 7, 2007, respondents Senate Committees submitted
Report No. 3121 submitted by respondents Senate Committees
the assailed Committee Report No. 312, where it noted the
on Government Corporations and Public Enterprises and on
need to examine the role of the PCGG in the management of
Public Services (respondents Senate Committees) on June 7,
POTC, PHILCOMSAT and PHC. After due proceedings, the
2007 for allegedly having been approved by respondent Senate
respondents Senate Committees found overwhelming
of the Republic of the Philippines (respondent Senate) with
mismanagement by the PCGG and its nominees over POTC,
grave abuse of discretion amounting to lack or in excess of
PHILCOMSAT and PHC, and that PCGG was negligent in
jurisdiction.
performing its mandate to preserve the government's interests
in the said corporations. In sum, Committee Report No. 312
The Factual Antecedents
recommended, inter alia, the privatization and transfer of the
The Philippine Communications Satellite Corporation jurisdiction over the shares of the government in POTC and
(PHILCOMSAT) is a wholly-owned subsidiary of the Philippine PHILCOMSAT to the Privatization Management Office (PMO)
Overseas Telecommunications Corporation (POTC), a under the Department of Finance (DOF) and the replacement of
government-sequestered organization in which the Republic of government nominees as directors of POTC and PHILCOMSAT.
the Philippines holds a 35% interest in shares of stocks.2
On November 15, 2007, petitioners filed the instant petition
Petitioner PHILCOMSAT Holdings Corporation (PHC),
before the Court, questioning, in particular, the haste with
meanwhile, is a private corporation duly organized and existing
which the respondent Senate approved the challenged
under Philippine laws and a holding company whose main
Committee Report No. 312.7 They also claim that respondent
operation is collecting the money market interest income of
Senator Richard Gordon acted with partiality and bias and
PHILCOMSAT.
denied them their basic right to counsel,8 and that respondent
Petitioners Enrique L. Locsin and Manuel D. Andal are both Senator Juan Ponce Enrile, despite having voluntarily recused
directors and corporate officers of PHC, as well as nominees of himself from the proceedings in view of his personal interests in
the government to the board of directors of both POTC and POTC, nonetheless continued to participate actively in the
PHILCOMSAT.3 By virtue of its interests in both PHILCOMSAT hearings.9
and POTC, the government has, likewise, substantial interest in
Issues Before The Court
PHC.
The basic issues advanced before the Court are: (1) whether the
For the period from 1986 to 1996, the government, through the
respondent Senate committed grave abuse of discretion
Presidential Commission on Good Government (PCGG),
amounting to lack or in excess of jurisdiction in approving
regularly received cash dividends from POTC. In 1998, however,
Committee Resolution No. 312; and (2) whether it should be
POTC suffered its first loss. Similarly, in 2004, PHC sustained a
nullified, having proposed no piece of legislation and having
₱7-million loss attributable to its huge operating expenses. By
been hastily approved by the respondent Senate.
2005, PHC's operating expenses had ballooned tremendously.
Likewise, several PHC board members established
The Court's Ruling
30
The respondents Senate Committees' power of inquiry relative On July 19, 1990, Cardia Limited (CARDIA) shipped on board the
to PSR No. 455 has been passed upon and upheld in the vessel M/V Pakarti Tiga at Shanghai Port China, 8,260 metric
consolidated cases of In the Matter of the Petition for Habeas tons or 165,200 bags of Grey Portland Cement to be discharged
Corpus of Camilo L. Sabio,10 which cited Article VI, Section 21 at the Port of Manila and delivered to its consignee, Heindrich
of the Constitution, as follows: Trading Corp. (HEINDRICH). The subject shipment was insured
with respondents, FGU Insurance Corp. (FGU) and Pioneer
"The Senate or the House of Representatives or any of its Insurance and Surety Corp. (PIONEER), against all risks under
respective committees may conduct inquiries in aid of Marine Open Policy No. 062890275 for the amount of
legislation in accordance with its duly published rules of P18,048,421.00. 3
procedure. The rights of persons appearing in or affected by
such inquiries shall be respected." The subject vessel is owned by P.T. Pakarti Tata (PAKARTI)
which it chartered to Shinwa Kaiun Kaisha Ltd. (SHINWA). 4
The Court explained that such conferral of the legislative power Representing itself as owner of the vessel, SHINWA entered
of inquiry upon any committee of Congress, in this case the into a charter party contract with Sky International, Inc. (SKY),
respondents Senate Committees, must carry with it all powers an agent of Kee Yeh Maritime Co. (KEE YEH), 5 which further
necessary and proper for its effective discharge.11 chartered it to Regency Express Lines S.A. (REGENCY). Thus, it
was REGENCY that directly dealt with consignee HEINDRICH,
On this score, the respondents Senate Committees cannot be
and accordingly, issued Clean Bill of Lading No. SM-1. 6
said to have acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction when it submitted Committee On July 23, 1990, the vessel arrived at the Port of Manila and
Resolution No. 312, given its constitutional mandate to conduct the shipment was discharged. However, upon inspection of
legislative inquiries. Nor can the respondent Senate be faulted HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV),
for doing so on the very same day that the assailed resolution agent of CARDIA, it was found that out of the 165,200 bags of
was submitted. The wide latitude given to Congress with cement, 43,905 bags were in bad order and condition. Unable
respect to these legislative inquiries has long been settled, to collect the sustained damages in the amount of
otherwise, Article VI, Section 21 would be rendered P1,423,454.60 from the shipper, CARDIA, and the charterer,
pointless.12 1âwphi1 REGENCY, the respondents, as co-insurers of the cargo, each
paid the consignee, HEINDRICH, the amounts of P427,036.40
Hence, on the basis of the pronouncements in the Sabio case,
and P284,690.94, respectively, 7 and consequently became
and as suggested13 by the parties in their respective pleadings,
subrogated to all the rights and causes of action accruing to
the issues put forth in the petition14 have become academic.
HEINDRICH.
Corollarily, petitioners Locsin and Andal's allegation15 that their
Thus, on August 8, 1991, respondents filed a complaint for
constitutionally-guaranteed right to counsel was violated during
damages against the following defendants: "REGENCY EXPRESS
the hearings held in furtherance of PSR No. 455 is specious. The
LINES, S.A./ UNKNOWN CHARTERER OF THE VESSEL 'PAKARTI
right to be assisted by counsel can only be invoked by a person
TIGA'/ UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF
under custodial investigation suspected for the commission of a
THE VESSEL 'PAKARTI TIGA', SKY INTERNATIONAL, INC. and/or
crime, and therefore attaches only during such custodial
ACE NAVIGATION COMPANY, INC." 8 which was docketed as
investigation.16 Since petitioners Locsin and Andal were invited
Civil Case No. 90-2016.
to the public hearings as resource persons, they cannot
therefore validly invoke their right to counsel. In their answer with counterclaim and cross-claim, PAKARTI and
SHINWA alleged that the suits against them cannot prosper
14. ACE NAVIGATION CO., INC., petitioner, vs.FGU INSURANCE
because they were not named as parties in the bill of lading. 9
CORPORATION and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents. Similarly, ACENAV claimed that, not being privy to the bill of
lading, it was not a real party-in-interest from whom the
This is an appeal under Rule 45 of the Rules of Court seeking to
respondents can demand compensation. It further denied being
reverse the June 22, 2004 Decision1 and February 17, 2006
the local ship agent of the vessel or REGENCY and claimed to be
Resolution2 of the Court of Appeals (CA) ordering petitioner
the agent of the shipper, CARDIA. 10
Ace Navigation Co., Inc., jointly and severally with Cardia
Limited, to pay respondents FGU Insurance Corp. and Pioneer For its part, SKY denied having acted as agent of the charterer,
Insurance and Surety Corp. the sum of P213,518.20 plus KEE YEH, which chartered the vessel from SHINWA, which
interest at the rate of six percentum (6%) from the filing of the originally chartered the vessel from PAKARTI. SKY also averred
complaint until paid. that it cannot be sued as an agent without impleading its
alleged principal, KEE YEH. 11
The Facts
31
On September 30, 1991, HEINDRICH filed a similar complaint Finding that the parties entered into a time charter party, not a
against the same parties and Commercial Union Assurance Co. demise or bareboat charter where the owner completely and
(COMMERCIAL), docketed as Civil Case No. 91-2415, which was exclusively relinquishes possession, command and navigation to
later consolidated with Civil Case No. 91-2016. However, the the charterer, the CA held PAKARTI, SHINWA, KEE YEH and its
suit against COMMERCIAL was subsequently dismissed on joint agent, SKY, solidarily liable for 70% of the damages sustained by
motion by the respondents and COMMERCIAL. 12 the cargo. This solidarity liability was borne by their failure to
prove that they exercised extraordinary diligence in the
Proceedings Before the RTC and the CA vigilance over the bags of cement entrusted to them for
transport. On the other hand, the CA passed on the remaining
In its November 26, 2001 Decision, 13 the RTC dismissed the
30% of the amount claimed to the shipper, CARDIA, and its
complaint, the fallo of which reads:
agent, ACENAV, upon a finding that the damage was partly due
to the cargo's inferior packing.
WHEREFORE, premises considered, plaintiffs’ complaint is
DISMISSED. Defendants’ counter-claim against the plaintiffs are
With respect to REGENCY, the CA affirmed the findings of the
likewise dismissed, it appearing that plaintiff[s] did not act in
RTC that it did not acquire jurisdiction over its person for
evident bad faith in filing the present complaint against them.
defective service of summons.
Defendant Pakarti and Shinwa’s cross-claims against their co-
PAKARTI's, SHINWA's, SKY's and ACENAV's respective motions
defendants are likewise dismissed for lack of sufficient
for reconsideration were subsequently denied in the CA's
evidence.
assailed February 17, 2006 Resolution.
No costs. SO ORDERED.
Issues Before the Court
Dissatisfied, the respondents appealed to the CA which, in its
PAKARTI, SHINWA, SKY and ACENAV filed separate petitions for
assailed June 22, 2004 Decision, 14 found PAKARTI, SHINWA,
review on certiorari before the Court, docketed as G.R. Nos.
KEE YEH and its agent, SKY, solidarily liable for 70% of the
171591, 171614, and 171663, which were ordered consolidated
respondents' claim, with the remaining 30% to be shouldered
in the Court’s Resolution dated July 31, 2006. 15
solidarily by CARDIA and its agent, ACENAV, thus:
On April 21, 2006, SKY manifested 16 that it will no longer
WHEREFORE, premises considered, the Decision dated
pursue its petition in G.R. No. 171614 and has preferred to
November 26, 2001 is hereby MODIFIED in the sense that:
await the resolution in G.R. No. 171663 filed by PAKARTI and
SHINWA. Accordingly, an entry of judgment 17 against it was
a) defendant-appellees P.T. Pakarti Tata, Shinwa Kaiun Kaisha,
made on August 18, 2006. Likewise, on November 29, 2007,
Ltd., Kee Yeh Maritime Co., Ltd. and the latter’s agent Sky
PAKARTI and SHINWA moved 18 for the withdrawal of their
International, Inc. are hereby declared jointly and severally
petitions for lack of interest, which the Court granted in its
liable, and are DIRECTED to pay FGU Insurance Corporation the
January 21, 2008 Resolution. 19 The corresponding entry of
amount of Two Hundred Ninety Eight Thousand Nine Hundred
judgment 20 against them was made on March 17, 2008.
Twenty Five and 45/100 (P298,925.45) Pesos and Pioneer
Insurance and Surety Corp. the sum of One Hundred Ninety
Thus, only the petition of ACENAV remained for the Court's
Nine Thousand Two Hundred Eighty Three and 66/100
resolution, with the lone issue of whether or not it may be held
(P199,283.66) Pesos representing Seventy (70%) percentum of
liable to the respondents for 30% of their claim.
their respective claims as actual damages plus interest at the
rate of six (6%) percentum from the date of the filing of the Maintaining that it was not a party to the bill of lading, ACENAV
complaint; and asserts that it cannot be held liable for the damages sought to
be collected by the respondents. It also alleged that since its
b) defendant Cardia Ltd. and defendant-appellee Ace
principal, CARDIA, was not impleaded as a party-
Navigation Co., Inc. are DECLARED jointly and severally liable
defendant/respondent in the instant suit, no liability can
and are hereby DIRECTED to pay FGU Insurance Corporation
therefore attach to it as a mere agent. Moreover, there is
One Hundred Twenty Eight Thousand One Hundred Ten and
dearth of evidence showing that it was responsible for the
92/100 (P128,110.92) Pesos and Pioneer Insurance and Surety
supposed defective packing of the goods upon which the award
Corp. Eighty Five Thousand Four Hundred Seven and 28/100
was based.
(P85,407.28) Pesos representing thirty (30%) percentum of
their respective claims as actual damages, plus interest at the The Court's Ruling
rate of six (6%) percentum from the date of the filing of the
complaint. A bill of lading is defined as "an instrument in writing, signed by
a carrier or his agent, describing the freight so as to identify it,
SO ORDERED.
32
stating the name of the consignor, the terms of the contract for ART. 1868. By the contract of agency, a person binds himself to
carriage, and agreeing or directing that the freight to be render some service or to do something in representation or on
delivered to the order or assigns of a specified person at a behalf of another, with the consent or authority of the latter.
specified place." 21
Corollarily, Article 1897 of the same Code provides that an
It operates both as a receipt and as a contract. As a receipt, it agent is not personally liable to the party with whom he
recites the date and place of shipment, describes the goods as contracts, unless he expressly binds himself or exceeds the
to quantity, weight, dimensions, identification marks and limits of his authority without giving such party sufficient notice
condition, quality, and value. As a contract, it names the of his powers.
contracting parties, which include the consignee, fixes the
route, destination, and freight rates or charges, and stipulates Both exceptions do not obtain in this case. Records are bereft
the rights and obligations assumed by the parties. 22 As such, it of any showing that ACENAV exceeded its authority in the
shall only be binding upon the parties who make them, their discharge of its duties as a mere agent of CARDIA. Neither was
assigns and heirs. 23 it alleged, much less proved, that ACENAV's limited obligation
as agent of the shipper, CARDIA, was not known to HEINDRICH.
In this case, the original parties to the bill of lading are: (a) the
shipper CARDIA; (b) the carrier PAKARTI; and (c) the consignee Furthermore, since CARDIA was not impleaded as a party in the
HEINDRICH. However, by virtue of their relationship with instant suit, the liability attributed upon it by the CA 27 on the
PAKARTI under separate charter arrangements, SHINWA, KEE basis of its finding that the damage sustained by the cargo was
YEH and its agent SKY likewise became parties to the bill of due to improper packing cannot be borne by ACENAV. As mere
lading. In the same vein, ACENAV, as admitted agent of CARDIA, agent, ACENAV cannot be made responsible or held
also became a party to the said contract of carriage. accountable for the damage supposedly caused by its principal.
28
The respondents, however, maintain 24 that ACENAV is a ship
agent and not a mere agent of CARDIA, as found by both the CA Accordingly, the Court finds that theCA erred in ordering
25 and the RTC. 26 ACENAV jointly and severally liable with CARDIA to pay 30o/o of
the respondents' claim.
The Court disagrees.
WHEREFORE, the assailed Decision and Resolution of the Court
Article 586 of the Code of Commerce provides: of Appeals are hereby REVERSED.1awp++i1 The complaint
against petitioner Ace Navigation Co., Inc. is hereby DISMISSED.
ART. 586. The shipowner and the ship agent shall be civilly
liable for the acts of the captain and for the obligations 15. ROSENA FONTELAR OGAWA, Petitioner, vs.ELIZABETH
contracted by the latter to repair, equip, and provision the GACHE MENIGISHI, Respondent.
vessel, provided the creditor proves that the amount claimed
was invested therein. This is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court assailing the March 8, 2010 Decision1 and June
By ship agent is understood the person entrusted with the 21, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV
No. 86362 which affirmed with modification the September 1,
provisioning of a vessel, or who represents her in the port in
2005 Decision3 of the Regional Trial Court (RTC) of Sorsogon
which she may be found. (Emphasis supplied) City, Branch 52, granting respondent’s counterclaim in the
amount of 1,000,000.00 Yen and deleting the award of
Records show that the obligation of ACENAV was limited to damages as well as attorney’s fees in favor of the petitioner.
informing the consignee HEINDRICH of the arrival of the vessel
in order for the latter to immediately take possession of the The Facts
goods. No evidence was offered to establish that ACENAV had a
hand in the provisioning of the vessel or that it represented the Petitioner Roseña Fontelar Ogawa and respondent Elizabeth
Gache Menigishi were childhood friends and former residents
carrier, its charterers, or the vessel at any time during the
of Sorsogon City. Respondent married a Japanese national,
unloading of the goods. Clearly, ACENAV's participation was
Tomohito Menigishi (Tomohito), and lived in Japan. Sometime
simply to assume responsibility over the cargo when they were in June 1992, the Menigishis visited the Philippines and
unloaded from the vessel. Hence, no reversible error was introduced Yashoyuki Ogawa (Yashoyuki), Tomohito’s friend, to
committed by the courts a quo in holding that ACENAV was not petitioner. Yashoyuki and petitioner eventually got married in
a ship agent within the meaning and context of Article 586 of the Philippines and thereafter, also lived in Japan.
the Code of Commerce, but a mere agent of CARDIA, the
On January 26, 2004, petitioner filed a complaint4 for sum of
shipper.
money, damages, breach of good human relation and unjust
enrichment before the RTC against respondent, docketed as
On this score, Article 1868 of the Civil Code states:
Civil Case No. 2004-7299, alleging that the latter borrowed from
33
her the amounts of P15,000.00, P100,000.00 and P8,000.00, in
September 2000, August 2001, and March 2003, respectively. SO ORDERED.
Unable to pay, respondent offered to sell her building and its
improvements in Sorsogon City to petitioner for a consideration The RTC refused to give credence to respondent's testimony on
of P1,500,000.00 with the agreement that her outstanding her counterclaims for being incredible, inconsistent, and
loans with petitioner be deducted from the purchase price and contrary to human experience. It likewise disregarded the
the balance payable in installments. receipt presented by respondent as proof of petitioner's
purported indebtedness of 1,000,000.00 Yen.
As partial payment for the properties, petitioner remitted the
following amounts to respondent: (a) P150,000.00 through the The CA Ruling
account of her friend Emma Fulleros on October 23, 2003; and
(b) P250,772.90 by way of bank remittance to respondent's On appeal, the CA affirmed the RTC’s awards of the sums of
Equitable-PCI Bank Account on December 8, 2003. Having paid P150,000.00 and P250,772.90 in favor of petitioner and
huge amounts and in order to protect her proprietary rights, sustained the denial of respondent's counterclaim of
petitioner then demanded for the execution of the 4,000,000.00 Yen for lack of evidence. However, it gave
corresponding deed of sale, but respondent backed out from probative value to the receipt for 1,000,000.00 Yen and held it
the deal and reneged on her obligations. sufficient to establish petitioner's indebtedness to respondent,
considering the purported admission of the former's counsel as
In her Answer with Counterclaim,5 respondent specifically well as petitioner's own failure to specifically deny the same
denied her indebtedness to petitioner and claimed that it was under oath as provided for under Section 8, Rule 8 of the Rules
the latter who owed her 1,000,000.00 Yen, equivalent to about of Court. Consequently, it granted respondent's counterclaim of
P500,000.00, as evidenced by a receipt. In partial payment of 1,000,000.00 Yen. Finally, having found both parties at fault,
her indebtedness, petitioner, thus, remitted the amounts of the CA deleted the awards of damages and attorney’s fees.
P150,000.00 and P250,000.00 to respondent, leaving a balance
of P100,000.00. Respondent also sought reimbursement of the Issue Before The Court
advances she allegedly made for the wedding expenses of
petitioner and Yashoyuki in the amount of 4,000,000.00 Yen. In this petition, petitioner advances the question of whether
While she admitted offering her property for sale to petitioner, the disputed receipt sufficiently established respondent's
respondent explained that the sale did not materialize as counterclaim that petitioner owed her 1,000,000.00 Yen.
petitioner failed to produce the stipulated downpayment. By
way of counterclaim, respondent prayed for the award of Petitioner’s Arguments
4,000,000.00 Yen, the balance of petitioner's purported loan in
the amount of P100,000.00; moral and exemplary damages; Petitioner argues that the receipt for 1,000,000 Yen is not a
and attorney’s fees. promissory note and as such, its due execution and
genuineness need not be denied under oath. Moreover, she
The RTC Ruling denied any admission of liability that can be deduced from her
counsel’s manifestation during the trial that "the one who
Finding that respondent was indeed indebted to petitioner in usually prepares the receipt is the obligor or the creditor."
the amounts of P150,000.00 and P250,772.90 or the total
amount of P400,772.90, the RTC rendered a Decision6 dated Respondent’s Arguments
September 1, 2005, thus:
Respondent, in her Comment, prays for the dismissal of the
1. Ordering the defendant to pay the plaintiff the amount of petition insisting that the CA did not err in sustaining the
P400,772.90 plus interest of 12% from the date of filing of this obligation of petitioner in her favor on the basis of the disputed
case until the same shall have been paid in full. receipt which the latter never denied and her counsel even
admitted.
2. Ordering the defendant to reimburse the plaintiff for the
actual expenses she incurred in filing the instant case, to wit: The Court’s Ruling
a. P54,000.00 for her fare of plane tickets The Court finds merit in the petition.
b. P7,355.00 for docket fees At the outset, it should be emphasized that the factual findings
of the trial court, when adopted and confirmed by the CA, are
3. Ordering the defendant to pay the plaintiff the following binding and conclusive upon the Court and may not be
amounts: reviewed on appeal. However, when the RTC and the CA differ
in their findings of fact and conclusions, as in this case, it
a. P25,000.00 – moral damages becomes imperative to digress from this general rule and revisit
the factual circumstances surrounding the controversy.7
b. P25,000.00 – exemplary damages
In this case, the RTC and the CA gave different interpretations
c. P50,000.00 – attorney’s fees on the context of the receipt (Exhibit 1) executed by the parties
and arrived at incongruent findings. On one hand, the RTC
d. P1,000.00 – per appearance of her lawyer considered it as having failed to establish any right on the part
34
of respondent to collect from petitioner the purported Atty. Gerona's statement that the one who usually prepares the
indebtedness of 1,000,000.00 Yen, while on the other, the CA receipt is the obligor or the creditor did not conclusively imply
found it sufficient to confer liability. that petitioner owed respondent 1,000,000.00 Yen, or vice
versa. Hence, absent any other evidence to prove the
A receipt is defined as a written and signed acknowledgment transaction for which the receipt was issued, the Court cannot
that money or good was delivered or received.8 Exhibit 1, upon consider Exhibit 1 as evidence of a purported loan between
which respondent relies to support her counterclaim, petitioner and respondent which the former categorically
sufficiently satisfies this definition. It reads in full: denied. It is settled that the burden of proof lies with the party
who asserts his/her right. In a counterclaim, the burden of
June 13, 2003 proving the existence of the claim lies with the defendant, by
I receive the total amount of 1,000,000 Yen (x x x) the quantum of evidence required by law, which in this case is
Signed preponderance of evidence. On this score, Section 1, Rule 133
Elizabeth Menigishi Roseña Ogawa of the Revised Rules on Evidence provides:
However, while indubitably containing the signatures of both
parties, a plain reading of the contents of Exhibit 1 negates any Section 1. Preponderance of evidence, how determined. – In
inference as to the nature of the transaction for which the civil cases, the party having the burden of proof must establish
1,000,000 Yen was received and who between the parties is the his case by a preponderance of evidence. In determining where
obligor and the obligee. What is apparent is a mere written and the preponderance of evidence or superior weight of evidence
signed acknowledgment that money was received. There are no on the issues involved lies, the court may consider all the facts
terms and conditions found therein from which a right or and circumstance of the case, the witness’ manner of testifying,
obligation may be established. Hence, it cannot be considered their intelligence, their means and opportunity of knowing the
an actionable document9 upon which an action or defense may facts to which they are testifying, the nature of the facts to
be founded. which they testify, the probability of their testimony, their
interest or want of interest, and also their personal credibility
Consequently, there was no need to deny its genuineness and so far as the same may legitimately appear upon the trial. The
due execution under oath in accordance with Section 8, Rule 8 court may also consider the number of witnesses, though the
of the Rules of Civil Procedure which provides: preponderance is not necessarily with the greater number.
Section 8. How to contest such documents. – When an action or "Preponderance of evidence" is the weight, credit, and value of
defense is founded upon a written instrument, copied in, or the aggregate evidence on either side and is usually considered
attached to the corresponding pleading as provided in the to be synonymous with the term "greater weight of evidence"
preceding Section, the genuineness and due execution of the or "greater weight of credible evidence."11
instrument shall be deemed admitted unless the adverse party,
under oath, specifically denies them, and sets forth what he From the evidence on record, it is clear that respondent failed
claims to be the facts; but the requirement of an oath does not to prove her counterclaim by preponderance of
apply when the adverse party does not appear to be party to evidence.1âwphi1
the instrument or when compliance with an order for an
inspection of the original is refused. In view of the foregoing, the Court cannot sustain the findings
of the CA that both parties are at fault.12 Accordingly, the
Corollary thereto, the manifestation made in open court by award of damages granted by the RTC in favor of petitioner
Atty. Gerona, petitioner's counsel, cannot be construed as an must be reinstated with the modification that the award of
admission of her liability. The pertinent testimony of actual damages in the amount of
respondent and the manifestation of Atty. Gerona on May 18,
2005 read: P400,772.00,13 in the nature of a loan or forbearance of
money, shall earn 12% interest per annum reckoned from the
Q: Ms. Witness, on the cross-examination, the counsel asked date of filing of the instant complaint until the finality of this
you how come that the signature of Rosena which was marked Decision. Thereafter, the judgment award inclusive of interest
as EXHIBIT "1-a" and your signature marked as EXHIBIT "1-b" shall bear 12% annual interest until fully paid. 14
are parallel to each other?
WHEREFORE, the instant petition is GRANTED. The March 8,
A: Because it was Rosena who made this. I was just made to 201 0 Decision and June 21, 2010 Resolution of the Court of
confirm that she borrowed money from me. Appeals are REVERSED and SET ASIDE and the September 1,
2005 Decision of the Regional Trial Court of Sorsogon City,
Q: Whose handwriting are these, the wording I received One Branch 52 is REINSTATED with MODIFICATION ordering
Million Yen… (interrupted) respondent Elizabeth Gache Menigishi to pay
ATTY. GERONA: (TO THE COURT) petitioner Rosefia Fontelar Ogawa the amount of P400,772.00
plus 12% interest per annum reckoned from the date of filing of
That is admitted, Your Honor, because the one who usually the instant complaint until the finality of this Decision.
prepares the receipt is the obligor or the creditor.10 Thereafter, the judgment award inclusive of interest shall bear
12% annual interest until fully paid.
From the foregoing exchange, it cannot be clearly ascertained
who between the two signatories is the obligor and obligee.
35
16. AQUILINO Q. PIMENTEL, JR., SERGIO TADEO and NELSON assistance of P500.00/month, or P6,000.00/year, and an
ALCANTARA, Petitioners, vs.EXECUTIVE SECRETARY PAQUITO educational assistance of P300.00/month for 10 months, or a
N. OCHOA and SECRETARY CORAZON JULIANO-SOLIMAN OF total of P3,000.00/year, for each child but up to a maximum of
THE DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT three children per family.9 Thus, after an assessment on the
(DSWD), Respondents. appropriate assistance package, a household beneficiary could
receive from the government an annual subsidy for its basic
For the Court’s consideration in this Petition for Certiorari and needs up to an amount of P15,000.00, under the following
Prohibition is the constitutionality of certain provisions of conditionalities:
Republic Act No. 10147 or the General Appropriations Act
(GAA) of 20111 which provides a P21 Billion budget allocation a) Pregnant women must get pre natal care starting from the
for the Conditional Cash Transfer Program (CCTP) headed by 1st trimester, child birth is attended by skilled/trained
the Department of Social Welfare & Development (DSWD). professional, get post natal care thereafter
Petitioners seek to enjoin respondents Executive Secretary
Paquito N. Ochoa and DSWD Secretary Corazon Juliano-Soliman b) Parents/guardians must attend family planning
from implementing the said program on the ground that it sessions/mother's class, Parent Effectiveness Service and others
amounts to a "recentralization" of government functions that
have already been devolved from the national government to c) Children 0-5 years of age get regular preventive health check-
the local government units. ups and vaccines
The Facts d) Children 3-5 years old must attend day care program/pre-
school
In 2007, the DSWD embarked on a poverty reduction strategy
with the poorest of the poor as target beneficiaries.2 Dubbed e) Children 6-14 years of age are enrolled in schools and attend
"Ahon Pamilyang Pilipino," it was pre-pilot tested in the at least 85% of the time10
municipalities of Sibagat and Esperanza in Agusan del Sur; the
municipalities of Lopez Jaena and Bonifacio in Misamis Under A.O. No. 16, s. 2008, the DSWD also institutionalized a
Occidental, the Caraga Region; and the cities of Pasay and coordinated inter-agency network among the Department of
Caloocan3 upon the release of the amount of P50 Million Pesos Education (DepEd), Department of Health (DOH), Department
under a Special Allotment Release Order (SARO) issued by the of Interior and Local Government (DILG), the National Anti-
Department of Budget and Management.4 Poverty Commission (NAPC) and the local government units
(LGUs), identifying specific roles and functions in order to
On July 16, 2008, the DSWD issued Administrative Order No. ensure effective and efficient implementation of the CCTP. As
16, series of 2008 (A.O. No. 16, s. 2008),5 setting the the DSWD takes on the role of lead implementing agency that
implementing guidelines for the project renamed "Pantawid must "oversee and coordinate the implementation, monitoring
Pamilyang Pilipino Program" (4Ps), upon the following stated and evaluation of the program," the concerned LGU as partner
objectives, to wit: agency is particularly tasked to –
1. To improve preventive health care of pregnant women and a. Ensure availability of the supply side on health and education
young children in the target areas.
2. To increase enrollment/attendance of children at elementary b. Provide necessary technical assistance for Program
level implementation
6. To encourage parent's participation in the growth and e. Prepare reports on issues and concerns regarding Program
development of young children, as well as involvement in the implementation and submit to the Regional Advisory
community.6 Committee, and
This government intervention scheme, also conveniently f. Hold monthly committee meetings11
referred to as CCTP, "provides cash grant to extreme poor
households to allow the members of the families to meet A Memorandum of Agreement (MOA)12 executed by the DSWD
certain human development goals."7 with each participating LGU outlines in detail the obligation of
both parties during the intended five-year implementation of
Eligible households that are selected from priority target areas the CCTP.
consisting of the poorest provinces classified by the National
Statistical Coordination Board (NCSB)8 are granted a health
36
Congress, for its part, sought to ensure the success of the CCTP salaries, powers and functions and duties of local officials, and
by providing it with funding under the GAA of 2008 in the all other matters relating to the organization and operation of
amount of Two Hundred Ninety-Eight Million Five Hundred Fifty the local units.
Thousand Pesos (P298,550,000.00). This budget allocation
increased tremendously to P5 Billion Pesos in 2009, with the xxx
amount doubling to P10 Billion Pesos in 2010. But the biggest
allotment given to the CCTP was in the GAA of 2011 at Twenty Section 14. The President shall provide for regional
One Billion One Hundred Ninety-Four Million One Hundred development councils or other similar bodies composed of local
Seventeen Thousand Pesos (P21,194,117,000.00).13 1âwphi1 government officials, regional heads of departments and other
government offices, and representatives from non-
Petitioner Aquilino Pimentel, Jr., a former Senator, joined by governmental organizations within the regions for purposes of
Sergio Tadeo, incumbent President of the Association of administrative decentralization to strengthen the autonomy of
Barangay Captains of Cabanatuan City, Nueva Ecija, and Nelson the units therein and to accelerate the economic and social
Alcantara, incumbent Barangay Captain of Barangay Sta. growth and development of the units in the region.
Monica, Quezon City, challenges before the Court the (Underscoring supplied)
disbursement of public funds and the implementation of the
CCTP which are alleged to have encroached into the local In order to fully secure to the LGUs the genuine and meaningful
autonomy of the LGUs. autonomy that would develop them into self-reliant
communities and effective partners in the attainment of
The Issue national goals,16 Section 17 of the Local Government Code
vested upon the LGUs the duties and functions pertaining to
THE P21 BILLION CCTP BUDGET ALLOCATION UNDER THE DSWD the delivery of basic services and facilities, as follows:
IN THE GAA FY 2011 VIOLATES ART. II, SEC. 25 & ART. X, SEC. 3
OF THE 1987 CONSTITUTION IN RELATION TO SEC. 17 OF THE SECTION 17. Basic Services and Facilities. –
LOCAL GOVERNMENT CODE OF 1991 BY PROVIDING FOR THE
RECENTRALIZATION OF THE NATIONAL GOVERNMENT IN THE (a) Local government units shall endeavor to be self-reliant and
DELIVERY OF BASIC SERVICES ALREADY DEVOLVED TO THE shall continue exercising the powers and discharging the duties
LGUS. and functions currently vested upon them. They shall also
discharge the functions and responsibilities of national agencies
Petitioners admit that the wisdom of adopting the CCTP as a and offices devolved to them pursuant to this Code. Local
poverty reduction strategy for the Philippines is with the government units shall likewise exercise such other powers and
legislature. They take exception, however, to the manner by discharge such other functions and responsibilities as are
which it is being implemented, that is, primarily through a necessary, appropriate, or incidental to efficient and effective
national agency like DSWD instead of the LGUs to which the provision of the basic services and facilities enumerated herein.
responsibility and functions of delivering social welfare,
agriculture and health care services have been devolved (b) Such basic services and facilities include, but are not limited
pursuant to Section 17 of Republic Act No. 7160, also known as to, x x x.
the Local Government Code of 1991, in relation to Section 25,
Article II & Section 3, Article X of the 1987 Constitution. While the aforementioned provision charges the LGUs to take
on the functions and responsibilities that have already been
Petitioners assert that giving the DSWD full control over the devolved upon them from the national agencies on the aspect
identification of beneficiaries and the manner by which services of providing for basic services and facilities in their respective
are to be delivered or conditionalities are to be complied with, jurisdictions, paragraph (c) of the same provision provides a
instead of allocating the P21 Billion CCTP Budget directly to the categorical exception of cases involving nationally-funded
LGUs that would have enhanced its delivery of basic services, projects, facilities, programs and services, thus:
results in the "recentralization" of basic government functions,
which is contrary to the precepts of local autonomy and the (c) Notwithstanding the provisions of subsection (b) hereof,
avowed policy of decentralization. public works and infrastructure projects and other facilities,
programs and services funded by the National Government
Our Ruling under the annual General Appropriations Act, other special
laws, pertinent executive orders, and those wholly or partially
The Constitution declares it a policy of the State to ensure the funded from foreign sources, are not covered under this
autonomy of local governments14 and even devotes a full Section, except in those cases where the local government unit
article on the subject of local governance15 which includes the concerned is duly designated as the implementing agency for
following pertinent provisions: such projects, facilities, programs and services. (Underscoring
supplied)
Section 3. The Congress shall enact a local government code
which shall provide for a more responsive and accountable local The essence of this express reservation of power by the
government structure instituted through a system of national government is that, unless an LGU is particularly
decentralization with effective mechanisms of recall, initiative, designated as the implementing agency, it has no power over a
and referendum, allocate among the different local government program for which funding has been provided by the national
units their powers, responsibilities, and resources, and provide government under the annual general appropriations act, even
for the qualifications, election, appointment and removal, term,
37
if the program involves the delivery of basic services within the decentralization of power amounts to ‘self-immolation,’ since
jurisdiction of the LGU. in that event, the autonomous government becomes
accountable not to the central authorities but to its
The Court held in Ganzon v. Court of Appeals17 that while it is constituency.22
through a system of decentralization that the State shall
promote a more responsive and accountable local government Indeed, a complete relinquishment of central government
structure, the concept of local autonomy does not imply the powers on the matter of providing basic facilities and services
conversion of local government units into "mini-states."18 We cannot be implied as the Local Government Code itself weighs
explained that, with local autonomy, the Constitution did against it. The national government is, thus, not precluded from
nothing more than "to break up the monopoly of the national taking a direct hand in the formulation and implementation of
government over the affairs of the local government" and, thus, national development programs especially where it is
did not intend to sever "the relation of partnership and implemented locally in coordination with the LGUs concerned.
interdependence between the central administration and local
government units."19 In Pimentel v. Aguirre,20 the Court Every law has in its favor the presumption of constitutionality,
defined the extent of the local government's autonomy in and to justify its nullification, there must be a clear and
terms of its partnership with the national government in the unequivocal breach of the Constitution, not a doubtful and
pursuit of common national goals, referring to such key argumentative one.23 Petitioners have failed to discharge the
concepts as integration and coordination. Thus: burden of proving the invalidity of the provisions under the
GAA of 2011. The allocation of a P21 billion budget for an
Under the Philippine concept of local autonomy, the national intervention program formulated by the national government
government has not completely relinquished all its powers over itself but implemented in partnership with the local
local governments, including autonomous regions. Only government units to achieve the common national goal
administrative powers over local affairs are delegated to development and social progress can by no means be an
political subdivisions. The purpose of the delegation is to make encroachment upon the autonomy of local governments.
governance more directly responsive and effective at the local
levels. In turn, economic, political and social development at WHEREFORE, premises considered, the petition is hereby
the smaller political units are expected to propel social and DISMISSED.
economic growth and development. But to enable the country
to develop as a whole, the programs and policies effected 17. HARRY L. GO, TONNY NGO, JERRY NGO AND JANE GO,
locally must be integrated and coordinated towards a common Petitioners, vs.THE PEOPLE OF THE PHILIPPINES and
national goal. Thus, policy-setting for the entire country still lies HIGHDONE COMPANY, LTD., ET AL., Respondents.
in the President and Congress.
The procedure for taking depositions in criminal cases
Certainly, to yield unreserved power of governance to the local recognizes the prosecution's right to preserve testimonial
government unit as to preclude any and all involvement by the evidence and prove its case despite the unavailability of its
national government in programs implemented in the local witness. It cannot, however, give license to prosecutorial
level would be to shift the tide of monopolistic power to the indifference or unseemly involvement in a prosecution witness'
other extreme, which would amount to a decentralization of absence from trial. To rule otherwise would effectively deprive
power explicated in Limbona v. Mangelin21 as beyond our the accused of his fundamental right to be confronted with the
constitutional concept of autonomy, thus: witnesses against him.
Now, autonomy is either decentralization of administration or In this Petition for Review on Certiorari under Rule 45 of the
decentralization of power.1âwphi1 There is decentralization of Revised Rules of Court, petitioners seek to nullify and set aside
administration when the central government delegates the February 19, 2008 Decision1 and November 28, 2008
administrative powers to political subdivisions in order to Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
broaden the base of government power and in the process to 99383, which reversed the September 12, 2006 Order3 issued
make local governments ‘more responsive and accountable’ by the Regional Trial Court (RTC) of Manila, Branch 27 in Civil
and ‘ensure their fullest development as self-reliant Case No. 06-114844 and upheld the grant of the prosecution’s
communities and make them more effective partners in the motion to take the testimony of a witness by oral depositions in
pursuit of national development and social progress.’ At the Laos, Cambodia.
same time, it relieves the central government of the burden of
managing local affairs and enables it to concentrate on national Petitioners Harry Go, Tonny Ngo, Jerry Ngo and Jane Go were
concerns. The President exercises ‘general supervision’ over charged before the Metropolitan Trial Court (MeTC) of Manila
them, but only to ‘ensure that local affairs are administered for Other Deceits under Article 318 of the Revised Penal Code
according to law.’ He has no control over their acts in the sense (RPC) docketed as Criminal Case No. 396447. The Information4
that he can substitute their judgments with his own. dated September 24, 2003, later amended5 on September 14,
2004, reads:
Decentralization of power, on the other hand, involves an
abdication of political power in the [sic] favor of local "That sometime in August 1996, in the City of Manila,
governments [sic] units declared to be autonomous. In that Philippines, the said accused, conspiring, confederating
case, the autonomous government is free to chart its own together and helping one another, did then and there willfully,
destiny and shape its future with minimum intervention from unlawfully and feloniously defraud Highdone Company Ltd.
central authorities. According to a constitutional author, Represented by Li Luen Ping, in the following manner, to wit: all
38
said accused, by means of false manifestations and fraudulent On November 28, 2008, the CA denied petitioners' motion for
representations which they made to said Li Luen Ping to the reconsideration. Hence, this petition alleging that –
effect that they have chattels such as machinery, spare parts,
equipment and raw materials installed and fixed in the I.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
premises of BGB Industrial Textile Mills Factory located in the METROPOLITAN TRIAL COURT INFRINGED THE
Bataan Export Processing Zone (BEPZ) in Mariveles, Bataan, CONSTITUTIONAL RIGHT OF THE PETITIONERS TO A PUBLIC
executed a Deed of Mortgage for a consideration of the amount TRIAL IN ALLOWING THE TAKING OF THE DEPOSITION OF THE
of $464,266.90 or its peso equivalent at P20,892,010.50 more COMPLAINING WITNESS IN LAOS, CAMBODIA.
or less in favor of ML Resources and Highdone Company Ltd.
Representing that the said deed is a FIRST MORTGAGE when in II.THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
truth and in fact the accused well knew that the same had been DEPOSITION TAKING OF THE COMPLAINING WITNESS IN LAOS,
previously encumbered, mortgaged and foreclosed by CHINA CAMBODIA IS AN INFRINGEMENT OF THE CONSTITUTIONAL
BANK CORPORATION as early as September 1994 thereby RIGHT OF THE PETITIONERS TO CONFRONT THE SAID WITNESS
causing damage and prejudice to said HIGHDONE COMPANY FACE TO FACE.
LTD., in the said amount of $464,266.90 or its peso equivalent
at P20,892,010.50 more or less." III.THE COURT OF APPEALS ERRED IN SUSTAINING THE JUDICIAL
LEGISLATION COMMITTED BY THE METROPOLITAN TRIAL
Upon arraignment, petitioners pleaded not guilty to the charge. COURT IN APPLYING THE RULES ON DEPOSITION-TAKING IN
CIVIL CASES TO CRIMINAL CASES.
The prosecution's complaining witness, Li Luen Ping, a frail old
businessman from Laos, Cambodia, traveled from his home IV.THE COURT OF APPEALS ERRED IN LIMITING THE
country back to the Philippines in order to attend the hearing TRADITIONAL DEFINITION OF GRAVE ABUSE OF DISCRETION,
held on September 9, 2004. However, trial dates were OVERLOOKING THE ESTABLISHED RULE THAT VIOLATION OF
subsequently postponed due to his unavailability. THE CONSTITUTION, THE LAW OR JURISPRUDENCE SIMILARLY
COMES WITHIN THE PURVIEW OF GRAVE ABUSE OF
On October 13, 2005, the private prosecutor filed with the DISCRETION.
MeTC a Motion to Take Oral Deposition6 of Li Luen Ping,
alleging that he was being treated for lung infection at the We rule in favor of petitioners.
Cambodia Charity Hospital in Laos, Cambodia and that, upon
doctor's advice, he could not make the long travel to the The Procedure for Testimonial Examination of an Unavailable
Philippines by reason of ill health. Prosecution Witness is Covered Under Section 15, Rule 119.
Notwithstanding petitioners' Opposition,7 the MeTC granted8 The examination of witnesses must be done orally before a
the motion after the prosecution complied with the directive to judge in open court.13 This is true especially in criminal cases
submit a Medical Certificate of Li Luen Ping. Petitioners sought where the Constitution secures to the accused his right to a
its reconsideration which the MeTC denied,9 prompting public trial and to meet the witnessess against him face to face.
petitioners to file a Petition for Certiorari10 before the RTC. The requirement is the "safest and most satisfactory method of
investigating facts" as it enables the judge to test the witness'
On September 12, 2006, the RTC granted the petition and credibility through his manner and deportment while
declared the MeTC Orders null and void.11 The RTC held that testifying.14 It is not without exceptions, however, as the Rules
Section 17, Rule 23 on the taking of depositions of witnesses in of Court recognizes the conditional examination of witnesses
civil cases cannot apply suppletorily to the case since there is a and the use of their depositions as testimonial evidence in lieu
specific provision in the Rules of Court with respect to the of direct court testimony.
taking of depositions of prosecution witnesses in criminal cases,
which is primarily intended to safeguard the constitutional Even in criminal proceedings, there is no doubt as to the
rights of the accused to meet the witness against him face to availability of conditional examination of witnesses – both for
face. the benefit of the defense, as well as the prosecution. The
Court's ruling in the case of Vda. de Manguerra v. Risos15
Upon denial by the RTC of their motion for reconsideration explicitly states that –
through an Order dated March 5, 2006,12 the prosecution
elevated the case to the CA. "x x x As exceptions, Rule 23 to 28 of the Rules of Court provide
for the different modes of discovery that may be resorted to by
On February 19, 2008, the CA promulgated the assailed a party to an action. These rules are adopted either to
Decision which held that no grave abuse of discretion can be perpetuate the testimonies of witnesses or as modes of
imputed upon the MeTC for allowing the deposition-taking of discovery. In criminal proceedings, Sections 12, 13 and 15, Rule
the complaining witness Li Luen Ping because no rule of 119 of the Revised Rules of Criminal Procedure, which took
procedure expressly disallows the taking of depositions in effect on December 1, 2000, allow the conditional examination
criminal cases and that, in any case, petitioners would still have of both the defense and prosecution witnesses." (Underscoring
every opportunity to cross-examine the complaining witness supplied)16
and make timely objections during the taking of the oral
deposition either through counsel or through the consular The procedure under Rule 23 to 28 of the Rules of Court allows
officer who would be taking the deposition of the witness. the taking of depositions in civil cases, either upon oral
examination or written interrogatories, before any judge,
39
notary public or person authorized to administer oaths at any protection of the accused's constitutional rights. The giving of
time or place within the Philippines; or before any testimony during trial is the general rule. The conditional
examination of a witness outside of the trial is only an
Philippine consular official, commissioned officer or person exception, and as such, calls for a strict construction of the
authorized to administer oaths in a foreign state or country, rules.20 (Underscoring supplied)
with no additional requirement except reasonable notice in
writing to the other party.17 It is argued that since the Rules of Civil Procedure is made
explicitly applicable in all cases, both civil and criminal as well as
But for purposes of taking the deposition in criminal cases, special proceedings, the deposition-taking before a Philippine
more particularly of a prosecution witness who would consular official under Rule 23 should be deemed allowable
forseeably be unavailable for trial, the testimonial examination also under the circumstances.
should be made before the court, or at least before the judge,
where the case is pending as required by the clear mandate of However, the suggested suppletory application of Rule 23 in the
Section 15, Rule 119 of the Revised Rules of Criminal Procedure. testimonial examination of an unavailable prosecution witness
The pertinent provision reads thus: has been categorically ruled out by the Court in the same case
of Vda. de Manguerra, as follows:
SEC. 15. Examination of witness for the prosecution. – When it
satisfactorily appears that a witness for the prosecution is too It is true that Section 3, Rule 1 of the Rules of Court provides
sick or infirm to appear at the trial as directed by the court, or that the rules of civil procedure apply to all actions, civil or
has to leave the Philippines with no definite date of returning, criminal, and special proceedings. In effect, it says that the rules
he may forthwith be conditionally examined before the court of civil procedure have suppletory application to criminal cases.
where the case is pending. Such examination, in the presence However, it is likewise true that criminal proceedings are
of the accused, or in his absence after reasonable notice to primarily governed by the Revised Rules of Criminal Procedure.
attend the examination has been served on him shall be
conducted in the same manner as an examination at the trial. Considering that Rule 119 adequately and squarely covers the
Failure or refusal of the accused to attend the examination situation in the instant case, we find no cogent reason to apply
after notice shall be considered a waiver. The statement taken Rule 23 suppletorily or otherwise." (Underscoring supplied)
may be admitted in behalf of or against the accused.
The Conditional Examination of a Prosecution Witness Cannot
Since the conditional examination of a prosecution witness Defeat the Rights of the Accused to Public Trial and
must take place at no other place than the court where the Confrontation of Witnesses
case is pending, the RTC properly nullified the MeTC's orders
granting the motion to take the deposition of Li Luen Ping The CA took a simplistic view on the use of depositions in
before the Philippine consular official in Laos, Cambodia. We criminal cases and overlooked fundamental considerations no
quote with approval the RTC's ratiocination in this wise: less than the Constitution secures to the accused, i.e., the right
to a public trial and the right to confrontation of witnesses.
The condition of the private complainant being sick and of Section 14(2), Article III of the
advanced age falls within the provision of Section 15 Rule 119
of the Rules of Court. However, said rule substantially provides Constitution provides as follows:
that he should be conditionally examined before the court
where the case is pending. Thus, this Court concludes that the Section 14. (1) x x x
language of Section 15 Rule 119 must be interpreted to require
the parties to present testimony at the hearing through live (2) In all criminal prosecutions, the accused shall be presumed
witnesses, whose demeanor and credibility can be evaluated by innocent until the contrary is proved, and shall enjoy the right
the judge presiding at the hearing, rather than by means of to be heard by himself and counsel, to be informed of the
deposition. No where in the said rule permits the taking of nature and cause of the accusation against him, to have a
deposition outside the Philippines whether the deponent is sick speedy, impartial and public trial, to meet the witnesses face to
or not.18 (Underscoring supplied) face, and to have compulsory process to secure the attendance
of witnesses and the production of evidence in his behalf.
Certainly, to take the deposition of the prosecution witness However, after arraignment, trial may proceed notwithstanding
elsewhere and not before the very same court where the case the absence of the accused provided that he has been duly
is pending would not only deprive a detained accused of his notified and his failure to appear is unjustifiable. (Underscoring
right to attend the proceedings but also deprive the trial judge supplied)
of the opportunity to observe the prosecution witness'
deportment and properly assess his credibility, which is In dismissing petitioners' apprehensions concerning the
especially intolerable when the witness' testimony is crucial to deprivation of their constitutional rights to a public trial and
the prosecution's case against the accused. This is the import of confrontation, the CA opined that petitioners would still be
the Court's ruling in Vda. de Manguerra19 where we further accorded the right to cross-examine the deponent witness and
declared that – raise their objections during the deposition-taking in the same
manner as in a regular court trial.
While we recognize the prosecution's right to preserve the
testimony of its witness in order to prove its case, we cannot We disagree. There is a great deal of difference between the
disregard the rules which are designed mainly for the face-to- face confrontation in a public criminal trial in the
40
presence of the presiding judge and the cross-examination of a guarantee. It commands, not that evidence be reliable, but that
witness in a foreign place outside the courtroom in the absence reliability be assessed in a particular manner: by testing in the
of a trial judge. In the aptly cited case of People v. Estenzo,21 crucible of cross-examination. The Clause thus reflects a
the Court noted the uniqueness and significance of a witness judgment, not only about the desirability of reliable evidence (a
testifying in open court, thus: point on which there could be little dissent), but about how
reliability can best be determined." (Underscoring supplied)
"The main and essential purpose of requiring a witness to
appear and testify orally at a trial is to secure for the adverse The Webb Ruling is Not on All Fours with the Instant Case
party the opportunity of cross-examination. "The opponent",
according to an eminent authority, "demands confrontation, The CA found the frail and infirm condition of the prosecution
not for the idle purpose of gazing upon the witness, or of being witness as sufficient and compelling reason to uphold the MeTC
gazed upon by him, but for the purpose of cross examination Orders granting the deposition-taking, following the ruling in
which cannot be had except by the direct and personal putting the case of People v. Webb28 that the taking of an unavailable
of questions and obtaining immediate answers." There is also witness' deposition is in the nature of a discovery procedure
the advantage of the witness before the judge, and it is this – it the use of which is within the trial court's sound discretion
enables the judge as trier of facts "to obtain the elusive and which needs only to be exercised in a reasonable manner and in
incommunicable evidence of a witness' deportment while consonance with the spirit of the law.29
testifying, and a certain subjective moral effect is produced
upon the witness. It is only when the witness testifies orally But the ruling in the cited case is not instantly applicable herein
that the judge may have a true idea of his countenance, as the factual settings are not similar.1âwphi1 The accused in
manner and expression, which may confirm or detract from the the Webb case had sought to take the oral deposition of five
weight of his testimony. Certainly, the physical condition of the defense witnesses before a Philippine consular agent in lieu of
witness will reveal his capacity for accurate observation and presenting them as live witnesses, alleging that they were all
memory, and his deportment and physiognomy will reveal clues residents of the United States who could not be compelled by
to his character. These can only be observed by the judge if the subpoena to testify in court. The trial court denied the motion
witness testifies orally in court. x x x"22 (Underscoring of the accused but the CA differed and ordered the deposition
supplied)1âwphi1 taken. When the matter was raised before this Court, we
sustained the trial court's disallowance of the deposition-taking
The right of confrontation, on the other hand, is held to apply on the limited ground that there was no necessity for the
specifically to criminal proceedings and to have a twofold procedure as the matter sought to be proved by way of
purpose: (1) to afford the accused an opportunity to test the deposition was considered merely corroborative of the
testimony of witnesses by cross-examination, and (2) to allow evidence for the defense.30
the judge to observe the deportment of witnesses.23 The Court
explained in People v. Seneris24 that the constitutional In this case, where it is the prosecution that seeks to depose
requirement "insures that the witness will give his testimony the complaining witness against the accused, the stringent
under oath, thus deterring lying by the threat of perjury charge; procedure under Section 15, Rule 119 cannot be ignored
it forces the witness to submit to cross-examination, a valuable without violating the constitutional rights of the accused to due
instrument in exposing falsehood and bringing out the truth; process.
and it enables the court to observe the demeanor of the
witness and assess his credibility."25 Finally, the Court takes note that prosecution witness Li Luen
Ping had managed to attend the initial trial proceedings before
As the right of confrontation is intended "to secure the accused the MeTC of Manila on September 9, 2004. At that time, Li Luen
in the right to be tried as far as facts provable by witnesses as Ping's old age and fragile constitution should have been
meet him face to face at the trial who give their testimony in his unmistakably apparent and yet the prosecution failed to act
presence, and give to the accused an opportunity of cross- with zeal and foresight in having his deposition or testimony
examination,"26 it is properly viewed as a guarantee against taken before the MeTC pursuant to Section 15, Rule 119 of the
the use of unreliable testimony in criminal trials. In the Revised Rules of Court. In fact, it should have been imperative
American case of Crawford v. Washington,27 the US Supreme for the prosecution to have moved for the preservation of Li
Court had expounded on the procedural intent of the Luen Ping's testimony at that first instance given the fact that
confrontation requirement, thus: the witness is a non-resident alien who can leave the
Philippines anytime without any definite date of return.
Where testimonial statements are involved, we do not think Obviously, the prosecution allowed its main witness to leave
the Framers meant to leave the Sixth Amendment's right to the court's jurisdiction without availing of the court procedure
confront witness face to face protection to the vagaries of the intended to preserve the testimony of such witness. The loss of
rules of evidence, much less to amorphous notions of its cause is attributable to no other party.
"reliability". Certainly, none of the authorities discussed above
acknowledges any general reliability exception to the common- Still, even after failing to secure Li Luen Ping's conditional
law rule. examination before the MeTC prior to said witness' becoming
sick and unavailable, the prosecution would capitalize upon its
Admitting statements deemed reliable by a judge is own failure by pleading for a liberal application of the rules on
fundamentally at odds with the right of confrontation. To be depositions. It must be emphasized that while the prosecution
sure, the Clause's ultimate goal is to ensure reliability of must provide the accused every opportunity to take the
evidence, but it is a procedural rather than a substantive deposition of witnesses that are material to his defense in order
41
to avoid charges of violating the right of the accused to (30) years. Jeremias also claimed that when Paulina Lusterio
compulsory process, the State itself must resort to deposition- (Paulina), petitioners' predecessor-in-interest, surreptitiously
taking sparingly if it is to guard against accusations of violating had the property registered in her name under a free patent,
the right of the accused to meet the witnesses against him face the Community Environment and Natural Resources Office
to face. Great care must be observed in the taking and use of (CENRO) conducted an investigation, upon Jeremias' protest,
depositions of prosecution witnesses to the end that no and found that it was the latter who was in actual occupation
conviction of an accused will rely on ex parte affidavits and and possession of the property. The CENRO thus recommended
deposition.31 that the title issued in Paulina's name be revoked in order for
the property to be reverted back to the state. To further
Thus, the CA ignored the procedure under the Revised Rules of support his defense of acquisitive prescription, Jeremias
Criminal Procedure for taking the deposition of an unavailable claimed that his house and other permanent
prosecution witness when it upheld the trial court's order improvementsarestill existing on the property.
allowing the deposition of prosecution witness Li Luen Ping to
take place in a venue other than the court where the case is The MCTC Ruling
pending. This was certainly grave abuse of discretion.
Upon motion of petitioners, the MCTC rendered a Summary
WHEREFORE, the petition is hereby GRANTED. The assailed Judgment upon a finding that no genuine issue of fact had been
Decision dated February 19, 2008 and the Resolution dated tendered by the answer. Holding that petitioners' claim to the
November 28, 2008 of the Court of Appeals are REVERSED and disputed property was founded on TCT No. 72780 issued in
SET ASIDE. Accordingly, the Decision of the Regional Trial Court their names, which is indefeasible and cannot be attacked
which disallowed the deposition-taking in Laos, Cambodia is collaterally, the MCTC directed Jeremias and all persons
REINSTATED. claiming rights under him (1) to surrender the possession of the
property to petitioners and (2) to pay actual damages in the
18. SPOUSES ROLANDO D. SOLLER and NENITE T. SOLLER, amount of P3,000.00 per month from February 1996 until
Petitioners, vs.HEIRS OF JEREMIAS ULAYAO, namely, NELSON actual turnover of the possession of the property, as well as
ULAYAO, FERELYN ULAYAO-DEL MUNDO, EDJUNNE ULAYAO, moral damages and attorney's fees, each in the amount of
WILMA ULAYAO, LAILA ULAYAO, ANALYN ULAYAO, and P10,000.00.
LILIBETH ULAYAO, Respondents.
The RTC Ruling
This Petition for Review on Certiorari assails the August 18,
2006 Decision1 and November 21, 2006 Resolution2 of the During the pendency of the case7 before the MCTC, Jeremias
Court of Appeals (CA) in CA-G.R. SP No. 92478 which vacated died and was consequently substituted by his heirs, herein
and set aside the November 9, 2005 Decision3 of the Regional respondents, who appealed the Summary Judgment before the
Trial Court (RTC) of Pinamalayan, Oriental Mindoro, Branch XLII, RTC.
which, in turn, affirmed with modification the July 1, 2005
Summary Judgment4 rendered by the Municipal Circuit Trial While the RTC affirmed the findings of the MCTC, it however
Court (MCTC) of Bansud-Gloria, Oriental Mindoro. deleted the award of damages, ruling that the "environmental
milieu does not justify such recovery x xx"8 and that there was
The Factual Antecedents no showing of gross and evident bad faith on the part of
respondents.
Petitioners-spouses Rolando and NenitaSoller are allegedly the
registered owners of a parcel of land situated in Poblacion, The CA Ruling
Bansud, Oriental Mindoro with an area of 564 square meters,
more or less, covered by Transfer Certificate of Title (TCT) No. On appeal before it, the CA found merit in respondents'
72780 of the Register of Deeds of Oriental Mindoro. Petitioners petition and vacated the summary judgments rendered by the
and their predecessors-in-interest were purportedly in open, RTC and MCTC on the ground that the defenses raised by
peaceful, and continuous possession of the property in the respondents' predecessor-in-interest, Jeremias, are
concept of owner since time immemorial. substantially factual as to necessitate a full-blown trial on the
merits. The CA held that, having raised the defense of
However, in February 1996, the original defendant, now- acquisitive prescription in Jeremias' answer, he ought to have
deceased JeremiasUlayao (Jeremias), and all persons claiming been duly heard on such defense in the course of a trial.
rights under him, allegedly by means of force, violence, stealth Consequently, the rendition of a summary judgment in this case
and intimidation, entered into the possession of the land and, was improper. The CA, thus, ordered the remand of the case to
despite repeated demands to desist, constructed a house on the MCTC of Bansud-Gloria for the conduct of a full-blown trial.
the property. This prompted petitioners to bring the matter
before the barangay, but conciliation failed. Thus, petitioners Issue Before The Court
instituted a complaint5 for recovery of possession with
damages before the MCTC of Bansud, Oriental Mindoro. The basic issue advanced for resolution in this case is the
propriety of rendering a summary judgment.
In Jeremias' Answer,6 he denied petitioners' allegations and
raised the special and affirmative defense of acquisitive The Court's Ruling
prescription, as he had purportedly been in long, continuous
and adverse possession of the property for more than thirty
42
Summary judgments are proper when, upon motion of the Secretary of Finance, and as an ex-officio member of the
plaintiff or the defendant, the court finds that the answer filed Monetary Board, Respondents.
by the defendant does not tender a genuine issue as to any
material fact and that one party is entitled to a judgment as a This is a Petition for Certiorari and Prohibition with a prayer for
matter of law.9 In Viajar v. Estenzo,10 the Court explained: the issuance of a temporary restraining order, seeking to
declare as unconstitutional Executive Order No. 13, entitled,
Relief by summary judgment is intended to expedite or "Abolishing the Presidential Anti-Graft Commission and
promptly dispose of cases where the facts appear undisputed Transferring Its Investigative, Adjudicatory and
and certain from the pleadings, depositions, admissions and Recommendatory Functions to the Office Of The Deputy
affidavits. But if there be a doubt as to such facts and there be Executive Secretary For Legal Affairs, Office of the President",1
an issue or issues of fact joined by the parties, neither one of and to permanently prohibit respondents from administratively
them can pray for a summary judgment. Where the facts proceeding against petitioner on the strength of the assailed
pleaded by the parties are disputed or contested, proceedings executive order.
for a summary judgment cannot take the place of a trial.
The Facts
x xx Relief by summary judgment can only be allowed after
compliance with the minimum requirement of vigilance by the On April 16, 2001, then President Gloria Macapagal-Arroyo
court in a summary hearing considering that this remedy is in issued Executive Order No. 12 (E.O. 12) creating the
derogation of a party's right to a plenary trial of his case. At any Presidential Anti-Graft Commission (PAGC) and vesting it with
rate, a party who moves for summary judgment has the burden the power to investigate or hear administrative cases or
of demonstrating clearly the absence of any genuine issue of complaints for possible graft and corruption, among others,
fact, or that the issue posed in the complaint is so patently against presidential appointees and to submit its report and
unsubstantial as not to constitute a genuine issue for trial, and recommendations to the President. Pertinent portions of E.O.
any doubt as to the existence of such an issue is resolved 12 provide:
against the movant.1âwphi1
Section 4. Jurisdiction, Powers and Functions. –
In this case, records show that the original defendant, Jeremias,
raised the special and affirmative defense of acquisitive (a) x x x xxx xxx
prescription in his answer, claiming that he was in open,
continuous and notorious possession or the disputed property (b) The Commission, acting as a collegial body, shall have the
as, in fact, his house and other permanent improvements are authority to investigate or hear administrative cases or
still existing thereon. As succinctly explained by the CA in its complaints against all presidential appointees in the
assailed Decision, the defense of acquisitive prescription government and any of its agencies or instrumentalities xxx
inevitably involves the issue of actual, physical and material
possession, which is always a question of fact.11 The existence xxx xxx xxx
of this issue therefore necessitates, for its proper resolution,
the presentation of competent and relevant evidence, which xxx xxx xxx
can only be done in the course of a full-blown trial.
Section 8. Submission of Report and Recommendations. – After
As aptly observed in the case of Calubaquib, et al. v. completing its investigation or hearing, the Commission en
Republic,12 where the disputed property was actually covered banc shall submit its report and recommendations to the
by an original certificate of title (OCT) in the name of the President. The report and recommendations shall state, among
respondent: others, the factual findings and legal conclusions, as well as the
penalty recommend (sic) to be imposed or such other action
More importantly. by proceeding to rule against petitioners that may be taken."
without any trial, the trial and appellate courts made a
conclusion which was based merely on an assumption that On November 15, 2010, President Benigno Simeon Aquino III
petitioners' defense of acquisitive prescription was a sham, and issued Executive Order No. 13 (E.O. 13), abolishing the PAGC
that the ultimate facts pleaded in their Answer (e.g., open and and transferring its functions to the Office of the Deputy
continuous possession of the property since the early 1900s) Executive Secretary for Legal Affairs (ODESLA), more
cannot be proven at all. This assumption is baseless as it is particularly to its newly-established Investigative and
premature and unfair. Adjudicatory Division (IAD). The full text of the assailed
executive order reads:
xxx
EXECUTIVE ORDER NO. 13
WHEREFORE, the assailed Decision and Resolution of the Court
of Appeals are hereby AFFIRMED. ABOLISHING THE PRESIDENTIAL ANTI-GRAFT COMMISSION AND
TRANSFERRING ITS INVESTIGATIVE, ADJUDICATORY AND
19. PROSPERO A. PICHAY, JR., Petitioner, vs.OFFICE OF THE RECOMMENDATORY FUNCTIONS TO THE OFFICE OF THE
DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS, OFFICE OF
INVESTIGATIVE AND ADJUDICATORY DIVISION, HON. THE PRESIDENT
PAQUITO N. OCHOA, JR., in his capacity as Executive
Secretary, and HON. CESAR V. PURISIMA, in his capacity as
43
WHEREAS, this administration has a continuing mandate and Legislative Divisions of the ODESLA, the Investigative and
advocacy to fight and eradicate corruption in the different Adjudicatory Division shall be created.
departments, bureaus, offices and other government agencies
and instrumentalities; The newly created Investigative and Adjudicatory Division shall
perform powers, functions and duties mentioned in Section 2
WHEREAS, the government adopted a policy of streamlining the hereof, of PAGC.
government bureaucracy to promote economy and efficiency in
government; The Deputy Executive Secretary for Legal Affairs (DESLA) will be
the recommending authority to the President, thru the
WHEREAS, Section VII of the 1987 Philippine Constitution Executive Secretary, for approval, adoption or modification of
provides that the President shall have control of all the the report and recommendations of the Investigative and
executive departments, bureaus and offices; Adjudicatory Division of ODESLA.
WHEREAS, Section 31 Chapter 10, Title III, Book III of Executive SECTION 4. Personnel Who May Be Affected By the Abolition of
Order 292 (Administrative Code of 1987) provides for the PAGC. The personnel who may be affected by the abolition of
continuing authority of the President to reorganize the the PAGC shall be allowed to avail of the benefits provided
administrative structure of the Office of the President; under existing laws if applicable. The Department of Budget
and Management (DBM) is hereby ordered to release the
WHEREAS, Presidential Decree (PD) No. 1416 (Granting necessary funds for the benefits of the employees.
Continuing Authority to the President of the Philippines to
Reorganize the National Government), as amended by PD 1722, SECTION 5. Winding Up of the Operation and Disposition of the
provides that the President of the Philippines shall have Functions, Positions, Personnel, Assets and Liabilities of PAGC.
continuing authority to reorganize the administrative structure The winding up of the operations of PAGC including the final
of the National Government and may, at his discretion, create, disposition or transfer of their functions, positions, personnel,
abolish, group, consolidate, merge or integrate entities, assets and liabilities as may be necessary, shall be in
agencies, instrumentalities and units of the National accordance with the applicable provision(s) of the Rules and
Government, as well as, expand, amend, change or otherwise Regulations Implementing EO 72 (Rationalizing the Agencies
modify their powers, functions and authorities; Under or Attached to the Office of the President) dated March
15, 2002. The winding up shall be implemented not later than
WHEREAS, Section 78 of the General Provisions of Republic Act 31 December 2010.
No. 9970 (General Appropriations Act of 2010) authorizes the
President of the Philippines to direct changes in the The Office of the Executive Secretary, with the assistance of the
organizational units or key positions in any department or Department of Budget and Management, shall ensure the
agency; smooth and efficient implementation of the dispositive actions
and winding-up of the activities of PAGC.
NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the
Philippines, by virtue of the powers vested in me by law, do SECTION 6. Repealing Clause. All executive orders, rules,
hereby order the following: regulations and other issuances or parts thereof, which are
inconsistent with the provisions of this Executive Order, are
SECTION 1. Declaration of Policy. It is the policy of the hereby revoked or modified accordingly.
government to fight and eradicate graft and corruption in the
different departments, bureaus, offices and other government SECTION 7. Effectivity. This Executive Order shall take effect
agencies and instrumentalities. immediately after its publication in a newspaper of general
circulation.
The government adopted a policy of streamlining the
government bureaucracy to promote economy and efficiency in On April 6, 2011, respondent Finance Secretary Cesar V.
the government. Purisima filed before the IAD-ODESLA a complaint affidavit2 for
grave misconduct against petitioner Prospero A. Pichay, Jr.,
SECTION 2. Abolition of Presidential Anti-Graft Commission Chairman of the Board of Trustees of the Local Water Utilities
(PAGC). To enable the Office of the President (OP) to directly Administration (LWUA), as well as the incumbent members of
investigate graft and corrupt cases of Presidential appointees in the LWUA Board of Trustees, namely, Renato Velasco, Susana
the Executive Department including heads of government- Dumlao Vargas, Bonifacio Mario M. Pena, Sr. and Daniel
owned and controlled corporations, the Landingin, which arose from the purchase by the LWUA of Four
Hundred Forty-Five Thousand Three Hundred Seventy Seven
Presidential Anti-Graft Commission (PAGC) is hereby abolished (445,377) shares of stock of Express Savings Bank, Inc.
and their vital functions and other powers and functions
inherent or incidental thereto, transferred to the Office of the On April 14, 2011, petitioner received an Order3 signed by
Deputy Executive Secretary for Legal Affairs (ODESLA), OP in Executive Secretary Paquito N. Ochoa, Jr. requiring him and his
accordance with the provisions of this Executive Order. co-respondents to submit their respective written explanations
under oath. In compliance therewith, petitioner filed a Motion
SECTION 3. Restructuring of the Office of the Deputy Executive to Dismiss Ex Abundante Ad Cautelam manifesting that a case
Secretary for Legal Affairs, OP. In addition to the Legal and involving the same transaction and charge of grave misconduct
entitled, "Rustico B. Tutol, et al. v. Prospero Pichay, et al.", and
44
docketed as OMB-C-A-10-0426-I, is already pending before the (2)Transfer any function under the Office of the President to
Office of the Ombudsman. any other Department or Agency as well as transfer functions to
the Office of the President from other Departments and
Now alleging that no other plain, speedy and adequate remedy Agencies; and
is available to him in the ordinary course of law, petitioner has
resorted to the instant petition for certiorari and prohibition (3)Transfer any agency under the Office of the President to any
upon the following grounds: other Department or Agency as well as transfer agencies to the
Office of the President from other departments or agencies.4
I. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER
OF THE LEGISLATURE TO CREATE A PUBLIC OFFICE. In the case of Buklod ng Kawaning EIIB v. Zamora5 the Court
affirmed that the President's authority to carry out a
II. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER reorganization in any branch or agency of the executive
OF THE LEGISLATURE TO APPROPRIATE FUNDS. department is an express grant by the legislature by virtue of
E.O. 292, thus:
III. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER
OF CONGRESS TO DELEGATE QUASI-JUDICIAL POWERS TO But of course, the list of legal basis authorizing the President to
ADMINISTRATIVE AGENCIES. reorganize any department or agency in the executive branch
does not have to end here. We must not lose sight of the very
IV. E.O. 13 IS UNCONSTITUTIONAL FOR ENCROACHING UPON source of the power – that which constitutes an express grant
THE POWERS OF THE OMBUDSMAN. of power. Under Section 31, Book III of Executive Order No. 292
(otherwise known as the Administrative Code of 1987), "the
V. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE President, subject to the policy of the Executive Office and in
GUARANTEE OF DUE PROCESS. order to achieve simplicity, economy and efficiency, shall have
the continuing authority to reorganize the administrative
VI. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE EQUAL structure of the Office of the President." For this purpose, he
PROTECTION CLAUSE. may transfer the functions of other Departments or Agencies to
the Office of the President. (Emphasis supplied)
Our Ruling
And in Domingo v. Zamora,6 the Court gave the rationale
In assailing the constitutionality of E.O. 13, petitioner behind the President's continuing authority in this wise:
asseverates that the President is not authorized under any
existing law to create the Investigative and Adjudicatory The law grants the President this power in recognition of the
Division, Office of the Deputy Executive Secretary for Legal recurring need of every President to reorganize his office "to
Affairs (IAD-ODESLA) and that by creating a new, additional and achieve simplicity, economy and efficiency." The Office of the
distinct office tasked with quasi-judicial functions, the President President is the nerve center of the Executive Branch. To
has not only usurped the powers of congress to create a public remain effective and efficient, the Office of the President must
office, appropriate funds and delegate quasi-judicial functions be capable of being shaped and reshaped by the President in
to administrative agencies but has also encroached upon the the manner he deems fit to carry out his directives and policies.
powers of the Ombudsman. Petitioner avers that the After all, the Office of the President is the command post of the
unconstitutionality of E.O. 13 is also evident when weighed President. (Emphasis supplied)
against the due process requirement and equal protection
clause under the 1987 Constitution. Clearly, the abolition of the PAGC and the transfer of its
functions to a division specially created within the ODESLA is
The contentions are unavailing. properly within the prerogative of the President under his
continuing "delegated legislative authority to reorganize" his
The President has Continuing Authority to Reorganize the own office pursuant to E.O. 292.
Executive Department under E.O. 292.
Generally, this authority to implement organizational changes is
Section 31 of Executive Order No. 292 (E.O. 292), otherwise limited to transferring either an office or a function from the
known as the Administrative Code of 1987, vests in the Office of the President to another Department or Agency, and
President the continuing authority to reorganize the offices the other way around.7
under him in order to achieve simplicity, economy and
efficiency. E.O. 292 sanctions the following actions undertaken Only Section 31(1) gives the President a virtual freehand in
for such purpose: dealing with the internal structure of the Office of the President
Proper by allowing him to take actions as extreme as abolition,
(1)Restructure the internal organization of the Office of the consolidation or merger of units, apart from the less drastic
President Proper, including the immediate Offices, the move of transferring functions and offices from one unit to
Presidential Special Assistants/Advisers System and the another. Again, in Domingo v. Zamora8 the Court noted:
Common Staff Support System, by abolishing, consolidating, or
merging units thereof or transferring functions from one unit to However, the President's power to reorganize the Office of the
another; President under Section 31 (2) and (3) of EO 292 should be
distinguished from his power to reorganize the Office of the
President Proper. Under Section 31 (1) of EO 292, the President
45
can reorganize the Office of the President Proper by abolishing, A valid reorganization must not only be exercised through
consolidating or merging units, or by transferring functions legitimate authority but must also be pursued in good faith. A
from one unit to another. In contrast, under Section 31 (2) and reorganization is said to be carried out in good faith if it is done
(3) of EO 292, the President's power to reorganize offices for purposes of economy and efficiency.13 It appears in this
outside the Office of the President Proper but still within the case that the streamlining of functions within the Office of the
Office of the President Proper was pursued with such purposes in mind.
President is limited to merely transferring functions or agencies In its Whereas clauses, E.O. 13 cites as bases for the
from the Office of the President to Departments or Agencies, reorganization the policy dictates of eradicating corruption in
and vice versa. the government and promoting economy and efficiency in the
bureaucracy. Indeed, the economical effects of the
The distinction between the allowable organizational actions reorganization is shown by the fact that while Congress had
under Section 31(1) on the one hand and Section 31 (2) and (3) initially appropriated P22 Million for the PAGC's operation in
on the other is crucial not only as it affects employees' tenurial the 2010 annual budget,14 no separate or added funding of
security but also insofar as it touches upon the validity of the such a considerable amount was ever required after the
reorganization, that is, whether the executive actions transfer of the PAGC functions to the IAD-ODESLA.
undertaken fall within the limitations prescribed under E.O.
292. When the PAGC was created under E.O. 12, it was Apparently, the budgetary requirements that the IAD-ODESLA
composed of a Chairman and two (2) Commissioners who held needed to discharge its functions and maintain its personnel
the ranks of Presidential Assistant II and I, respectively,9 and would be sourced from the following year's appropriation for
was placed directly "under the Office of the President."10 On the President's Offices under the General Appropriations Act of
the other hand, the ODESLA, to which the functions of the 2011.15 Petitioner asseverates, however, that since Congress
PAGC have now been transferred, is an office within the Office did not indicate the manner by which the appropriation for the
of the President Proper.11 Since both of these offices belong to Office of the President was to be distributed, taking therefrom
the Office of the President Proper, the reorganization by way of the operational funds of the IAD-ODESLA would amount to an
abolishing the PAGC and transferring its functions to the illegal appropriation by the President. The contention is without
ODESLA is allowable under Section 31 (1) of E.O. 292. legal basis.
Petitioner, however, goes on to assert that the President went There is no usurpation of the legislative power to appropriate
beyond the authority granted by E.O. 292 for him to reorganize public funds.
the executive department since his issuance of E.O. 13 did not
merely involve the abolition of an office but the creation of one In the chief executive dwell the powers to run government.
as well. He argues that nowhere in the legal definition laid Placed upon him is the power to recommend the budget
down by the Court in several cases does a reorganization necessary for the operation of the Government,16 which
include the act of creating an office. implies that he has the necessary authority to evaluate and
determine the structure that each government agency in the
The contention is misplaced. executive department would need to operate in the most
economical and efficient manner.17 Hence, the express
The Reorganization Did not Entail the Creation of a New, recognition under Section 78 of R.A. 9970 or the General
Separate and Distinct Office. Appropriations Act of 2010 of the President’s authority to
"direct changes in the organizational units or key positions in
The abolition of the PAGC did not require the creation of a new, any department or agency." The aforecited provision, often and
additional and distinct office as the duties and functions that consistently included in the general appropriations laws,
pertained to the defunct anti-graft body were simply recognizes the extent of the President’s power to reorganize
transferred to the ODESLA, which is an existing office within the the executive offices and agencies under him, which is, "even to
Office of the President Proper. The reorganization required no the extent of modifying and realigning appropriations for that
more than a mere alteration of the administrative structure of purpose."18
the ODESLA through the establishment of a third division – the
Investigative and Adjudicatory Division – through which And to further enable the President to run the affairs of the
ODESLA could take on the additional functions it has been executive department, he is likewise given constitutional
tasked to discharge under E.O. 13. In Canonizado v. Aguirre,12 authority to augment any item in the General Appropriations
We ruled that – Law using the savings in other items of the appropriation for his
office.19 In fact, he is explicitly allowed by law to transfer any
Reorganization takes place when there is an alteration of the fund appropriated for the different departments, bureaus,
existing structure of government offices or units therein, offices and agencies of the Executive Department which is
including the lines of control, authority and responsibility included in the General Appropriations Act, to any program,
between them. It involves a reduction of personnel, project or activity of any department, bureau or office included
consolidation of offices, or abolition thereof by reason of in the General Appropriations Act or approved after its
economy or redundancy of functions. enactment.20
The Reorganization was Pursued in Good Faith. Thus, while there may be no specific amount earmarked for the
IAD-ODESLA from the total amount appropriated by Congress in
the annual budget for the Office of the President, the necessary
46
funds for the IAD-ODESLA may be properly sourced from the The IAD-ODESLA does not encroach upon the powers and
President's own office budget without committing any illegal duties of the Ombudsman.
appropriation. After all, there is no usurpation of the
legislature's power to appropriate funds when the President Contrary to petitioner's contention, the IAD-ODESLA did not
simply allocates the existing funds previously appropriated by encroach upon the Ombudsman's primary jurisdiction when it
Congress for his office. took cognizance of the complaint affidavit filed against him
notwithstanding the earlier filing of criminal and administrative
The IAD-ODESLA is a fact-finding and recommendatory body cases involving the same charges and allegations before the
not vested with quasi-judicial powers. Office of the Ombudsman. The primary jurisdiction of the
Ombudsman to investigate and prosecute cases refers to
Petitioner next avers that the IAD-ODESLA was illegally vested criminal cases cognizable by the Sandiganbayan and not to
with judicial power which is reserved to the Judicial administrative cases. It is only in the exercise of its primary
Department and, by way of exception through an express grant jurisdiction that the Ombudsman may, at any time, take over
by the legislature, to administrative agencies. He points out the investigation being conducted by another investigatory
that the name Investigative and Adjudicatory Division is proof agency. Section 15 (1) of R.A. No. 6770 or the Ombudsman Act
itself that the IAD-ODESLA wields quasi-judicial power. of 1989, empowers the Ombudsman to –
The argument is tenuous. As the OSG aptly explained in its (1)Investigate and prosecute on its own or on complaint by any
Comment,21 while the term "adjudicatory" appears part of its person, any act or omission of any public officer or employee,
appellation, the IAD-ODESLA cannot try and resolve cases, its office or agency, when such act or omission appears to be
authority being limited to the conduct of investigations, illegal, unjust, improper or inefficient. It has primary jurisdiction
preparation of reports and submission of recommendations. over cases cognizable by the Sandiganbayan and, in the
E.O. 13 explicitly states that the IAD-ODESLA shall "perform exercise of its primary jurisdiction, it may take over, at any
powers, functions and duties xxx, of PAGC."22 stage, from any investigatory agency of government, the
investigation of such cases. (Emphasis supplied)
Under E.O. 12, the PAGC was given the authority to "investigate
or hear administrative cases or complaints against all Since the case filed before the IAD-ODESLA is an administrative
presidential appointees in the government"23 and to "submit disciplinary case for grave misconduct, petitioner may not
its report and recommendations to the President."24 The IAD- invoke the primary jurisdiction of the Ombudsman to prevent
ODESLA is a fact-finding and recommendatory body to the the IAD-ODESLA from proceeding with its investigation. In any
President, not having the power to settle controversies and event, the Ombudsman's authority to investigate both elective
adjudicate cases. As the Court ruled in Cariño v. Commission on and appointive officials in the government, extensive as it may
Human Rights,25 and later reiterated in Biraogo v. The be, is by no means exclusive. It is shared with other similarly
Philippine Truth Commission:26 authorized government agencies.28
Fact-finding is not adjudication and it cannot be likened to the While the Ombudsman's function goes into the determination
judicial function of a court of justice, or even a quasi-judicial of the existence of probable cause and the adjudication of the
agency or office. The function of receiving evidence and merits of a criminal accusation, the investigative authority of
ascertaining therefrom the facts of a controversy is not a the IAD- ODESLA is limited to that of a fact-finding investigator
judicial function. To be considered as such, the act of receiving whose determinations and recommendations remain so until
evidence and arriving at factual conclusions in a controversy acted upon by the President. As such, it commits no usurpation
must be accompanied by the authority of applying the law to of the Ombudsman's constitutional duties.
the factual conclusions to the end that the controversy may be
decided or determined authoritatively, finally and definitively, Executive Order No. 13 Does Not Violate Petitioner's Right to
subject to such appeals or modes of review as may be provided Due Process and the Equal Protection of the Laws.
by law.
Petitioner goes on to assail E.O. 13 as violative of the equal
The President's authority to issue E.O. 13 and constitute the protection clause pointing to the arbitrariness of limiting the
IAD-ODESLA as his fact-finding investigator cannot be doubted. IAD-ODESLA's investigation only to presidential appointees
After all, as Chief Executive, he is granted full control over the occupying upper-level positions in the government. The equal
Executive Department to ensure the enforcement of the laws. protection of the laws is a guaranty against any form of undue
Section 17, Article VII of the Constitution provides: favoritism or hostility from the government.29 It is embraced
under the due process concept and simply requires that, in the
Section 17. The President shall have control of all the executive application of the law, "all persons or things similarly situated
departments, bureaus and offices. He shall ensure that the laws should be treated alike, both as to rights conferred and
be faithfully executed. responsibilities imposed."30 The equal protection clause,
however, is not absolute but subject to reasonable classification
The obligation to see to it that laws are faithfully executed so that aggrupations bearing substantial distinctions may be
necessitates the corresponding power in the President to treated differently from each other. This we ruled in Farinas v.
conduct investigations into the conduct of officials and Executive Secretary,31 wherein we further stated that –
employees in the executive department.27
The equal protection of the law clause is against undue favor
and individual or class privilege, as well as hostile discrimination
47
or the oppression of inequality. It is not intended to prohibit Secretary Purisima. In administrative proceedings, the filing of
legislation which is limited either in the object to which it is charges and giving reasonable opportunity for the person so
directed or by territory within which it is to operate. It does not charged to answer the accusations against him constitute the
demand absolute equality among residents; it merely requires minimum requirements of due process,35 which simply means
that all persons shall be treated alike, under like circumstances having the opportunity to explain one’s side.36 Hence, as long
and conditions both as to privileges conferred and liabilities as petitioner was given the opportunity to explain his side and
enforced. The equal protection clause is not infringed by present evidence, the requirements of due process are
legislation which applies only to those persons falling within a satisfactorily complied with because what the law abhors is an
specified class, if it applies alike to all persons within such class, absolute lack of opportunity to be heard.37 The records show
and reasonable grounds exist for making a distinction between that petitioner was issued an Order requiring him to submit his
those who fall within such class and those who do not. written explanation under oath with respect to the charge of
(Emphasis supplied) grave misconduct filed against him. His own failure to submit
his explanation despite notice defeats his subsequent claim of
Presidential appointees come under the direct disciplining denial of due process.
authority of the President. This proceeds from the well settled
principle that, in the absence of a contrary law, the power to Finally, petitioner doubts that the IAD-ODESLA can lawfully
remove or to discipline is lodged in the same authority on perform its duties as an impartial tribunal, contending that both
which the power to appoint is vested.32 Having the power to the IAD-ODESLA and respondent Secretary Purisima are
remove and/or discipline presidential appointees, the President connected to the President. The mere suspicion of partiality will
has the corollary authority to investigate such public officials not suffice to invalidate the actions of the IAD-ODESLA. Mere
and look into their conduct in office.33 Petitioner is a allegation is not equivalent to proof. Bias and partiality
presidential appointee occupying the high-level position of
Chairman of the LWUA. Necessarily, he comes under the cannot be presumed.38 Petitioner must present substantial
disciplinary jurisdiction of the President, who is well within his proof to show that the lAD-ODES LA had unjustifiably sided
right to order an investigation into matters that require his against him in the conduct of the investigation. No such
informed decision. evidence has been presented as to defeat the presumption of
regularity m the performance of the fact-finding investigator's
There are substantial distinctions that set apart presidential duties. The assertion, therefore, deserves scant consideration.
appointees occupying upper-level positions in government from
non-presidential appointees and those that occupy the lower Every law has in its favor the presumption of constitutionality,
positions in government. In Salumbides v. Office of the and to justify its nullification, there must be a clear and
Ombudsman,34 we had ruled extensively on the substantial unequivocal breach of the Constitution, not a doubtful and
distinctions that exist between elective and appointive public argumentative one.39 Petitioner has failed to discharge the
officials, thus: burden of proving the illegality of E.O. 13, which IS indubitably a
valid exercise of the President's continuing authority to
Substantial distinctions clearly exist between elective officials reorganize the Office of the President.
and appointive officials. The former occupy their office by
virtue of the mandate of the electorate. They are elected to an WHEREFORE, premises considered, the petition IS hereby
office for a definite term and may be removed therefrom only DISMISSED.
upon stringent conditions. On the other hand, appointive
officials hold their office by virtue of their designation thereto 20. CIVIL SERVICE COMMISSION, Petitoner, vs.DR. AGNES
by an appointing authority. Some appointive officials hold their OUIDA P. YU, Respondent.
office in a permanent capacity and are entitled to security of
tenure while others serve at the pleasure of the appointing In this Petition for Review on Certiorari under Rule 45 of the
authority. Rules of Court, the Civil Service Commission (CSC) assails the
Decision1 dated March 30, 2009 and the Resolution2 dated July
xxxx 9, 2009 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
00327-MIN declaring Dr. Agnes Ouida P. Yu to have a vested
An election is the embodiment of the popular will, perhaps the right in the position of Chief of Hospital II until her retirement
purest expression of the sovereign power of the on August 24, 2004.
people.1âwphi1 It involves the choice or selection of candidates
to public office by popular vote. Considering that elected The Facts
officials are put in office by their constituents for a definite
term, x x x complete deference is accorded to the will of the In 1992, the national government implemented a devolution
electorate that they be served by such officials until the end of program pursuant to Republic Act (R.A.) No. 7160, otherwise
the term for which they were elected. In contrast, there is no known as the ―The Local Government Code of 1991,” which
such expectation insofar as appointed officials are concerned. affected the Department of Health (DOH) along with other
(Emphasis supplied) government agencies.
Also, contrary to petitioner's assertions, his right to due process Prior to the devolution, Dr. Fortunata Castillo (hereinafter Dr.
was not violated when the IAD-ODESLA took cognizance of the Castillo) held the position of Provincial Health Officer II (PHO II)
administrative complaint against him since he was given of the Department of Health (DOH) Regional Office No. IX in
sufficient opportunity to oppose the formal complaint filed by Zamboanga City and was the head of both the Basilan Provincial
48
Health Hospital and Public Health Services. Respondent Dr. the Local Government of Basilan created the position. Thus,
Agnes Ouida P. Yu (Dr. Yu), on the other hand, held the position instead of the undersigned being automatically re-appointed
of Provincial Health Officer I (PHO I). She was assigned, Provincial Health Officer II of the Hospital, later to be renamed
however, at the Integrated Provincial Health Office in Isabela, Chief of Hospital II, pursuant to the Re-Nationalization Law, she
Basilan. was instead given an appointment still as Provincial Health
Officer II but under a co-terminous status at the Center for
Health and Development, DOH … which position the
Upon the implementation of the devolution program, then undersigned refused to accept...
Basilan Governor Gerry Salapuddin (Governor Salapuddin)
refused to accept Dr. Castillo as the incumbent of the PHO II On June 7, 2004, the CSC issued Resolution4 No. 040655
position that was to be devolved to the local government unit granting Dr. Yu's protest and revoking the appointment of Dr.
of Basilan, prompting the DOH to retain Dr. Castillo at the Dayrit as Chief of Hospital II of Basilan General Hospital.
Regional Office No. IX in Zamboanga City where she would Further, Secretary Dayrit was directed to appoint Dr. Yu to said
serve the remaining four years of her public service. She retired position. Upon motion for reconsideration, however, the CSC
in 1996. reversed itself and issued Resolution5 No. 040967 dated
September 1, 2004 declaring that the position of PHO II was
Meanwhile, in 1994, or two years after the implementation of never devolved to the Provincial Government of Basilan but
the devolution program, Governor Salapuddin appointed Dr. Yu was retained by the DOH; that the PHO II position held by Dr.
to the PHO II position. Yu was a newly-created position; and that, therefore, she did
not have a vested right to the Chief of Hospital II position that
On February 23, 1998, Republic Act No. 8543, otherwise known was created by virtue of R.A No. 8543.
as ―An Act Converting the Basilan Provincial Hospital in the
Municipality of Isabela, Province of Basilan, into a Tertiary Dr. Yu then filed a motion for reconsideration which was denied
Hospital Under the Full Administrative and Technical by the CSC in its Resolution6 No. 050287 dated February 28,
Supervision of the Department of Health, Increasing the 2005. She then elevated her case to the CA on petition for
Capacity to One Hundred Beds and Appropriating Funds review raising the sole issue of whether the item of PHO II she
Therefor," was passed into law whereby the hospital positions previously occupied was a devolved position or a locally created
previously devolved to the local government unit of Basilan one.
were re-nationalized and reverted to the DOH. The Basilan
Provincial Health Hospital was later renamed the Basilan On March 30, 2009, the CA rendered the assailed Decision in
General Hospital, and the position of PHO II was then re- favor of Dr. Yu, disposing as follows:
classified to Chief of Hospital II.
FOR REASONS STATED, the Petition for Review is GRANTED and
While Dr. Yu was among the personnel reverted to the DOH CSC Resolutions Nos. 040967 and 050287 are REVERSED and
with the re-nationalization of the Basilan General Hospital, she SET ASIDE. Petitioner is declared to have a vested right in the
was made to retain her original item of PHO II instead of being Chief of Hospital II position up to her retirement in August 24,
given the re-classified position of Chief of Hospital II. 2004 and should receive her corresponding salaries and
Subsequently, on August 1, 2003, then DOH Secretary Manuel benefits.
M. Dayrit (Secretary Dayrit) appointed Dr. Domingo Remus A.
Dayrit (Dr. Dayrit) to the position of Chief of Hospital II. SO ORDERED.7
Aggrieved, Dr. Yu filed a letter of protest dated September 30, In ruling that the PHO II position was devolved to the Basilan
20033 before the CSC claiming that she has a vested right to the Provincial Government, the appellate court ratiocinated in this
position of Chief of Hospital II. The pertinent portions of said wise:
letter read:
xxx The CSC’s ruling that there are two PHO II positions is not
I come before your good office protesting the appointment implausible but contrary to the evidence on hand.
issued by … DOH Secretary Manuel M. Dayrit in favor of Dr.
Domingo Remus A. Dayrit as Chief of Hospital … of the Basilan A perusal of the pleadings and attachments reveal that the PHO
General Hospital … II position was devolved to the Basilan Provincial Government.
In a letter dated May 19, 1994, Ms. Vivian L. Young, Officer-in-
xxx Charge of the Department of Health, Local Government
Assistance & Monitoring Service informed former Governor
… the position of Chief of Hospital II to which Dr. Dayrit has Salapuddin that the PHO II position was devolved to the local
been appointed is a mere conversion from the item of government, viz:
Provincial Health Officer II previously occupied by the herein
protestant. Dear Gov. Salapuddin,
When what used to be called the Basilan Provincial Hospital This will refer to your letter relative to the item position of Dr.
was re-nationalized, now called the Basilan General Hospital, Fortunata C. Castillo which has been devolved to the provincial
the position of Provincial Health Officer II, then occupied by the government of BASILAN.
undersigned, was refused re-nationalized (sic) by DOH alleging
the same position to be an LGU-created position, that is, that
49
Please be informed that only the devolved health personnel renationalization as such a system is merely adopted for
who were not accepted by their Local Chief Executive have purposes of proper and systematic coding of all positions in the
been retained by DOH, the item positions per se remained in government, particularly in the budgeting process. Thus, the
the respective LGU’s. xxx The LGU’s have the option to retain position you are presently holding should be considered as one
the items vacated or to collapse the same for financial reasons. belonging to the national government prior to its devolution,
regardless of the position item number attached to the position
xxx of the previous holder thereof.
Based on the foregoing letter, Dr. Milagros L. Fernandez, Thus, it is apparent that the PHO II position occupied by
Director IV of the DOH – Regional Field Office No. IX, petitioner is one and the same position which was previously
Zamboanga City, wrote a letter to petitioner, to wit: occupied by Dr. Castillo before the devolution. When the latter
was not accepted by Gov. Salapuddin, Dr. Castillo was retained
xxx by the DOH but the PHO II item was devolved to the Provincial
Government of Basilan. Consequently, the position of PHO II
Madam: became vacant. This is obvious by the fact that the salaries of
Dr. Castillo were taken from a special fund and not from the
The letter dated May 19, 1994 of Ms. Vivian L. Young, Office-in- appropriation for the PHO II position.
Charge (sic), LGAMS, Department of Health, clarifies the issue
raised by the Provincial Governor, in his letter dated April 14, The motion for reconsideration of the foregoing Decision filed
1994, insofar as the retention of the Provincial Health Officer II by the CSC was denied by the CA in its Resolution8 dated July 9,
of the province, in the person of Dr. Fortunata Castillo by the 2009. Hence, in this petition for review on certiorari, the CSC
DOH in view of the non-acceptance by the Governor consistent alleged that -
with the provisions of law on devolution.
The Issue
1. Dr. Fortunata A. Castillo, who was holding the position of
Provincial Health Officer II of the province, and a devolved THE COURT OF APPEALS ERRED IN HOLDING THAT THE PHO II
health personnel, was retained by the DOH for reason above- POSITION PREVIOUSLY OCCUPIED BY RESPONDENT YU IS A
mentioned. DEVOLVED POSITION.9
2. While she, the occupant, was retained, the item position The Ruling of the Court
remained as among those items in the Plantilla of Personnel of
the Integrated Provincial Health Office devolved to the Office of In pursuance of the declared policy under The Local
the Provincial Governor. Government Code of 1991 (R.A. No. 7160) to provide for a
more responsive and accountable local government structure
3. The Governor, in such a case, may or may not retain her item through a system of decentralization,10 national agencies or
in his Plantilla, or abolish it for reason therein stated. The offices, including the DOH, were mandated to devolve to the
position herewith (sic) was left vacant with the retention of Dr. local government units the responsibility for the provision of
Castillo in this office. basic services and facilities.11
4. The funds for salary and other benefits of the devolved item As defined, ―devolution‖ is the act by which the national
position of Provincial Health Officer II remained devolved with government confers power and authority upon the various local
the Office of the Governor. government units to perform specific functions and
responsibilities.12 Specifically, Section 17(i) of the same Code
In other words, with the retention of Dr. Castillo hereto, she prescribes the manner of devolution, as follows:
never carried with her the item position and the funds
appropriated for salary and other benefits accruing to the (i) The devolution contemplated in this Code shall include the
position of Provincial Health Officer II. transfer to local government units of the records, equipment,
and other assets and personnel of national agencies and offices
xxx corresponding to the devolved powers, functions and
responsibilities.
In a letter dated October 26, 2001, Director Macybel Alfaro-
Sashi of the Civil Service Commission Regional Office IX Personnel of said national agencies or offices shall be absorbed
informed the petitioner that: by the local government units to which they belong or in whose
areas they are assigned to the extent that it is administratively
At the outset, it is apparent that the position you presently viable as determined by the said oversight committee:
occupy is one which should be included in the list of Provided, further, That regional directors who are career
renationalized positions notwithstanding the fact that the said executive service officers and other officers of similar rank in
position carries a position item number different from that the said regional offices who cannot be absorbed by the local
carried by the previous holder thereof. Hence, the contention government unit shall be retained by the national government,
of the DOH Regional Office that your position is not the same as without any diminution of rank, salary or tenure.
that of the previous holder simply because they bear different
position item numbers deserves very scant consideration. The To ensure the proper implementation of the devolution
position item numbers are immaterial in case of process, then President Corazon C. Aquino issued Executive
50
Order (E.O.) No. 503, otherwise known as the ―Rules and corresponding budget appropriation. He further declared that
Regulations Implementing the Transfer of Personnel and Assets, during the formal turn over program in 1993 attended by Dr.
Liabilities and Records of National Government Agencies Whose Milagros Fernandez, representing the DOH Regional Office, the
Functions Are To Be Devolved To The Local Government Units item position of PHO II was among the positions turned over to
And For Other Related Purposes," which laid down the the Provincial Government of Basilan. Thus, the argument17 of
following pertinent guidelines with respect to the transfer of petitioner CSC that only 53 plantilla positions, not 54, were
personnel: devolved to the local government of Basilan does not hold
water. It cannot be disputed that Dr. Castillo's PHO II position
Section 2. Principles and Policies Governing Transfer of was devolved.
Personnel. -
However, Governor Salapuddin refused to reappoint Dr. Castillo
a. Coverage, Tenure, Compensation and Career Development. to her devolved position in the LGU for no other reason than
— that he ―wanted to accept only the item position of PHO II.”18
It was not shown, and no attempt was ever made on the part of
xxx the LGU to show, that the absorption of Dr. Castillo was not
administratively viable. There being no valid and legal basis
2. The absorption of the NGA personnel by the LGU shall be therefor, Governor Salapuddin's refusal to accept Dr. Castillo
mandatory, in which case, the LGUs shall create the equivalent was, plainly and simply, whimsical.1âwphi1
positions of the affected personnel except when it is not
administratively viable. Be that as it may, Governor Salapuddin's refusal did not prevent
the devolution of Dr.Castillo which, together with that of the
3. Absorption is not administratively viable when there is a PHO II position, took effect by operation of law. In order to
duplication of functions unless the LGU opts to absorb the solve his dilemma, Governor Salapuddin requested that Dr.
personnel concerned. Castillo be detailed instead at the DOH, which was confirmed by
then Secretary of Health Juan M. Flavier in his Department
4. The national personnel who are not absorbed by the LGUs Order19 No. 228, series of 1993, signed on July 9, 1993,
under no. 3 above, shall be retained by the NGA concerned, reproduced hereunder as follows:
subject to civil service law, rules and regulations.
This will officially confirm the detail of Dr. Fortunata A. Castillo
xxx PHO-II – Basilan at the Regional Health Field Office No. IX,
Zamboanga City per request of the Governor of Basilan, the
12. Except as herein otherwise provided, devolved permanent Honorable Jerry (sic) Salapuddin in his letter to Dr. Castillo,
personnel shall be automatically reappointed by the local chief provided that the provincial government of Basilan will
executive concerned immediately upon their transfer which continue to pay her salary and other benefits she's entitled
shall not go beyond June 30, 1992. xxx thereto until further notice or order. (Emphasis added)
On the basis of the foregoing, it was mandatory for Governor Clearly therefore, the drawing of Dr. Castillo's salary from the
Salapuddin to absorb the position of PHO II, as well as its LGU of Basilan which Governor Salapuddin claimed to have
incumbent, Dr. Fortunata Castillo. Highlighting the absence of allowed simply ―to accommodate her (Dr. Castillo)"20 was, in
discretion is the use of the word ―shall‖ both in Section 17 (i) fact, a necessary consequence of her devolution to the LGU and
of R.A. No. 7160 and in Section 2(a)(2) of E.O. No. 503, which subsequent detail to the DOH. Officials and employees on detail
connotes a mandatory order. Its use in a statute denotes an with other offices shall be paid their salaries, emoluments,
imperative obligation and is inconsistent with the idea of allowances, fringe benefits and other personal services costs
discretion.13 The only instance that the LGU concerned may from the appropriations of their parent agencies and in no case
choose not to absorb the NGA personnel is when absorption is shall such be charged against the appropriations of the agencies
not administratively viable, meaning, it would result to where they are assigned or detailed, except when authorized
duplication of functions, in which case, the NGA personnel shall by law.21
be retained by the national government. However, in the
absence of the recognized exception, devolved permanent A detail is defined and governed by Executive Order 292, Book
personnel shall be automatically reappointed Section 2(a)(12) V, Title 1, Subtitle A, Chapter 5, Section 26 (6), thus:22
by the local chief executive concerned immediately upon their
transfer which shall not go beyond June 30, 1992. Webster's (6) Detail. A detail is the movement of an employee from one
Third New International Dictionary defines ―automatic‖ as agency to another without the issuance of an appointment and
―involuntary either wholly or to a major extent so that any shall be allowed, only for a limited period in the case of
activity of the will is largely negligible.” Being ―automatic‖, employees occupying professional, technical and scientific
thus, connotes something mechanical, spontaneous and positions. If the employee believes that there is no justification
perfunctory.14 for the detail, he may appeal his case to the Commission.
Pending appeal, the decision to detail the employee shall be
There is no dearth of evidence showing that the item position executory unless otherwise ordered by the Commission.
of PHO II was, in fact, devolved to the Provincial Government of (Emphasis added)
Basilan. Governor Salapuddin himself certified15 that said
position was included in the 1992 OSCAS16 received from the Had Dr. Castillo felt aggrieved by her detail to the DOH Regional
Department of Budget and Management (DBM) with its Office, she was not without recourse. The law afforded her the
51
right to appeal her case to the CSC, but she had not seen fit to even if she wanted to. Considering, however, that Governor
question the justification for her detail. We could only surmise Salapuddin's clear infraction of the law is not in issue before us,
that, since Dr. Castillo was looking at only three more years we need not make any pronouncement on this matter.
from the time of her detail until her retirement in 1996, and
considering that she obviously would not suffer any diminution We rule, therefore, under the attendant circumstances of the
in salary and rank, she found it pointless to pursue the matter. case, that with Dr. Castillo's re-absorption by the DOH which
appears to bear the former's approval, her devolved position
Neither did Dr. Castillo find need to raise a howl when, at the with the LGU of Basilan was left vacant. In her May 19, 1994
behest of Governor Salapuddin who was determined to replace letter to Governor Salapuddin, Ms. Vivian L. Young informed
her, DOH officials categorized her as a devolution non-viable the local chief executive that he had the ―option to retain the
employee, along with 216 others nationwide, by the mere fact item vacated or to collapse the same for financial reasons.”26
that she was not accepted by the LGU of Basilan and not Thus, we hold that Dr. Yu was validly appointed to the position
because of an actual non-viability. Hence, in 1994, when of PHO II in 1994 and, consequently, acquired a vested right to
Governor Salapuddin formally manifested his intention to stop its re-classified designation – Chief of Hospital II. As such, Dr. Yu
the drawing of Dr. Castillo's salary from the LGU in anticipation should have been automatically re-appointed by Secretary
of his appointment of Dr. Yu to the PHO II position, Dr. Castillo Dayrit in accordance with the Guidelines for the Re-
ceased to be a detailed employee at the DOH Regional Office Nationalization of Personnel, Assets and Appropriations of
but was re-absorbed by the DOH as a devolution non-viable Basilan Provincial Hospital,27 the pertinent portion of which
employee and, consequently, paid salaries and benefits from provides, as follows:
the Miscellaneous Personnel Benefits Fund that had been set
aside under the Office of the Secretary of Health precisely for Item III. Principles and Policies Governing the Transfer of
such employees. Basilan Provincial Hospital
―Abandonment of an office is the voluntary relinquishment of xxx ln as much as a re-appointment is no longer feasible due to
an office by the holder with the intention of terminating his her retirement, petitioner should at least recover her salaries
possession and control thereof. In order to constitute for the services she had rendered. However, petitioner
abandonment of office, it must be total and under such admitted that she received her salary as PHO II converted to
circumstance as clearly to indicate an absolute relinquishment. Chief of Hospital for the period August to November 2001.
There must be a complete abandonment of duties of such Therefore, she should receive her salary and benefits as Chief of
continuance that the law will infer a relinquishment. Hospital from December 2001 up to her retirement in August
Abandonment of duties is a voluntary act; it springs from and is 24, 2004. 28
accompanied by deliberation and freedom of choice. There are,
therefore, two essential elements of abandonment: first, an WHEREFORE, the instant petition is hereby DENIED for lack of
intention to abandon and, second, an overt or 'external' act by merit. The assailed Decision dated March 30, 2009 in CA-G.R. SP
which the intention is carried into effect."25 No. 00327-MIN is AFFIRMED.
By no stretch of the imagination can Dr. Castillo's seeming 21. ENGR. GILBERT TUMBOKON, Complainant, vs.ATTY.
lackadaisical attitude towards protecting her rights be MARIANO R. PEFIANCO, Respondent.
construed as an abandonment of her position resulting in her
having intentionally and voluntarily vacated the same. Before the Court is an administrative complaint for disbarment
Governor Salapuddin's tenacious refusal to accept Dr. Castillo filed by complainant Engr. Gilbert Tumbokon against
negates any and all voluntariness on the part of the latter to let respondent Atty. Mariano R. Pefianco for grave dishonesty,
go of her position. The risk of incurring the ire of a powerful gross misconduct constituting deceit and grossly immoral
politician effectively tied Dr. Castillo's hands, and it was quite conduct.
understandable that she could not don her gloves and fight,
52
In his Complaint,1 complainant narrated that respondent In the present case, respondent's defense that forgery had
undertook to give him 20% commission, later reduced to 10%, attended the execution of the August 11, 1995 letter was belied
of the attorney's fees the latter would receive in representing by his July 16, 1997 letter admitting to have undertaken the
Spouses Amable and Rosalinda Yap (Sps. Yap), whom he payment of complainant's commission but passing on the
referred, in an action for partition of the estate of the late responsibility to Sps. Yap. Clearly, respondent has violated Rule
Benjamin Yap (Civil Case No. 4986 before the Regional Trial 9.02,12 Canon 9 of the Code which prohibits a lawyer from
Court of Aklan). Their agreement was reflected in a letter2 dividing or stipulating to divide a fee for legal services with
dated August 11, 1995. However, respondent failed to pay him persons not licensed to practice law, except in certain cases
the agreed commission notwithstanding receipt of attorney's which do not obtain in the case at bar.
fees amounting to 17% of the total estate or about ₱ 40 million.
Instead, he was informed through a letter3 dated July 16, 1997 Furthermore, respondent did not deny the accusation that he
that Sps. Yap assumed to pay the same after respondent had abandoned his legal family to cohabit with his mistress with
agreed to reduce his attorney's fees from 25% to 17%. He then whom he begot four children notwithstanding that his moral
demanded the payment of his commission4 which respondent character as well as his moral fitness to be retained in the Roll
ignored. of Attorneys has been assailed. The settled rule is that betrayal
of the marital vow of fidelity or sexual relations outside
Complainant further alleged that respondent has not lived up marriage is considered disgraceful and immoral as it manifests
to the high moral standards required of his profession for deliberate disregard of the sanctity of marriage and the marital
having abandoned his legal wife, Milagros Hilado, with whom vows protected by the Constitution and affirmed by our laws.13
he has two children, and cohabited with Mae FlorGalido, with Consequently, We find no reason to disturb the IBP's finding
whom he has four children. He also accused respondent of that respondent violated the Lawyer's Oath14 and Rule 1.01,
engaging in money-lending business5 without the required Canon 1 of the Code which proscribes a lawyer from engaging
authorization from the BangkoSentralngPilipinas. in "unlawful, dishonest, immoral or deceitful conduct."
In his defense, respondent explained that he accepted Sps. However, We find the charge of engaging in illegal money
Yap's case on a 25% contingent fee basis, and advanced all the lending not to have been sufficiently established.1âwphi1 A
expenses. He disputed the August 11, 1995 letter for being a "business" requires some form of investment and a sufficient
forgery and claimed that Sps. Yap assumed to pay number of customers to whom its output can be sold at profit
complainant's commission which he clarified in his July 16, 1997 on a consistent basis.15 The lending of money to a single
letter. He, thus, prayed for the dismissal of the complaint and person without showing that such service is made available to
for the corresponding sanction against complainant's counsel, other persons on a consistent basis cannot be construed
Atty. Florencio B. Gonzales, for filing a baseless complaint.6 asindicia that respondent is engaged in the business of lending.
In the Resolution7 dated February 16, 2004, the Court resolved Nonetheless, while We rule that respondent should be
to refer this administrative case to the Integrated Bar of the sanctioned for his actions, We are minded that the power to
Philippines (IBP) for investigation, report and recommendation. disbar should be exercised with great caution and only in clear
In his Report and Recommendation8 dated October 10, 2008, cases of misconduct that seriously affect the standing and
the Investigating IBP Commissioner recommended that character of the lawyer as an officer of the court and as
respondent be suspended for one (1) year from the active member of the bar,16 or the misconduct borders on the
practice of law, for violation of the Lawyer's Oath, Rule 1.01, criminal, or committed under scandalous circumstance,17
Canon 1; Rule 7.03, Canon 7 and Rule 9.02, Canon 9 of the Code which do not obtain here. Considering the circumstances of the
of Professional Responsibility (Code). The IBP Board of case, We deem it appropriate that respondent be suspended
Governors adopted and approved the same in its Resolution from the practice of law for a period of one (1) year as
No. XIX-2010-4539 dated August recommended.
28, 2010. Respondent moved for reconsideration10 which was WHEREFORE, respondent ATTY. MARIANO R. PEFIANCO is
denied in Resolution No. XIX-2011-141 dated October 28, 2011. found GUILTY of violation of the Lawyer’s Oath, Rule 1.01,
Canon 1 of the Code of Professional Responsibility and Rule
After due consideration, We adopt the findings and 9.02, Canon 9 of the same Code and SUSPENDED from the
recommendation of the IBP Board of Governors. active practice of law ONE (1) YEAR effective upon notice
hereof.
The practice of law is considered a privilege bestowed by the
State on those who show that they possess and continue to Let copies of this Resolution be entered in the personal record
possess the legal qualifications for the profession. As such, of respondent as a member of the Philippine Bar and furnished
lawyers are expected to maintain at all times a high standard of the Office of the Bar Confidant, the Integrated Bar of the
legal proficiency, morality, honesty, integrity and fair dealing, Philippines and the Office of the Court Administrator for
and must perform their four-fold duty to society, the legal circulation to all courts in the country.
profession, the courts and their clients, in accordance with the
values and norms embodied in the Code.11 Lawyers may, thus, 22. EMILIA O. DHALIWAL, Complainant, vs.ATTY. ABELARDO B.
be disciplined for any conduct that is wanting of the above DUMAGUING, Respondent.
standards whether in their professional or in their private
capacity.
53
Emilia O. Dhaliwal filed a complaint for violation of Canon 16 of Resolution No. XVIII-2007-93, adopting with modification the
the Code of Professional Responsibility against Atty. Abelardo Commission's Report and Recommendation, to wit:
B. Dumaguing.
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED
In her sworn statement, complainant alleged that she engaged and APPROVED, with modification, the Report and
the services of respondent in connection with the purchase of a Recommendation of the Investigating Commissioner of the
parcel of land from Fil-Estate Development, Inc. (Fil-Estate). On above-entitled case, herein made part of this Resolution as
June 13, 2000, upon the instruction of respondent, Annex "A"; and, finding the recommendation fully supported by
complainant's daughter and son-in-law withdrew ₱ 342,000.00 the evidence on record and the applicable laws and rules, and
from the Philippine National Bank (PNB) and handed the cash considering Respondent's violation of Canon 16 of the Code of
over to respondent. They then proceeded to BPI Family Bank Professional Responsibility by his failure to return and account
Malcolm Square Branch where respondent purchased two to complainant the amount previously consigned with the
manager's checks in the amounts of ₱ 58,631.94 and ₱ HLURB despite demand, Atty. Abelardo B. Dumaguing is hereby
253,188.00 both payable to the order of Fil-Estate Inc. When SUSPENDED from the practice of law for six (6) months and
asked why the manager's checks were not purchased at PNB, Orderedto Return the amount of ₱ 311,819.94 to complainant
respondent explained that he has friends at the BPI Family Bank within thirty (30) days from receipt of notice.
and that is where he maintains an account. These manager's
checks were subsequently consigned with the Housing and Respondent's motion for reconsideration was denied by the IBP
Land Use Regulatory Board (HLURB) after complainant’s Board of Governors in Resolution No. XX-2012-42.
request to suspend payments to Fil-Estate had been granted.
On September 22, 2000, respondent, on behalf of complainant, The Court adopts the IBP's findings of fact and conclusions of
filed with the HLURB a complaint for delivery of title and law.
damages against Fil-Estate. A week after or on September 29,
2000, he withdrew the two manager's checks that were The Code of Professional Responsibility provides:
previously consigned. On March 3, 2003, complainant informed
the HLURB through a letter that respondent was no longer Canon 16-A lawyer shall hold in trust all moneys and properties
representing her. On March 11, 2003, the HLURB promulgated of his client that may come into his possession.
its Decision, adverse to complainant, finding the case for Rule 16.01-A lawyer shall account for all money or property
delivery of title and damages premature as there was no collected or received for or from the client.
evidence of full payment of the purchase price. Thereafter, Rule 16.02-A lawyer shall keep the funds of each client separate
complainant made demands upon respondent to return and and apart from his own and those of others kept by him.
account to her the amounts previously consigned with the Rule 16.03-A lawyer shall deliver the funds and property of his
HLURB. Respondent did not comply. Thus, complainant prays client when due or upon demand.
that respondent be disbarred.
Money entrusted to a lawyer for a specific purpose, such as
In his answer, respondent admitted substantially all of the payment for the balance of the purchase price of a parcel of
allegations in the complaint. In defense, he claims that the land as in the present case, but not used for the purpose,
amount of P311,819.94 was consigned to the HLURB to cover should be immediately returned.2 "A lawyer's failure to return
the full payment of the balance of the purchase price of the lot upon demand the funds held by him on behalf of his client gives
with Fil-Estate. Fil-Estate, however, did not accept the same as rise to the presumption that he has appropriated the same for
it wanted complainant to also pay interests and surcharges his own use in violation of the trust reposed in him by his client.
totalling more than ₱ 800,000.00. Because the amount was Such act is a gross violation of general morality as well as of
formally consigned with the HLURB, he allegedly filed a professional ethics. It impairs public confidence in the legal
motion1 to verify if the judgment in the case was already profession and deserves punishment."3
satisfied. He claimed that his motion has not yet been acted
upon; hence, he did not deem it proper as yet to return the Since respondent withdrew the consignation of the BPI
consigned amount. manager’s checks in the total amount of ₱ 311,891.94 from the
HLURB and the same was not used to settle the balance of the
Following the submission by complainant of her verified purchase price of the parcel of land purchased by complainant
position paper and the failure of respondent to submit his, from Fil-Estate, then reimbursement with legal interest4 was
despite having been given ample opportunity to do so, the properly ordered by the IBP.
Commission on Bar Discipline, through Attorney Gerely C. Rico,
submitted its Report and Recommendation finding complainant Respondent's proffered excuse of having to await the HLURB
to have sufficiently established that respondent violated Canon action on his alleged motion-- the filing of which he miserably
16 of the Code of Professional Responsibility. It also found failed to prove-- as a condition to the return of the sum of ₱
respondent to have submitted a false and fabricated piece of 311 ,891.94 to complainant compounds his liability and even
documentary evidence, as the January 2004 Motion attached to bolstered his attitude to use dishonest means if only to evade
his answer as Annex A did not bear any proof of service upon his obligation. It underlines his failure to meet the high moral
the opposing party and proof of filing with the HLURB. The standards required of members of the legal profession.
Commission recommended that respondent be suspended
from the practice of law for a period of one (1) year. On WHEREFORE, Atty. Abelardo B. Dumaguing is adjudged GUILTY
September 19, 2007, the IBP Board of Governors passed of violating Canon 16 of the Code of Professional Responsibility.
He is hereby SUSPENDED from the practice of law for a period
54
of six (6) months effective upon receipt of this Resolution. He is On October 4, 1996, Citytrust and BPI merged, with the latter as
also ordered to return to complainant Emilia O. Dhaliwal, the the surviving corporation. The Articles of Merger provide,
amount of P311,819.94 with legal interest of six percent (6%) among others, that "all liabilities and obligations of Citytrust
per annum from the time of his receipt of the money on shall be transferred to and become the liabilities and
September 29, 2000 up to the finality of this Resolution and obligations of BPI in the same manner as if the BPI had itself
twelve percent (12%) per annum from finality thereof until incurred such liabilities or obligations."7
paid.
On December 22, 1998, the CA denied the appeal in CA-G.R. CV
Let copies of this Resolution be furnished the Office of the Bar No. 23166 and affirmed in toto the decision of the RTC, which
Confidant to be entered into respondent’s personal records as had become final and executory on January 24, 1999.
attorney. Copies shall likewise be furnished the IBP and the
Office of the Court Administrator for circulation to all courts Hence, Lee filed a Motion for Execution8 before the RTC on July
concerned. 29, 1999, which was granted. Upon issuance of the
corresponding writ, he sought the release of the garnished
23. BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs.CARLITO deposits of Trendline. When the writ was implemented,
LEE, Respondent. however, BPI Manager Samuel Mendoza, Jr. denied having
possession, control and custody of any deposits or properties
In this Petition for Review on Certiorari1 under Rule 45 of the belonging to defendants, prompting Lee to seek the production
Rules of Court, petitioner Bank of the Philippine Islands (BPI) of their records of accounts with BPI. However, on the
seeks to reverse and set aside the February 11, 2009 Decision2 manifestation of BPI that it cannot locate the defendants' bank
and October 29, 2009 Resolution3 of the Court of Appeals (CA) records with Citytrust, the RTC denied the motion on
in CA-G.R. No. 87911 which annulled the March 1, 20043 and September 6, 2002.
September 16, 20044 Orders of the Regional Trial Court (RTC)
of Makati City, Branch 61 and instead, entered a new one On December 16, 2002, Lee filed a Motion for Execution and/or
directing the RTC to issue a writ of execution and/or enforce Enforcement of Garnishment9 before the RTC seeking to
garnishment against the bank deposit of Trendline Resources & enforce against BPI the garnishment of Trendline’s deposit in
Commodities Exponent, Inc. (Trendline) and Leonarda Buelva the amount of P700,962.10 and other deposits it may have had
(Buelva) with the defunct Citytrust Banking Corporation with Citytrust. The RTC denied the motion for dearth of
(Citytrust), now merged with BPI. evidence showing that BPI took over the subject accounts from
Citytrust and the fact that BPI was not a party to the case. Lee’s
The Facts motion for reconsideration was likewise denied.10
On April 26, 1988, respondent Carlito Lee (Lee) filed a Lee elevated the matter to the CA on a petition for certiorari. In
complaint for sum of money with damages and application for its February 11, 2009 Decision, the CA annulled the questioned
the issuance of a writ of attachment against Trendline and orders, finding grave abuse of discretion on the part of the RTC
Buelva (collectively called "defendants") before the RTC, in denying Lee’s motion to enforce the garnishment against
docketed as Civil Case No. 88-702, seeking to recover his total Trendline’s attached bank deposits with Citytrust, which have
investment in the amount of P5.8 million. Lee alleged that he been transferred to BPI by virtue of their merger. It found BPI
was enticed to invest his money with Trendline upon Buelva’s liable to deliver to the RTC the garnished bank deposit of
misrepresentation that she was its duly licensed investment Trendline in the amount of P700,962.10, which Citytrust
consultant or commodity saleswoman. His investments, withheld pursuant to the RTC's previously-issued writ of
however, were lost without any explanation from the attachment.
defendants.
The CA refused to give credence to BPI’s defense that it can no
On May 4, 1988, the RTC issued a writ of preliminary longer locate Trendline’s bank records with the defunct
attachment whereby the Check-O-Matic Savings Accounts of Citytrust, as its existence was supported by evidence and by the
Trendline with Citytrust Banking Corporation, Ayala Branch, in latter's admission. Neither did it consider BPI a stranger to the
the total amount of P700,962.10 were garnished. Subsequently, case, holding it to have become a party in-interest upon the
the RTC rendered a decision on August 8, 1989 finding approval by the Securities and Exchange Commission (SEC) of
defendants jointly and severally liable to Lee for the full amount the parties’ Articles of Merger. BPI’s Motion for
of his investment plus legal interest, attorney’s fees and costs Reconsideration11 was denied in the CA's October 29, 2009
of suit. The defendants appealed the RTC decision to the CA, Resolution.
docketed as CA-G.R. CV No. 23166.
The Issues
Meanwhile, on April 13, 1994, Citytrust filed before the RTC an
Urgent Motion and Manifestation5 seeking a ruling on In this petition, BPI ascribes the following errors to the CA:
defendants' request to release the amount of P591,748.99 out
of the garnished amount for the purpose of paying Trendline’s A. THE HONORABLE COURT OF APPEALS ERRED IN NOT
tax obligations. Having been denied for lack of jurisdiction, DISMISSING CA-G.R. SP No. 87911, THE PETITION FOR
Trendline filed a similar motion6 with the CA which the latter CERTIORARI UNDER RULE 65 OF THE REVISED RULES OF COURT,
denied for failure to prove that defendants had no other assets FILED BY RESPONDENT CARLITO LEE BEING AN IMPROPER
to answer for its tax obligations. REMEDY.
55
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT Conformably with the provisions of Section 1, Rule 41 of the
PETITIONER BPI BECAME PARTY-IN-INTEREST IN THE CASE FILED Revised Rules of Court above-quoted, the remedy from such
BY RESPONDENT CARLITO LEE UPON THE APPROVAL BY THE interlocutory order is certiorari under Rule 65. Thus, contrary to
SECURITIES AND EXCHANGE COMMISSION OF ITS MERGER the contention of BPI, the CA did not err in assuming
WITH CITYTRUST BANKING CORPORATION. jurisdiction over the petition for certiorari.
C. THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING BPI likewise insists that the CA erred in considering it a party to
THAT THE MOTION FOR EXECUTION AND/OR ENFORCEMENT the case by virtue of its merger with Citytrust, the garnishee of
OF GARNISHMENT IS NOT THE APPROPRIATE REMEDY IN THE defendants' deposits.
EVENT THERE IS A THIRD PARTY INVOLVED DURING THE
EXECUTION PROCESS OF A FINAL AND EXECUTORY JUDGMENT. The Court is not convinced.
D. THE HONORABLE COURT OF APPEALS ERRED IN RULING Section 5, Rule 65 of the Revised Rules of Court requires that
THAT PETITIONER BPI SHOULD BE HELD ACCOUNTABLE FOR persons interested in sustaining the proceedings in court must
THE AMOUNT OF PHP700,962.10.12 be impleaded as private respondents. Upon the merger of
Citytrust and BPI, with the latter as the surviving corporation,
The Ruling of the Court and with all the liabilities and obligations of Citytrust
transferred to BPI as if it had incurred the same, BPI
Section 1, Rule 41 of the Revised Rules of Court provides: undoubtedly became a party interested in sustaining the
proceedings, as it stands to be prejudiced by the outcome of
SECTION 1. Subject of appeal. - x x x the case.
No appeal may be taken from: It is a settled rule that upon service of the writ of garnishment,
the garnishee becomes a "virtual party" or "forced intervenor"
xxx to the case and the trial court thereby acquires jurisdiction to
bind the garnishee to comply with its orders and processes. In
(b) An interlocutory order; Perla Compania de Seguros, Inc. v. Ramolete,16 the Court
ruled:
xxx
In order that the trial court may validly acquire jurisdiction to
In any of the foregoing circumstances, the aggrieved party may bind the person of the garnishee, it is not necessary that
file an appropriate special civil action as provided in Rule 65.13 summons be served upon him. The garnishee need not be
impleaded as a party to the case. All that is necessary for the
A punctilious examination of the records will reveal that Lee trial court lawfully to bind the person of the garnishee or any
had previously sought the execution of the final and executory person who has in his possession credits belonging to the
decision of the RTC dated August 8, 1989 which was granted judgment debtor is service upon him of the writ of
and had resulted in the issuance of the corresponding writ of garnishment.
execution. However, having garnished the deposits of Trendline
with Citytrust in the amount of ₱ 700,962.10 by virtue of a writ The Rules of Court themselves do not require that the
of preliminary attachment, Lee filed anew a Motion for garnishee be served with summons or impleaded in the case in
Execution and/or Enforcement of Garnishment before the RTC order to make him liable.
on December 16, 2002. While the RTC denied the motion in its
March 1, 2004 Order, the denial was clearly with respect only xxxx
to the enforcement of the garnishment, to wit:
Through the service of the writ of garnishment, the garnishee
Acting on the Motion for Execution and/or Enforcement of becomes a "virtual party" to, or a "forced intervenor" in, the
Garnishment filed by plaintiff Carlito Lee, and there being no case and the trial court thereby acquires jurisdiction to bind
evidence shown that the accounts subject of the motion were him to compliance with all orders and processes of the trial
taken over by the Bank of the Philippine Islands from Citytrust court with a view to the complete satisfaction of the judgment
Bank and considering further that Bank of Philippine Islands is of the court.17
not a party to this case, the instant Motion is DENIED for lack of
merit. Citytrust, therefore, upon service of the notice of garnishment
and its acknowledgment that it was in possession of
SO ORDERED.14 defendants' deposit accounts in its letter-reply dated June 28,
1988, became a "virtual party" to or a "forced intervenor" in
Consequently, the foregoing Order merely involved the the civil case. As such, it became bound by the orders and
implementation of a writ of execution, hence, interlocutory in processes issued by the trial court despite not having been
nature. An interlocutory order is one that does not finally properly impleaded therein. Consequently, by virtue of its
dispose of the case, and does not end the court's task of merger with BPI on October 4, 1996, BPI, as the surviving
adjudicating the parties’ contentions and determining their corporation, effectively became the garnishee, thus the "virtual
rights and liabilities as regards each other, but obviously party" to the civil case.
indicates that other things remain to be done.15
56
Corollarily, it should be emphasized that a merger of two an order made to that effect, the judgment oblige to institute
corporations produces, among others, the following effects: an action against such person or corporation for the recovery of
such interest or debt, forbid a transfer or other disposition of
1. The constituent corporations shall become a single such interest or debt within one hundred twenty (120) days
corporation which, in case of merger, shall be the surviving from notice of the order, and may punish disobedience of such
corporation designated in the plan of merger; and in case of order as for contempt. Such order may be modified or vacated
consolidation, shall be the consolidated corporation designated at any time by the court which issued it, or by the court in
in the plan of consolidation; which the action is brought, upon such terms as may be just.
(Underscoring supplied).
2. The separate existence of the constituent corporation shall
cease, except that of the surviving or the consolidated The institution of a separate action against a garnishee
corporation; contemplates a situation where the garnishee (third person)
"claims an interest in the property adverse to him (judgment
3. The surviving or the consolidated corporation shall possess debtor) or denies the debt."19 Neither of these situations exists
all the rights, privileges, immunities and powers and shall be in this case. The garnishee does not claim any interest in the
subject to all the duties and liabilities of a corporation deposit accounts of the defendants, nor does it deny the
organized under this Code; existence of the deposit accounts. In fact, Citytrust admitted in
its letter dated June 28, 1988 that it is in possession of the
4. The surviving or the consolidated corporation shall deposit accounts.
thereupon and thereafter possess all the rights, privileges,
immunities and franchises of each of the constituent Considering the foregoing disquisitions, BPI's liability for the
corporations; and all property, real or personal, and all garnished deposits of defendants has been clearly established.
receivables due on whatever account, including subscriptions to
shares and other choses in action, and all and every other Garnishment has been defined as a specie of attachment for
interest of, or belonging to, or due to each constituent reaching credits belonging to the judgment debtor and owing
corporation, shall be deemed transferred to and vested in such to him from a stranger to the litigation.20 A writ of attachment
surviving or consolidated corporation without further act or is substantially a writ of execution except that it emanates at
deed; and the beginning, instead of at the termination, of a suit. It places
the attached properties in custodia legis, obtaining pendente
5. The surviving or consolidated corporation shall be lite a lien until the judgment of the proper tribunal on the
responsible and liable for all the liabilities and obligations of plaintiff’s claim is established, when the lien becomes effective
each of the constituent corporations in the same manner as if as of the date of the levy.21
such surviving or consolidated corporation had itself incurred
such liabilities or obligations; and any pending claim, action or By virtue of the writ of garnishment, the deposits of the
proceeding brought by or against any of such constituent defendants with Citytrust were placed in custodia legis of the
corporations may be prosecuted by or against the surviving or court. From that time onwards, their deposits were under the
consolidated corporation. The rights of creditors or liens upon sole control of the RTC and Citytrust holds them subject to its
the property of any of such constituent corporations shall not orders until such time that the attachment or garnishment is
be impaired by such merger or consolidation.18 (Underscoring discharged, or the judgment in favor of Lee is satisfied or the
supplied) credit or deposit is delivered to the proper officer of the
court.22 Thus, Citytrust, and thereafter BPI, which
In sum, although Citytrust was dissolved, no winding up of its automatically assumed the former’s liabilities and obligations
affairs or liquidation of its assets, privileges, powers and upon the approval of their Articles of Merger, is obliged to keep
liabilities took place. As the surviving corporation, BPI simply the deposit intact and to deliver the same to the proper officer
continued the combined businesses of the two banks and upon order of the court.
absorbed all the rights, privileges, assets, liabilities and
obligations of Citytrust, including the latter’s obligation over the However, the RTC is not permitted to dissolve or discharge a
garnished deposits of the defendants. preliminary attachment or garnishment except on grounds
specifically provided23 in the Revised Rules of Court, namely,24
Adopting another tack, BPI claims that Lee should have instead (a) the debtor has posted a counter-bond or has made the
availed himself of the remedy provided under Section 43, Rule requisite cash deposit;25 (b) the attachment was improperly or
39 of the Revised Rules of Court because he is a third party to irregularly issued26 as where there is no ground for
the case who denies possession of the property. attachment, or the affidavit and/or bond filed therefor are
defective or insufficient; (c) the attachment is excessive, but the
The argument is specious. discharge shall be limited to the excess;27 (d) the property
attachment is exempt from preliminary attachment;28 or (e)
Section 43, Rule 39 of the Revised Rules of Court states: the judgment is rendered against the attaching creditor.29
SECTION 43. Proceedings when indebtedness denied or another Evidently, the loss of bank records of a garnished deposit is not
person claims the property. – If it appears that a person or a ground for the dissolution of garnishment. Consequently, the
corporation, alleged to have property of the judgment obligor obligation to satisfy the writ stands.
or to be indebted to him, claims an interest in the property
adverse to him or denies the debt, the court may authorize, by
57
Moreover, BPI cannot avoid the obligation attached to the writ unconstitutional Section 8(2) of Republic Act (R.A.) No. 6770,
of garnishment by claiming that the fund was not transferred to otherwise known as the Ombudsman Act of 1989, which gives
it, in light of the Articles of Merger which provides that "all the President the power to dismiss a Deputy Ombudsman of
liabilities and obligations of Citytrust shall be transferred to and the Office of the Ombudsman.
become the liabilities and obligations of BPI in the same
manner as if the BPI had itself incurred such liabilities or The second case, docketed as G.R. No. 196232, is a Petition for
obligations, and in order that the rights and interest of creditors Certiorari and Prohibition (with application for issuance of a
of Citytrust or liens upon the property of Citytrust shall not be temporary restraining order or status quo order) seeking to
impaired by merger."30 annul, reverse and set aside (1) the undated Order2 requiring
petitioner Wendell Barreras-Sulit to submit a written
Indubitably, BPI IS liable to deliver the fund subject of the writ explanation with respect to alleged acts or omissions
of garnishment. constituting serious/grave offenses in relation to the Plea
Bargaining Agreement (PLEBARA) entered into with Major
With regard to the amount of the garnished fund, the Court General Carlos F. Garcia; and (2) the April 7, 2011 Notice of
concurs with the finding of the CA that the total amount of Preliminary Investigation,3 both issued by the Office of the
garnished deposit of Trendline as of January 27, 1994 is President in OP-DC-Case No. 11-B-003, the administrative case
P700,962.10,31 extant in its motion for partial lifting of the writ initiated against petitioner as a Special Prosecutor of the Office
of preliminary attachment32 and which amount, as correctly of the Ombudsman. The petition likewise seeks to declare as
observed by the CA, remains undisputed33 throughout the unconstitutional Section 8(2) of R.A. No. 6770 giving the
proceedings relative to this case. President the power to dismiss a Special Prosecutor of the
Office of the Ombudsman.
WHEREFORE, the instant petition is DENIED and the assailed
February 11, 2009 Decision and October 29, 2009 Resolution of The facts from which these two cases separately took root are
the Court of Appeals are AFFIRMED. neither complicated nor unfamiliar.
24. EMILIO A. GONZALES III, Petitioner, vs.OFFICE OF THE In the morning of August 23, 2010, news media scampered for
PRESIDENT OF THE PHILIPPINES, acting through and a minute-by-minute coverage of a hostage drama that had
represented by EXECUTIVE SECRETARY PAQUITO N. OCHOA, slowly unfolded right at the very heart of the City of Manila.
JR., SENIOR DEPUTY EXECUTIVE SECRETARY JOSE AMOR M. While initial news accounts were fragmented it was not difficult
AMORANDO, Officer in Charge, Office of the Deputy Executive to piece together the story on the hostage-taker, Police Senior
Secretary for Legal Affairs, ATTY. RONALDO A. GERON, DIR. Inspector Rolando Mendoza. He was a disgruntled former
ROWENA TURINGAN-SANCHEZ, and ATTY. CARLITOD. police officer attempting to secure his reinstatement in the
CATAYONG, Respondents. police force and to restore the benefits of a life-long, and
erstwhile bemedaled, service. The following day, broadsheets
x-----------------------x and tabloids were replete with stories not just of the deceased
hostage-taker but also of the hostage victims, eight of whom
G.R. No. 196232 died during the bungled police operation to rescue the hapless
innocents. Their tragic deaths triggered word wars of foreign
WENDELL BARRERAS-SULIT, Petitioner, vs.ATTY. PAQUITO N. relation proportions. One newspaper headline ran the story in
OCHOA, JR., in his capacity as EXECUTIVE SECRETARY, OFFICE detail, as follows:
OF THE PRESIDENT, ATTY. DENNIS F. ORTIZ, ATTY. CARLO
D.SULAY and ATTY. FROILAN MONTALBAN, .JR., in their MANILA, Philippines - A dismissed policeman armed with an
capacities as CHAIRMAN and MEMBERS of the OFFICE OF assault rifle hijacked a bus packed with tourists, and killed most
MALACAÑANG LEGAL AFFAIRS, Respondents. of its passengers in a 10 hour-hostage drama shown live on
national television until last night.
These two petitions have been consolidated not because they
stem from the same factual milieu but because they raise a Former police senior inspector Rolando Mendoza was shot
common thread of issues relating to the President's exercise of dead by a sniper at past 9 p.m. Mendoza hijacked the bus and
the power to remove from office herein petitioners who claim took 21 Chinese tourists hostage, demanding his reinstatement
the protective cloak of independence of the constitutionally- to the police force.
created office to which they belong - the Office of the
Ombudsman. The hostage drama dragged on even after the driver of the bus
managed to escape and told police that all the remaining
The first case, docketed as G.R. No. 196231, is a Petition for passengers had been killed.
Certiorari (with application for issuance of temporary
restraining order or status quo order) which assails on Late into the night assault forces surrounded the bus and tried
jurisdictional grounds the Decision1 dated March 31, 2011 to gain entry, but a pair of dead hostages hand-cuffed to the
rendered by the Office of the President in OP Case No. 10-J-460 door made it difficult for them. Police said they fired at the
dismissing petitioner Emilio A. Gonzales III, Deputy Ombudsman wheels of the bus to immobilize it.
for the Military and Other Law Enforcement Offices (MOLEO),
upon a finding of guilt on the administrative charges of Gross Police used hammers to smash windows, door and wind-shield
Neglect of Duty and Grave Misconduct constituting a Betrayal but were met with intermittent fire from the hos-tage taker.
of Public Trust. The petition primarily seeks to declare as
58
Police also used tear gas in an effort to confirm if the remaining teams and snipers near the scene. A crisis man-agement
hostages were all dead or alive. When the standoff ended at committee had been activated with Manila Vice Mayor Isko
nearly 9 p.m., some four hostages were rescued alive while Moreno coordinating the actions with the MPD.
Mendoza was killed by a sniper.
Earlier last night, Ombudsman Merceditas Gutierrez had a
Initial reports said some 30 policemen stormed the bus. Shots meeting with Moreno to discuss Mendoza's case that led to his
also rang out, sending bystanders scampering for safety. dismissal from the service. Ombudsman spokesman Jose de
Jesus said Gutierrez gave a "sealed letter" to Moreno to be
It took the policemen almost two hours to assault the bus delivered to Mendoza. De Jesus did not elaborate on the
because gunfire reportedly rang out from inside the bus. contents of the letter but said Moreno was tasked to personally
deliver the letter to Mendoza.
Mendoza hijacked the tourist bus in the morning and took the
tourists hostage. MPD spokesman Chief Inspector Edwin Margarejo said
Mendoza was apparently distraught by the slow process of the
Mendoza, who claimed he was illegally dismissed from the Ombudsman in deciding his motion for reconside-ration. He
police service, initially released nine of the hostages during the said the PNP-Internal Affairs Service and the Manila Regional
drama that began at 10 a.m. and played out live on national Trial Court had already dismissed crim-inal cases against him.
television.
The hostage drama began when Mendoza flagged down the
Live television footage showed Mendoza asking for food for Hong Thai Travel Tourist bus (TVU-799), pretend-ing to hitch a
those remaining in the bus, which was delivered, and fuel to ride. Margarejo said the bus had just left Fort Santiago in
keep the air-conditioning going. The disgruntled former police Intramuros when Mendoza asked the driver to let him get on
officer was reportedly armed with an M-16 rifle, a 9 mm pistol and ride to Quirino Grandstand. Upon reaching the Quirino
and two hand grenades. Grandstand, Mendoza an-nounced to the passengers that they
would be taken hostage. "Having worn his (police) uniform, of
Mendoza posted a handwritten note on the windows of the course there is no doubt that he already planned the hostage
bus, saying "big deal will start after 3 p.m. today." Another sign taking," Margarejo said. - Sandy Araneta, Nestor Etolle, Delon
stuck to another window said "3 p.m. today deadlock." Porcalla, Amanda Fisher, Cecille Suerte Felipe, Christi-na
Mendez, AP Grandstand Carnage, The Philippine Star, Updated
Stressing his demand, Mendoza stuck a piece of paper with a August 24, 2010 12:00 AM, Val Rodri-guez.4
handwritten message: "Big mistake to correct a big wrong
decision." A larger piece of paper on the front windshield was In a completely separate incident much earlier in time, more
headed, "Release final decision," apparently referring to the particularly in December of 2003, 28-year-old Juan Paolo Garcia
case that led to his dismissal from the police force. and 23-year-old Ian Carl Garcia were caught in the United
States smuggling $100,000 from Manila by concealing the cash
Negotiations dragged on even after Mendoza's self-imposed in their luggage and making false statements to US Customs
deadline. Officers. The Garcia brothers pleaded guilty to bulk cash
smuggling and agreed to forfeit the amount in favor of the US
Senior Police Officer 2 Gregorio Mendoza said his brother was Government in exchange for the dismissal of the rest of the
upset over his dismissal from the police force. "His problem was charges against them and for being sentenced to time served.
he was unjustly removed from service. There was no due Inevitably, however, an investigation into the source of the
process, no hearing, no com-plaint," Gregorio said. smuggled currency conducted by US Federal Agents and the
Philippine Government unraveled a scandal of military
Last night, Gregorio was arrested by his colleagues on corruption and amassed wealth -- the boys' father, Retired
suspicions of being an accessory to his brother's action. Major General Carlos F. Garcia, former Chief Procurement
Tensions rose as relatives tried to prevent lawmen from Officer of the Armed Forces, had accumulated more than ₱ 300
arresting Gregorio in front of national television. This triggered Million during his active military service. Plunder and Anti-
the crisis that eventually forced Mendoza to carry out his threat Money Laundering cases were eventually filed against Major
and kill the remaining hostages. General Garcia, his wife and their two sons before the
Sandiganbayan.
Negotiators led by Superintendent Orlando Yebra and Chief
Inspector Romeo Salvador tried to talk Mendoza into G.R. No. 196231
surrendering and releasing the 21 hostages, mostly children
and three Filipinos, including the driver, the tourist guide and a Sometime in 2008, a formal charge5 for Grave Misconduct
photographer. Yebra reportedly lent a cellphone to allow (robbery, grave threats, robbery extortion and physical injuries)
communications with Mendoza in-side the bus, which was was filed before the Philippine National Police-National Capital
parked in front ofthe Quirino Grandstand. Region (PNP-NCR) against Manila Police District Senior
Inspector (P/S Insp.) Rolando Mendoza, and four others,
Children could be seen peeking from the drawn curtains of the namely, Police Inspector Nelson Lagasca, Senior Police
bus while police negotiators hovered near the scene. Inspector I Nestor David, Police Officer III Wilson Gavino, and
Police Officer II Roderick Lopena. A similar charge was filed by
Manila Police District (MPD) director Chief Superinten-dent the private complainant, Christian M. Kalaw, before the Office
Rodolfo Magtibay ordered the deployment of crack police of the City Prosecutor, Manila, docketed as I.S. No. 08E-09512.
59
In the aftermath of the hostage-taking incident, which ended in
On July 24, 2008, while said cases were still pending, the Office the tragic murder of eight HongKong Chinese nationals, the
of the Regional Director of the National Police Commission injury of seven others and the death of P/S Insp. Rolando
(NPC) turned over, upon the request of petitioner Emilio A. Mendoza, a public outcry against the blundering of government
Gonzales III, all relevant documents and evidence in relation to officials prompted the creation of the Incident Investigation and
said case to the Office of the Deputy Ombudsman for Review Committee (IIRC),13 chaired by Justice Secretary Leila
appropriate administrative adjudication.6 Subsequently, Case de Lima and vice-chaired by Interior and Local Government
No. OMB-P-A-08-0670-H for Grave Misconduct was lodged Secretary Jesus Robredo. It was tasked to determine
against P/S Insp. Rolando Mendoza and his fellow police accountability for the incident through the conduct of public
officers, who filed their respective verified position papers as hearings and executive sessions. However, petitioner, as well as
directed. the Ombudsman herself, refused to participate in the IIRC
proceedings on the assertion that the Office of the Ombudsman
Meanwhile, on August 26, 2008, I.S. No. 08E-09512 was is an independent constitutional body.
dismissed7 upon a finding that the material allegations made by
the complainant had not been substantiated "by any evidence Sifting through testimonial and documentary evidence, the IIRC
at all to warrant the indictment of respondents of the offenses eventually identified petitioner Gonzales to be among those in
charged." Similarly, the Internal Affairs Service of the PNP whom culpability must lie. In its Report,14 the IIRC made the
issued a Resolution8 dated October 17, 2008 recommending following findings:
the dismissal without prejudice of the administrative case
against the same police officers, for failure of the complainant Deputy Ombudsman Gonzales committed serious and
to appear in three (3) consecutive hearings despite due notice. inexcusable negligence and gross violation of their own rules of
procedure by allowing Mendoza's motion for reconsideration to
However, on February 16, 2009, upon the recommendation of languish for more than nine (9) months without any
petitioner Emilio Gonzales III, a Decision9 in Case No. OMB-P-A- justification, in violation of the Ombudsman prescribed rules to
08-0670-H finding P/S Insp. Rolando Mendoza and his fellow resolve motions for reconsideration in administrative
police officers guilty of Grave Misconduct was approved by the disciplinary cases within five (5) days from submission. The
Ombudsman. The dispositive portion of said Decision reads: inaction is gross, considering there is no opposition thereto.
The prolonged inaction precipitated the desperate resort to
WHEREFORE, it is respectfully recommended that respondents hostage-taking.
P/S Insp. ROLANDO DEL ROSARIO MENDOZA and PO3 WILSON
MATIC GAVINO of PRO-ARMM, Camp Brig. Gen. Salipada K. More so, Mendoza's demand for immediate resolution of his
Pendatun, Parang, Shariff Kabunsuan; P/INSP. NELSON URBANO motion for reconsideration is not without legal and compelling
LAGASCA, SPO1 NESTOR REYES DAVID and PO2 RODERICK bases considering the following:
SALVA LOPEÑA of Manila Police District, Headquarters, United
Nations Avenue, Manila, be meted the penalty of DISMISSAL (a) PSI Mendoza and four policemen were investigated by the
from the Service, pursuant to Section 52 (A), Rule IV, Uniform Ombudsman involving a case for alleged robbery (extortion),
Rules on Administrative Cases in the Civil Service, with the grave threats and physical injuries amounting to grave
accessory penalties of forfeiture of retirement benefits and misconduct allegedly committed against a certain Christian
perpetual disqualification from reemployment in the Kalaw. The same case, however, was previously dismissed by
government service pursuant to Section 58, Rule IV of the same the Manila City Prosecutors Office for lack of probable cause
Uniform Rules of Administrative Cases in the Civil Service, for and by the PNP-NCR Internal Affairs Service for failure of the
having committed GRAVE MISCONDUCT. complainant (Christian Kalaw) to submit evidence and
prosecute the case. On the other hand, the case which was filed
On November 5, 2009, they filed a Motion for much ahead by Mendoza et al. against Christian Kalaw involving
Reconsideration10 of the foregoing Decision, followed by a the same incident, was given due course by the City
Supplement to the Motion for Reconsideration11 on November Prosecutors Office.
19, 2009. On December 14, 2009, the pleadings mentioned and
the records of the case were assigned for review and (b) The Ombudsman exercised jurisdiction over the case based
recommendation to Graft Investigation and Prosecutor Officer on a letter issued motu proprio for Deputy Ombudsman Emilio
Dennis L. Garcia, who released a draft Order12 on April 5, 2010 A. Gonzalez III, directing the PNP-NCR - without citing any
for appropriate action by his immediate superior, Director reason - to endorse the case against Mendoza and the arresting
Eulogio S. Cecilio, who, in turn, signed and forwarded said policemen to his office for administrative adjudication, thereby
Order to petitioner Gonzalez's office on April 27, 2010. Not showing undue interest on the case. He also caused the
more than ten (10) days after, more particularly on May 6, docketing of the case and named Atty. Clarence V. Guinto of
2010, petitioner endorsed the Order, together with the case the PNP-CIDG-NCR, who indorsed the case records, as the
records, for final approval by Ombudsman Merceditas N. nominal complainant, in lieu of Christian Kalaw. During the
Gutierrez, in whose office it remained pending for final review proceedings, Christian Kalaw did not also affirm his complaint-
and action when P/S Insp. Mendoza hijacked a bus-load of affidavit with the Ombudsman or submit any position paper as
foreign tourists on that fateful day of August 23, 2010 in a required.
desperate attempt to have himself reinstated in the police
service. (c) Subsequently, Mendoza, after serving preventive
suspension, was adjudged liable for grave misconduct by
Deputy Ombudsman Gonzales (duly approved on May 21, 2009)
60
based on the sole and uncorroborated complaint-affidavit of xxxx
Christian Kalaw, which was not previously sustained by the City
Prosecutor's Office and the PNP Internal Affairs Service. From When the two Ombudsman officials received Mendoza's
the said Resolution, Mendoza interposed a timely motion for demand for the release of the final order resolving his motion
reconsideration (dated and filed November 5, 2009) as well as a for reconsideration, they should have performed their duty by
supplement thereto. No opposition or comment was filed resolving the reconsideration that same day since it was already
thereto. pending for nine months and the prescribed period for its
resolution is only five days. Or if they cannot resolve it that
(d) Despite the pending and unresolved motion for same day, then they should have acted decisively by issuing an
reconsideration, the judgment of dismissal was enforced, order provisionally suspending the further enforcement of the
thereby abruptly ending Mendoza's 30 years of service in the judgment of dismissal subject to revocation once the
PNP with forfeiture of all his benefits. As a result, Mendoza reconsideration is denied and without prejudice to the arrest
sought urgent relief by sending several hand-written letter- and prosecution of Mendoza for the hostage-taking. Had they
requests to the Ombudsman for immediate resolution of his done so, the crisis may have ended peacefully, without
motion for reconsideration. But his requests fell on deaf ears. necessarily compromising the integrity of the institution. After
all, as relayed to the negotiators, Mendoza did express
xxxx willingness to take full responsibility for the hostage-taking if
his demand for release of the final decision or reinstatement
By allowing Mendoza's motion for reconsideration to languish was met.
for nine long (9) months without any justification, Ombudsman
Gutierrez and Deputy Ombudsman Gonzales committed But instead of acting decisively, the two Ombudsman officials
complete and wanton violation of the Ombudsman prescribed merely offered to review a pending motion for review of the
rule to resolve motions for reconsideration in administrative case, thereby prolonging their inaction and aggravating the
disciplinary cases within five (5) days from submission (Sec. 8, situation. As expected, Mendoza - who previously berated
Ombudsman Rules of Procedure). The inaction is gross, there Deputy Gonzales for allegedly demanding Php150,000 in
being no opposition to the motion for reconsideration. exchange for favorably resolving the motion for reconsideration
- rejected and branded as trash ("basura") the Ombudsman [sic]
Besides, the Ombudsman, without first resolving the motion for letter promising review, triggering the collapse of the
reconsideration, arbitrarily enforced the judgment of dismissal negotiations. To prevent the situation from getting out of hand,
and ignored the intervening requests for immediate resolution, the negotiators sought the alternative option of securing before
thereby rendering the inaction even more inexcusable and the PNP-NCRPO an order for Mendoza's provisional
unjust as to amount to gross negligence and grave misconduct. reinstatement pending resolution of the motion for
reconsideration. Unfortunately, it was already too late. But had
SECOND, Ombudsman Gutierrez and Deputy Ombudsman the Ombudsman officials performed their duty under the law
Gonzales committed serious disregard of due process, manifest and acted decisively, the entire crisis may have ended
injustice and oppression in failing to provisionally suspend the differently.
further implementation of the judgment of dismissal against
Mendoza pending disposition of his unresolved motion for The IIRC recommended that its findings with respect to
reconsideration. petitioner Gonzales be referred to the Office of the President
(OP) for further determination of possible administrative
By enforcing the judgment of dismissal without resolving the offenses and for the initiation of the proper administrative
motion for reconsideration for over nine months, the two proceedings.
Ombudsman officials acted with arbitrariness and without
regard to due process and the constitutional right of an accused On October 15, 2010, the OP instituted a Formal Charge15
to the speedy disposition of his case. As long as his motion for against petitioner Gonzales for Gross Neglect of Duty and/or
reconsideration remained pending and unresolved, Mendoza Inefficiency in the Performance of Official Duty under Rule XIV,
was also effectively deprived of the right to avail of the ordinary Section 22 of the Omnibus Rules Implementing Book V of E.O.
course of appeal or review to challenge the judgment of No. 292 and other pertinent Civil
dismissal before the higher courts and seek a temporary
restraining order to prevent the further execution thereof. Service Laws, rules and regulations, and for Misconduct in
Office under Section 3 of the Anti-Graft and Corrupt Practices
As such, if the Ombudsman cannot resolve with dispatch the Act.16 Petitioner filed his Answer17 thereto in due time.
motion for reconsideration, it should have provisionally
suspended the further enforcement of the judgment of Shortly after the filing by the OP of the administrative case
dismissal without prejudice to its re-implementation if the against petitioner, a complaint dated October 29, 2010 was
reconsideration is eventually denied. Otherwise, the filed by Acting Assistant Ombudsman Joselito P. Fangon before
Ombudsman will benefit from its own inaction. Besides, the the Internal Affairs Board of the Office of the Ombudsman
litigant is entitled to a stay of the execution pending resolution charging petitioner with "directly or indirectly requesting or
of his motion for reconsideration. Until the motion for receiving any gift, present, share, percentage, or benefit, for
reconsideration is denied, the adjudication process before the himself or for any other person, in connection with any contract
Ombudsman cannot be considered as completely finished and, or transaction between the Government and any other party,
hence, the judgment is not yet ripe for execution. wherein the public officer in his official capacity has to
intervene under the law" under Section 3(b) of the Anti-Graft
61
and Corrupt Practices Act, and also, with solicitation or
acceptance of gifts under Section 7(d) of the Code of Conduct Outraged by the backroom deal that could allow Major General
and Ethical Standards.18 In a Joint Resolution19 dated February Garcia to get off the hook with nothing but a slap on the hand
17, 2011, which was approved by Ombudsman Ma. Merceditas notwithstanding the prosecution's apparently strong evidence
N. Gutierrez, the complaint was dismissed, as follows: of his culpability for serious public offenses, the House of
Representatives' Committee on Justice conducted public
WHEREFORE, premises considered, finding no probable cause hearings on the PLEBARA. At the conclusion of these public
to indict respondent Emilio A. Gonzales III for violations of hearings, the Committee on Justice passed and adopted
Section 3(b) of R.A. No. 3019 and Section 7(d) of R.A. No. 6713, Committee Resolution No. 3,24 recommending to the President
the complaint is hereby be [sic] DISMISSED. the dismissal of petitioner Barreras-Sulit from the service and
the filing of appropriate charges against her Deputies and
Further, finding no sufficient evidence to hold respondent Assistants before the appropriate government office for having
administratively liable for Misconduct, the same is likewise committed acts and/or omissions tantamount to culpable
DISMISSED. violations of the Constitution and betrayal of public trust, which
are violations under the Anti-Graft and Corrupt Practices Act
Meanwhile, the OP notified20 petitioner that a Preliminary and grounds for removal from office under the Ombudsman
Clarificatory Conference relative to the administrative charge Act.
against him was to be conducted at the Office of the Deputy
Executive Secretary for Legal Affairs (ODESLA) on February 8, The Office of the President initiated OP-DC-Case No. 11-B-003
2011. Petitioner Gonzales alleged,21 however, that on February against petitioner Barreras-Sulit. In her written explanation,
4, 2011, he heard the news that the OP had announced his petitioner raised the defenses of prematurity and the lack of
suspension for one year due to his delay in the disposition of jurisdiction of the OP with respect to the administrative
P/S Insp. Mendoza's motion for reconsideration. Hence, disciplinary proceeding against her. The OP, however, still
believing that the OP had already prejudged his case and that proceeded with the case, setting it for preliminary investigation
any proceeding before it would simply be a charade, petitioner on April 15, 2011.
no longer attended the scheduled clarificatory conference.
Instead, he filed an Objection to Proceedings22 on February 7, Hence, the petition.
2011. Despite petitioner's absence, however, the OP pushed
through with the proceedings and, on March 31, 2011, The Issues
rendered the assailed Decision,23 the dispositive portion of
which reads: In G.R. No. 196231, petitioner Gonzales raises the following
grounds, to wit:
WHEREFORE, in view of the foregoing, this Office finds Deputy
Ombudsman Emilio A. Gonzales III guilty of Gross Neglect of (A)
Duty and Grave Misconduct constituting betrayal of public
trust, and hereby meted out the penalty of DISMISSAL from RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH
service. THE OTHER INDIVIDUAL RESPONDENTS, HAS NO
CONSTITUTIONAL OR VALID STATUTORY AUTHORITY TO
SO ORDERED. SUBJECT PETITIONER TO AN ADMINISTRATIVE INVESTIGATION
AND TO THEREAFTER ORDER HIS REMOVAL AS DEPUTY
Hence, the petition. OMBUDSMAN.
In April of 2005, the Acting Deputy Special Prosecutor of the RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH
Office of the Ombudsman charged Major General Carlos F. THE OTHER INDIVIDUAL RESPONDENTS, GRAVELY ABUSED ITS
Garcia, his wife Clarita D. Garcia, their sons Ian Carl Garcia, Juan DISCRETION AMOUNTING TO LACK OR EXCESS OF
Paulo Garcia and Timothy Mark Garcia and several unknown JURISDICTION WHEN IT CONDUCTED ITS INVESTIGATION AND
persons with Plunder (Criminal Case No. 28107) and Money RENDERED ITS DECISION IN VIOLATION OF PETITIONER'S RIGHT
Laundering (Criminal Case No. SB09CRM0194) before the TO DUE PROCESS.
Sandiganbayan.
(C)
On January 7, 2010, the Sandiganbayan denied Major General
Garcia's urgent petition for bail holding that strong prosecution RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH
evidence militated against the grant of bail. On March 16, 2010, THE INDIVIDUAL RESPONDENTS, GRAVELY ABUSED ITS
however, the government, represented by petitioner, Special DISCRETION AMOUNTING TO LACK OR EXCESS OF
Prosecutor Wendell Barreras-Sulit ("Barreras-Sulit") and her JURISDICTION IN FINDING THAT PETITIONER COMMITTED
prosecutorial staff sought the Sandiganbayan's approval of a DELAY IN THE DISPOSITION OF MENDOZA'S MOTION FOR
Plea Bargaining Agreement (hereinafter referred to as RECONSIDERATION.
"PLEBARA") entered into with the accused. On May 4, 2010, the
Sandiganbayan issued a Resolution finding the change of plea
warranted and the PLEBARA compliant with jurisprudential (D)
guidelines.
62
RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH The ombudsman traces its origins to the primitive legal order of
THE INDIVIDUAL RESPONDENTS, GRAVELY ABUSED ITS Germanic tribes. The Swedish term, which literally means
DISCRETION AMOUNTING TO LACK OR EXCESS OF "agent" or "representative," communicates the concept that
JURISDICTION IN FINDING THAT PETITIONER TOOK UNDUE has been carried on into the creation of the modern-day
INTEREST IN MENDOZA'S CASE. ombudsman, that is, someone who acts as a neutral
representative of ordinary citizens against government
(E) abuses.29 This idea of a people's protector was first
institutionalized in the Philippines under the 1973 Constitution
RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH with the creation of the Tanodbayan, which wielded the twin
THE INDIVIDUAL RESPONDENTS, GRAVELY ABUSED ITS powers of investigation and prosecution. Section 6, Article XIII
DISCRETION AMOUNTING TO LACK OR EXCESS OF of the 1973 Constitution provided thus:
JURISDICTION IN FAULTING PETITIONER FOR NOT RELEASING
THE RESOLUTION ON MENDOZA'S MOTION FOR Sec. 6. The Batasang Pambansa shall create an office of the
RECONSIDERATION OR FOR NOT SUSPENDING MENDOZA'S Ombudsman, to be known as Tanodbayan, which shall receive
DISMISSAL FROM SERVICE DURING THE HOSTAGE CRISIS. and investigate complaints relative to public office, including
those in government-owned or controlled corporations, make
(F) appropriate recommendations, and in case of failure of justice
as defined by law, file and prosecute the corresponding
RESPONDENT OFFICE OF THE PRESIDENT, ACTING THROUGH criminal, civil, or administrative case before the proper court or
THE INDIVIDUAL RESPONDENTS, GRAVELY ABUSED ITS body.
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN FINDING THAT THERE WAS SUBSTANTIAL The framers of the 1987 Constitution later envisioned a more
EVIDENCE TO SHOW THAT PETITIONER DEMANDED A BRIBE effective ombudsman vested with authority to "act in a quick,
FROM MENDOZA.25 inexpensive and effective manner on complaints against
administrative officials", and to function purely with the
On the other hand, in G.R. No. 196232, petitioner Barreras-Sulit "prestige and persuasive powers of his office" in correcting
poses for the Court the question - improprieties, inefficiencies and corruption in government
freed from the hampering effects of prosecutorial duties.30
AS OF THIS POINT IN TIME, WOULD TAKING AND CONTINUING Accordingly, Section 13, Article XI of the 1987 Constitution
TO TAKE ADMINISTRATIVE DISCIPLINARY PROCEEDING AGAINST enumerates the following powers, functions, and duties of the
PETITIONER BE LAWFUL AND JUSTIFIABLE?26 Office of the Ombudsman, viz:
Re-stated, the primordial question in these two petitions is (1) Investigate on its own, or on complaint by any person, any
whether the Office of the President has jurisdiction to exercise act or omission of any public official, employee, office or
administrative disciplinary power over a Deputy Ombudsman agency, when such act or omission appears to be illegal, unjust,
and a Special Prosecutor who belong to the constitutionally- improper, or inefficient.
created Office of the Ombudsman.
(2) Direct, upon complaint or at its own instance, any public
The Court's Ruling official or employee of the Government, or any subdivision,
agency or instrumentality thereof, as well as of any
Short of claiming themselves immune from the ordinary means government-owned or controlled corporation with original
of removal, petitioners asseverate that the President has no charter, to perform and expedite any act or duty required by
disciplinary jurisdiction over them considering that the Office of law, or to stop, prevent, and correct any abuse or impropriety
the Ombudsman to which they belong is clothed with in the performance of duties.
constitutional independence and that they, as Deputy
Ombudsman and Special Prosecutor therein, necessarily bear (3) Direct the officer concerned to take appropriate action
the constitutional attributes of said office. against a public official or employee at fault, and recommend
his removal, suspension, demotion, fine, censure, or
The Court is not convinced. prosecution, and ensure compliance therewith.
The Ombudsman's administrative (4) Direct the officer concerned, in any appropriate case, and
disciplinary power over a Deputy subject to such limitations as may be provided by law, to
Ombudsman and Special Prose-cutor is not exclusive. furnish it with copies of documents relating to contracts or
transactions entered into by his office involving the
It is true that the authority of the Office of the Ombudsman to disbursement or use of public funds or properties, and report
conduct administrative investigations proceeds from its any irregularity to the Commission on Audit for appropriate
constitutional mandate to be an effective protector of the action.
people against inept and corrupt government officers and
employees,27 and is subsumed under the broad powers (5) Request any government agency for assistance and
"explicitly conferred" upon it by the 1987 Constitution and R.A. information necessary in the discharge of its responsibilities,
No. 6770.28 and to examine, if necessary, pertinent records and documents.
63
(6) Publicize matters covered by its investigation when Section 8. Removal; Filling of Vacancy.-
circumstances so warrant and with due prudence.
xxxx
(7) Determine the causes of inefficiency, red tape,
mismanagement, fraud, and corruption in the Government and (2) A Deputy or the Special Prosecutor, may be removed from
make recommendations for their elimination and the office by the President for any of the grounds provided for the
observance of high standards of ethics and efficiency. removal of the Ombudsman, and after due process.
(8) Promulgate its rules of procedure and exercise such other It is a basic canon of statutory construction that in interpreting
powers or perform such functions or duties as may be provided a statute, care should be taken that every part thereof be given
by law.31 effect, on the theory that it was enacted as an integrated
measure and not as a hodge-podge of conflicting provisions. A
Congress thereafter passed, on November 17, 1989, Republic construction that would render a provision inoperative should
Act No. 6770, the Ombudsman Act of 1989, to shore up the be avoided; instead, apparently inconsistent provisions should
Ombudsman's institutional strength by granting it "full be reconciled whenever possible as parts of a coordinated and
administrative disciplinary power over public officials and harmonious whole.33 Otherwise stated, the law must not be
employees,"32 as follows: read in truncated parts. Every part thereof must be considered
together with the other parts, and kept subservient to the
Sec. 21. Officials Subject to Disciplinary Authority; Exceptions. - general intent of the whole enactment.34
The Office of the Ombudsman shall have disciplinary authority
over all elective and appointive officials of the Government and A harmonious construction of these two apparently conflicting
its subdivisions, instrumentalities and agencies, including provisions in R.A. No. 6770 leads to the inevitable conclusion
Members of the Cabinet, local government, government-owned that Congress had intended the Ombudsman and the President
or controlled corporations and their subsidiaries, except over to exercise concurrent disciplinary jurisdiction over petitioners
officials who may be removed only by impeachment or over as Deputy Ombudsman and Special
Members of Congress, and the Judiciary.(Emphasis supplied)
Prosecutor, respectively. This sharing of authority goes into the
In the exercise of such full administrative disciplinary authority, wisdom of the legislature, which prerogative falls beyond the
the Office of the Ombudsman was explicitly conferred the pale of judicial inquiry. The Congressional deliberations on this
statutory power to conduct administrative investigations under matter are quite insightful, viz:
Section 19 of the same law, thus:
x x x Senator Angara explained that the phrase was added to
Sec. 19. Administrative complaints. - The Ombudsman shall act highlight the fact that the Deputy Tanodbayan may only be
on all complaints relating, but not limited, to acts or omissions removed for cause and after due process. He added that the
which: President alone has the power to remove the Deputy
Tanodbayan.
1. Are contrary to law or regulation;
Reacting thereto, Senator Guingona observed that this might
2. Are unreasonable, unfair, oppressive or discriminatory; impair the independence of the Tanodbayan and suggested
that the procedural removal of the Deputy Tanodbayan...; and
3. Are inconsistent with the general course of an agency's that he can be removed not by the President but by the
functions, though in accordance with law; Ombudsman.
4. Proceed from a mistake of law or an arbitrary ascertainment However, the Chair expressed apprehension that the
of facts; Ombudsman and the Deputy Ombudsman may try to protect
one another. The Chair suggested the substitution of the phrase
5. Are in the exercise of discretionary powers but for an "after due process" with the words after due notice and hearing
improper purpose; or with the President as the ultimate authority.
6. Are otherwise irregular, immoral or devoid of justification. Senator Guingona contended, however, that the Constitution
provides for an independent Office of the Tanodbayan, and to
While the Ombudsman's authority to discipline administratively allow the Executive to have disciplinary powers over the
is extensive and covers all government officials, whether Tanodbayan Deputies would be an encroachment on the
appointive or elective, with the exception only of those officials independence of the Tanodbayan.
removable by impeachment, the members of congress and the
judiciary, such authority is by no means exclusive. Petitioners Replying thereto, Senator Angara stated that originally, he was
cannot insist that they should be solely and directly subject to not averse to the proposal, however, considering the Chair's
the disciplinary authority of the Ombudsman. For, while Section observation that vesting such authority upon the Tanodbayan
21 declares the Ombudsman's disciplinary authority over all itself could result in mutual protection, it is necessary that an
government officials, Section 8(2), on the other hand, grants outside official should be vested with such authority to effect a
the President express power of removal over a Deputy check and balance.35
Ombudsman and a Special Prosecutor. Thus:
64
Indubitably, the manifest intent of Congress in enacting both any implied repeal, and all efforts should be exerted in order to
provisions - Section 8(2) and Section 21 - in the same Organic harmonize and give effect to all laws on the subject.37
Act was to provide for an external authority, through the
person of the President, that would exercise the power of While Hagad v. Gozo Dadole38 upheld the plenary power of the
administrative discipline over the Deputy Ombudsman and Office of the Ombudsman to discipline elective officials over the
Special Prosecutor without in the least diminishing the same disciplinary authority of the President under R.A. No.
constitutional and plenary authority of the Ombudsman over all 7160, the more recent case of the Office of the Ombudsman v.
government officials and employees. Such legislative design is Delijero39 tempered the exercise by the Ombudsman of such
simply a measure of "check and balance" intended to address plenary power invoking Section 23(2)40 of R.A. No. 6770, which
the lawmakers' real and valid concern that the Ombudsman gives the Ombudsman the option to "refer certain complaints
and his Deputy may try to protect one another from to the proper disciplinary authority for the institution of
administrative liabilities. appropriate administrative proceedings against erring public
officers or employees." The Court underscored therein the clear
This would not be the first instance that the Office of the legislative intent of imposing "a standard and a separate set of
President has locked horns with the Ombudsman on the matter procedural requirements in connection with administrative
of disciplinary jurisdiction. An earlier conflict had been settled proceedings involving public school teachers"41 with the
in favor of shared authority in Hagad v. Gozo Dadole.36 In said enactment of R.A. No. 4670, otherwise known as "The Magna
case, the Mayor and Vice-Mayor of Mandaue City, and a Carta for Public School Teachers." It thus declared that, while
member of the Sangguniang Panlungsod, were charged before the Ombudsman's administrative disciplinary authority over a
the Office of the Deputy Ombudsman for the Visayas with public school teacher is concurrent with the proper
violations of R.A. No. 3019, R.A. No. 6713, and the Revised investigating committee of the Department of Education, it
Penal Code. The pivotal issue raised therein was whether the would have been more prudent under the circumstances for
Ombudsman had been divested of his authority to conduct the Ombudsman to have referred to the DECS the complaint
administrative investigations over said local elective officials by against the public school teacher.
virtue of the subsequent enactment of the Local Government
Code of 1991 (R.A. No. 7160), the pertinent provision of which Unquestionably, the Ombudsman is possessed of jurisdiction to
states: discipline his own people and mete out administrative
sanctions upon them, including the extreme penalty of
Sec. 61. Form and Filing of Administrative Complaints.- A dismissal from the service. However, it is equally without
verified complaint against any erring local elective official shall question that the President has concurrent authority with
be prepared as follows: respect to removal from office of the Deputy Ombudsman and
Special Prosecutor, albeit under specified conditions.
(a) A complaint against any elective official of a province, a Considering the principles attending concurrence of jurisdiction
highly urbanized city, an independent component city or where the Office of the President was the first to initiate a case
component city shall be filed before the Office of the President. against petitioner Gonzales, prudence should have prompted
the Ombudsman to desist from proceeding separately against
The Court resolved said issue in the negative, upholding the petitioner through its Internal Affairs Board, and to defer
ratiocination of the Solicitor General that R.A. No. 7160 should instead to the President's assumption of authority, especially
be viewed as having conferred on the Office of the President, when the administrative charge involved "demanding and
but not on an exclusive basis, disciplinary authority over local soliciting a sum of money" which constitutes either graft and
elective officials. Despite the fact that R.A. No. 7160 was the corruption or bribery, both of which are grounds reserved for
more recent expression of legislative will, no repeal of pertinent the President's exercise of his authority to remove a Deputy
provisions in the Ombudsman Act was inferred therefrom. Thus Ombudsman.
said the Court:
In any case, assuming that the Ombudsman's Internal Affairs
Indeed, there is nothing in the Local Government Code to Board properly conducted a subsequent and parallel
indicate that it has repealed, whether expressly or impliedly, administrative action against petitioner, its earlier dismissal of
the pertinent provisions of the Ombudsman Act. The two the charge of graft and corruption against petitioner could not
statutes on the specific matter in question are not so have the effect of preventing the Office of the President from
inconsistent, let alone irreconcilable, as to compel us to only proceeding against petitioner upon the same ground of graft
uphold one and strike down the other. Well settled is the rule and corruption. After all, the doctrine of res judicata applies
that repeals of laws by implication are not favored, and that only to judicial or quasi-judicial proceedings, not to the exercise
courts must generally assume their congruent application. The of administrative powers.42 In Montemayor v. Bundalian,43
two laws must be absolutely incompatible, and a clear finding the Court sustained the President's dismissal from service of a
thereof must surface, before the inference of implied repeal Regional Director of the Department of Public Works and
may be drawn. The rule is expressed in the maxim, interpretare Highways (DPWH) who was found liable for unexplained wealth
et concordare legibus est optimus interpretendi, i.e., every upon investigation by the now defunct Philippine Commission
statute must be so interpreted and brought into accord with Against Graft and Corruption (PCAGC). The Court categorically
other laws as to form a uniform system of jurisprudence. The ruled therein that the prior dismissal by the Ombudsman of
fundament is that the legislature should be presumed to have similar charges against said official did not operate as res
known the existing laws on the subject and not to have enacted judicata in the PCAGC case.
conflicting statutes. Hence, all doubts must be resolved against
By granting express statutory
65
power to the President to remove THE PRESIDENT. The purpose of the amendment of
a Deputy Ombudsman and a Commissioner Davide is not just to include the Ombudsman
Special Prosecutor, Congress among those officials who have to be removed from office only
merely filled an obvious gap in onimpeachment. Is that right?
the law.
The Power of the President to
Section 9, Article XI of the 1987 Constitution confers upon the Remove a Deputy Ombudsman
President the power to appoint the Ombudsman and his and a Special Prosecutor is
Deputies, viz: Implied from his Power to
Appoint.
Section 9. The Ombudsman and his Deputies shall be appointed
by the President from a list of at least six nominees prepared by Under the doctrine of implication, the power to appoint carries
the Judicial and Bar Council, and from a list of three nominees with it the power to remove.48 As a general rule, therefore, all
for every vacancy thereafter. Such appointments shall require officers appointed by the President are also removable by
no confirmation. All vacancies shall be filled within three him.49 The exception to this is when the law expressly provides
months after they occur. otherwise - that is, when the power to remove is expressly
vested in an office or authority other than the appointing
While the removal of the Ombudsman himself is also expressly power. In some cases, the Constitution expressly separates the
provided for in the Constitution, which is by impeachment power to remove from the President's power to appoint. Under
under Section 244 of the same Article, there is, however, no Section 9, Article VIII of the 1987 Constitution, the Members of
constitutional provision similarly dealing with the removal from the Supreme Court and judges of lower courts shall be
office of a Deputy Ombudsman, or a Special Prosecutor, for appointed by the President. However, Members of the
that matter. By enacting Section 8(2) of R.A. 6770, Congress Supreme Court may be removed after impeachment
simply filled a gap in the law without running afoul of any proceedings initiated by Congress (Section 2, Article XI), while
provision in the Constitution or existing statutes. In fact, the judges of lower courts may be removed only by the Supreme
Constitution itself, under Section 2, authorizes Congress to Court by virtue of its administrative supervision over all its
provide for the removal of all other public officers, including the personnel (Sections 6 and 11, Article VIII). The Chairpersons and
Deputy Ombudsman and Special Prosecutor, who are not Commissioners of the Civil Service Commission Section 1(2),
subject to impeachment. Article IX(B), the Commission on Elections Section 1(2), Article
IX(C), and the Commission on Audit Section 1(2), Article IX(D)
That the Deputies of the Ombudsman were intentionally shall likewise be appointed by the President, but they may be
excluded from the enumeration of impeachable officials is clear removed only by impeachment (Section 2, Article XI). As priorly
from the following deliberations45 of the Constitutional stated, the Ombudsman himself shall be appointed by the
Commission, thus: President (Section 9, Article XI) but may also be removed only
by impeachment (Section 2, Article XI).
MR. REGALADO. Yes, thank you. On Section 10, regarding the
Ombudsman, there has been concern aired by Commissioner In giving the President the power to remove a Deputy
Rodrigo about who will see to it that the Ombudsman will Ombudsman and Special Prosecutor, Congress simply laid down
perform his duties because he is something like a guardian of in express terms an authority that is already implied from the
the government. This recalls the statement of Juvenal that President's constitutional authority to appoint the aforesaid
while the Ombudsman is the guardian of the people, "Quis officials in the Office of the Ombudsman.
custodiet ipsos custodies", who will guard the guardians? I
understand here that the Ombudsman who has the rank of a The Office of the Ombudsman is charged with monumental
chairman of a constitutional commission is also removable only tasks that have been generally categorized into investigatory
by impeachment. power, prosecutorial power, public assistance, authority to
inquire and obtain information and the function to adopt,
MR. ROMULO. That is the intention, Madam President. institute and implement preventive measures.50 In order to
ensure the effectiveness of his constitutional role, the
MR. REGALADO. Only the Ombudsman? Ombudsman was provided with an over-all deputy as well as a
deputy each for Luzon, Visayas and Mindanao. However, well
MR. MONSOD. Only the Ombudsman. into the deliberations of the Constitutional Commission, a
provision for the appointment of a separate deputy for the
MR. REGALADO. So not his deputies, because I am concerned military establishment was necessitated by Commissioner
with the phrase "have the rank of". We know, for instance, that Ople's lament against the rise within the armed forces of
the City Fiscal of Manila has the rank of a justice of the "fraternal associations outside the chain of command" which
Intermediate Appellate Court, and yet he is not a part of the have become the common soldiers' "informal grievance
judiciary. So I think we should clarify that also and read our machinery" against injustice, corruption and neglect in the
discussions into the Record for purposes of the Commission and uniformed service,51 thus:
the Committee.46
In our own Philippine Armed Forces, there has arisen in recent
xxx years a type of fraternal association outside the chain of
command proposing reformist objectives. They constitute, in
fact, an informal grievance machinery against injustices to the
66
rank and file soldiery and perceive graft in higher rank and declared the creation of the independent Office of the
neglect of the needs of troops in combat zones. The Reform the Ombudsman, composed of the Ombudsman and his Deputies,
Armed Forces Movement of RAM has kept precincts for pushing who are described as "protectors of the people" and
logistics to the field, the implied accusation being that most of constitutionally mandated to act promptly on complaints filed
the resources are used up in Manila instead of sent to soldiers in any form or manner against public officials or employees of
in the field. The Guardians, the El Diablo and other the Government Section 12, Article XI. Pertinent provisions
organizations dominated by enlisted men function, more or under Article XI prescribes a term of office of seven years
less, as grievance collectors and as mutual aid societies. without reappointment Section 11, prohibits a decrease in
salaries during the term of office Section 10, provides strict
This proposed amendment merely seeks to extend the office of qualifications for the office Section 8, grants fiscal autonomy
the Ombudsman to the military establishment, just as it Section 14 and ensures the exercise of constitutional functions
champions the common people against bureaucratic Section 12 and 13. The cloak of independence is meant to build
indifference. The Ombudsman can designate a deputy to help up the Office of the Ombudsman's institutional strength to
the ordinary foot soldier get through with his grievance to effectively function as official critic, mobilizer of government,
higher authorities. This deputy will, of course work in close constitutional watchdog53 and protector of the people. It
cooperation with the Minister of National Defense because of certainly cannot be made to extend to wrongdoings and permit
the necessity to maintain the integrity of the chain of the unbridled acts of its officials to escape administrative
command. Ordinary soldiers, when they know they can turn to discipline.
a military Ombudsman for their complaints, may not have to
fall back on their own informal devices to obtain redress for Being aware of the constitutional imperative of shielding the
their grievances. The Ombudsman will help raise troop morale Office of the Ombudsman from political influences and the
in accordance with a major professed goal of the President and discretionary acts of the executive, Congress laid down two
the military authorities themselves. x x x restrictions on the President's exercise of such power of
removal over a Deputy Ombudsman, namely: (1) that the
The add-on now forms part of Section 5, Article XI which reads removal of the Deputy Ombudsman must be for any of the
as follows: grounds provided for the removal of the Ombudsman and (2)
that there must be observance of due process. Reiterating the
Section 5. There is hereby created the independent Office of grounds for impeachment laid down in Section 2, Article XI of
the Ombudsman, composed of the Ombudsman to be known as the 1987 Constitution, paragraph 1 of Section 8 of R.A. No.
Tanodbayan, one over-all Deputy and at least one Deputy each 6770 states that the Deputy Ombudsman may be removed
for Luzon, Visayas and Mindanao. A separate deputy for the from office for the same grounds that the Ombudsman may be
military establishment shall likewise be appointed. (Emphasis removed through impeachment, namely, "culpable violation of
supplied) the Constitution, treason, bribery, graft and corruption, other
high crimes, or betrayal of public trust." Thus, it cannot be
The integrity and effectiveness of the Deputy Ombudsman for rightly said that giving the President the power to remove a
the MOLEO as a military watchdog looking into abuses and Deputy Ombudsman, or a Special Prosecutor for that matter,
irregularities that affect the general morale and professionalism would diminish or compromise the constitutional
in the military is certainly of primordial importance in relation independence of the Office of the Ombudsman. It is, precisely,
to the President's own role asCommander-in-Chief of the a measure of protection of the independence of the
Armed Forces. It would not be incongruous for Congress, Ombudsman's Deputies and Special Prosecutor in the discharge
therefore, to grant the President concurrent disciplinary of their duties that their removal can only be had on grounds
authority over the Deputy Ombudsman for the military and provided by law.
other law enforcement offices.
In Espinosa v. Office of the Ombudsman,54 the Court
Granting the President the Power elucidated on the nature of the Ombudsman's independence in
to Remove a Deputy Ombudsman this wise -
does not Diminish the
Independence of the Office of the The prosecution of offenses committed by public officers is
Ombudsman. vested in the Office of the Ombudsman. To insulate the Office
from outside pressure and improper influence, the Constitution
The claim that Section 8(2) of R.A. No. 6770 granting the as well as RA 6770 has endowed it with a wide latitude of
President the power to remove a Deputy Ombudsman from investigatory and prosecutory powers virtually free from
office totally frustrates, if not resultantly negates the legislative, executive or judicial intervention. This Court
independence of the Office of the Ombudsman is tenuous. The consistently refrains from interfering with the exercise of its
independence which the Office of the Ombudsman is vested powers, and respects the initiative and independence inherent
with was intended to free it from political considerations in in the Ombudsman who, 'beholden to no one, acts as the
pursuing its constitutional mandate to be a protector of the champion of the people and the preserver of the integrity of
people. What the Constitution secures for the Office of the public service.
Ombudsman is, essentially, political independence. This means
nothing more than that "the terms of office, the salary, the Petitioner Gonzales may not be
appointments and discipline of all persons under the office" are removed from office where the
"reasonably insulated from the whims of politicians."52 And so questioned acts, falling short of
it was that Section 5, Article XI of the 1987 Constitution had constitutional standards, do not
67
constitute betrayal of public trust. which only requires that a decision must "have something upon
which it is based."62
Having now settled the question concerning the validity of the
President's power to remove the Deputy Ombudsman and Factual findings of administrative bodies are controlling when
Special Prosecutor, we now go to the substance of the supported by substantial evidence.63 The OP's pronouncement
administrative findings in OP Case No. 10-J-460 which led to the of administrative accountability against petitioner and the
dismissal of herein petitioner, Deputy Ombudsman Emilio A. imposition upon him of the corresponding penalty of removal
Gonzales, III. from office was based on the finding of gross neglect of duty
and grave misconduct in office amounting to a betrayal of
At the outset, the Court finds no cause for petitioner Gonzales public trust, which is a constitutional ground for the removal by
to complain simply because the OP proceeded with the impeachment of the Ombudsman (Section 2, Article XI, 1987
administrative case against him despite his non-attendance Constitution), and a statutory ground for the President to
thereat. Petitioner was admittedly able to file an Answer in remove from office a Deputy Ombudsman and a Special
which he had interposed his defenses to the formal charge Prosecutor Section 8(2) of the Ombudsman Act.
against him. Due process is satisfied when a person is notified
of the charge against him and given an opportunity to explain The OP held that petitioner's want of care and wrongful
or defend himself. In administrative proceedings, the filing of conduct consisted of his unexplained action in directing the
charges and giving reasonable opportunity for the person so PNP-NCR to elevate P/S Insp. Mendoza's case records to his
charged to answer the accusations against him constitute the office; his failure to verify the basis for requesting the
minimum requirements of due process.55 Due process is simply Ombudsman to take over the case; his pronouncement of
having the opportunity to explain one's side, or an opportunity administrative liability and imposition of the extreme penalty of
to seek a reconsideration of the action or ruling complained dismissal on P/S Insp. Mendoza based upon an unverified
of.56 complaint-affidavit; his inordinate haste in implementing P/S
Insp. Mendoza's dismissal notwithstanding the latter's non-
The essence of due process is that a party is afforded receipt of his copy of the Decision and the subsequent filing of a
reasonable opportunity to be heard and to submit any evidence motion for reconsideration; and his apparent unconcern that
he may have in support of his defense.57 Mere opportunity to the pendency of the motion for reconsideration for more than
be heard is sufficient. As long as petitioner was given the five months had deprived P/S Insp. Mendoza of available
opportunity to explain his side and present evidence, the remedies against the immediate implementation of the
requirements of due process are satisfactorily complied with Decision dismissing him from the service.
because what the law abhors is an absolute lack of opportunity
to be heard.58 Besides, petitioner only has himself to blame for Thus, taking into consideration the factual determinations of
limiting his defense through the filing of an Answer. He had the IIRC, the allegations and evidence of petitioner in his
squandered a subsequent opportunity to elucidate upon his Answer as well as other documentary evidence, the OP
pleaded defenses by adamantly refusing to attend the concluded that: (1) petitioner failed to supervise his
scheduled Clarificatory Conference despite notice. The OP subordinates to act with dispatch on the draft resolution of P/S
recounted as follows - Insp. Mendoza's motion for reconsideration and thereby caused
undue prejudice to P/S Insp. Mendoza by effectively depriving
It bears noting that respondent Deputy Ombudsman Gonzalez the latter of the right to challenge the dismissal before the
was given two separate opportunities to explain his side and courts and prevent its immediate execution, and (2) petitioner
answer the Formal Charge against him. showed undue interest by having P/S Insp. Mendoza's case
endorsed to the Office of the Ombudsman and resolving the
In the first instance, respondent was given the opportunity to same against P/S Insp. Mendoza on the basis of the unverified
submit his answer together with his documentary evidence, complaint-affidavit of the alleged victim Christian Kalaw.
which opportunity respondent actually availed of. In the second
instance, this Office called a Clarificatory Conference on 8 The invariable rule is that administrative decisions in matters
February 2011 pursuant to respondent's express election of a within the executive jurisdiction can only be set aside on proof
formal investigation. Despite due notice, however, respondent of gross abuse of discretion, fraud, or error of law.64 In the
Deputy Ombudsman refused to appear for said conference, instant case, while the evidence may show some amount of
interposing an objection based on the unfounded notion that wrongdoing on the part of petitioner, the Court seriously
this Office has prejudged the instant case. Respondent having doubts the correctness of the OP's conclusion that the imputed
been given actual and reasonable opportunity to explain or acts amount to gross neglect of duty and grave misconduct
defend himself in due course, the requirement of due process constitutive of betrayal of public trust. To say that petitioner's
has been satisfied.59 offenses, as they factually appear, weigh heavily enough to
constitute betrayal of public trust would be to ignore the
In administrative proceedings, the quantum of proof necessary significance of the legislature's intent in prescribing the removal
for a finding of guilt is substantial evidence,60 which is more of the Deputy Ombudsman or the Special Prosecutor for causes
than a mere scintilla and means such relevant evidence as a that, theretofore, had been reserved only for the most serious
reasonable mind might accept as adequate to support a violations that justify the removal by impeachment of the
conclusion.61 The fact, therefore, that petitioner later refused highest officials of the land.
to participate in the hearings before the OP is not a hindrance
to a finding of his culpability based on substantial evidence, Would every negligent act or misconduct in the performance of
a Deputy Ombudsman's duties constitute betrayal of public
68
trust warranting immediate removal from office? The question inexcusable negligence of duty, favoritism, and gross exercise of
calls for a deeper, circumspective look at the nature of the discretionary powers."69 In other words, acts that should
grounds for the removal of a Deputy Ombudsman and a Special constitute betrayal of public trust as to warrant removal from
Prosecutor vis-a-vis common administrative offenses. office may be less than criminal but must be attended by bad
faith and of such gravity and seriousness as the other grounds
Betrayal of public trust is a new ground for impeachment under for impeachment.
the 1987 Constitution added to the existing grounds of culpable
violation of the Constitution, treason, bribery, graft and A Deputy Ombudsman and a Special Prosecutor are not
corruption and other high crimes. While it was deemed broad impeachable officers. However, by providing for their removal
enough to cover any violation of the oath of office,65 the from office on the same grounds as removal by impeachment,
impreciseness of its definition also created apprehension that the legislature could not have intended to redefine
"such an overarching standard may be too broad and may be constitutional standards of culpable violation of the
subject to abuse and arbitrary exercise by the legislature."66 Constitution, treason, bribery, graft and corruption, other high
Indeed, the catch-all phrase betrayal of public trust that crimes, as well as betrayal of public trust, and apply them less
referred to "all acts not punishable by statutes as penal stringently. Hence, where betrayal of public trust, for purposes
offenses but, nonetheless, render the officer unfit to continue of impeachment, was not intended to cover all kinds of official
in office"67 could be easily utilized for every conceivable wrongdoing and plain errors of judgment, this should remain
misconduct or negligence in office. However, deliberating on true even for purposes of removing a Deputy Ombudsman and
some workable standard by which the ground could be Special Prosecutor from office. Hence, the fact that the grounds
reasonably interpreted, the Constitutional Commission for impeachment have been made statutory grounds for the
recognized that human error and good faith precluded an removal by the President of a Deputy Ombudsman and Special
adverse conclusion. Prosecutor cannot diminish the seriousness of their nature nor
the acuity of their scope. Betrayal of public trust could not
MR. VILLACORTA: x x x One last matter with respect to the use suddenly "overreach" to cover acts that are not vicious or
of the words "betrayal of public trust" as embodying a ground malevolent on the same level as the other grounds for
for impeachment that has been raised by the Honorable impeachment.
Regalado. I am not a lawyer so I can anticipate the difficulties
that a layman may encounter in understanding this provision The tragic hostage-taking incident was the result of a
and also the possible abuses that the legislature can commit in confluence of several unfortunate events including system
interpreting this phrase. It is to be noted that this ground was failure of government response. It cannot be solely attributed
also suggested in the 1971 Constitutional Convention. A review then to what petitioner Gonzales may have negligently failed to
of the Journals of that Convention will show that it was not do for the quick, fair and complete resolution of the case, or to
included; it was construed as encompassing acts which are just his error of judgment in the disposition thereof. Neither should
short of being criminal but constitute gross faithlessness against petitioner's official acts in the resolution of P/S Insp. Mendoza's
public trust, tyrannical abuse of power, inexcusable negligence case be judged based upon the resulting deaths at the Quirino
of duty, favoritism, and gross exercise of discretionary powers. I Grandstand. The failure to immediately act upon a party's
understand from the earlier discussions that these constitute requests for an early resolution of his case is not, by itself, gross
violations of the oath of office, and also I heard the Honorable neglect of duty amounting to betrayal of public trust. Records
Davide say that even the criminal acts that were enumerated in show that petitioner took considerably less time to act upon
the earlier 1973 provision on this matter constitute betrayal of the draft resolution after the same was submitted for his
public trust as well. In order to avoid confusion, would it not be appropriate action compared to the length of time that said
clearer to stick to the wording of Section 2 which reads: "may draft remained pending and unacted upon in the Office of
be removed from office on impeachment for and conviction of, Ombudsman Merceditas N. Gutierrez. He reviewed and denied
culpable violation of the Constitution, treason, bribery, and P/S Insp. Mendoza's motion for reconsideration within nine (9)
other high crimes, graft and corruption or VIOLATION OF HIS calendar days reckoned from the time the draft resolution was
OATH OF OFFICE", because if betrayal of public trust submitted to him on April 27, 2010 until he forwarded his
encompasses the earlier acts that were enumerated, then it recommendation to the Office of Ombudsman Gutierrez on
would behoove us to be equally clear about this last provision May 6, 2010 for the latter's final action. Clearly, the release of
or phrase. any final order on the case was no longer in his hands.
MR. NOLLEDO: x x x I think we will miss a golden opportunity if Even if there was inordinate delay in the resolution of P/S Insp.
we fail to adopt the words "betrayal of public trust" in the 1986 Mendoza's motion and an unexplained failure on petitioner's
Constitution. But I would like him to know that we are part to supervise his subordinates in its prompt disposition, the
amenable to any possible amendment. Besides, I think plain same cannot be considered a vicious and malevolent act
error of judgment, where circumstances may indicate that warranting his removal for betrayal of public trust. More so
there is good faith, to my mind, will not constitute betrayal of because the neglect imputed upon petitioner appears to be an
public trust if that statement will allay the fears of difficulty in isolated case.
interpreting the term."68 (Emphasis supplied)
Similarly, petitioner's act of directing the PNP-IAS to endorse
The Constitutional Commission eventually found it reasonably P/S Insp. Mendoza's case to the Ombudsman without citing any
acceptable for the phrase betrayal of public trust to refer to reason therefor cannot, by itself, be considered a manifestation
"acts which are just short of being criminal but constitute gross of his undue interest in the case that would amount to wrongful
faithlessness against public trust, tyrannical abuse of power, or unlawful conduct. After all, taking cognizance of cases upon
69
the request of concerned agencies or private parties is part and injury to the Government or giving any private party any
parcel of the constitutional mandate of the Office of the unwarranted benefits, advantage or preference through
Ombudsman to be the "champion of the people." The factual manifest partiality, evident bad faith or gross inexcusable
circumstances that the case was turned over to the Office of negligence. With reference to the doctrine of prejudicial
the Ombudsman upon petitioner's request; that administrative procedural antecedent, petitioner Barreras-Sulit asserts that
liability was pronounced against P/S Insp. Mendoza even the propriety of taking and continuing to take administrative
without the private complainant verifying the truth of his disciplinary proceeding against her must depend on the final
statements; that the decision was immediately implemented; disposition by the Sandiganbayan of the PLEBARA, explaining
or that the motion for reconsideration thereof remained that if the Sandiganbayan would uphold the PLEBARA, there
pending for more than nine months cannot be simply taken as would no longer be any cause of complaint against her; if not,
evidence of petitioner's undue interest in the case considering then the situation becomes ripe for the determination of her
the lack of evidence of any personal grudge, social ties or failings.
business affiliation with any of the parties to the case that could
have impelled him to act as he did. There was likewise no The argument will not hold water. The incidents that have
evidence at all of any bribery that took place, or of any corrupt taken place subsequent to the submission in court of the
intention or questionable motivation. PLEBARA shows that the PLEBARA has been practically
approved, and that the only thing which remains to be done by
Accordingly, the OP's pronouncement of administrative the Sandiganbayan is to promulgate a judgment imposing the
accountability against petitioner and the imposition upon him proper sentence on the accused Major General Garcia based on
of the corresponding penalty of dismissal must be reversed and his new pleas to lesser offenses. On May 4, 2010, the
set aside, as the findings of neglect of duty or misconduct in Sandiganbayan issued a resolution declaring that the change of
office do not amount to a betrayal of public trust. Hence, the plea under the PLEBARA was warranted and that it complied
President, while he may be vested with authority, cannot order with jurisprudential guidelines. The Sandiganbayan, thereafter,
the removal of petitioner as Deputy Ombudsman, there being directed the accused Major General Garcia to immediately
no intentional wrongdoing of the grave and serious kind convey in favor of the State all the properties, both real and
amounting to a betrayal of public trust. personal, enumerated therein. On August 11, 2010, the
Sandiganbayan issued a resolution, which, in order to put into
This is not to say, however, that petitioner is relieved of all effect the reversion of Major General Garcia's ill-gotten
liability for his acts showing less than diligent performance of properties, ordered the corresponding government agencies to
official duties. Although the administrative acts imputed to cause the transfer of ownership of said properties to the
petitioner fall short of the constitutional standard of betrayal of Republic of the Philippines. In the meantime, the Office of the
public trust, considering the OP's factual findings of negligence Special Prosecutor (OSP) informed the Sandiganbayan that an
and misconduct against petitioner, the Court deems it Order70 had been issued by the Regional Trial Court of Manila,
appropriate to refer the case to the Office of the Ombudsman Branch 21 on November 5, 2010 allowing the transfer of the
for further investigation of the charges in OP Case No. 10-J-460 accused's frozen accounts to the Republic of the Philippines
and the imposition of the corresponding administrative pursuant to the terms of the PLEBARA as approved by the
sanctions, if any. Sandiganbayan. Immediately after the OSP informed the
Sandiganbayan that its May 4, 2010 Resolution had been
Inasmuch as there is as yet no existing ground justifying his substantially complied with, Major General Garcia
removal from office, petitioner is entitled to reinstatement to manifested71 to the Sandiganbayan on November 19, 2010 his
his former position as Deputy Ombudsman and to the payment readiness for sentencing and for the withdrawal of the criminal
of backwages and benefits corresponding to the period of his information against his wife and two sons. Major General
suspension. Garcia's Motion to Dismiss,72 dated December 16, 2010 and
filed with the Sandiganbayan, reads:
The Office of the President is vested
with statutory authority to proceed 1.0 The Co-Accused were impleaded under the theory of
administratively against petitioner conspiracy with the Principal Accused MGen. Carlos F. Garcia
Barreras-Sulit to determine the (AFP Ret.), (Principal Accused) with the allegation that the act
existence of any of the grounds for of one is the act of the others. Therefore, with the approval by
her removal from office as provided the Honorable Court of the Plea Bargaining Agreement
for under the Constitution and the executed by the Principal Accused, the charges against the Co-
Ombudsman Act. Accused should likewise be dismissed since the charges against
them are anchored on the same charges against the Principal
Petitioner Barreras-Sulit, on the other hand, has been resisting Accused.
the President's authority to remove her from office upon the
averment that without the Sandiganbayan's final approval and On December 16, 2010, the Sandiganbayan allowed accused
judgment on the basis of the PLEBARA, it would be premature Major General Garcia to plead guilty to the lesser offenses of
to charge her with acts and/or omissions "tantamount to direct bribery and violation of Section 4(b), R.A. No. 9160, as
culpable violations of the Constitution and betrayal of public amended. Upon Major General Garcia's motion, and with the
trust," which are grounds for removal from office under Section express conformity of the OSP, the Sandiganbayan allowed him
8, paragraph (2) of the Ombudsman Act of 1989; and which also to post bail in both cases, each at a measly amount of ₱
constitute a violation of Section 3, paragraph (e) of Republic Act 30,000.00.
No. 3019 (Anti-Graft and Corrupt Practices Act) - causing undue
70
The approval or disapproval of the PLEBARA by the against petitioner Barreras-Sulit and are, thus, better left to the
Sandiganbayan is of no consequence to an administrative complete and effective resolution of the administrative case
finding of liability against petitioner Barreras-Sulit. While the before the Office of the President.
court's determination of the propriety of a plea bargain is on
the basis of the existing prosecution evidence on record, the The challenge to the constitutionality of Section 8(2) of the
disciplinary authority's determination of the prosecutor's Ombudsman Act has, nonetheless, failed to obtain the
administrative liability is based on whether the plea bargain is necessary votes to invalidate the law, thus, keeping said
consistent with the conscientious consideration of the provision part of the law of the land. To recall, these cases
government's best interest and the diligent and efficient involve two distinct issues: (a) the constitutionality of Section
performance by the prosecution of its public duty to prosecute 8(2) of the Ombudsman Act; and (b) the validity of the
crimes against the State. Consequently, the disciplining administrative action of removal taken against petitioner
authority's finding of ineptitude, neglect or willfulness on the Gonzales. While the Court voted unanimously to reverse the
part of the prosecution, more particularly petitioner Special decision of the OP removing petitioner Gonzales from office, it
Prosecutor Barreras-Sulit, in failing to pursue or build a strong was equally divided in its opinion on the constitutionality of the
case for the government or, in this case, entering into an assailed statutory provision in its two deliberations held on
agreement which the government finds "grossly April 17, 2012 and September 4, 2012. There being no majority
disadvantageous," could result in administrative liability, vote to invalidate the law, the Court, therefore, dismisses the
notwithstanding court approval of the plea bargaining challenge to the constitutionality of Section 8(2) of the
agreement entered into. Ombudsman Act in accordance with Section 2(d), Rule 12 of the
Internal Rules of the Court.
Plea bargaining is a process in criminal cases whereby the
accused and the prosecution work out a mutually satisfactory Indeed, Section 4(2), Article VIII of the 1987 Constitution
disposition of the case subject to court approval.73 The essence requires the vote of the majority of the Members of the Court
of a plea bargaining agreement is the allowance of an accused actually taking part in the deliberation to sustain any challenge
to plead guilty to a lesser offense than that charged against to the constitutionality or validity of a statute or any of its
him. Section 2, Rule 116 of the Revised Rules of Criminal provisions.
Procedure provides the procedure therefor, to wit:
WHEREFORE, in G.R. No. 196231, the decision of the Office of
SEC. 2. Plea of guilty to a lesser offense. -- At arraignment, the the President in OP Case No. 10-J-460 is REVERSED and SET
accused, with the consent of the offended party and the ASIDE. Petitioner Emilio A. Gonzales III is ordered REINSTATED
prosecutor, may be allowed by the trial court to plead guilty to with payment of backwages corresponding to the period of
a lesser offense which is necessarily included in the offense suspension effective immediately, even as the Office of the
charged. After arraignment but before trial, the accused may Ombudsman is directed to proceed with the investigation in
still be allowed to plead guilty to said lesser offense after connection with the above case against petitioner. In G.R. No.
withdrawing his plea of not guilty. No amendment of the 196232, We AFFIRM the continuation of OP-DC Case No. 11-B-
complaint or information is necessary. (Sec. 4, Cir. 38-98) 003 against Special Prosecutor Wendell Barreras-Sulit for
alleged acts and omissions tantamount to culpable violation of
Plea bargaining is allowable when the prosecution does not the Constitution and a betrayal of public trust, in accordance
have sufficient evidence to establish the guilt of the accused of with Section 8(2) of the Ombudsman Act of 1989.
the crime charged.74 However, if the basis for the allowance of
a plea bargain in this case is the evidence on record, then it is The challenge to the constitutionality of Section 8(2) of the
significant to state that in its earlier Resolution75 promulgated Ombudsman Act is hereby DENIED.
on January 7, 2010, the Sandiganbayan had evaluated the
testimonies of twenty (20) prosecution witnesses and declared 25. CITY OF IRIGA, Petitioner, vs.CAMARINES SUR III ELECTRIC
that "the conglomeration of evidence presented by the COOPERATIVE, INC. (CASURECO III), Respondent.
prosecution is viewed by the Court to be of strong character
that militates against the grant of bail." The Court reiterates that a franchise tax is a tax levied on the
exercise by an entity of the rights or privileges granted to it by
Notwithstanding this earlier ruling by the Sandiganbayan, the the government.1 In the absence of a clear and subsisting legal
OSP, unexplainably, chose to plea bargain with the accused provision granting it tax exemption, a franchise holder, though
Major General Garcia as if its evidence were suddenly non-profit in nature, may validly be assessed franchise tax by a
insufficient to secure a conviction. At this juncture, it is not local government unit.
amiss to emphasize that the "standard of strong evidence of
guilt which is sufficient to deny bail to an accused is markedly Before the Court is a petition filed under Rule 45 of the Revised
higher than the standard of judicial probable cause which is Rules of Court seeking to set aside the February 11, 2010
sufficient to initiate a criminal case."76 Hence, in light of the Decision2 and July 12, 2010 Resolution3 of the Court of Appeals
apparently strong case against accused Major General Garcia, (CA), which reversed the February 7, 2005 Decision of the
the disciplining authority would be hard-pressed not to look Regional Trial Court (RTC) of Iriga City, Branch 36 and ruled that
into the whys and wherefores of the prosecution's turnabout in respondent Camarines Sur III Electric Cooperative, Inc.
the case. (CASURECO III) is exempt from payment of local franchise tax.
The Court need not touch further upon the substantial matters The Facts
that are the subject of the pending administrative proceeding
71
CASURECO III is an electric cooperative duly organized and
existing by virtue of Presidential Decree (PD) 269,4 as amended, SO ORDERED.16
and registered with the National Electrification Administration
(NEA). It is engaged in the business of electric power Only CASURECO III appealed from the RTC Decision, questioning
distribution to various end-users and consumers within the City its liability for franchise taxes.
of Iriga and the municipalities of Nabua, Bato, Baao, Buhi, Bula
and Balatan of the Province of Camarines Sur, otherwise known Ruling of the Court of Appeals
as the "Rinconada area."5
In its assailed Decision, the CA found CASURECO III to be a non-
Sometime in 2003, petitioner City of Iriga required CASURECO profit entity, not falling within the purview of "businesses
III to submit a report of its gross receipts for the period 1997- enjoying a franchise" pursuant to Section 137 of the LGC. It
2002 to serve as the basis for the computation of franchise explained that CASURECO III‟s non-profit nature is diametrically
taxes, fees and other charges.6 The latter complied7 and was opposed to the concept of a "business," which, as defined
subsequently assessed taxes. under Section 131 of the LGC, is a "trade or commercial activity
regularly engaged in as a means of livelihood or with a view to
On January 7, 2004, petitioner made a final demand on profit." Consequently, it relieved CASURECO III from liability to
CASURECO III to pay the franchise taxes due for the period pay franchise taxes.
1998-2003 and real property taxes due for the period 1995-
2003.8 CASURECO III, however, refused to pay said taxes on the Petitioner moved for reconsideration, which the CA denied in
ground that it is an electric cooperative provisionally registered its July 12, 2010 Resolution for being filed a day late, hence, the
with the Cooperative Development Authority (CDA),9 and instant petition.
therefore exempt from the payment of local taxes.10
Issues Before the Court
On March 15, 2004, petitioner filed a complaint for collection of
local taxes against CASURECO III before the RTC, citing its Petitioner raises two issues for resolution, which the Court
power to tax under the Local Government Code (LGC) and the restates as follows: (1) whether or not an electric cooperative
Revenue Code of Iriga City.11 registered under PD 269 but not under RA 693817 is liable for
the payment of local franchise taxes; and (2) whether or not the
It alleged that as of December 31, 2003, CASURECO III‟s situs of taxation is the place where the franchise holder
franchise and real property taxes liability, inclusive of penalties, exercises its franchise regardless of the place where its services
surcharges and interest, amounted to Seventeen Million Thirty- or products are delivered.
Seven Thousand Nine Hundred Thirty-Six Pesos and Eighty-Nine
Centavos (₱ 17,037,936.89) and Nine Hundred Sixteen CASURECO III, on the other hand, raises the procedural issue
Thousand Five Hundred Thirty-Six Pesos and Fifty Centavos (₱ that since the motion for reconsideration of the CA Decision
916,536.50), respectively.12 was filed out of time, the same had attained finality.
In its Answer, CASURECO III denied liability for the assessed The Court’s Ruling
taxes, asserting that the computation of the petitioner was
erroneous because it included 1) gross receipts from service The petition is meritorious.
areas beyond the latter‟s territorial jurisdiction; 2) taxes that
had already prescribed; and 3) taxes during the period when it Before delving into the substantive issues, the Court notes the
was still exempt from local government tax by virtue of its then procedural lapses extant in the present case.
subsisting registration with the CDA.13
Proper Mode of Appeal from the
Ruling of the Trial Court Decision of the Regional Trial
Court involving local taxes
In its Decision dated February 7, 2005, the RTC ruled that the
real property taxes due for the years 1995-1999 had already RA 9282,18 which took effect on April 23, 2004, expanded the
prescribed in accordance with Section 19414 of the LGC. jurisdiction of the Court of Tax Appeals (CTA) to include, among
However, it found CASURECO III liable for franchise taxes for others, the power to review by appeal decisions, orders or
the years 2000-2003 based on its gross receipts from Iriga City resolutions of the Regional Trial Courts in local tax cases
and the Rinconada area on the ground that the "situs of originally decided or resolved by them in the exercise of their
taxation is the place where the privilege is exercised."15 The original or appellate jurisdiction.19
dispositive portion of the RTC Decision reads:
Considering that RA 9282 was already in effect when the RTC
WHEREFORE, in view of the foregoing, defendant is hereby rendered its decision on February 7, 2005, CASURECO III should
made liable to pay plaintiff real property taxes and franchise have filed its appeal, not with the CA, but with the CTA Division
taxes on its receipts, including those from service area covering in accordance with the applicable law and the rules of the CTA.
Nabua, Bato, Baao and Buhi for the years 2000 up to the Resort to the CA was, therefore, improper, rendering its
present. The realty taxes for the years 1995 and 1999 is hereby decision null and void for want of jurisdiction over the subject
declared prescribed. The City Assessor is hereby directed to matter. A void judgment has no legal or binding force or
make the proper classification of defendant‟s real property in efficacy for any purpose or at any place.20 Hence, the fact that
accordance with Ordinance issued by the City Council. petitioner's motion for reconsideration from the CA Decision
72
was belatedly filed is inconsequential, because a void and non- granting the local government units, like petitioner, the power
existent decision would never have acquired finality.21 to impose and collect franchise tax, to wit:
The foregoing procedural lapses would have been sufficient to SEC. 137. Franchise Tax. - Notwithstanding any exemption
dismiss the instant petition outright and declare the decision of granted by any law or other special law, the province may
the RTC final. However, the substantial merits of the case impose a tax on businesses enjoying a franchise, at a rate not
compel us to dispense with these lapses and instead, exercise exceeding fifty percent (50%) of one percent (1%) of the gross
the Court‟s power of judicial review. annual receipts for the preceding calendar year based on the
incoming receipt, or realized, within its territorial jurisdiction.
CASURECO III is not exempt from xxx
payment of franchise tax
SEC. 151. Scope of Taxing Powers. - Except as otherwise
PD 269, which took effect on August 6, 1973, granted electric provided in this Code, the city, may levy the taxes, fees, and
cooperatives registered with the NEA, like CASURECO III, charges which the province or municipality may impose:
several tax privileges, one of which is exemption from the Provided, however, That the taxes, fees and charges levied and
payment of "all national government, local government and collected by highly urbanized and independent component
municipal taxes and fees, including franchise, filing, cities shall accrue to them and distributed in accordance with
recordation, license or permit fees or taxes."22 the provisions of this Code. The rates of taxes that the city may
levy may exceed the maximum rates allowed for the province
On March 10, 1990, Congress enacted into law RA 6938,23 or municipality by not more than fifty percent (50%) except the
otherwise known as the "Cooperative Code of the Philippines," rates of professional and amusement taxes.
and RA 693924 creating the CDA. The latter law vested the
power to register cooperatives solely on the CDA, while the Taking a different tack, CASURECO III maintains that it is exempt
former provides that electric cooperatives registered with the from payment of franchise tax because of its nature as a non-
NEA under PD 269 which opt not to register with the CDA shall profit cooperative, as contemplated in PD 269,28 and insists
not be entitled to the benefits and privileges under the said that only entities engaged in business, and not non-profit
law. entities like itself, are subject to the said franchise tax.
On January 1, 1992, the LGC took effect, and Section 193 The Court is not persuaded.
thereof withdrew tax exemptions or incentives previously
enjoyed by "all persons, whether natural or juridical, including In National Power Corporation v. City of Cabanatuan,29 the
government-owned or controlled corporations, except local Court declared that "a franchise tax is „a tax on the privilege of
water districts, cooperatives duly registered under R.A. No. transacting business in the state and exercising corporate
6938, non-stock and non-profit hospitals and educational franchises granted by the state."30 It is not levied on the
institutions."25 corporation simply for existing as a corporation, upon its
property or its income, but on its exercise of the rights or
In Philippine Rural Electric Cooperatives Association, Inc. privileges granted to it by the government.31 "It is within this
(PHILRECA) v. The Secretary, Department of Interior and Local context that the phrase „tax on businesses enjoying a
Government,26 the Court held that the tax privileges granted franchise‟ in Section 137 of the LGC should be interpreted and
to electric cooperatives registered with NEA under PD 269 were understood."32
validly withdrawn and only those registered with the CDA under
RA 6938 may continue to enjoy the tax privileges under the Thus, to be liable for local franchise tax, the following requisites
Cooperative Code. should concur: (1) that one has a "franchise" in the sense of a
secondary or special franchise; and (2) that it is exercising its
Therefore, CASURECO III can no longer invoke PD 269 to evade rights or privileges under this franchise within the territory of
payment of local taxes. Moreover, its provisional registration the pertinent local government unit.33
with the CDA which granted it exemption for the payment of
local taxes was extended only until May 4, 1992. Thereafter, it There is a confluence of these requirements in the case at bar.
can no longer claim any exemption from the payment of local By virtue of PD 269, NEA granted CASURECO III a franchise to
taxes, including the subject franchise tax.1âwphi1 operate an electric light and power service for a period of fifty
(50) years from June 6, 1979,34 and it is undisputed that
Indisputably, petitioner has the power to impose local taxes. CASURECO III operates within Iriga City and the Rinconada area.
The power of the local government units to impose and collect It is, therefore, liable to pay franchise tax notwithstanding its
taxes is derived from the Constitution itself which grants them non-profit nature.
"the power to create its own sources of revenues and to levy
taxes, fees and charges subject to such guidelines and limitation CASURECO III is liable for
as the Congress may provide."27 This explicit constitutional franchise tax on gross receipts
grant of power to tax is consistent with the basic policy of local within Iriga City and
autonomy and decentralization of governance. With this power, Rinconada area
local government units have the fiscal mechanisms to raise the
funds needed to deliver basic services to their constituents and CASURECO III further argued that its liability to pay franchise
break the culture of dependence on the national government. tax, if any, should be limited to gross receipts received from the
Thus, consistent with these objectives, the LGC was enacted
73
supply of the electricity within the City of Iriga and not those
from the Rinconada area. In the proceedings before the RTC, petitioners offered official
records from the Securities and Exchange Commission (SEC)
Again, the Court is not convinced. which revealed the following information3 as of February 20,
1988 with respect to ZACI's incorporators, their respective
It should be stressed that what the petitioner seeks to collect subscriptions:
from CASURECO III is a franchise tax, which as defined, is a tax
on the exercise of a privilege. As Section 13735 of the LGC However, the RTC noted4 that ZACI had folded up and ceased
provides, franchise tax shall be based on gross receipts business operations as early as 1983, and when inquiries
precisely because it is a tax on business, rather than on persons regarding its paid-in capital were made in 1992, or almost ten
or property.36 Since it partakes of the nature of an excise (10) years later, no changes were reflected in the company
tax/37 the situs of taxation is the place where the privilege is books.
exercised, in this case in the City of Iriga, where CASURECO III
has its principal office and from where it operates, regardless of Finding petitioners to be indebted to ZACI as its incorporators in
the place where its services or products are delivered. Hence, the aggregate amount of ₱ 750,000.00 by way of unpaid stock
franchise tax covers all gross receipts from Iriga City and the subscriptions on the basis of the records of the SEC, the RTC, in
Rinconada area. its September 29, 2004 Decision,5 ordered petitioners to settle
their obligations to the capital stock of ZACI.
WHEREFORE, the petition is GRANTED. The assailed Decision
dated February 11, 2010 and Resolution dated July 12, 2010 of Petitioners' motion for reconsideration was denied in the RTC's
the Court of Appeals are hereby SET ASIDE and the Decision of December 9, 2004 Order.6
the Regional Trial Court oflriga City, Branch 36, is REINSTATED.
The CA Ruling
26. JOSE VICENTE ATILANO II, HEIRS OF CARLOS V. TAN
represented by Conrad K. Tan, Carlos K. Tan, Camilo Karl K. Aggrieved, petitioners filed a petition for certiorari before the
Tan, Carisa Rosenda T. Go, NELIDA F. ATILANO and ISIDRA K. appellate court, imputing grave abuse of discretion upon the
TAN, Petitioners, vs. HON. JUDGE TIBING A. ASAALI, Presiding RTC for failing to consider Section 43, Rule 39 of the Revised
Judge of the Regional Trial Court of Zamboanga City and Rules of Court which substantially provides for the proceedings
ATLANTIC MERCHANDISING, INC., Respondents. that should be conducted when a third person allegedly
This Petition for Review on Certiorari assails the May 27, 2005 indebted to a judgment debtor denies the debt. However, the
Resolution 1 and September 6, 2006 Resolution2 of the Court of CA dismissed7 their petition outright on the following grounds:
Appeals (CA) in CA-G.R. SP No. 00231 which dismissed the (1) failure to attach certified true copies of the assailed RTC
petition for certiorari filed by petitioners Jose Vicente Atilano II, Decision and Order; (2) only three out of four petitioners signed
Heirs of Carlos V. Tan represented by Conrad K. Tan, Carlos K. the verification and certification of non-forum shopping; (3) the
Tan, Camilo Karl K. Tan, Carisa Rosenda T. Go, Nelida F. Atilano IBP Official Receipt Number of the counsel for petitioners was
and Isidra K. Tan for failure to comply with the rules of outdated, violating Bar Matter No. 287; and (4) deficiency in
procedure. the docket and other fees in the sum of ₱ 1,530.00.
Under the circumstances, therefore, the RTC should have Under this factual backdrop, the CA, therefore, should have
directed respondent to institute a separate action against exercised its sound judicial discretion when it dismissed
petitioners for the purpose of recovering their alleged petitioners' certiorari action.1âwphi1
indebtedness to ZACI, in accordance with Section 43, Rule 39 of
the Rules of Court, which provides: It should have carefully weighed, with circumspection and
prudence, the issues and grievances that petitioners have
Section 43. Proceedings when indebtedness denied or another raised vis-a-vis the procedural defect of their petition. Records
person claims the property. – If it appears that a person or show that petitioners had fully paid the deficiency in the docket
corporation, alleged to have property of the judgment obligor fee in the sum of PI ,530.0019 notwithstanding the fact that it
or to be indebted to him, claims an interest in the property was made beyond the reglementary period under the rules.
adverse to him or denies the debt, the court may authorize, by What is significant, however, is that petitioners have fully
an order made to that effect, the judgment obligee to institute complied with all the deficiencies enumerated by theCA in its
an action against such person or corporation for the recovery of assailed May 27, 2005 Resolution.
such interest or debt, forbid a transfer or other disposition of
such interest or debt within one hundred twenty (120) days Considered in this light, the Court, therefore, deems it in the
from notice of the order, and may punish disobedience of such interest of substantial justice and petitioners' constitustionally-
order as for contempt. Such order may be modified or vacated guaranteed right to due process to relax the rules of procedure
at any time by the court which issued it, or the court in which in order to prevent an apparent travesty of justice in this case.
the action is brought, upon such terms as may be just.
(Emphasis supplied) WHEREFORE, the instant petition is GRANTED and the assailed
May 27, 2005 and September 6, 2006 Resolutions of the Court
It is well-settled that no man shall be affected by any of Appeals are SET ASIDE. The September 29, 2004 Decision and
proceeding to which he is a stranger, and strangers to a case December 9, 2004 Order of the RTC are likewise NULLIFIED,
are not bound by a judgment rendered by the court.13 without prejudice to the institution of a separate action against
Execution of a judgment can only be issued against one who is a petitioners in accordance with Section 43, Rule 39 ofthe Rules
party to the action, and not against one who, not being a party of Court.
thereto, did not have his day in court.14 Due process dictates
that a court decision can only bind a party to the litigation and
not against innocent third parties.15 27. DIONISIO P. PILOT, Petitioner, vs.RENATO B. BARON,
SHERIFF IV, REGIONAL TRIAL COURT, BRANCH 264, PASIG CITY,
Respondent.
75
As a ministerial officer, a sheriff is expected to faithfully
RESOLUTION perform what is incumbent upon him, even in the absence of
instruction.11 Thus, he must discharge his duties with due care
PERLAS-BERNABE, J.: and utmost diligence. In serving court writs and processes and
in implementing court orders, he cannot afford to err without
On October 8, 2007, complainant filed a letter-complaint1 affecting the integrity of his office and the efficient
before the Office of the Court Administrator (OCA) of the administration of justice.12
Supreme Court charging respondent sheriff of grave
misconduct2 for his failure/refusal to conduct the auction sale Respondent sheriff, by his omission to file the required
of the levied prope1ty pursuant to the Order of Execution comment and to pay the fine imposed by the Court,
issued by the Regional Trial Court (RTC) of Pasig City, Branch disregarded the duty of every employee in the judiciary to obey
264 in Civil Case No. 66262.3 the orders and processes of the Court without delay. The same
evinces lack of interest in clearing his name in the face of grave
Complainant is the judgment obligee in the Decision4 dated imputations, constituting an implied admission of the
February 25, 2006 rendered in the aforementioned case, in the charges.13 Nonetheless, the Court evaluated and examined the
amount of ₱ 516,297.50 with legal interest from December records of the case and found sufficient basis in complainant's
1993, moral and exemplary damages and attorney’s fees, each charges.
in the amount of ₱ 50,000.00, as well as the costs of the suit.
Records disclose that after levying on the property of the
To implement the writ of execution (writ) issued therein and for judgment obligors, respondent sheriff issued a notice of auction
the payment of publication expenses, respondent sheriff asked sale (notice) and accordingly scheduled the sale on September
and received from complainant the amount of ₱ 15,000.00 and 3, 2007. It was, thus, incumbent upon him to comply with the
thereafter, levied the house and lot of the judgment obligors, requirements of Section 15, Rule 39 of the Rules of Court
Spouses Noel and Gregoria Bambalan (Sps. Bambalan), located (Rules) prior to the sale, namely, (a) to cause the posting of the
in Bo. Rosario, Pasig City and covered by Transfer Certificate of notice for 20 days in 3 public places in Pasig City where the sale
Title No. PT-78872. While the auction sale was scheduled on was to take place; (b) to cause the publication of the notice
September 3, 2007, the same did not push through purportedly once a week for two consecutive weeks in a newspaper of
for lack of publication. Instead, it was reset to September 19, general circulation, selected by raffle; (c) to serve a written
2007, then to September 25, 2007 and later to October 5, 2007, notice of the sale to the judgment obligors at least three days
which were all canceled on account of complainant's failure to before the sale. However, notwithstanding receipt from the
heed respondent sheriff's additional demand of the amount of complainant of the amount of ₱ 15,000.00 under an assurance
₱ 18,000.00 for publication expenses. that he would take care of everything, no auction sale was
conducted on the scheduled date for lack of the required
On September 25, 2007, respondent sheriff instructed publication. Worse, he asked anew for publication expenses in
complainant to proceed to his office to receive the amount of ₱ a higher amount, and solicited money for his cellphone load,
500,000.00 paid by the daughter of Sps. Bambalan. When the transportation expenses in the service of the notice, as well as
latter ignored the instruction, he offered to deliver the said sheriff's fee of 2.5% of the minimum bid amount indicated in
amount for a sheriff’s fee of 2.5% of the amount indicated in the notice. Moreover, instead of conducting the auction sale as
the notice of auction sale.5 Moreover, on several occasions, he re-scheduled, he unjustifiably insisted that complainant accept
solicited money from complainant for his cellphone load and the ₱ 500,000.00 paid by the daughter of Sps. Bambalan which
transportation expenses in the service of the notice of sale. is below the amount sought to be recovered under the subject
decision. He likewise failed to observe the proper procedural
Despite directives6 from the Court, respondent sheriff failed to steps laid down in Section 10,14 Rule 141 of the Rules in
submit his comment to the letter-complaint. A fine of ₱ collecting sums of money from a party-litigant. He should have
1,000.00,7 later increased to ₱ 2,000.00, 8 was imposed upon (a) prepared an estimate of expenses to be incurred; (b)
him which he likewise failed to pay, prompting the Court to obtained court approval for such estimated expenses; (c)
declare the case submitted for decision on the basis of the caused the interested party to deposit with the Clerk of Court
pleadings filed.9 and Ex Officio Sheriff the corresponding amount; (d) secured
from the Clerk of Court the said amount; (e)
The complaint has merit. disbursed/liquidated his expenses within the same period for
rendering a return on the writ; and (f) refunded any unspent
Sheriffs play an important role in the administration of justice amount15 to the complainant.1âwphi1
since they are tasked to execute final judgments of the courts
that would otherwise become empty victories for the prevailing Consequently, the Court finds respondent sheriff guilty of
party if not enforced.10 The 2002 Revised Manual for Clerks of dishonesty and grave misconduct when he unlawfully
Court characterizes sheriffs' functions as purely ministerial, to collected16 and pocketed the amount of ₱ 15,000.00 intended
wit: to defray the expenses for the publication of the notice and
enforcement of the writ of execution but which was not
Sheriffs are ministerial officers. They are agents of the law and accordingly spent. He is likewise guilty of dereliction of duty in
not agents of the parties, neither of the creditor nor of the failing to observe the proper procedure in collecting execution
purchaser at a sale conducted by him. It follows, therefore, that expenses and conducting an execution sale.17 Moreover, he
the sheriff can make no compromise in an execution sale. violated Canon III, Section 2(b) of A.M. No. 03-06-13-SC,18
which prohibits court employees from receiving tips or any
76
remuneration from parties to the actions or proceedings with scheme to deprive him of the benefits of regularization,
the courts.19 claiming to have assumed tasks necessary and desirable in the
trade or business of petitioners and under their direct control
Under Section 5220 of the Uniform Rules on Administrative and supervision. In support of his claim, he submitted, among
Cases in the Civil Service, dishonesty and grave misconduct are others, copies of his time cards, Official Business Itinerary Slips,
classified as grave offenses meriting the supreme penalty of Daily Attendance Sheets and other documents prescribing the
dismissal from service21 even for the first offense. On the other manner in which his tasks were to be accomplished under the
hand, dereliction of duty for failure to comply with Section 10, control of the petitioners and acknowledging his status as a
Rule 141 of the Rules of Court is punishable with a fine of ₱ regular employee of the corporation.
5,000.00.22
On the other hand, petitioners, in their position paper,8
Considering, however, the Resolution of the Court dated April asserted that respondent Dakilawas a consultant and not their
19, 2010 in A.M. No. 10-3-76-RTC which declared respondent regular employee. The latter was not included in petitioners'
sheriff dropped from the rolls effective May 4, 2009 for having payroll and paid a fixed amount under the consultancy
been on absence without official leave (AWOL), the only contract. He was not required to observe regular working hours
appropriate imposable penalty is fine. Under the premises, the and was free to adopt means and methods to accomplish his
Court imposes upon him a fine in the reasonable amount of ₱ task except as to the results of the work required of him.
40,000.00, which may be deducted from his accrued leave Hence, no employer-employee relationship existed between
credits, if sufficient. them. Moreover, respondentDakila terminated his contract in a
letter dated April 19, 2007, thus, negating his dismissal.
WHEREFORE, the Court finds respondent RENATO B. BARON
GUILTY of dishonesty and grave misconduct, violation of Canon Ruling of the Labor Arbiter
III, Section 2(b) of A.M. No. 03-06-13-SC and dereliction of duty,
and is FINED in the amount of FORTY THOUSAND PESOS (₱ On May 28, 2008, Labor Arbiter Thomas T. Que, Jr. rendered a
40,000.00) to be deducted from his accrued leave credits, if Decision9 finding respondent Dakila to have been illegally
sufficient. dismissed and ordered his reinstatement with full backwages
computed from the time of his dismissal on May 1, 2007 until
Let copies of this Resolution be filed in the personal record of his actual reinstatement as well as the payment of his unpaid
respondent and furnished him at his address of record. benefits under the Collective Bargaining Agreement (CBA). He
declared respondent Dakila to be a regular employee on the
28. THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER basis of the unrebutted documentary evidence showing that he
M. ENANO-BOTE, Petitioners, vs.FRANCISCO N. DAKILA, was under the petitioners' direct control and supervision and
Respondent. performed tasks that were either incidental or usually desirable
and necessary in the trade or business of petitioner corporation
The Petition for Review on Certiorari1 assails the August 31, for a period of ten years. Having been dismissed without cause
20112 and November 23, 20113 Resolutions of the Court of and notice, respondent Dakila was awarded moral and
Appeals (CA) in CA-G.R. SP No. 113015 which affirmed the exemplary damages in the amount of ₱ 50,000.00 each. He is
September 10, 2009 Decision4 and December 15, 2009 also entitled to avail of thecorporation's retirement benefits
Resolution5 of the National Labor Relations Commission (NLRC) upon his reinstatement.
finding respondent Francisco N.Dakila (respondent Dakila) to
have been illegally dismissed. Ruling of the NLRC
The Factual Antecedents On appeal, the NLRC sustained the Labor Arbiter's (LA) finding
Respondent Dakila was employed by petitionercorporation as that respondent Dakila was a regular employee and that his
early as 1987 and terminated for cause in April 1997 when the dismissal was illegal. However, it noted that since he was
corporation was sold. In May 1997, he was rehired as already beyond the retirement age, his reinstatement was no
consultant by the petitioners under a Contract for Consultancy longer feasible. As such, it ordered the payment of his
Services6 dated April 30, 1997. retirement pay to be computed from 1997 until the date of the
decision. Moreover, it found respondent Dakila entitled to
Thereafter, in a letter7 dated April 19, 2007, respondent Dakila reinstatement wages from the time petitioners received a copy
informed petitioners of his compulsory retirement effective of the LA’s Decision on July 7, 2008 up to the date of the NLRC's
May 2, 2007 and sought for the payment of his retirement decision. Thus, it ordered the petitioners to pay respondent
benefits pursuant to the Collective Bargaining Agreement. His Dakila the additional amount of ₱ 278,508.33representing
request, however, was not acted upon. Instead, he was reinstatement wages and retirement pay.10
terminated from service effective May 1, 2007.
The petitioners' motion for reconsideration having been denied
Consequently, respondent Dakila filed a complaint for in the Resolution11 dated December 15, 2009, they filed a
constructive illegal dismissal, non-payment of retirement petition for certiorari12 before the CA raising the following
benefits, under/non-payment of wages and other benefits of a errors:
regular employee, and damages against petitioners, The New
Philippine Skylanders, Inc. and its President and General (1) the complaint should have been dismissed against petitioner
Manager, Jennifer M. Eñano-Bote, before the NLRC. He Jennifer M. Eñano-Bote absent any showing of bad faith;
averred, among others, that the consultancy contract was a
77
(2) respondent Dakila is not a regular employee; WHEREFORE, premises considered, the petition is PARTLY
GRANTED. The assailed August 31, 2011 and November 23,
(3) respondent was not illegally dismissed as it was the 2011 Resolutions of the Court of Appeals in CA-G.R. SP No.
respondent who resigned; and 113015 are MODIFIED as follows:
(4) theLA’s monetary award has no basis. (1) petitioner Jennifer M. Eñano-Bote is ABSOLVED from liability
for payment of respondent Francisco N. Dakila's monetary
Ruling of the CA awards;
In the Resolution13 dated August 31, 2011, the CA dismissed (2) the awards of reinstatement wages pending appeal as well
the petition for failure to show that the NLRC committed grave as the moral and exemplary damages are ordered DELETED;
abuse of discretion in affirming the LA's Decision. It found the and
factual findings of the LA and the NLRC to be supported by
substantial evidence and thus, should be accorded respect and (3) the computation of backwages should be limited only for a
finality. Petitioners' motion for reconsideration therefrom was day prior to his compulsory retirement.
likewise denied in the Resolution14 dated November 23, 2011.
29. ASIA INTERNATIONAL AUCTIONEERS, INC., Petitioner,
Hence, the instant petition reiterating the arguments raised vs.COMMISSIONER OF INTERNAL REVENUE, Respondent.
before the CA.
Before the Court is a Petition for Review seeking to reverse and
Ruling of the Court set aside the Decision dated August 3, 2007 of the Court of Tax
Appeals (CTA) En Banc, 1 and the Resolutions dated November
The issue of illegal dismissal is premised on the existence of an 20, 20062 and February 22, 20073 of the CTA First Division
employer-employee relationship between the parties herein. It dismissing Asia International Auctioneers, Inc.’s (AIA) appeal
is essentially a question of fact, beyond the ambit of a petition due to its alleged failure to timely protest the Commissioner of
for review on certiorari under Rule 45 of the Rules of Court Internal Revenue’s (CIR) tax assessment.
unless there is a clear showing of palpable error or arbitrary
disregard of evidence which does not obtain in this case. The Factual Antecedents
Records reveal that both the LA and the NLRC, as affirmed by
the CA, have found substantial evidence to show that AIA is a duly organized corporation operating within the Subic
respondent Dakila was a regular employee who was dismissed Special Economic Zone. It is engaged in the importation of used
without cause. motor vehicles and heavy equipment which it sells to the public
through auction.4
Following Article 279 of the Labor Code, an employee who is
unjustly dismissed from work is entitled to reinstatement On August 25, 2004, AIA received from the CIR a Formal Letter
without loss of seniority rights and other privileges and to his of Demand, dated July 9, 2004, containing an assessment for
full backwages computed from the time he was illegally deficiency value added tax (VAT) and excise tax in the amounts
dismissed. However, considering that respondent Dakila was of ₱ 102,535,520.00 and ₱ 4,334,715.00, respectively, or a total
terminated on May 1, 2007, or one (1) day prior to his amount of ₱ 106,870,235.00, inclusive of penalties and interest,
compulsory retirement on May 2, 2007, his reinstatement is no for auction sales conducted on February 5, 6, 7, and 8, 2004.5
longer feasible. Accordingly, the NLRC correctly held him
entitled to the payment of his retirement benefits pursuant to AIA claimed that it filed a protest letter dated August 29, 2004
the CBA. On the other hand, his backwages should be through registered mail on August 30, 2004.6 It also submitted
computed only for days prior to his compulsory retirement additional supporting documents on September 24, 2004 and
which in this case is only a day. Consequently, the award of November 22, 2004.7
reinstatement wages pending appeal must be deleted for lack
of basis. The CIR failed to act on the protest, prompting AIA to file a
Similarly, the Court finds no basis to hold petitioner Jennifer M. petition for review before the CTA on June 20, 2005,8 to which
Eñano-Bote, President and General Manager of The New the CIR filed its Answer on July 26, 2005.9
Philippine Skylanders, Inc., jointly and severally liable with the
corporation for the payment of the monetary awards. The mere On March 8, 2006, the CIR filed a motion to dismiss10 on the
lack of authorized or just cause to terminate one's employment ground of lack of jurisdiction citing the alleged failure of AIA to
and the failure to observe due process do not ipso facto mean timely file its protest which thereby rendered the assessment
that the corporate officer acted with malice or bad faith.15 final and executory. The CIR denied receipt of the protest letter
There must be independent proof of malice or bad faith which dated August 29, 2004 claiming that it only received the protest
was not established in this case. Perforce, petitioner Jennifer M. letter dated September 24, 2004 on September 27, 2004, three
Eñano-Bote cannot be made personally liable for the liabilities days after the lapse of the 30-day period prescribed in Section
of the corporation which, by legal fiction, has a personality 22811 of the Tax Code.12
separate and distinct from its officers, stockholders and
members. Moreover, for lack of factual and legal bases, the In opposition to the CIR’s motion to dismiss, AIA submitted the
awards of moral and exemplary damages cannot also be following evidence to prove the filing and the receipt of the
sustained.16 1âwphi1 protest letter dated August 29, 2004: (1) the protest letter
dated August 29, 2004 with attached Registry Receipt No.
78
3824;13 (2) a Certification dated November 15, 2005 issued by Qualification22 issued by the BIR on February 5, 2008 stating
Wilfredo R. De Guzman, Postman III, of the Philippine Postal that AIA "has availed and is qualified for Tax Amnesty for the
Corporation of Olongapo City, stating that Registered Letter No. Taxable Year 2005 and Prior Years" pursuant to RA 9480.
3824 dated August 30, 2004 , addressed to the CIR, was
dispatched under Bill No. 45 Page 1 Line 11 on September 1, With AIA’s availment of the Tax Amnesty Program under RA
2004 from Olongapo City to Quezon City;14 (3) a Certification 9480, the Court is tasked to first determine its effects on the
dated July 5, 2006 issued by Acting Postmaster, Josefina M. instant petition.
Hora, of the Philippine Postal Corporation-NCR, stating that
Registered Letter No. 3824 was delivered to the BIR Records Ruling of the Court
Section and was duly received by the authorized personnel on
September 8, 2004;15 and (4) a certified photocopy of the A tax amnesty is a general pardon or the intentional
Receipt of Important Communication Delivered issued by the overlooking by the State of its authority to impose penalties on
BIR Chief of Records Division, Felisa U. Arrojado, showing that persons otherwise guilty of violating a tax law. It partakes of an
Registered Letter No. 3824 was received by the BIR.16 AIA also absolute waiver by the government of its right to collect what is
presented Josefina M. Hora and Felisa U. Arrojado as witnesses due it and to give tax evaders who wish to relent a chance to
to testify on the due execution and the contents of the start with a clean slate.23
foregoing documents.
A tax amnesty, much like a tax exemption, is never favored or
Ruling of the Court of Tax Appeals presumed in law. The grant of a tax amnesty, similar to a tax
exemption, must be construed strictly against the taxpayer and
After hearing both parties, the CTA First Division rendered the liberally in favor of the taxing authority.24
first assailed Resolution dated November 20, 2006 granting the
CIR’s motion to dismiss. Citing Republic v. Court of Appeals,17 it In 2007, RA 9480 took effect granting a tax amnesty to qualified
ruled that "while a mailed letter is deemed received by the taxpayers for all national internal revenue taxes for the taxable
addressee in the course of the mail, still, this is merely a year 2005 and prior years, with or without assessments duly
disputable presumption, subject to controversion, and a direct issued therefor, that have remained unpaid as of December 31,
denial of the receipt thereof shifts the burden upon the party 2005.25
favored by the presumption to prove that the mailed letter
indeed was received by the addressee."18 The Tax Amnesty Program under RA 9480 may be availed of by
any person except those who are disqualified under Section 8
The CTA First Division faulted AIA for failing to present the thereof, to wit:
registry return card of the subject protest letter. Moreover, it
noted that the text of the protest letter refers to a Formal Section 8. Exceptions. — The tax amnesty provided in Section 5
Demand Letter dated June 9, 2004 and not the subject Formal hereof shall not extend to the following persons or cases
Demand Letter dated July 9, 2004. Furthermore, it rejected existing as of the effectivity of this Act:
AIA’s argument that the September 24, 2004 letter merely
served as a cover letter to the submission of its supporting (a) Withholding agents with respect to their withholding tax
documents pointing out that there was no mention therein of a liabilities;
prior separate protest letter.19
(b) Those with pending cases falling under the jurisdiction of
AIA’s motion for reconsideration was subsequently denied by the Presidential Commission on Good Government;
the CTA First Division in its second assailed Resolution dated
February 22, 2007. On appeal, the CTA En Banc in its Decision (c) Those with pending cases involving unexplained or
dated August 3, 2007 affirmed the ruling of the CTA First unlawfully acquired wealth or under the Anti-Graft and Corrupt
Division holding that AIA’s evidence was not sufficient to prove Practices Act;
receipt by the CIR of the protest letter dated August 24, 2004.
(d) Those with pending cases filed in court involving violation of
Hence, the instant petition. the Anti-Money Laundering Law;
Issue Before the Court (e) Those with pending criminal cases for tax evasion and other
criminal offenses under Chapter II of Title X of the National
Both parties discussed the legal bases for AIA’s tax liability, Internal Revenue Code of 1997, as amended, and the felonies
unmindful of the fact that this case stemmed from the CTA’s of frauds, illegal exactions and transactions, and malversation
dismissal of AIA’s petition for review for failure to file a timely of public funds and property under Chapters III and IV of Title
protest, without passing upon the substantive merits of the VII of the Revised Penal Code; and
case.
(f) Tax cases subject of final and executory judgment by the
Relevantly, on January 30, 2008, AIA filed a Manifestation and courts.(Emphasis supplied)
Motion with Leave of the Honorable Court to Defer or Suspend
Further Proceedings20 on the ground that it availed of the Tax The CIR contends that AIA is disqualified under Section 8(a) of
Amnesty Program under Republic Act 948021 (RA 9480), RA 9480 from availing itself of the Tax Amnesty Program
otherwise known as the Tax Amnesty Act of 2007. On February because it is "deemed" a withholding agent for the deficiency
13, 2008, it submitted to the Court a Certification of taxes. This argument is untenable.
79
Sense, Inc. (petitioner) for failure to implead Dou Mac, Inc.
The CIR did not assess AIA as a withholding agent that failed to (DMI) as an indispensable party.
withhold or remit the deficiency VAT and excise tax to the BIR
under relevant provisions of the Tax Code. Hence, the The Factual Antecedents
argument that AIA is "deemed" a withholding agent for these
deficiency taxes is fallacious. Records show that petitioner was the main contractor of the
FOC Network Project of Globe Telecom in Mindanao. In
Indirect taxes, like VAT and excise tax, are different from connection with the project, petitioner entered into a Sub-
withholding taxes.1âwphi1 To distinguish, in indirect taxes, the Contract Agreement3 (Agreement) with DMI, under which the
incidence of taxation falls on one person but the burden latter was tasked to undertake an underground open-trench
thereof can be shifted or passed on to another person, such as work. Petitioner required DMI to give a bond, in the event that
when the tax is imposed upon goods before reaching the DMI fails to perform its obligations under the Agreement. Thus,
consumer who ultimately pays for it.26 On the other hand, in DMI secured surety4 and performance5 bonds, both in the
case of withholding taxes, the incidence and burden of taxation amount of ₱ 5,171,488.00, from respondent Malayan Insurance
fall on the same entity, the statutory taxpayer. The burden of Company, Inc. (respondent) to answer: (1) for the unliquidated
taxation is not shifted to the withholding agent who merely portion of the downpayment, and (2) for the loss and damage
collects, by withholding, the tax due from income payments to that petitioner may suffer, respectively, should DMI fail to
entities arising from certain transactions27 and remits the same perform its obligations under the Agreement. Under the bonds,
to the government. Due to this difference, the deficiency VAT respondent bound itself jointly and severally liable with DMI.6
and excise tax cannot be "deemed" as withholding taxes merely
because they constitute indirect taxes. Moreover, records During the course of excavation and restoration works, the
support the conclusion that AIA was assessed not as a Department of Public Works and Highways (DPWH) issued a
withholding agent but, as the one directly liable for the said work-stoppage order against DMI after finding the latter’s work
deficiency taxes.28 unsatisfactory. Notwithstanding the said order, however, DMI
still failed to adopt corrective measures, prompting petitioner
The CIR also argues that AIA, being an accredited to terminate7 the Agreement and seek8 indemnification from
investor/taxpayer situated at the Subic Special Economic Zone, respondent in the total amount of ₱ 1,040,895.34.
should have availed of the tax amnesty granted under RA
939929 and not under RA 9480. This is also untenable. However, respondent effectively denied9 petitioner’s claim on
the ground that the liability of its principal, DMI, should first be
RA 9399 was passed prior to the passage of RA 9480. RA 9399 ascertained before its own liability as a surety attaches. Hence,
does not preclude taxpayers within its coverage from availing of the instant complaint, premised on respondent’s liability under
other tax amnesty programs available or enacted in futuro like the surety and performance bonds secured by DMI.
RA 9480. More so, RA 9480 does not exclude from its coverage
taxpayers operating within special economic zones. As long as it Seeking the dismissal10 of the complaint, respondent claimed
is within the bounds of the law, a taxpayer has the liberty to that DMI is an indispensable party that should be impleaded
choose which tax amnesty program it wants to avail. and whose liability should first be determined before
respondent can be held liable.
Lastly, the Court takes judicial notice of the "Certification of
Qualification"30 issued by Eduardo A. Baluyut, BIR Revenue On the other hand, petitioner asserted11 that respondent is a
District Officer, stating that AlA "has availed and is qualified for surety who is directly and primarily liable to indemnify
Tax Amnesty for the Taxable Year 2005 and Prior Years" petitioner, and that the bond is "callable on demand"12 in the
pursuant to RA 9480. In the absence of sufficient evidence event DMI fails to perform its obligations under the Agreement.
proving that the certification was issued in excess of authority,
the presumption that it was issued in the regular performance The RTC’s Ruling
of the revenue district officer's official duty stands.31 In its April 8, 2010 Order,13 the RTC dismissed the complaint
without prejudice, for failure to implead DMI as a party
WHEREFORE, the petition is DENIED for being MOOT and defendant. It ruled that before respondent could be held liable
ACADEMIC in view of Asia International Auctioneers, Inc.'s (AlA) on the surety and performance bonds, it must first be
availment of the Tax Amnesty Program under RA 9480. established that DMI, with whom petitioner had originally
Accordingly, the outstanding deficiency taxes of AlA are contracted, had indeed violated the Agreement. DMI,
deemed fully settled. therefore, is an indispensable party that must be impleaded in
the instant suit.
30. LIVING @ SENSE, INC., Petitioner, vs.MALAYAN On August 25, 2010, the RTC denied14 petitioner’s motion for
INSURANCE COMPANY, INC., Respondent. reconsideration for failure to set the same for hearing as
required under the rules.
This Petition for Review on Certiorari assails, on pure question
of law, the Orders dated April 8, 20101 and August 25, 20102 of The Issue Before The Court
the Regional Trial Court (RTC) of Parafiaque City, Branch 257
dismissing, without prejudice, the complaint for specific The sole issue to be resolved by the Court is whether DMI is an
performance and breach of contract filed by petitioner Living @ indispensable party in this case.
80
The Court's Ruling Accordingly, the Court finds that the RTC erred in holding that
DMI Is an indispensable party and, consequently, in dismissing
Petitioner maintains that the rule on solidary obligations the complaint filed by petitioner without prejudice.
permits it, as creditor, to proceed against any of the solidary
debtors, citing Article 1216 of the Civil Code which provides: WHEREFORE, the assailed April 8, 2010 and August 25, 2010
Orders of the Regional Trial Court (RTC) of Parañaque City,
Article 1216. The creditor may proceed against any one of the Branch 257 are hereby SET ASIDE. Petitioner's complaint is
solidary debtors or some or all of them simultaneously. The ordered REINSTATED and the case remanded to the RTC for
demand made against one of them shall not be an obstacle to further proceedings.
those which may subsequently be directed against the others,
so long as the debt has not been fully collected. 31. ASSOCIATED MARINE OFFICERS AND SEAMEN'S UNION OF
THE PHILIPPINES PTGWO-ITF, Petitioner, vs.NORIEL DECENA,
The petition is meritorious. Respondent.
Records show that when DMI secured the surety and This Petition for Review on Certiorari seeks the reversal of the
performance bonds from respondent in compliance with Decision1 of the Court of Appeals (CA) dated July 31, 2006, as
petitioner’s requirement, respondent bound itself "jointly and well as the Resolution2 dated June 20, 2007, which dismissed
severally" with DMI for the damages and actual loss that the complaint for unlawful detainer filed by petitioner against
petitioner may suffer should DMI fail to perform its obligations respondent on the ground of prematurity, as petitioner has not
under the Agreement, as follows: shown that it complied with the mandatory requirements for a
valid and effective cancellation of the contract to sell a house
That we, DOU MAC INC. as Principal, and MALAYAN INSURANCE and lot.
CO., INC., x xx are held firmly bound unto LIVING @ SENSE INC.
in the sum of FIVE MILLION ONE HUNDRED SEVENTY ONE The Factual Antecedents
THOUSAND FOUR HUNDRED EIGHTY EIGHT AND 00/100 PESOS
ONLY (PHP ***5,171,488.00), PHILIPPINE Currency, for the Associated Marine Officers and Seamen's Union of the
payment of which sum, well and truly to be made, we bind Philippines –
ourselves, our heirs, executors, administrators, successors and
assigns, jointly and severally, firmly by these presents xxx15 PTGWO-ITF (petitioner) is a duly registered labor organization
(Emphasis Supplied) engaged in an on-going Shelter Program, which offers
residential lots and fully-furnished houses to its members-
The term "jointly and severally" expresses a solidary seafarers under a reimbursement scheme requiring no down
obligation16 granting petitioner, as creditor, the right to payment and no interest on the principal sum advanced for the
proceed against its debtors, i.e., respondent or DMI. acquisition and development of the land and the construction
of the house.
The nature of the solidary obligation under the surety does not
make one an indispensable party.17 An indispensable party is a On April 27, 1995, petitioner entered into a contract3 under the
party-in-interest without whom no final determination can be Shelter Program with one of its members, Noriel Decena
had of an action, and who shall be joined mandatorily either as (respondent), allowing the latter to take possession of a house
plaintiffs or defendants. The presence of indispensable parties and lot described as 7 STOLT MODEL, Lot 16, Block 7, in the
is necessary to vest the court with jurisdiction, thus, without Seamen's Village, Sitio Piela, Barangay Paliparan, Dasmariñas,
their presence to a suit or proceeding, the judgment of a court Cavite, with the obligation to reimburse petitioner the cost
cannot attain real finality. The absence of an indispensable (US$28,563)4 thereof in 180 equal monthly payments. It was
party renders all subsequent actions of the court null and void stipulated in said contract that, in case respondent fails to remit
for want of authority to act, not only as to the absent parties three (3) monthly reimbursement payments, he shall be given a
but even as to those present.18 3-month grace period within which to remit his arrears,
otherwise, the contract shall be automatically revoked or
In this case, DMI is not an indispensable party because cancelled and respondent shall voluntarily vacate the premises
petitioner can claim indemnity directly from respondent, having without need of demand or judicial action.5
made itself jointly and severally liable with DMI for the
obligation under the bonds. Therefore, the failure to implead Subsequently, respondent failed to pay twenty-five (25)
DMI is not a ground to dismiss the case, even if the same was monthly reimbursement payments covering the period August
without prejudice.1âwphi1 1999 to August 2001, despite demands. Hence, petitioner
cancelled the contract and treated all his reimbursement
Moreover, even on the assumption that DMI was, indeed, an payments as rental payments for his occupancy of the house
indispensable party, the RTC committed reversible error in and lot.
dismissing the complaint. Failure to implead an indispensable
party is not a ground for the dismissal of an action, as the On August 21, 2001, petitioner sent respondent a notice of final
remedy in such case is to implead the party claimed to be demand6 requiring him to fulfill his obligation within a 30-day
indispensable, considering that parties may be added by order grace period. Thereafter, on October 18, 2001, his wife received
of the court, on motion of the party or on its own initiative at a notice to vacate7 the premises. For failure of respondent to
any stage of the action.19 heed said notices, petitioner filed a complaint before the
barangay lupon and, eventually, a case for unlawful detainer,
81
docketed as Civil Case No. 12108 before the Municipal Trial
Court (MTC) of Dasmariñas, Cavite. 1. The Honorable Court of Appeals erred in changing the main
issue to be resolved in the instant unlawful detainer case from
The Ruling of the MTC who has the better right of possession to whether or not the
agreement between the parties is a contract of lease or a
On December 4, 2002, the MTC found petitioner's case contract to sell, especially when the nature of the agreement
meritorious and, thus, rendered judgment9 ordering between the parties was never questioned nor raised as an
respondent to (1) vacate the premises; (2) pay monthly rental issue in the court a quo.
in the amount of ₱ 8,109.00 from August 1999 with legal
interests thereon until he has actually and fully paid the same; 2. Even assuming that the Honorable Court of Appeals was
and (3) pay attorney's fees in the amount of ₱ 30,000.00, as correct in changing the main issue to be resolved, it
well as the costs of suit. nevertheless erred in determining that:
The Ruling of the RTC a. The agreement between the parties is allegedly one of
contract to sell – when the Housing and Land Use Regulatory
On appeal (App. Civil Case No. 312-03), the Regional Trial Court Board itself already made a pronouncement that the Shelter
(RTC) of Imus, Cavite, affirmed10 in toto the decision of the Program and its contract award is not a sale of real estate.
MTC after finding that the cancellation and revocation of the
contract for failure of respondent to remit 25 monthly b. The action for unlawful detainer filed by petitioner AMOSUP
reimbursement payments converted the latter's stay on the is allegedly premature – especially considering that Republic
premises to one of "mere permission"11 by petitioner, and that Act No. 6552, which requires notarial notice of rescission, is not
respondent's refusal to heed the notice to vacate the premises applicable to the case at bar and, thus, the written notice of
rendered his continued possession thereof unlawful.12 termination previously served on the respondent is already
sufficient.21
With respect to the issue raised by respondent that the instant
case is covered by Republic Act No. 6552 (R.A. No. 6552),13 the The Ruling of the Court
Maceda Law, the RTC ruled in the negative, ratiocinating that
the Shelter Contract Award is neither a contract of sale nor a It is basic that a contract is what the law defines it to be, and
contract to sell. Rather, it is "more akin to a contract of lease not what it is called by the contracting parties. A contract to sell
with the monthly reimbursements as rentals."14 is defined as a bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the subject property
The Ruling of the Court of Appeals despite delivery thereof to the prospective buyer, binds itself to
sell the said property exclusively to the prospective buyer upon
On petition for review (CA-G.R. SP No. 81954) before the CA, fulfillment of the condition agreed upon, that is, full payment of
the appellate court set aside the decision of the RTC and the purchase price.22
entered a new judgment15 dismissing the complaint for
unlawful detainer and restoring respondent to the peaceful The Shelter Contract Award granted to respondent expressly
possession of the subject house and lot. The CA held that the stipulates that "upon completion of payment of the amount of
contract between the parties is not a contract of lease, but a US$28,563 representing the full value of the House and Lot
contract to sell, which stipulates that upon full payment of the subject of the Contract Award, the UNION shall execute a Deed
value of the house and lot, respondent shall become the owner of Transfer and shall cause the issuance of the corresponding
thereof.16 The issues, which involve "the propriety of Transfer Certificate of Title in favor of and in the name of the
terminating the relationship contracted by the parties, as well AWARDEE."23 It cannot be denied, therefore, that the parties
as the demand upon [respondent] to deliver the premises and herein entered into a contract to sell in the guise of a
to pay unpaid reimbursements,"17 extend beyond those reimbursement scheme requiring respondent to make monthly
commonly involved in unlawful detainer suits, thus, converting reimbursement payments which are, in actuality, installment
the instant case into one incapable of pecuniary estimation payments for the value of the subject house and lot.
exclusively cognizable by the RTC.18
While respondent occupied the subject premises, title
Moreover, the appellate court faulted petitioner for failing to nonetheless remained with petitioner. Considering, therefore,
comply with the mandatory twin requirements for a valid and that the basis for such occupation is a contract to sell the
effective cancellation of a contract to sell under Section 3 (b) of premises on installment, the contractual relations between the
R.A. No. 6552: (1) to send a notarized notice of cancellation, parties are more than that of a lessor-lessee.24 The appellate
and (2) to refund the cash surrender value of the payments on court thus correctly ruled that the Shelter Contract Award has
the property. Consequently, it held that the contract to sell still not been converted into one of lease.
subsists, at least until properly rescinded, and the action for
ejectment filed by petitioner is premature.19 Petitioner tried, albeit in vain, to mislead the Court that the
nature of the agreement between the parties, and even the
Aggrieved, petitioner filed a motion for reconsideration, which validity of the termination thereof, were never raised in the
was denied by the CA in its Resolution20 dated June 20, 2007. trial courts. In the pre-trial brief filed by respondent before the
Hence, petitioner is now before this Court alleging that – MTC, the first issue he presented is "whether or not the present
action is a simple case of or an action for unlawful detainer or
The Issues
82
an action for rescission of the Contract of Shelter Award which that the only issue resolved in that case is "whether or not the
is outside of the jurisdiction of the Honorable Court."25 respondent (petitioner herein) is engaged in the business of
selling real estate subdivisions, so as to fall under the ambit of
In the parallel case of Pagtalunan v. Dela Cruz Vda. De P.D. 957, the resolution of which would determine whether or
Manzano,26 which likewise originated as an action for unlawful not respondent is required under the law to register with (the)
detainer, we affirmed the finding of the appellate court that, Office and procure a license to sell."30
since the contract to sell was not validly cancelled or rescinded
under Section 3(b) of R.A. No. 6552, the respondent therein had Section 2(b) of P.D. 957 defines a sale as follows:
the right to continue occupying unmolested the property
subject thereof. Section 3(b) reads: b.) Sale or Sell – "sale" or "sell" shall include every disposition,
or attempt to dispose, for a valuable consideration, of a
SEC. 3. In all transactions or contracts involving the sale or subdivision lot, including the building and other improvements
financing of real estate on installment payments, including thereon, if any, in a subdivision project or a condominium unit
residential condominium apartments but excluding industrial in a condominium project. "Sale" or "sell" shall include a
lots, commercial buildings and sales to tenants under Republic contract to sell, a contract of purchase and sale, an exchange,
Act Numbered Thirty-eight hundred forty-four, as amended by an attempt to sell, an option of sale or purchase, a solicitation
Republic Act Numbered Sixty-three hundred eighty-nine, where of a sale, or an offer to sell, directly or by an agent, or by a
the buyer has paid at least two years of installments, the buyer circular letter, advertisement or otherwise.
is entitled to the following rights in case he defaults in the
payment of succeeding installments: A privilege given to a member of a cooperative, corporation,
partnership, or any association and/or the issuance of a
xxx certificate or receipt evidencing or giving the right of
participation in, or right to any land in consideration of
(b) If the contract is canceled, the seller shall refund to the payment of the membership fee or dues, shall be deemed a
buyer the cash surrender value of the payments on the sale within the meaning of this definition.
property equivalent to fifty per cent of the total payments
made, and, after five years of installments, an additional five A reading of the Decision in its entirety reveals a vacillation on
per cent every year but not to exceed ninety per cent of the the part of the HLURB in classifying the transaction between
total payments made: Provided, That the actual cancellation of petitioner and its members. While the HLURB held that there is
the contract shall take place after thirty days from receipt by no sale as contemplated under the first paragraph of the
the buyer of the notice of cancellation or the demand for aforequoted provision "for the reason that there is no valuable
rescission of the contract by a notarial act and upon full consideration involved in the transaction,"31 yet it went on to
payment of the cash surrender value to the buyer. (Emphasis opine that the second paragraph of the same provision
supplied) "appears to have an apparent application in the instant case
although the same is not clear."32 Then, in its final
As we emphasized in Pagtalunan, "R.A. No. 6552, otherwise disposition,33 the HLURB required petitioner to secure a
known as the Realty Installment Buyer Protection Act, Certificate of Registration and License to Sell for its subdivision
recognizes in conditional sales of all kinds of real estate project thereby effectively bringing it under the jurisdiction of
(industrial, commercial, residential) the right of the seller to said office. Clearly, the argument of petitioner that respondent
cancel the contract upon non-payment of an installment by the is not a realty installment buyer that needs to be protected by
buyer, which is simply an event that prevents the obligation of the law has no leg to stand on.
the vendor to convey title from acquiring binding force." While
we agreed that the cancellation of a contract to sell may be In the interest, however, of putting an end to the controversy
done outside of court, however, "the cancellation by the seller between the parties herein that had lasted for more than ten
must be in accordance with Sec. 3(b) of R.A. No. 6552, which (10) years, as in the cited case of Pagtalunan, the Court orders
requires a notarial act of rescission and the refund to the buyer respondent to pay his arrears and settle the balance of the full
of the full payment of the cash surrender value of the payments value of the subject premises. He had enjoyed the use thereof
on the property."27 In the present case, as aptly pointed out by since 1995. After defaulting in August 1999, respondent had
the appellate court, petitioner failed to prove that the Shelter not made any subsequent reimbursement payments. Thus, for
Contract Award had been cancelled in accordance with R.A. No. the delay in his reimbursement payments, we award interest at
6552, which would have been the basis for the illegality of the rate of 6% per annum on the unpaid balance applying
respondent's possession of the subject premises. Hence, the Article 220934 of the Civil Code, there being no stipulation in
action for ejectment must necessarily fail. the Shelter Contract Award for such interest.35 For purposes of
computing the legal interest, the reckoning period should be
Petitioner nonetheless insists on the inapplicability of R.A. No. the notice of final demand, conformably with Articles 116936
6552 in this case, capitalizing on the Decision28 of the Housing and 158937 of the same Code, which, as found by the MTC, was
and Land Use Regulatory Board in HLURB CASE No. IV6-090902- sent by petitioner to respondent on August 21, 2001.38
1842 entitled "Seamen's Village Brotherhood Homeowners
Association, Inc. v. Associated Marine Officers And Seamen's In his Comment to the instant Petition, respondent claimed that
Union of the Philippines (AMOSUP)" which held that the he had made payments in the amount of ₱ 318,167.70.39 The
transaction between petitioner and the residents of Seamen's total amount for reimbursement for the subject house and lot
Village cannot be considered a sale within the purview of is US$28,563, which the Shelter Contract Award requires to be
Presidential Decree (P.D.) No. 957.29 It should be pointed out paid in "180 equal monthly periodic reimbursements of US$159
83
or in equivalent Philippine Currency at the time the same falls sale, damages and attorney’s feesagainst herein respondents
due."40 For lack of pertinent data with which to determine how heirs of spouses Hadji Yusop Uy and Julpha Ibrahim Uy (heirs of
many months respondent's alleged total payment of ₱ Uy).
318,167.70 is equivalent to, we direct petitioner to submit to
the trial court an accounting of the payments made by The Facts
respondent particularly showing the number of months he was
able to make the required payments of US$159 or its peso During her lifetime, Anunciacion Neri (Anunciacion) had seven
equivalent. The balance of the full value of the subject premises children, two (2) from her first marriage with Gonzalo Illut
shall then be computed on the basis of the following formula: (Gonzalo), namely: Eutropia and Victoria, and five (5) from her
(180 months minus the number of months that respondent had second marriage with Enrique Neri (Enrique), namely:
already paid) multiplied by US$159 or its peso equivalent at the Napoleon, Alicia, Visminda, Douglas and Rosa. Throughout the
time of payment. marriage of spouses Enrique and Anunciacion, they acquired
several homestead properties with a total area of 296,555
WHEREFORE, the Decision of the Court of Appeals dated July square meters located in Samal, Davao del Norte, embraced by
31, 2006 and the Resolution dated June 20, 2007 are hereby Original Certificate of Title (OCT) Nos. (P-7998) P-21285 , (P-
AFFIRMED with the following MODIFICATIONS: 14608) P-51536 and P-20551 (P-8348)7 issued on February 15,
1957, August 27, 1962 and July 7, 1967, respectively.
1. The Municipal Trial Court of Dasmariñas, Cavite is directed to
conduct a hearing, within a maximum period of thirty (30) days On September 21, 1977, Anunciacion died intestate. Her
from receipt of this Decision, to determine: (a) the unpaid husband, Enrique, in his personal capacity and as natural
balance of the full value of the subject house and Jot; and (b) guardian of his minor children Rosa and Douglas, together with
the reasonable amount of rental for the subject property at Napoleon, Alicia, and Vismindaexecuted an Extra-Judicial
present times. Settlement of the Estate with Absolute Deed of Sale8 on July 7,
1979, adjudicating among themselves the said homestead
2. Within sixty (60) days from the determination of the trial properties, and thereafter, conveying themto the late spouses
court of said balance, respondent shall pay the amount thereof Hadji Yusop Uy and Julpha Ibrahim Uy (spouses Uy)for a
to petitioner, with interest at six percent ( 6%) per annum from consideration of ₱ 80,000.00.
August 1, 2001 up to the date of actual payment;
On June 11, 1996, the children of Enrique filed a complaint for
3. Upon payment, petitioner shall execute a Deed of Absolute annulment of saleof the said homestead properties against
Sale of the subject property and deliver the transfer certificate spouses Uy (later substituted by their heirs)before the RTC,
of title in favor of respondent; docketed as Civil Case No.96-28, assailing the validity of the sale
for having been sold within the prohibited period.
4. In case of failure to pay within the mandated 60-day period, Thecomplaint was later amended to include Eutropia and
respondent shall immediately vacate the premises without Victoriaas additional plaintiffs for having been excluded and
need of further demand. Petitioner, on the other hand, shall deprived of their legitimes as childrenof Anunciacion from her
pay respondent the cash surrender value equivalent to 50% of first marriage.
the total reimbursement payments made. The Shelter Contract
Award shall then be deemed cancelled thirty (30) days after In their amended answer with counterclaim, the heirs of Uy
receipt by respondent of the full payment of the cash surrender countered that the sale took place beyond the 5-year
value. If respondent fails to vacate the premises, he shall be prohibitory period from the issuance of the homestead patents.
charged reasonable rental in the amount determined by the They also denied knowledge of Eutropia and Victoria’s
trial court. exclusionfrom the extrajudicial settlement and sale of the
subject properties, and interposed further the defenses of
32. NAPOLEON D. NERI, ALICIA D. NERI-MONDEJAR, prescription and laches.
VISMINDA D. NERI-CHAMBERS, ROSA D. NERI-MILLAN,
DOUGLAS D. NERI, EUTROPIA D. ILLUT-COCKINOS AND The RTC Ruling
VICTORIA D. ILLUT-PIALA, Petitioners, vs.
HEIRS OF HADJI YUSOP UY AND JULPHA* IBRAHIM UY, On October 25, 2004, the RTC rendered a decision ordering,
Respondents. among others, the annulment of the Extra-Judicial Settlement
of the Estate with Absolute Deed of Sale. It ruled that while the
sale occurred beyond the 5-year prohibitory period, the sale is
In this Petition for Review on Certiorari1 under Rule 45 of the still void because Eutropia and Victoria were deprived of their
Rules of Court, petitioners Napoleon D. Neri (Napoleon), Alicia hereditary rights and that Enrique had no judicial authority to
D. Neri-Mondejar (Alicia), Visminda D. Neri-Chambers sell the shares of his minor children, Rosa and Douglas.
(Visminda), Rosa D. Neri-Millan (Rosa), Douglas D. Neri
(Douglas), Eutropia D. Illut-Cockinos (Eutropia), and Victoria D. Consequently, it rejected the defenses of laches and
Illut-Piala (Victoria) seek to reverse and set aside the April 27, prescription raised by spouses Uy, who claimed possession of
2010 Decision2 and October 18, 2010 Resolution3 of the Court the subject properties for 17 years, holding that co-ownership
of Appeals (CA) in CA-G.R. CV No. 01031-MIN which annulled rights are imprescriptible.
the October 25, 2004 Decision4 of the Regional Trial Court
(RTC) of Panabo City, Davao del Norte and instead, entered a The CA Ruling
new one dismissing petitioners’ complaint for annulment of
84
On appeal, the CAreversed and set aside the ruling of the RTC in inheritances,9 entitling them to their pro indiviso shares in her
its April 27, 2010 Decision and dismissed the complaint of the whole estate, as follows:
petitioners. It held that, while Eutropia and Victoria had no
knowledge of the extrajudicial settlement and sale of the Hence, in the execution of the Extra-Judicial Settlement of the
subject properties and as such, were not bound by it, the CA Estate with Absolute Deed of Sale in favor of spouses Uy, all the
found it unconscionable to permit the annulment of the sale heirs of Anunciacionshould have participated. Considering that
considering spouses Uy’s possession thereof for 17 years, and Eutropia and Victoria were admittedly excluded and that then
thatEutropia and Victoriabelatedlyfiled their actionin 1997, minors Rosa and Douglas were not properly represented
ormore than two years fromknowledge of their exclusion as therein, the settlement was not valid and binding uponthem
heirs in 1994 when their stepfather died. It, however, did not and consequently, a total nullity.
preclude the excluded heirs from recovering their legitimes
from their co-heirs. Section 1, Rule 74 of the Rules of Court provides:
Similarly, the CA declared the extrajudicial settlement and the SECTION 1. Extrajudicial settlement by agreement between
subsequent saleas valid and binding with respect to Enrique heirs. – x x x
and hischildren, holding that as co-owners, they have the right
to dispose of their respective shares as they consider necessary The fact of the extrajudicial settlement or administration shall
or fit.While recognizing Rosa and Douglas to be minors at that be published in a newspaper of general circulation in the
time, they were deemed to have ratified the sale whenthey manner provided in the next succeeding section; but no
failed to question it upon reaching the age of majority.Italso extrajudicial settlement shall be binding upon any person who
found laches to have set in because of their inaction for a long has not participated therein or had no notice thereof.
period of time. (Underscoring added)
The Issues The effect of excluding the heirs in the settlement of estate was
further elucidated in Segura v. Segura,10 thus:
In this petition, petitioners imputeto the CA the following
errors: It is clear that Section 1 of Rule 74 does not apply to the
partition in question which was null and void as far as the
I. WHEN IT UPHELDTHE VALIDITY OF THE "EXTRA JUDICIAL plaintiffs were concerned. The rule covers only valid partitions.
SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF SALE" The partition in the present case was invalid because it
AS FAR AS THE SHARES OF EUTROPIA AND VICTORIA WERE excluded six of the nine heirs who were entitled to equal shares
CONCERNED, THEREBY DEPRIVING THEM OF THEIR in the partitioned property. Under the rule "no extrajudicial
INHERITANCE; settlement shall be binding upon any person who has not
participated therein or had no notice thereof." As the partition
II. WHEN IT DID NOT NULLIFY OR ANNUL THE "EXTRA JUDICIAL was a total nullity and did not affect the excluded heirs, it was
SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF SALE" not correct for the trial court to hold that their right to
WITH RESPECT TO THE SHARESOF ROSA AND DOUGLAS, challenge the partition had prescribed after two years from its
THEREBY DEPRIVING THEM OF THEIR INHERITANCE; and execution…
III. WHEN IT FOUND THAT LACHES OR PRESCRIPTION HAS SET However, while the settlement of the estate is null and void,
IN. the subsequent sale of the subject propertiesmade by Enrique
and his children, Napoleon, Alicia and Visminda, in favor of the
The Ruling of the Court respondents isvalid but only with respect to their proportionate
shares therein.It cannot be denied that these heirs have
The petitionis meritorious. acquired their respective shares in the properties of
Anunciacion from the moment of her death11 and that, as
It bears to stress that all the petitioners herein are indisputably owners thereof, they can very well sell their undivided share in
legitimate children of Anunciacion from her first and second the estate.12
marriages with Gonzalo and Enrique, respectively, and
consequently, are entitled to inherit from her in equal shares, With respect to Rosa and Douglas who were minors at the time
pursuant to Articles 979 and 980 of the Civil Code which read: of the execution of the settlement and sale, their natural
guardian and father, Enrique, represented them in the
ART. 979. Legitimate children and their descendants succeed transaction. However, on the basis of the laws prevailing at that
the parents and other ascendants, without distinction as to sex time, Enrique was merely clothed with powers of
or age, and even if they should come from different marriages. administration and bereft of any authority to dispose of their
2/16 shares in the estate of their mother, Anunciacion.
xxx
Articles 320 and 326 of the Civil Code, the laws in force at the
ART. 980. The children of the deceased shall always inherit from time of the execution of the settlement and sale, provide:
him in their own right, dividing the inheritance in equal shares.
ART. 320. The father, or in his absence the mother, is the legal
As such, upon the death of Anunciacion on September 21, administrator of the property pertaining to the child under
1977, her children and Enrique acquired their respective parental authority. If the property is worth more than two
85
thousand pesos, the father or mother shall give a bond subject binding on him. It is this voluntary choice, knowingly made,
to the approval of the Court of First Instance. which amounts to a ratification of what was theretofore
unauthorized, and becomes the authorized act of the party so
ART. 326. When the property of the child is worth more than making the ratification.16 Once ratified, expressly or impliedly
two thousand pesos, the father or mother shall be considered a such as when the person knowingly received benefits from it,
guardian of the child’s property, subject to the duties and the contract is cleansed from all its defects from the moment it
obligations of guardians under the Rules of Court. was constituted,17 as it has a retroactive effect.
Corollarily, Section 7, Rule 93 of the Rules of Court also Records, however, show that Rosa had ratified the extrajudicial
provides: settlement of the estate with absolute deed of sale. In
Napoleon and Rosa’s Manifestation18 before the RTC dated
SEC. 7. Parents as Guardians. – When the property of the child July 11, 1997,they stated:
under parental authority is worth two thousand pesos or less,
the father or the mother, without the necessity of court "Concerning the sale of our parcel of land executed by our
appointment, shall be his legal guardian. When the property of father, Enrique Neri concurred in and conformed to by us and
the child is worth more than two thousand pesos, the father or our other two sisters and brother (the other plaintiffs), in favor
the mother shall be considered guardian of the child’s property, of Hadji Yusop Uy and his spouse Hadja Julpa Uy on July 7,
with the duties and obligations of guardians under these Rules, 1979, we both confirmed that the same was voluntary and
and shall file the petition required by Section 2 hereof. For good freely made by all of us and therefore the sale was absolutely
reasons, the court may, however, appoint another suitable valid and enforceable as far as we all plaintiffs in this case are
persons. concerned;" (Underscoring supplied)
Administration includes all acts for the preservation of the In their June 30, 1997 Joint-Affidavit,19 Napoleon and Rosa also
property and the receipt of fruits according to the natural alleged:
purpose of the thing. Any act of disposition or alienation, or any
reduction in the substance of the patrimony of child, exceeds "That we are surprised that our names are included in this case
the limits of administration.13 Thus, a father or mother, as the since we do not have any intention to file a case against Hadji
natural guardian of the minor under parental authority, does Yusop Uy and Julpha Ibrahim Uy and their family and we
not have the power to dispose or encumber the property of the respect and acknowledge the validity of the Extra-Judicial
latter. Such power is granted by law only to a judicial guardian Settlement of the Estate with Absolute Deed of Sale dated July
of the ward’s property and even then only with courts’ prior 7, 1979;" (Underscoring supplied)
approval secured in accordance with the proceedings set forth
by the Rules of Court.14 Clearly, the foregoing statements constitutedratification of the
settlement of the estate and the subsequent sale, thus, purging
Consequently, the disputed sale entered into by Enrique in all the defects existing at the time of its execution and
behalf of his minor children without the proper judicial legitimizing the conveyance of Rosa’s 1/16 share in the estate
authority, unless ratified by them upon reaching the age of of Anunciacion to spouses Uy. The same, however, is not true
majority,15 is unenforceable in accordance with Articles 1317 with respect to Douglas for lack of evidence showing
and 1403(1) of the Civil Code which provide: ratification.
ART. 1317. No one may contract in the name of another Considering, thus, that the extrajudicial settlement with sale is
without being authorized by the latter or unless he has by law a invalid and therefore, not binding on Eutropia, Victoria and
right to represent him. Douglas, only the shares ofEnrique, Napoleon, Alicia, Visminda
and Rosa in the homestead properties have effectivelybeen
A contract entered into in the name of another by one who has disposed in favor of spouses Uy. "A person can only sell what he
no authority or legal representation, or who has acted beyond owns, or is authorized to sell and the buyer can as a
his powers, shall be unenforceable, unless it is ratified, consequence acquire no more than what the sellercan legally
expressly or impliedly, by the person on whose behalf it has transfer."20 On this score, Article 493 of the Civil Codeis
been executed, before it is revoked by the other contracting relevant, which provides:
party.
Each co-owner shall have the full ownership of his part and of
ART. 1403. The following contracts are unenforceable, unless the fruits and benefits pertaining thereto, and he may therefore
they are ratified: alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are
(1) Those entered into the name of another person by one who involved. But the effect of the alienation or the mortgage, with
has been given no authority or legal representation, or who has respect to the co-owners, shall be limited to the portion which
acted beyond his powers; may be allotted to him in the division upon the termination of
the co-ownership.
xxx
Consequently, spouses Uy or their substituted heirs became pro
Ratification means that one under no disability voluntarily indiviso co-owners of the homestead properties with Eutropia,
adopts and gives sanction to some unauthorized act or Victoria and Douglas, who retained title to their respective 1/16
defective proceeding, which without his sanction would not be shares. They were deemed to be holding the 3/16 shares of
86
Eutropia, Victoria and Douglas under an implied constructive
trust for the latter’s benefit, conformably with Article 1456 of x---------------x
the Civil Code which states:"if property is acquired through
mistake or fraud, the person obtaining it is, by force of law, G.R. Nos. 139331 & 140845-46
considered a trustee of an implied trust for the benefit of the
person from whom the property comes." As such, it is only fair, PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs.VAL DE LOS
just and equitable that the amount paid for their shares REYES, Accused-Appellant.
equivalent to ₱ 5,000.0021 each or a total of ₱ 15,000.00 be
returned to spouses Uy with legal interest. This refers to the June 25, 1997 Decision1 of the Regional Trial
Court (RTC) of Tabaco, Albay, Branch 16, convicting appellant
On the issue of prescription, the Court agrees with petitioners Donel Go (appellant) of two (2) counts of rape and sentencing
that the present action has not prescribed in so far as it seeks him to suffer the death penalty for each count and to pay moral
to annul the extrajudicial settlement of the estate. Contrary to damages and attorney’s fees. By reason of the penalty
the ruling of the CA, the prescriptive period of 2 years provided imposed, these cases were elevated to the Court for automatic
in Section 1 Rule 74 of the Rules of review.
Court reckoned from the execution of the extrajudicial The Factual Antecedents
settlement finds no application to petitioners Eutropia, Victoria
and Douglas, who were deprived of their lawful participation in On December 22, 1994, at around 4:00 o’clock in the afternoon,
the subject estate. Besides, an "action or defense for the complainant Imelda B. Brutas (Imelda), upon the request of her
declaration of the inexistence of a contract does not prescribe" sister Clara, went to the house of appellant at San Roque,
in accordance with Article 1410 of the Civil Code. Tabaco, Albay to bring some pictures. Upon arrival thereat,
Imelda saw appellant by the road outside his house talking to
However, the action to recover property held in trust prescribes another man, whom appellant introduced to her as Val De Los
after 10 years from the time the cause of action accrues,22 Reyes (Val). However, because it suddenly rained, the three of
which is from the time of actual notice in case of unregistered them took shelter inside appellant’s house, where appellant
deed.23 In this case, Eutropia, Victoria and Douglas claimed to and Val forced Imelda to drink two bottles of beer, causing her
have knowledge of the extrajudicial settlement with sale after to feel dizzy. It was under this condition that Val succeeded in
the death of their father, Enrique, in 1994 which spouses Uy having sexual intercourse with her against her will. Thereafter,
failed to refute. Hence, the complaint filed in 1997 was well appellant took his turn with Imelda, aided by Val who covered
within the prescriptive period of 10 years. her mouth and held her hands.
WHEREFORE, the instant petition is GRANTED. The April 27, Apparently not satisfied, Val once again ravished Imelda, with
2010 Decision and October 18, 2010 Resolution of the Court of the assistance of appellant who likewise covered her mouth
Appeals are REVERSED and SET ASIDE and a new judgment is and held her hands.
entered:
Thus, Imelda filed criminal complaints for rape against
1. Declaring the Extra-Judicial Settlement of the Estate of appellant and Val, who were jointly charged in two (2)
Anunciacion Neri NULL and VOID; Informations, as follows:
2. Declaring the Absolute Deed of Sale in favor of the late Criminal Case No. T-26402
spouses Hadji Yusop Uy and Julpha Ibrahim Uy as regards the
13/16 total shares of the late Enrique Neri, Napoleon Neri, That on or about the 22nd day of December, 1994 at more or
Alicia D. Neri-Mondejar, Visminda D. Neri-Chambers and Rosa less between the hours of 4:00 o’clock in the afternoon and
D. Neri-Millan VALID; 10:00 o’clock in the evening at Barangay San Roque, Tabaco,
Albay, Philippines, and within the jurisdiction of this Honorable
3. Declaring Eutropia D. Illut-Cockinos, Victoria D. Illut-Piala and Court, DONEL GO, with the indispensable cooperation and help
Douglas D. Neri as the LAWFUL OWNERS of the 3/16 portions of of VAL DE LOS REYES, by means of force and intimidation and
the subject homestead properties, covered by Original rendering IMELDA B. BRUTAS almost unconscious by forcing
Certificate of Title Nos. (P-7998) P-2128, (P-14608) P-5153 and private complainant to drink two bottles of beer, DONEL GO,
P-20551 (P-8348); and wilfully, unlawfully and feloniously did lie and succeeded in
having carnal knowledge of IMELDA B. BRUTAS, against her will,
4. Ordering the estate of the late Enrique Neri, as well as to her damage and prejudice.
Napoleon Neri, Alicia D. Neri-Mondejar, Visminda D. Neri-
Chambers and Rosa D. Neri-Millan to return to the respondents Criminal Case No. T-26413
jointly and solidarily the amount paid corresponding to the
3/16 shares of Eutropia, Victoria and Douglas in the total That on or about the 22nd day of December, 1994 at more or
amount of ₱ 15,000.00, with legal interest at 6% per annum less between the hours of 4:00 o’clock in the afternoon and
computed from the time of payment until finality of this 10:00 o’clock in the evening at Barangay San Roque, Tabaco,
decision and 12% per annum thereafter until fully paid. Albay, Philippines, and within the jurisdiction of this Honorable
Court, VAL DE LOS REYES, with the indispensable cooperation
33. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs.VAL DE and help of DONEL GO, by means of force and intimidation and
LOS REYES and DONELGO, Accused-Appellants. rendering IMELDA B. BRUTAS almost unconscious by forcing
87
private complainant to drink two bottles of beer, VAL DE LOS At the outset, the Court notes that these cases were elevated
REYES, wilfully, unlawfully and feloniously did lie and succeeded to Us on automatic review in view of the RTC’s imposition of
in having carnal knowledge of IMELDA B. BRUTAS, against her the death penalty upon appellant in its June 25, 1997 Decision.
will, to her damage and prejudice. However, with the Court’s pronouncement in the 2004 case of
People v. Mateo12 providing for and making mandatory the
Unfortunately, the authorities were able to arrest only intermediate review by the CA of cases involving the death
appellant while Val remained at large. Thus, appellant was penalty, reclusion perpetua or life imprisonment, the proper
arraigned and pleaded not guilty to the crime charged, but course of action would be to remand these cases to the
before the prosecution could conclude the presentation of its appellate court for the conduct of an intermediate review.
evidence, he jumped bail. Consequently, he was tried in
absentia. After a judicious review of the records, however, the Court no
longer sees the necessity of transferring these cases to the CA
On June 25, 1997, the RTC convicted4 appellant of two (2) for intermediate review and instead, deems it more
counts of rape and sentenced him to suffer the death penalty appropriate to dismiss the instant appeal.
for each count and to pay moral damages and attorney’s fees.
In view of the penalty of death imposed upon him, the case was Records reveal that the appellant jumped bail during the
elevated to the Court on automatic review, herein docketed as proceedings before the RTC and was, in fact, tried and
G.R. Nos. 130714 and 139634. Meanwhile, the cases against Val convicted in absentia. There is dearth of evidence showing that
were sent to the archives pending his arrest. he has since surrendered to the court’s jurisdiction. Thus, he
has no right to pray for affirmative relief before the courts.
On August 19, 1997, the RTC revived5 the criminal cases against Once an accused escapes from prison or confinement, jumps
Val, who, after trial, was likewise found guilty beyond bail as in appellant’s case, or flees to a foreign country, he loses
reasonable doubt of the three (3) charges of rape filed against his standing in court, and unless he surrenders or submits to
him.6 Through counsel, Val appealed his conviction before the the jurisdiction of the court, he is deemed to have waived any
Court, docketed as G.R. Nos. 139331 and 140845-46. right to seek relief therefrom.13 1âwphi1
On August 14, 2000, the Court ordered7 the consolidation of Thus, even if the Court were to remand these cases to the CA
the five (5) cases. for intermediate review, the CA would only be constrained to
dismiss appellant’s appeal, as he is considered a fugitive from
On December 27, 2002, the Court En Banc rendered a Decision8 justice. On this score, Section 8, Rule 124 of the Rules of Court
vacating the judgment of conviction against Val, upon a finding is relevant, which provides:
that the RTC violated Sections 1 and 2, Rule 132 and Section 1,
Rule 133 of the then Revised Rules of Court which required that SEC. 8. Dismissal of appeal for abandonment or failure to
the testimonies of the witnesses be given orally. It would prosecute. – The Court of Appeals may, upon motion of the
appear from the records that during Val’s trial, the prosecution appellee or motu proprio and with notice to the appellant in
merely adopted the transcript of the stenographic notes during either case, dismiss the appeal if the appellant fails to file his
the trial against appellant and asked the prosecution witnesses brief within the time prescribed by this Rule, except where the
to affirm their previous testimonies. Thus, finding that the appellant is represented by a counsel de officio.
proceedings against Val were abbreviated and irregular, the
Court remanded G.R. Nos. 139331 and 140845-46 to the RTC The Court of Appeals may also, upon motion of the appellee or
for rehearing. Meanwhile, the automatic review of the cases motu proprio, dismiss the appeal if the appellant escapes from
against appellant in G.R. Nos. 130714 and 139634 was held in prison or confinement, jumps bail or flees to a foreign country
abeyance. during the pendency of the appeal.14 (Emphasis supplied)
Val was tried anew before the RTC, which, in its Joint Decision9 It bears to stress that the right to appeal is merely a statutory
dated June 28, 2005, eventually convicted him for three (3) privilege, and, as such, may be exercised only in the manner
counts of rape and sentenced him to suffer the death penalty and in accordance with the provisions of the law. The party who
as well as to pay private complainant ₱ 50,000.00 as damages seeks to avail of the same must comply with the requirements
for each count. He appealed his conviction to the Court of of the Rules, failing which, the right to appeal is lost.15
Appeals (CA), docketed as CA-G.R. CR-H.C. No. 01642 which in
its December 19, 2006 Decision,10 affirmed his conviction, with WHEREFORE, the appeal is DISMISSED.
the modification reducing the penalty of death to reclusion
perpetua for each count, and ordering the payment of the 34. REPUBLIC OF THE PHILIPPINES, represented by the
amount of ₱ 50,000.00 by way of moral damages to the victim. Regional Executive Director of the Department of
Val’s motion for reconsideration was likewise denied,11 hence, Environment and Natural Resources, Regional Office No. 3,
his separate appeal before the Court, docketed as G.R. No. Petitioner, vs.ROMAN CATHOLIC ARCHBISHOP OF MANILA,
177357, pending before the Court’s Third Division. With the Respondent.
foregoing factual backdrop, only appellant’s appeal is left
before the Court En Banc for resolution. x-----------------------x
88
SAMAHANG KABUHAYAN NG SAN LORENZO KKK, INC., Court,11 hence, beyond the competence of the RTC to act
represented by its Vice President ZenaidaTurla, Petitioner, vs. upon.
ROMAN CATHOLIC ARCHBISHOP OF MANILA, Rerspondent.
Ruling of the Trial Court
Before the Court are two separate petitions filed under Rule 45
of the Rules of Court seeking to set aside the April 22, 2010 In its Orderdated January 27, 2009,12 the RTC denied RCAM's
Decision1 and July 19, 2010 Resolution2 of the Court of Appeals motion to dismiss for being premature. It declaredthat while
(CA) which ordered the Regional Trial Court (RTC), Branch 843 the decision of the CFI dated September 21, 1915 pertains only
of Malolos, Bulacan to grant the motion to dismiss filed by to parcels 495, 496, 497 and 498 and did not mention Lot Nos.
respondent Roman Catholic Archbishop of Manila (RCAM) and 43 & 50, an examination of OCT No. 588 and Decree No. 57486
to dismiss the complaint of petitioner Republic of the reveals that the subject lots were conferred on RCAM pursuant
Philippines (Republic). to a decision in G.L.R.O Record No. 9269 promulgated on
December 3, 1914. Hence, it found a need to first ascertain the
On November 22, 2010, respondent RCAM filed motion4 for litigious issues of whether a separate prior decision was
consolidation of the two (2) cases on the ground that they promulgated on December 3, 1914 as stated in Decree No.
involve a common issue, have the same parties and assail the 5748613 and whether the issuance of the subject decree and
same Decision and Resolution of the CA which was granted by inclusion of Lot Nos. 43 to 50 were done in violation of such
the Court in its January 12, 2011 Resolution.5 separate decision.
The Facts RCAM's motion for reconsideration having been denied, the
matter was elevated to the CA on certiorari alleging grave
On January 30, 2007, petitioner Republic filed a complaint abuse of discretion on the part of the RTC.
docketed as Civil Case No. 62-M-2007 before the RTC of
Malolos City, Bulacan, for cancellation of titles and reversion Ruling of the Court of Appeals
against respondent RCAM and several others.6 The complaint
alleged, inter alia, that RCAM appears as the registered owner In its assailed Decision,14 the CA held that while reversion suits
of eight (8) parcels of land, Lot Nos. 43 to 50, with a total area are allowed under the law, the same should be instituted
of 39,790 square meters, situated in Panghulo, Obando, before the CA because the RTC cannot nullify a decision
Bulacan under Original Certificate of Title (OCT) No. 588 rendered by a co-equal land registration court. The CA further
supposedly issued by the Register of Deeds of Bulacan on applied equitable estoppel against the State and considered it
November 7, 1917. OCT No. 588 allegedly emanated from barred from filing a reversion suit. It explained that the lots
Decree No. 57486 issued on October 30, 1917 by the Chief of were already alienated to innocent purchasers for value and
the General Land Registration Office pursuant to a decision the State failed to take action to contest the title for an
dated September 21, 1915 in Land Registration Case No. 5, unreasonable length of time. Hence, the CA ordered the RTC to
G.L.R.O. Record No. 9269 in favor of RCAM.A reading, however, grant RCAM's motion to dismiss.
of the said decision reveals that it only refers to Lot Nos. 495,
496, 497, 498 and 638 and not to Lot Nos. 43 to 50.In 1934, Both petitioners separately moved for reconsideration which
RCAM sold the said eight (8) parcels of land to the other named the CA denied in its July 12, 2010 Resolution. Hence, the
defendants in the complaint resulting in the cancellation of OCT present petitions.
No.588 and issuance of transfer certificates of title in the names
of the corresponding transferees. Subsequently, the Lands Issue Before the Court
Management Bureau conducted an investigation and
ascertained that the subject lots are identical to Lot No. 2077, The consolidated cases raise the common issue of whether or
Cad-302-D and Lot Nos. 1293, 1306 and 1320, Cad-302-D with a not the RTC has jurisdiction over the action filed by the
total area of 22,703 square meters. These parcels of land were Republic.
certified by the Bureau of Forest Development on January 17,
1983 as falling within the unclassified lands of the public The Court’s Ruling
domain and it was only on May 8, 1984 that they were declared
alienable and disposable per Forestry Administrative Order No. The petitions are meritorious.
4-1776, with no public land application/ land patent.7
Petitioners insist that they do not seek the annulment of
On April 16, 2007, petitioner Republic received a copy of a judgment of the RTC (then CFI) acting as Land Registration
motion for leave to intervene and to admit complaint-in- Court but the nullification of the subject OCT No. 588 and the
intervention filed by the Samahang Kabuhayang San Lorenzo derivative titles over Lot Nos. 43 to 50. They claim that these
KKK, Inc. (KKK),8 occupants of the subject property, which was parcels of land could not have been validly titled in 1917
subsequently granted by the RTC.9 Thenceforth, answers and because they were not the subject of Land Registration Case
various other pleadings were filed by the appropriate parties. No. 5, G.L.R.O. Record No. 9269. Moreover, these lots were not
yet classified as alienable and disposable at that time, having
During the course of the pre-trial, RCAM filed a motion to been declared as such only on May 8, 1984. On the other hand,
dismiss assailing the jurisdiction10 of the RTC over the the respondent maintains that petitioners' suit essentially seeks
complaint. It alleged that the action for reversion of title was the annulment of judgment of the RTC, hence, jurisdiction lies
essentially one for annulment of judgment of the then Court of with the CA under Rule 47 of the Rules of Court. Consequently,
First Instance (CFI) of Bulacan, acting as a Land Registration
89
the RTC was correctly ordered by the CA to grant the motion to the doctrine of equitable estoppel as the parties have not
dismiss. presented any evidence that would support such finding.
An order denying a motion to dismiss is an interlocutory order WHEREFORE, the petitions are GRANTED. The assailed April 22,
which neither terminates nor finally disposes of a case as it 2010 Decision and July 19, 2010 Resolution of the Court of
leaves something to be done by the court before the case is Appeals are hereby ANNULLED and SET ASIDE. The Order of the
finally decided on the merits.15 Thus, as a general rule, the Regional Trial Court, Branch 84 of Malolos, Bulacan is
denial of a motion to dismiss cannot be questioned in a special AFFIRMED.
civil action for certiorari which is a remedy designed to correct
errors of jurisdiction and not errors of judgment.16 However, 35. DIAGEO PHILIPPINES, INC., Petitioner, vs.COMMISSIONER
when the denial of the motion to dismiss is tainted with grave OF INTERNAL REVENUE, Respondent.
abuse of discretion, the grant of the extraordinary remedy of
certiorari may be justified.17 By grave abuse of discretion is Before the Court is a Petition for Review under Rule 45 of the
meant such capricious and whimsical exercise of judgment that Rules of Court assailing the Decision1 of the Court of Tax
is equivalent to lack of jurisdiction.18 The abuse of discretion Appeals (CTA) En Banc dated July 2, 2008 in CTA EB No. 260.
must be grave as where the power is exercised in an arbitrary
or despotic manner by reason of passion or personal hostility, The petition seeks the proper interpretation of Section 130(D)2
and must be so patent and gross as to amount to an evasion of of the National Internal Revenue Code of 1997 (Tax Code),
positive duty or to a virtual refusal to perform the duty particularly, on the question of who may claim the refund or tax
enjoined by or to act at all in contemplation of law.19 credit of excise taxes paid on goods actually exported.
Respondent's motion to dismiss assails the jurisdiction of the The Factual Antecedents
RTC over the nature of the action before it. Hence, to
determine whether the RTC gravely abused its discretion in Petitioner Diageo Philippines, Inc. (Diageo) is a domestic
denying the motion to dismiss it is pertinent to first ascertain corporation organized and existing under the laws of the
whether the RTC has jurisdiction over the case. Republic of Philippines and is primarily engaged in the business
of importing, exporting, manufacturing, marketing, distributing,
It is axiomatic that the nature of an action and whether the buying and selling, by wholesale, all kinds of beverages and
tribunal has jurisdiction over such action are to be determined liquors and in dealing in any material, article, or thing required
from the material allegations of the complaint, the law in force in connection with or incidental to its principal business.3 It is
at the time the complaint is filed, and the character of the relief registered with the Bureau of Internal Revenue (BIR) as an
sought irrespective of whether the plaintiff is entitled to all or excise tax taxpayer, with Tax Identification No. 000-161-879-
some of the claims averred.20 Jurisdiction is not affected by the 000.4
pleas or the theories set up by defendant in an answer to the
complaint or a motion to dismiss the same.21 For the periodNovember 1, 2003 to December 31, 2004, Diageo
purchased raw alcohol from its supplier for use in the
In the present case, the material averments, as well as the manufacture of its beverage and liquor products. The supplier
character of the relief prayed for by petitioners in the complaint imported the raw alcohol and paid the related excise taxes
before the RTC, show that their action is one for cancellation of thereon before the same were sold to the petitioner.5 The
titles and reversion, not for annulment of judgment of the RTC. purchase price for the raw alcohol included, among others, the
The complaint alleged that Lot Nos. 43 to 50, the parcels of land excise taxes paid by the supplierin the total amount of
subject matter of the action, were not the subject of the CFI’s P12,007,528.83.6
judgment in the relevant prior land registration case. Hence,
petitioners pray that the certificates of title of RCAM be Subsequently, Diageo exported its locally manufactured liquor
cancelled which will not necessitate the annulment of said products to Japan, Taiwan, Turkey and Thailand and received
judgment. Clearly, Rule 47 of the Rules of Court on annulment the corresponding foreign currency proceeds of such export
of judgment finds no application in the instant case.1âwphi1 sales.7
The RTC may properly take cognizance of reversion suits which Within two (2) years from the time the supplier paid the subject
do not call for an annulment of judgment of the RTC22 acting as excise taxes, Diageo filed with the BIR Large Taxpayer’s Audit
a Land Registration Court. Actions for cancellation of title and and Investigation Division II applications for tax refund/issuance
reversion, like the present case, belong to the class of cases of tax credit certificates corresponding to the excise taxes
that "involve the title to, or possession of, real property, or any which its supplier paid but passed on to it as part of the
interest therein"23 and where the assessed value of the purchase price of the subject raw alcohol invoking Section
property exceeds P20,000.00,24 fall under the jurisdiction of 130(D) of the Tax Code.
the RTC.25 Consequently, no grave abuse of discretion excess
of jurisdiction can be attributed to the RTC in denying RCAM’s However, due to the failure of the respondent Commissioner of
motion to dismiss.1âwphi1 Internal Revenue (CIR) to act upon Diageo’s claims, the latter
was constrained to timely file a petition for review before the
Moreover, it should be stressed that the only incident before CTA.8
the CA for resolution was the propriety of RCAM’s motion to
dismiss, thus, it was premature for the CA at this stage to apply On December 27, 2005, the CIR filed its Answer assailing
Diageo’s lack of legal personality to institute the claim for
90
refund because it was not the one that paid the alleged excise
taxes but its supplier.9 Subsequently, the CIR filed a motion to Section 130.Filing of Return and Payment of Excise Tax on
dismiss reiterating the same issue.10 Domestic Products. – xxx
The Ruling of the Court of Tax Appeals (A) Persons Liable to File a Return, Filing of Return on Removal
and Payment of Tax.-
On July 20, 2006, the CTA Second Division issued a Resolution11
dismissing the petition on the ground that Diageo is not the real (1) Persons Liable to File a Return. – Every person liable to pay
party in interest to file the claim for refund. Citing Philippine excise tax imposed under this Title shall file a separate return
Acetylene Co., Inc. v. Commissioner of Internal Revenue,12 the for each place of production setting forth, among others, the
CTA Second Division ruled that although an excise tax is an description and quantity or volume of products to be removed,
indirect tax which can be passed on to the purchaser of goods, the applicable tax base and the amount of tax due thereon;
the liability therefor still remains with the manufacturer or Provided however, That in the case of indigenous petroleum,
seller, hence, the right to claim refund is only available to it.13 natural gas or liquefied natural gas, the excise tax shall be paid
Diageo filed a motion for reconsideration which was by the first buyer, purchaser or transferee for local sale, barter
subsequently denied in the Resolution dated January 8, 2007.14 or transfer, while the excise tax on exported products shall be
paid by the owner, lessee, concessionaire or operator of the
On February 13, 2007, Diageo filed a petition for review15 mining claim.Should domestic products be removed from the
which the CTAEn Bancin its Decision dated July 2, place of production without the payment of the tax, the owner
2008dismissed,thereby affirming the ruling of the CTA Second or person having possession thereof shall be liable for the tax
Division.16 due thereon.
Citing Rule 3, Section 2,17 of the Rules of Court, the CTA En xxxx
Banc held that the right to a refund or tax credit of the excise
taxes under Section 130(D) of the Tax Code is available only to (D) Credit for Excise tax on Goods Actually Exported.- When
persons enumerated in Sections 130(A)(1)18 and (2)19 of the goods locally produced or manufactured are removed and
same Code because they are the ones primarily and legally actually exported without returning to the Philippines, whether
liable to pay such taxes. As Diageo failed to prove that it had so exported in their original state or as ingredients or parts of
actually paid the claimed excise taxes as manufacturer- any manufactured goods or products, any excise tax paid
exporter, the CTA En Banc likewise did not find it as the proper thereon shall be credited or refunded upon submission of the
party to claim a refund.Hence, the instant petition. proof of actual exportation and upon receipt of the
corresponding foreign exchange payment: Provided, That the
Diageo claims to be a real party in interest entitled to recover excise tax on mineral products, except coal and coke, imposed
the subject refund or tax credit because it stands to be under Section 151 shall not be creditable or refundable even if
benefited or injured by the judgment in this suit.20 It contends the mineral products are actually exported.
that the tax privilege under Section 130(D) applies to every
exporter provided the conditions therein set forth are complied A reading of the foregoing provision, however, reveals that
with, namely, (1) the goods are exported either in their original contrary to the position of Diageo, the right to claim a refund or
state or as ingredients or part of any manufactured goods or be credited with the excise taxes belongs to its supplier. The
products; (2) the exporter submits proof of exportation; and (3) phrase "any excise tax paid thereon shall be credited or
the exporter likewise submits proof of receipt of the refunded" requires that the claimant be the same person who
corresponding foreign exchange payment.21 It argues that paid the excise tax. In Silkair (Singapore) Pte, Ltd. v.
Section 130(D) does not limit the grant of the tax privilege to Commissioner of Internal Revenue, the Court has categorically
manufacturers/producers-exporters only but to every exporter declared that "[t]he proper party to question, or seek a refund
of locally manufactured/produced goods subject only to the of, an indirect tax is the statutory taxpayer, the person on
conditions aforementioned.22 whom the tax is imposed by law and who paid the same even if
he shifts the burden thereof to another."23
The Issue
Excise taxes imposed under Title VI of the Tax Code are taxes on
The sole issue to be resolved is whether Diageo has the legal property24 which are imposed on "goods manufactured or
personality to file aclaim for refund or tax credit for the excise produced in the Philippines for domestic sales or consumption
taxes paid by its supplier on the raw alcohol it purchased and or for any other disposition and to things imported."25 Though
used in the manufacture of its exported goods. excise taxes are paid by the manufacturer or producer before
removal of domestic products from the place of production26
Ruling of the Court or by the owner or importer before the release of imported
articles from the customshouse,27 the same partake of the
The petition is without merit. nature of indirect taxes when it is passed on to the subsequent
purchaser.
Excise taxes partake of the nature of
indirect taxes. Indirect taxesare defined asthose wherein the liability for the
payment of the tax falls on one person but the burden thereof
Diageo bases its claim for refund on Section 130 of the Tax can be shifted to another person. When the seller passes on the
Code which reads: tax to his buyer, he, in effect, shifts the tax burden, not the
91
liability to pay it, to the purchaser as part of the price of goods Finally, statutes granting tax exemptions are construed
sold or services rendered.28 stricissimi juris against the taxpayer and liberally in favor of the
taxing authority. A claim of tax exemption must be clearly
Accordingly, when the excise taxes paid by the supplier were shown and based on language in law too plain to be
passed on to Diageo, what was shifted is not the tax per se but mistaken.31 Unfortunately, Diageo failed to meet the burden of
anadditional cost of the goods sold. Thus, the supplier remains proof that it is covered by the exemption granted under Section
the statutory taxpayer even if Diageo, the purchaser, actually 130(D) of the Tax Code.
shoulders the burden of tax.
In sum, Diageo, not being the party statutorily liable to pay
The statutory taxpayer is the proper excise taxes and having failed to prove that it is covered by the
party to claim refund of indirect exemption granted under Section 130(D) of the Tax Code, is not
taxes. the proper party to claim a refund or credit of the excise taxes
paid on the ingredients of its exported locally produced liquor.
As defined in Section 22(N) of the Tax Code, a taxpayer means
any person subject to tax.1âwphi1 He is, therefore, the person WHIEREFORE, the petition is DENIED and the assailed CTA En
legally liable to file a return and pay the tax as provided for in Banc Decision in CTA EB No. 260 dated July 2, 2008 is
Section 130(A). As such, he is the person entitled to claim a AFFIRMED.
refund.
36. IN THE MATTER OF THE PETITION FOR THE PROBATE OF
Relevant isSection 204(C) of the Tax Code which provides: THE LAST WILL AND TESTAMENT OF ENRIQUE S. LOPEZ
RICHARD B. LOPEZ, Petitioner, vs.DIANA JEANNE LOPEZ,
Section 204. Authority of the Commissioner to Compromise, MARYBETH DE LEON and VICTORIA L. TUAZON, Respondents.
Abate, and Refund or Credit Taxes.- The Commissioner may -
This Petition for Review on Certiorari assails the March 30, 2009
xxxx Decision1 and October 22, 2009 Resolution2 of the Court of
Appeals (CA) in CA-G.R. CV No. 87064 which affirmed the
(C) Credit or refund taxes erroneously or illegally received or August 26, 2005 Decision3 of the Regional Trial Court of Manila,
penalties imposed without authority, refund the value of Branch 42 (RTC), in SP. Proc. No. 99-95225 disallowing the
internal revenue stamps when they are returned in good probate of the Last Will and Testament of Enrique S. Lopez.
condition by the purchaser, and, in his discretion, redeem or The Factual Antecedents
change unused stamps that have been rendered unfit for use
and refined their value upon proof of destruction. No credit or On June 21, 1999, Enrique S. Lopez (Enrique) died leaving his
refund of taxes or penalties shall be allowed unless the wife, Wendy B. Lopez, and their four legitimate children,
taxpayer files in writing with the Commissioner a claim for namely, petitioner Richard B. Lopez (Richard) and the
credit or refund within two (2) years after the payment of the respondents Diana Jeanne Lopez (Diana), Marybeth de Leon
tax or penalty: Provided, however, that a return filed showing (Marybeth) and Victoria L. Tuazon (Victoria) as compulsory
an overpayment shall be considered as a written claim for heirs. Before Enrique’s death, he executed a Last Will and
credit or refund. (Emphasis supplied) Testament4 on August 10, 1996 and constituted Richard as his
executor and administrator.
Pursuant to the foregoing, the person entitled to claim a tax
refund is the statutory taxpayer or the person liable for or On September 27, 1999, Richard filed a petition for the probate
subject to tax.29 In the present case, it is not disputed that the of his father's Last Will and Testament before the RTC of Manila
supplier of Diageo imported the subject raw alcohol, hence, it with prayer for the issuance of letters testamentary in his favor.
was the one directly liable and obligated to file a return and pay Marybeth opposed the petition contending that the purported
the excise taxes under the Tax Code before the goods or last will and testament was not executed and attested as
products are removed from the customs house. It is, therefore, required by law, and that it was procured by undue and
the statutory taxpayer as contemplated by law and remains to improper pressure and influence on the part of Richard. The
be so, even if it shifts the burden of tax to Diageo. said opposition was also adopted by Victoria.
Consequently, the right to claim a refund, if legally allowed,
belongs to it and cannot be transferred to another, in this case After submitting proofs of compliance with jurisdictional
Diageo, without any clear provision of law allowing the same. requirements, Richard presented the attesting witnesses,
namely: Reynaldo Maneja; Romulo Monteiro; Ana Maria
Unlike the law on Value Added Tax which allows the Lourdes Manalo (Manalo); and the notary public who notarized
subsequent purchaser under the tax credit method to refund or the will, Atty. Perfecto Nolasco (Atty. Nolasco). The
credit input taxes passed on to it by a supplier,30 no provision instrumental witnesses testified that after the late Enrique read
for excise taxes exists granting non-statutory taxpayer like and signed the will on each and every page, they also read and
Diageo to claim a refund or credit. It should also be stressed signed the same in the latter's presence and of one another.
that when the excise taxes were included in the purchase price Photographs of the incident were taken and presented during
of the goods sold to Diageo, the same was no longer in the trial. Manalo further testified that she was the one who
nature of a tax but already formed part of the cost of the prepared the drafts and revisions from Enrique before the final
goods. copy of the will was made.
92
Likewise, Atty. Nolasco claimed that Enrique had been his client
for more than 20 years. Prior to August 10, 1996, the latter Ruling of the Court
consulted him in the preparation of the subject will and
furnished him the list of his properties for distribution among The petition lacks merit.
his children. He prepared the will in accordance with Enrique's
instruction and that before the latter and the attesting The provisions of the Civil Code on Forms of Wills, particularly,
witnesses signed it in the presence of one another, he Articles 805 and 809 of the Civil Code provide:
translated the will which was written in English to Filipino and
added that Enrique was in good health and of sound mind at ART. 805. Every will, other than a holographic will, must be
that time. subscribed at the end thereof by the testator himself or by the
testator's name written by some other person in his presence,
On the other hand, the oppositors presented its lone witness, and by his express direction, and attested and subscribed by
Gregorio B. Paraon (Paraon), Officer-in-Charge of the Notarial three or more credible witnesses in the presence of the testator
Section, Office of the Clerk of Court, RTC, Manila. His testimony and of one another.
centered mainly on their findings that Atty. Nolasco was not a
notary public for the City of Manila in 1996, which on cross The testator or the person requested by him to write his name
examination was clarified after Paraon discovered that Atty. and the instrumental witnesses of the will, shall also sign, as
Nolasco was commissioned as such for the years 1994 to 1997. aforesaid, each and every page thereof, except the last, on the
left margin, and all the pages shall be numbered correlatively in
Ruling of the RTC letters placed on the upper part of each page.
In the Decision dated August 26, 2005,5 the RTC disallowed the The attestation shall state the number of pages used upon
probate of the will for failure to comply with Article 805 of the which the will is written, and the fact that the testator signed
Civil Code which requires a statement in the attestation clause the will and every page thereof, or caused some other person
of the number of pages used upon which the will is written. It to write his name, under his express direction, in the presence
held that while Article 809 of the same Code requires mere of the instrumental witnesses, and that the latter witnessed
substantial compliance of the form laid down in Article 805 and signed the will and all the pages thereof in the presence of
thereof, the rule only applies if the number of pages is reflected the testator and of one another.
somewhere else in the will with no evidence aliunde or extrinsic
evidence required. While the acknowledgment portion stated If the attestation clause is in a language not known to the
that the will consists of 7 pages including the page on which the witnesses, it shall be interpreted to them.1âwphi1
ratification and acknowledgment are written, the RTC observed (underscoring supplied)
that it has 8 pages including the acknowledgment portion. As
such, it disallowed the will for not having been executed and ART. 809. In the absence of bad faith, forgery, or fraud, or
attested in accordance with law. undue and improper pressure and influence, defects and
imperfections in the form of attestation or in the language used
Aggrieved, Richard filed a Notice of Appeal which the RTC therein shall not render the will invalid if it is proved that the
granted in the Order dated October 26, 2005.6 will was in fact executed and attested in substantial compliance
with all the requirements of Article 805.
Ruling of the Court of Appeals
The law is clear that the attestation must state the number of
On March 30, 2009,7 the CA issued the assailed decision pages used upon which the will is written. The purpose of the
dismissing the appeal. It held that the RTC erroneously granted law is to safeguard against possible interpolation or omission of
Richard's appeal as the Rules of Court is explicit that appeals in one or some of its pages and prevent any increase or decrease
special proceedings, as in this case, must be made through a in the pages.9
record on appeal. Nevertheless, even on the merits, the CA
found no valid reason to deviate from the findings of the RTC While Article 809 allows substantial compliance for defects in
that the failure to state the number of pages of the will in the the form of the attestation clause, Richard likewise failed in this
attestation clause was fatal. It noted that while Article 809 of respect. The statement in the Acknowledgment portion of the
the Civil Code sanctions mere substantial compliance with the subject last will and testament that it "consists of 7 pages
formal requirements set forth in Article 805 thereof, there was including the page on which the ratification and
a total omission of such fact in the attestation clause. acknowledgment are written"10 cannot be deemed substantial
Moreover, while the acknowledgment of the will made mention compliance. The will actually consists of 8 pages including its
of "7 pages including the page on which the ratification and acknowledgment which discrepancy cannot be explained by
acknowledgment are written," the will had actually 8 pages mere examination of the will itself but through the
including the acknowledgment portion thus, necessitating the presentation of evidence aliund.11 On this score is the
presentation of evidence aliunde to explain the discrepancy. comment of Justice J.B.L. Reyes regarding the application of
Richard's motion for reconsideration from the decision was Article 809, to wit:
likewise denied in the second assailed Resolution8 dated
October 22, 2009. x x x The rule must be limited to disregarding those defects that
can be supplied by an examination of the will itself: whether all
Hence, the instant petition assailing the propriety of the CA's the pages are consecutively numbered; whether the signatures
decision. appear in each and every page; whether the subscribing
93
witnesses are three or the will was notarized. All these are facts September 10, 2003, petitioner sought the opinion of Dr.
that the will itself can reveal, and defects or even omissions Nicanor F. Escutin who assessed his condition as a partial
concerning them in the attestation clause can be safely permanent disability with POEA Disability Grade 10, 20.15%. Dr.
disregarded. But the total number of pages, and whether all Escutin also opined that petitioner was suffering from "loss of
persons required to sign did so in the presence of each other grasping power of small objects in one hand, and inability to
must substantially appear in the attestation clause, being the turn forearm to pronation or supination. The period of healing
only check against perjury in the probate proceedings.12 remains undetermined. The patient is now unfit to go back to
(Emphasis supplied) work at sea at whatever capacity."14
Hence, the CA properly sustained the disallowance of the will. In their defense, respondents denied any liability contending
Moreover, it correctly ruled that Richard pursued the wrong that proper treatment and management were afforded
mode of appeal as Section 2(a), Rule 41 of the Rules of Court petitioner but he deliberately ignored his medical program by
explicitly provides that in special proceedings, as in this case, failing to appear on his scheduled appointment with the
the appeal shall be made by record on appeal. company-designated physician. Respondents also claim that
petitioner was paid his sickness allowance in full, and his
WHEREFORE, premises considered, the petition is DENIED. medical examinations, tests and check-ups were shouldered by
the company.15
37. BENJAMIN C. MILLAN, Petitioner, vs.WALLEM MARITIME
SERVICES, INC., REGINALDO A. OBEN AND/OR WALLEM The Labor Arbiter's Ruling
SHIPMANAGEMENT,1 LTD., Respondents.
In the Decision16 dated September 27, 2006, the Labor Arbiter
This is a petition for review on certiorari under Rule 45 of the held that since the company-designated physician failed to
Rules of Court assailing the Decision2 dated August 20, 2010 make any pronouncement on petitioner’s fitness to resume sea
and Resolution3 dated January 13, 2011 of the Court of Appeals service within 120 days as required by law, his disability is
(CA) in CA-G.R. SP No. 104924 which decreed petitioner deemed permanent and total. Consequently, respondents
Benjamin C. Millan entitled only to partial disability benefits in Wallem Maritime Services, Inc. and Wallem Shipmanagement,
the sum of US$7,465.00 plus ten percent (10%) thereof as Ltd. were found jointly and severally liable to pay petitioner
attorney's fees, or its peso equivalent at the time of payment. US$60,000.00 or its peso equivalent representing his
permanent and total disability compensation plus ten percent
The facts are undisputed. (10%) thereof or US$6,000.00 as attorney’s fees. Petitioner’s
claim for medical reimbursement and sickness allowance,
Petitioner Benjamin C. Millan has been under the employ of however, were denied for lack of merit.
Wallem Maritime Services, Inc. as a seafarer since May 1981.4
On October 19, 2002, he was deployed by the latter for its The NLRC Ruling
foreign principal, Wallem Shipmanagement, Ltd., as a messman
with a basic salary of US$405.00 a month on board M/T "Front On appeal, the National Labor Relations Commission (NLRC)
Vanadis."5 On February 13, 2003, he slipped while carrying the reversed and set aside the findings of the Labor Arbiter, ruling
ship’s provisions and injured his left arm. He was examined at that the assessments made with respect to the degree of
St. Paul’s Surgical Clinic in Yosu City, South Korea where he was petitioner’s disability by the two independent doctors who
diagnosed to have suffered "fracture on left ulnar shaft."6 examined him only once cannot prevail over the extensive
Hence, he was medically repatriated on February 26, 2003.7 On medical examinations conducted by the company-designated
February 28, 2003, he proceeded to the Manila Doctor’s physician, Dr. Estrada. It pointed out that under the POEA
Hospital where he consulted Dr. Ramon S. Estrada, the Standard Employment Contract, the post-employment medical
company-designated physician, and underwent an operation on examination and degree of disability must be performed and
March 3, 2003.8 After his discharge, he went through a series of declared by the company-designated physician.17
consultations and physical therapy sessions from May 6, 2003
until July 2, 2003.9 On July 5, 2003, Dr. Estrada reported that Aggrieved, petitioner filed a petition for certiorari under Rule
petitioner had completed his physical therapy program but will 65 of the Rules of Court before the CA.
have to undergo a physical capacity test on August 28, 200310
to evaluate his fitness to work.11 Instead, on August 29, 2003, The CA Ruling
petitioner filed a complaint12 against respondents Wallem
Maritime Services, Inc., its President/Manager Reginaldo A. In its assailed Decision18 dated August 20, 2010, the CA set
Oben, and Wallem Shipmanagement, Ltd. for medical aside the NLRC’s conclusions and rendered a new judgment
reimbursement, sickness allowance, permanent disability finding petitioner as suffering from partial permanent disability
benefits, compensatory damages, exemplary damages and Grade 10. It held that while petitioner’s disability has exceeded
attorney’s fees. 120 days, there was no showing that his "earning power was
wholly destroyed and he is still capable of performing
On September 1, 2003, petitioner consulted Dr. Rimando C. remunerative employment."19 Thus, it ordered respondent
Saguin, an orthopedic surgeon, who diagnosed him as suffering manning agency and its principal liable to pay petitioner
from Philippine Overseas Employment Administration (POEA) US$7,465.00 plus 10% thereof as attorney’s fees by way of
Disability Grade 11 and elbow bursitis which rendered him partial disability benefits.
"unfit to work at the moment."13 On
94
Hence, the instant petition20 based on the sole issue of (c) The company-designated physician declared that he is fit for
whether or not the CA committed reversible error in granting sea duty within the 120-day or 240-day period, as the case may
petitioner only partial permanent disability Grade 10 despite his be, but his physician of choice and the doctor chosen under
inability to work for more than 120 days. Section 20-B(3) of the POEA-SEC are of a contrary opinion;
In their Comment,21 respondents averred that the (d) The company-designated physician acknowledged that he is
determination made by the CA on the degree of petitioner’s partially permanently disabled but other doctors who he
disability was in accordance with the Schedule of Disability consulted, on his own and jointly with his employer, believed
Allowances under Section 32 of the POEA-Standard that his disability is not only permanent but total as well;
Employment Contract (POEA-SEC), hence, should be upheld.
(e) The company-designated physician recognized that he is
The Court’s ruling totally and permanently disabled but there is a dispute on the
disability grading;
There is no merit in this petition.
(f) The company-designated physician determined that his
A seafarer’s inability to resume his work after the lapse of more medical condition is not compensable or work-related under
than 120 days from the time he suffered an injury and/or illness the POEA-SEC but his doctor-of-choice and the third doctor
is not a magic wand that automatically warrants the grant of selected under Section 20-B(3) of the POEA-SEC found
total and permanent disability benefits in his favor. otherwise and declared him unfit to work;
In Vergara v. Hammonia Maritime Services, Inc.,22 the Court (g) The company-designated physician declared him totally and
elucidated on the seeming conflict between Paragraph 3, permanently disabled but the employer refuses to pay him the
Section 20(B)23 of the POEA-SEC (Department Order No. 004- corresponding benefits; and
00) and Article 192 (c)(1)24 of the Labor Code in relation to
Section 2(a), Rule X25 of the Amended Rules on Employees (h) The company-designated physician declared him partially
Compensation, thus: and permanently disabled within the 120-day or 240-day period
but he remains incapacitated to perform his usual sea duties
As these provisions operate, the seafarer, upon sign-off from after the lapse of said periods.
his vessel, must report to the company-designated physician
within three (3) days from arrival for diagnosis and treatment. None of the foregoing circumstances is extant in this case.
For the duration of the treatment but in no case to exceed 120
days, the seaman is on temporary total disability as he is totally Records show that from the time petitioner was repatriated on
unable to work. He receives his basic wage during this period February 26, 2003, 129 days had lapsed when he last consulted
until he is declared fit to work or his temporary disability is with the company-designated physician on July 5, 2003 and 181
acknowledged by the company to be permanent, either days had passed on the day he last visited his physiatrist on
partially or totally, as his condition is defined under the POEA August 26, 2003.27 Concededly, said periods have already
Standard Employment Contract and by applicable Philippine exceeded the 120-day period under Section 20(B) of the POEA-
laws. If the 120 days initial period is exceeded and no such SEC and Article 192 of the Labor Code. However, it cannot be
declaration is made because the seafarer requires further denied that the company-designated physician had
medical attention, then the temporary total disability period determined28 as early as March 5, 2003 or even before his
may be extended up to a maximum of 240 days, subject to the discharge from the hospital that petitioner’s condition required
right of the employer to declare within this period that a further medical treatment in the form of physical therapy
permanent partial or total disability already exists. The seaman sessions, which he had subsequently completed per Dr.
may of course also be declared fit to work at any time such Estrada’s Memo dated July 5, 2003,29 thus, justifying the
declaration is justified by his medical condition. (Italics in the extension of the 120-day period. The company-designated
original) physician therefore had a period of 240 days from the time that
petitioner suffered his injury or until October 24, 2003 within
Applying Vergara, the Court in the recent case of C.F. Sharp which to make a finding on his fitness for further sea duties or
Crew Management, Inc. v. Taok26 enumerated the following degree of disability.1âwphi1
instances when a seafarer may be allowed to pursue an action
for total and permanent disability benefits, to wit: Consequently, despite the lapse of the 120-day period,
petitioner was still considered to be under a state of temporary
(a) The company-designated physician failed to issue a total disability at the time he filed his complaint on August 29,
declaration as to his fitness to engage in sea duty or disability 2003, 184 days from the date of his medical repatriation which
even after the lapse of the 120-day period and there is no is well-within the 240-day applicable period in this case. Hence,
indication that further medical treatment would address his he cannot be said to have acquired a cause of action for total
temporary total disability, hence, justify an extension of the and permanent disability benefits.30 To stress, the rule is that a
period to 240 days; temporary total disability only becomes permanent when the
company-designated physician, within the 240-day period,
(b) 240 days had lapsed without any certification issued by the declares it to be so, or when after the lapse of the same, he fails
company-designated physician; to make such declaration.31
95
Besides, petitioner's own evidence shows that he is suffering On January 30, 1998, respondent Gertrudes Quirino, Prisco's
only from partial permanent disability of either Grade 10 or widow, represented by their son, Elmer, filed before the Office
11.32 Accordingly, in the absence of proof to the contrary/~ the of the Agrarian Reform Regional Adjudicator (RARAD) a
Court concurs with the CA 's finding that petitioner suffers from Complaint for Specific Performance, Redemption,
a partial permanent disability grade of 10. Reinstatement and Damages with Application for Writ of
Preliminary Injunction and TRO against Ernesto and petitioners.
WHEREFORE, premises considered, the instant petition is
DENIED. The Decision dated August 20, 2010 and Resolution In their Answer, petitioners averred that Prisco's+ right over the
dated January 13, 20 II of the Court of Appeals in CA-G.R. SP No. subject land was merely inchoate for failure to establish
104924 are AFFIRMED. payment of just compensation to the landowner; the deed was
null and void for being violative of the law and public policy;
SO ORDERED. and that the failure to consign the redemption money
effectively bars the redemption prayed for.
38. AURELIA GUA-AN AND SONIA GUA-AN MAMON,
Petitioners, vs.GERTRUDES QUIRINO, represented by ELMER For his part, Ernesto averred that he allowed petitioners to
QUIRINO, Respondent. redeem the lot because Prisco+ failed to appear on the agreed
date for redemption and on the information that the subject
Assailed in the instant Petition for Review on Certiorari under land was erroneously awarded to the latter.
Rule 45 of the Rules of Court are the Decision1 dated February
25, 2011 and Resolution2 dated September 15, 2011 rendered On May 6, 1998, the RARAD dismissed the complaint for lack of
by the Court of Appeals (CA) in CA-G.R. SP. No. 00589-MIN merit.
which set aside the December 29, 2004 Decision3 of the
Department of Agrarian Reform Adjudication Board (DARAB) The DARAB Ruling
and afforded respondent the preferential right of redemption
over the subject landholdings. In the Decision5 dated December 29, 2004, the DARAB denied
respondent's appeal and declared Prisco+ to have violated
The Factual Antecedents agrarian laws and of having abandoned the land by his failure to
cultivate the same continuously for a period of more than two
Subject of the instant case is a 2.8800 hectare agricultural land (2) calendar years. It canceled CLT No. 0-025227 in Prisco's+
situated in Batangan, Valencia, Bukidnon known as Lot 0899, name and ordered the Municipal Agrarian Reform Officer
covered by Certificate of Land Transfer (CLT) No. 0-025227 in (MARO) to reallocate the subject landholding to a qualified
the name of Prisco Quirino, Sr.+ (Prisco+) issued by the Ministry beneficiary.
(now Department) of Agrarian
The CA Ruling
Reform on October 16, 1979 pursuant to Presidential Decree
(P.D.) No. 27. On February 27, 1985, Prisco+ executed a Deed of On petition for review, the CA reversed and set aside6 the
Conditional Sale (deed) covering the subject landholding to DARAB's decision. It ruled that the pacto de retro sale between
Ernesto Bayagna (Ernesto) under the following conditions: Prisco+ and Ernesto was a mere equitable mortgage, hence, not
a prohibited transaction under P.D. 27, which is limited to
x x x that the condition of this sale is that I, Prisco Quirino, Sr. "transfers or conveyances of title to a landholding acquired
and my heirs hereby [reserve our] right to redeem or under the Land Reform Program of the Government." Having
repurchase the herein subject parcel of land by returning to acquired the subject land as a "qualified beneficiary," Prisco+
Ernesto Bayagna or his heirs the same amount of Forty and his heirs possess security of tenure thereon and could not
thousand Pesos (P40,000.00), Philippine currency, after the be dispossessed thereof except for cause and only through a
lapse of eight (8) years from the date of execution of this final and executory judgment. Thus, the CA afforded the heirs
instrument and if the subject land is not redeemed or of Prisco+ the preferential right of redemption over the subject
repurchased after the said eight years, there shall be an landholding.
automatic extension of four (4) years from the date the [eighth]
year expires, and if after the 4 term expires, and I, Prisco In the instant petition, petitioners insist that since respondent
Quirino, Sr., or my heirs still [fail] to redeem or repurchase the failed to tender and consign the redemption money, the latter
herein subject land, Ernesto Bayagna or his heirs shall continue has no cause of action against them. Moreover, considering
to possess and enjoy the subject land until it is finally redeemed that Prisco+ was not the absolute owner of the subject
or repurchased. After the P40,000.00 is returned to Ernesto property, he cannot validly mortgage the same. Besides, Prisco+
Bayagna or his heirs, the latter shall be obligated to return had lost his rights as a farmer-beneficiary when he transacted
peacefully the subject land without any tenant or lessee.4 with Ernesto in violation of the provisions of Section 73(f)7 of
Republic Act (R.A.) No. 6657, as amended (Comprehensive
Ernesto thereupon possessed and cultivated the subject land Agrarian Reform Law of 1988).
for more than 10 years before Prisco+ offered to redeem the
same in 1996, which was refused. Instead, Ernesto allowed the Our Ruling
former owner of the land, petitioner Aurelia Gua-An (Aurelia),
through her daughter, petitioner Sonia Gua-An Mamon (Sonia), The petition is meritorious.
to redeem the lot. Subsequently, Prisco+ passed away.
96
It bears to stress that upon the promulgation of P.D. 27, farmer- Prisco's+ heirs had lost any right to redeem the subject
tenants were deemed owners of the land they were tilling and landholding.
given the rights to possess, cultivate and enjoy the landholding
for themselves.8 Thus, P.D. 27 specifically prohibited any In fine, we find the DARAB Decision finding Prisco+ to have
transfer of such landholding except to the government or by violated agrarian laws, canceling his CLT and ordering the
hereditary succession. Section 279 of R.A. 6657 further allowed reallocation of the subject land to be more in accord with the
transfers to the Land Bank of the Philippines (LBP) and to other law and jurisprudence.
qualified beneficiaries. Consequently, any other transfer
constitutes a violation of the above proscription and is null and WHEREFORE, the assailed Decision dated February 25, 2011
void for being contrary to law.10 Relevant on this point is and Resolution dated September 15, 2011 of the Court of
Ministry of Agrarian Reform Memorandum Circular No. 7, series Appeals in CA-G.R. SP. No. 00589-MIN are hereby SET ASIDE.
of 1979 which provides: The DARAB Decision dated December 29, 2004 is REINSTATED.
"Despite the x x x prohibition, x x x many farmer-beneficiaries 39. ALDERSGATE COLLEGE, INC., ARSENIO L. MENDOZA,
of P.D. 27 have transferred their ownership, rights and/or IGNACIO A. GALINDEZ, WILSON E. SAGADRACA, and FILIPINAS
possession of their farms/homelots to other persons or have MENZEN, Petitioners, vs. JUNIFEN F. GAUUAN, ARTEMIO M.
surrendered the same to their former landowners. All these VILLALUZ, SR., TERESITA ARREOLA, FORTUNATA ANDAYA,
transactions/surrenders are violative of P.D. 27 and therefore SALVADOR C. AQUINO, ROBERTO M. TUGAWIN JOSE O.
null and void." RUPAC, Respondents, -and- ALDERSGATE COLLEGE, INC., DR.
WILLIE A. DAMASCO, REV. ELMER V. LUNA, JEMZ R. LUDAN,
A perusal of the Deed of Conditional Sale reveals the real SAMUEL V. FULGENCIO, REV. ISMAEL A. DAMASCO, VICENTE
intention of the parties not to enter into a contract of sale but V. RAMEL, SALVADOR C. AQUINO, CAMILO V. GALLARDO,
merely to secure the payment of the P40,000.00 loan of NORMALITA C. ORDONEZ, and ARSENIO L. SOLIMEN,
Prisco+. This is evident from the fact that the latter was given Respondents-Intervenors.
the right to repurchase the subject property even beyond the
12-year (original and extended) period, allowing in the This petition for review assails the March 30, 2010 Resolution1
meantime the continued possession of Ernesto pending and June 29, 2010 Order2 of the Regional Trial Court (RTC),
payment of the consideration. Under these conditions and in Branch 28, Nueva Vizcaya in SEC Case No. 3972 which granted
accordance with Article 160211 of the Civil Code, the CA did not the Motion to Withdraw and/or to Dismiss Case filed by the
err in adjudging the pacto de retro sale to be in reality an respondents-intervenors composed of the incumbent members
equitable mortgage. of the Board of Trustees of petitioner Aldersgate College, Inc.
However, contrary to the finding of the CA, the subject The Factual Antecedents
transaction is covered by the prohibition under P.D. No. 27 and
R.A. No. 6657 which include transfer of possession of the Sometime in March 1991, petitioners Aldersgate College, Inc.,
landholding to the vendee a retro, Ernesto, who, not being a Arsenio L. Mendoza, Ignacio A. Galindez, Wilson E. Sagadraca,
qualified beneficiary, remained in possession thereof for a and Filipinas Menzen, together with now deceased Justino R.
period of eleven (11) years. Hence, notwithstanding such Vigilia, Castulo Villanueva, Samuel F. Erana and Socorro
possession, the latter did not acquire any valid right or title Cabanilla, filed a case against the respondents before the
thereto, especially since he failed to take any positive measure Securities and Exchange Commission (SEC).3 When the SEC was
to cause the cancellation of Prisco's+ CLT No. 0-025227 despite reorganized pursuant to Republic Act 8799,4 the case was
the long lapse of time. transferred to the RTC of Nueva Vizcaya for further
proceedings.5 Pre-trial thereafter ensued and a Pre-Trial Order
On the other hand, the redemption made by petitioner Aurelia was issued enumerating the following issues:
was ineffective and void since reversion of the landholding to
the former owner is likewise proscribed under P.D. No. 27 in [a] which of the contending trustees and officers are legally
accordance with its policy of holding such lands under trust for elected in accordance with the 1970 By-Laws;
the succeeding generations of farmers.12
[b] whether the withdrawals and disbursements are in
However, while CLT No. 0-025227 remains in Prisco's+ name, accordance with the By-Laws;
the Court cannot turn a blind eye to the fact that Prisco+
surrendered possession and cultivation of the subject land to [c] whether there was a complete, audited report and
Ernesto, not for a mere temporary period, but for a period of 11 accounting of all the corporate funds;
years without any justifiable reason. Such act constituted
abandonment despite his avowed intent to resume possession [d] whether respondents Gauuan, Villaluz, Arreola and the
of the land upon payment of the loan. As defined in DAR banks, are jointly and severally liable to indemnify the school
Administrative Order No. 2, series of 1994, abandonment is a for all sums of money withdrawn, disbursed, paid, diverted and
willful failure of the agrarian reform beneficiary, together with unaccounted for without the approval and counter-signature of
his farm household, "to cultivate, till, or develop his land to the chairman;
produce any crop, or to use the land for any specific economic
purpose continuously for a period of two calendar years." It is a [e] whether there was a demand of a right of inspection and a
ground for cancellation by the DARAB of an award to the refusal to allow inspection, and
agrarian reform beneficiary. Consequently, respondent and/or
97
[f] whether respondents are liable for damages.6 (f) That the cause of action is barred by a prior judgment or by
the statute of limitations;
In a motion7 dated August 10, 2003, respondents sought the
dismissal of the complaint or the issuance of a summary (g) That the pleading asserting the claim states no cause of
judgment dismissing the case. On February 16, 2004, the RTC action;
denied8 the motion on the ground that "there are several
issues raised which would still need the presentation of (h) That the claim or demand set forth in the plaintiff’s pleading
evidence to determine the rights of the parties." A few years has been paid, waived, abandoned, or otherwise extinguished;
later, respondents-intervenors also sought the dismissal of the
complaint in their Answer-in-Intervention with Motion to (i) That the claim on which the action is founded is
Dismiss9 dated February 27, 2008 raising the lack of capacity, unenforceable under the provisions of the statute of frauds;
personality or authority to sue the individual petitioners in and
behalf of Aldersgate College, Inc. The RTC, in its February 6,
2009 Order, once more brushed aside the attempt to have the (j) That a condition precedent for filing the claim has not been
case dismissed.10 Unfazed, the respondents-intervenors again complied with.15
filed in February 2010 a Motion to Withdraw and/or to Dismiss
Case,11 alleging that the case was instituted without any board The rule is, however, different with respect to intra-corporate
resolution authorizing its filing and that the incumbent controversies.1âwphi1 Under Section 8, Rule 1 of the Interim
members of the Board of Trustees of petitioner Aldersgate Rules of Procedure for Intra-Corporate Controversies,16 a
College, Inc. had recently passed a resolution which sought the motion to dismiss is a prohibited pleading.
dismissal and/or withdrawal of the case.
As this case involves an intra-corporate dispute, the motion to
The RTC’s Ruling dismiss is undeniably a prohibited pleading. Moreover, the
Court finds no justification for the dismissal of the case based
On March 30, 2010, the RTC granted12 the motion despite the on the mere issuance of a board resolution by the incumbent
opposition of the petitioners, and dismissed the case on the members of the Board of Trustees of petitioner corporation
basis of the Resolution passed by the members of the Board of recommending its dismissal, especially considering the various
Trustees of petitioner Aldersgate College dated December 14, issues raised by the parties before the court a quo. Hence, the
2009 recommending the dismissal of the case. RTC should not have entertained, let alone have granted the
subject motion to dismiss.
Petitioners' motion for reconsideration was denied in the RTC's
June 29, 2010 Order.13 WHEREFORE, the petition is GRANTED. The assailed March 30,
2010 Resolution and June 29, 2010 Order of the Regional Trial
Hence the instant petition. Court, Branch 28, Nueva Vizcaya in SEC Case No. 3972 are
REVERSED and SET ASIDE. The RTC is DIRECTED to proceed with
Issue Before The Court the trial and to decide the case with dispatch.
Petitioners raise the issue of whether or not the RTC erred in 40. PHILIPPINE BANKING CORPORATION, Petitioner,
dismissing the case. vs.ARTURO DY, BERNARDO DY, JOSE DELGADO AND CIPRIANA
DELGADO, Respondents.
The Court's Ruling
This Petition for Review on Certiorari assails the January 30,
The petition is meritorious. 2008 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
51672, which set aside the October 5, 1994 Decision2 of the
In an ordinary civil action, a motion to dismiss must generally Regional Trial Court of Cebu City, Branch 22 (RTC) and directed
be filed "within the time for but before filing the answer to the the Register of Deeds of Cebu City to cancel Transfer Certificate
complaint"14 and on the grounds enumerated in Section 1, of Title (TCT) Nos. 517683 and 519014 in the names of
Rule 16 of the Rules of Court, to wit: respondents Arturo Dy and Bernardo Dy (Dys) and to issue the
corresponding TCTs in the name of respondent Cipriana
(a) That the court has no jurisdiction over the person of the Delgado (Cipriana).
defending party;
The Factual Antecedents
(b) That the court has no jurisdiction over the subject matter of
the claim; Cipriana was the registered owner of a 58,129-square meter
(sq.m.) lot, denominated as Lot No. 6966, situated in Barrio
(c) That venue is improperly laid; Tongkil, Minglanilla, Cebu, covered by TCT No. 18568. She and
her husband, respondent Jose Delgado (Jose), entered into an
(d) That the plaintiff has no legal capacity to sue; agreement with a certain Cecilia Tan (buyer) for the sale of the
said property for a consideration of P10.00/sq.m. It was agreed
(e) That there is another action pending between the same that the buyer shall make partial payments from time to time
parties for the same cause; and pay the balance when Cipriana and Jose (Sps. Delgado) are
ready to execute the deed of sale and transfer the title to her.
98
At the time of sale, the buyer was already occupying a portion respective claims. Hence, the RTC limited itself to the resolution
of the property where she operates a noodle (bihon) factory of the claims of Sps. Delgado, Philbank and the Dys against one
while the rest was occupied by tenants which Sps. Delgado another.
undertook to clear prior to full payment. After paying the total
sum of P147,000.00 and being then ready to pay the balance, The RTC Ruling
the buyer demanded the execution of the deed, which was
refused. Eventually, the buyer learned of the sale of the In the Decision10 dated October 5, 1994, the RTC dismissed the
property to the Dys and its subsequent mortgage to petitioner cross-claims of Sps. Delgado against the Dys and Philbank. It
Philippine Banking Corporation (Philbank), prompting the filing noted that other than Sps. Delgado's bare allegation of the Dys'
of the Complaint5 for annulment of certificate of title, specific supposed non-payment of the full consideration for Lot Nos.
performance and/or reconveyance with damages against Sps. 6966 and 4100-A, they failed to adduce competent evidence to
Delgado, the Dys and Philbank. support their claim. On the other hand, the Dys presented a
cash voucher11 dated April 6, 1983 duly signed by Sps. Delgado
In their Answer, Sps. Delgado, while admitting receipt of the acknowledging receipt of the total consideration for the two
partial payments made by the buyer, claimed that there was no lots.
perfected sale because the latter was not willing to pay their
asking price of P17.00/sq.m. They also interposed a cross-claim The RTC also observed that Sps. Delgado notified Philbank of
against the Dys averring that the deeds of absolute sale in their the purported simulation of the sale to the Dys only after the
favor dated June 28, 19826 and June 30, 19827 covering Lot No. execution of the loan and mortgage documents and the release
6966 and the adjoining Lot No. 4100-A (on which Sps. Delgado's of the loan proceeds to the latter, negating their claim of bad
house stands), were fictitious and merely intended to enable faith. Moreover, they subsequently notified the bank of the
them (the Dys) to use the said properties as collateral for their Dys' full payment for the two lots mortgaged to it.
loan application with Philbank and thereafter, pay the true
consideration of P17.00/sq.m. for Lot No. 6966. However, after The CA Ruling
receiving the loan proceeds, the Dys reneged on their
agreement, prompting Sps. Delgado to cause the annotation of However, on appeal, the CA set aside12 the RTC's decision and
an adverse claim on the Dys' titles and to inform Philbank of the ordered the cancellation of the Dys' certificates of title and the
simulation of the sale. Sps. Delgado, thus, prayed for the reinstatement of Cipriana's title. It ruled that there were no
dismissal of the complaint, with a counterclaim for damages perfected contracts of sale between Sps. Delgado and the Dys
and a cross-claim against the Dys for the payment of the in view of the latter's admission that the deeds of sale were
balance of the purchase price plus damages. purposely executed to facilitate the latter's loan application
with Philbank and that the prices indicated therein were not
For their part, the Dys denied knowledge of the alleged the true consideration. Being merely simulated, the contracts of
transaction between cross-claimants Sps. Delgado and buyer. sale were, thus, null and void, rendering the subsequent
They claimed to have validly acquired the subject property from mortgage of the lots likewise void.
Sps. Delgado and paid the full consideration therefor as the
latter even withdrew their adverse claim and never demanded The CA also declared Philbank not to be a mortgagee in good
for the payment of any unpaid balance. faith for its failure to ascertain how the Dys acquired the
properties and to exercise greater care when it conducted an
On the other hand, Philbank filed its Answer8 asserting that it is ocular inspection thereof. It thereby canceled the mortgage
an innocent mortgagee for value without notice of the defect in over the two lots.
the title of the Dys. It filed a cross-claim against Sps. Delgado
and the Dys for all the damages that may be adjudged against it The Petition
in the event they are declared seller and purchaser in bad faith,
respectively. In the present petition, Philbank insists that it is a mortgagee in
good faith. It further contends that Sps. Delgado are estopped
In answer to the cross-claim, Sps. Delgado insisted that from denying the validity of the mortgage constituted over the
Philbank was not a mortgagee in good faith for having granted two lots since they participated in inducing Philbank to grant a
the loan and accepted the mortgage despite knowledge of the loan to the Dys.
simulation of the sale to the Dys and for failure to verify the
nature of the buyer’s physical possession of a portion of Lot No. On the other hand, Sps. Delgado maintain that Philbank was
6966. They thereby prayed for the cancellation of the mortgage not an innocent mortgagee for value for failure to exercise due
in Philbank's favor. diligence in transacting with the Dys and may not invoke the
equitable doctrine of estoppel to conceal its own lack of
Subsequently, Sps. Delgado amended their cross-claim against diligence.
the Dys to include a prayer for the nullification of the deeds of
absolute sale in the latter's favor and the corresponding For his part, Arturo Dy filed a Petition-in-Intervention13 arguing
certificates of title, and for the consequent reinstatement of that while the deeds of absolute sale over the two properties
Cipriana’s title.9 were admittedly simulated, the simulation was only a relative
one involving a false statement of the price. Hence, the parties
The complaints against the Dys and Philbank were subsequently are still bound by their true agreement. The same was
withdrawn. On the other hand, both the buyer and Sps. opposed/objected to by both Philbank14 and Sps. Delgado15 as
Delgado never presented any evidence in support of their improper, considering that the CA judgment had long become
99
final and executory as to the Dys who neither moved for ocular inspection could have led to the discovery of the
reconsideration nor appealed the CA Decision. complicity between the ostensible mortgagors (the Dys) and
the true owners (Sps. Delgado).1âwphi1 In fine, Philbank can
The Ruling of the Court hardly be deemed negligent under the premises since the
ultimate cause of the mortgagors' (the Dys') defective title was
The petition is meritorious. the simulated sale to which Sps. Delgado were privies.
At the outset, the Court takes note of the fact that the CA Indeed, a finding of negligence must always be contextualized
Decision nullifying the questioned contracts of sale between in line with the attendant circumstances of a particular case. As
Sps. Delgado and the Dys had become final and executory. aptly held in Philippine National Bank v. Heirs of Estanislao
Accordingly, the Petition-in-Intervention filed by Arturo Dy, Militar,25 "the diligence with which the law requires the
which seeks to maintain the subject contracts' validity, can no individual or a corporation at all times to govern a particular
longer be entertained. The cancellation of the Dys' certificates conduct varies with the nature of the situation in which one is
of title over the disputed properties and the issuance of new placed, and the importance of the act which is to be
TCTs in favor of Cipriana must therefore be upheld. performed."26 Thus, without diminishing the time-honored
principle that nothing short of extraordinary diligence is
However, Philbank's mortgage rights over the subject required of banks whose business is impressed with public
properties shall be maintained. While it is settled that a interest, Philbank's inconsequential oversight should not and
simulated deed of sale is null and void and therefore, does not cannot serve as a bastion for fraud and deceit.
convey any right that could ripen into a valid title,16 it has been
equally ruled that, for reasons of public policy,17 the To be sure, fraud comprises "anything calculated to deceive,
subsequent nullification of title to a property is not a ground to including all acts, omissions, and concealment involving a
annul the contractual right which may have been derived by a breach of legal duty or equitable duty, trust, or confidence
purchaser, mortgagee or other transferee who acted in good justly reposed, resulting in damage to another, or by which an
faith.18 undue and unconscientious advantage is taken of another."27
In this light, the Dys' and Sps. Delgado's deliberate simulation of
The ascertainment of good faith or lack of it, and the the sale intended to obtain loan proceeds from and to
determination of whether due diligence and prudence were prejudice Philbank clearly constitutes fraudulent conduct. As
exercised or not, are questions of fact19 which are generally such, Sps. Delgado cannot now be allowed to deny the validity
improper in a petition for review on certiorari under Rule 45 of of the mortgage executed by the Dys in favor of Philbank as to
the Rules of Court (Rules) where only questions of law may be hold otherwise would effectively sanction their blatant bad
raised. A recognized exception to the rule is when there are faith to Philbank's detriment.
conflicting findings of fact by the CA and the RTC,20 as in this
case. Accordingly, in the interest of public policy, fair dealing, good
faith and justice, the Court accords Philbank the rights of a
Primarily, it bears noting that the doctrine of "mortgagee in mortgagee in good faith whose lien to the securities posted
good faith" is based on the rule that all persons dealing with must be respected and protected. In this regard, Philbank is
property covered by a Torrens Certificate of Title are not entitled to have its mortgage carried over or annotated on the
required to go beyond what appears on the face of the title. titles of Cipriana Delgado over the said properties.
This is in deference to the public interest in upholding the
indefeasibility of a certificate of title as evidence of lawful WHERFORE, the assailed January 30, 2008 Decision of the Court
ownership of the land or of any encumbrance thereon.21 In the of Appeals in CA-G.R. CV No. 51672 is hereby AFFIRMED with
case of banks and other financial institutions, however, greater MODIFICATION upholding the mortgage rights of petitioner
care and due diligence are required since they are imbued with Philippine Banking Corporation over the subject properties.
public interest, failing which renders the mortgagees in bad
faith. Thus, before approving a loan application, it is a standard 41. JOCELYN C. TALENS-DABON, Complainant, vs.JUDGE
operating practice for these institutions to conduct an ocular HERMIN E. ARCEO, REGIONAL TRIAL COURT, BRANCH 43, SAN
inspection of the property offered for mortgage and to verify FERNANDO, PAMPANGA, Respondent.
the genuineness of the title to determine the real owner(s) RE: PETITION FOR JUDICIAL CLEMENCY OF THEN JUDGE
thereof.22 The apparent purpose of an ocular inspection is to HERMIN E. ARCEO.
protect the "true owner" of the property as well as innocent
third parties with a right, interest or claim thereon from a For resolution is the Petition for Judicial Clemency1 filed by
usurper who may have acquired a fraudulent certificate of title Hermin E. Arceo (respondent), former Presiding Judge of the
thereto.23 Regional Trial Court, Branch 43, San Fernando, Pampanga,
seeking to lift the ban against his employment in any branch of
In this case, while Philbank failed to exercise greater care in the government, including government-owned or -controlled
conducting the ocular inspection of the properties offered for corporations, and to be allowed to receive his accrued leave
mortgage,24 its omission did not prejudice any innocent third credits and other monetary benefits.
parties. In particular, the buyer did not pursue her cause and
abandoned her claim on the property. On the other hand, Sps. In the Decision2 dated July 25, 1996, the Court dismissed
Delgado were parties to the simulated sale in favor of the Dys respondent from service for committing lewd and lustful acts
which was intended to mislead Philbank into granting the loan against complainant Atty. Jocelyn Talens-Dabon which
application. Thus, no amount of diligence in the conduct of the constituted gross misconduct and immorality prejudicial to the
100
best interest of the service. The dispositive portion of the Applying the foregoing standards to this case, the Court finds
subject Decision reads: merit in respondent’s prayer for the lifting of the ban against
his re-employment in the government service.
WHEREFORE, Judge Hermin E. Arceo is hereby DISMISSED from
the service for gross misconduct and immorality prejudicial to Records show that after his dismissal from the service,
the best interest of the service, with forfeiture of all retirement respondent engaged in private practice and most of his cases
benefits and with prejudice to re-employment in any branch of involve poor litigants, neighbors and close friends.11 He also
the government, including government-owned and controlled submitted a Certificate of Good Moral Character12 dated July
corporations. This decision is immediately executory. 16, 2012 issued by Maria Theresa V. Mendoza-Arcega, Acting
Executive Judge of the Regional Trial Court of Malolos City,
SO ORDERED. Bulacan and Certificate of Favorable Endorsement13 dated July
27, 2012 from Cecilio C. Villanueva, President of the Integrated
Thereafter, respondent filed the following pleadings: (a) Motion Bar of the Philippines (IBP) Marcelo H. Del Pilar (Bulacan
for Reconsideration with Leave of Court;3 (b) Motion for Leave Chapter) attesting to his reformation and recognizing his
to File Second Motion for Reconsideration and for Admission of valuable contributions to the bar and the bench. For these
herein Second Motion for Reconsideration,4 which were denied services, he was given the award Gawad Bunying Abogadong
in the Resolutions dated August 27, 19965 and October 22, Bulakenyo on August 25, 2011.14 The Court also notes the
1996,6 respectively; and (c) a Personal Plea for Reinstatement7 many years that had elapsed from the time of his dismissal and
dated December 17, 1997, which was merely noted without recognizes respondent's dedication, citations and
action in the Resolution8 dated January 27, 1998. contributions15 to the legal profession and to the judiciary
prior to his dismissal from the service.
On October 1, 2012, sixteen (16) years after his dismissal,
respondent filed the instant petition alleging that he had Respondent has sufficiently shown his remorse and reformation
immensely suffered from and endured the stigma caused by his after his dismissal from the service meriting the Court’s
dismissal from the service. He also claimed to have been liberality. While it may be conceded that respondent at 71
humbled by his experience and has become remorseful of his years old16 had already reached retirement age and can no
previous acts causing him to reform his ways and treat each longer be eligible for regular employment in the public service,
person with dignity and respect. He has devoted the past yet, considering his achievements and mental aptitude, it
sixteen (16) years to "mending his ways and proving to himself cannot be doubted that he could still be of service to the
and to the community that he can be a better man."9 government in some other capacity. In Castillo v. Calanog, Jr.,17
the Court lifted the penalty of disqualification imposed against
In A.M. No. 07-7-17-SC (Re: Letter of Judge Augustus C. Diaz, the respondent judge found guilty of immorality after he
Metropolitan Trial Court of Quezon City, Branch 37, Appealing showed sincere repentance and taking into account his
for Clemency),10 the Court laid down the following guidelines contributions during his tenure in the judiciary. In Re:
in resolving requests for judicial clemency, to wit: Conviction of Imelda B. Fortus, Clerk III, RTC, Br. 40, Calapan
City for the Crime of Violation of B.P. 22,18 the Court dismissed
1. There must be proof of remorse and reformation. These shall the errant probationer-employee on the ground that the crime
include but should not be limited to certifications or she committed involved moral turpitude but at the same time
testimonials of the officer(s) or chapter(s) of the Integrated Bar decreed that "she may be allowed to re-enter the government
of the Philippines, judges or judges associations and prominent service if she can prove that she is fit to serve again."
members of the community with proven integrity and probity.
A subsequent finding of guilt in an administrative case for the True, respondent was convicted by the Sandiganbayan in its
same or similar misconduct will give rise to a strong November 11, 2004 Decision19 in Criminal Case Nos. 24198-
presumption of non-reformation. 24199 for violation of the Anti-Sexual Harassment Law and
Article 336 of the Revised Penal Code, respectively. Records,
2. Sufficient time must have lapsed from the imposition of the however, reveal that he was granted probation20 and finally
penalty to ensure a period of reform. discharged21 after having complied with all the conditions
thereof. Concomitantly, all his civil rights which he had lost as a
3. The age of the person asking for clemency must show that he result of his conviction, including the right to be employed in
still has productive years ahead of him that can be put to good the public service, were restored.22
use by giving him a chance to redeem himself.
On respondent’s request for payment of accrued leave credits
4. There must be a showing of promise (such as intellectual during his tenure in the government, Section 11, paragraph 1 of
aptitude, learning or legal acumen or contribution to legal Rule 140 of the Rules of Court explicitly exempts accrued leave
scholarship and the development of the legal system or credits from the forfeiture of benefits, thus:
administrative and other relevant skills), as well as potential for
public service. Section 11. Sanctions. - A. If the respondent is guilty of a serious
charge, any of the following sanctions may be imposed:
5. There must be other relevant factors and circumstances that
may justify clemency. (Citations omitted) 1. Dismissal from the service, forfeiture of all or part of the
benefits as the Court may determine, and disqualification from
reinstatement or appointment to any public office, including
government-owned or -controlled corporations: Provided,
101
however, That the forfeiture of benefits shall in no case include On November 5, 2012, and during the pendency of this petition,
accrued leave credits; petitioners filed a Motion with Leave of Court to Withdraw the
Petition3 averring that subsequent events have overtaken the
Moreover, Civil Service Commission Memorandum Circular petition and that, with the termination of the impeachment
(MC) No. 41, Series of 1998, as amended by MC No. 14, s. of proceedings against former Chief Justice Corona, they are no
1999, provides: longer faced with the dilemma of either violating Republic Act
No. 6426 (RA 6426) or being held in contempt of court for
Section 37. Payment of terminal leave. - Any official/employee refusing to disclose the details of the subject foreign currency
of the government who retires, voluntarily resigns, or is deposits.
separated from the service and who is not otherwise covered
by special law, shall be entitled to the commutation of his leave It is well-settled that courts will not determine questions that
credits exclusive of Saturdays, Sundays and Holidays without have become moot and academic because there is no longer
limitation and regardless of the period when the credits were any justiciable controversy to speak of. The judgment will not
earned. serve any useful purpose or have any practical legal effect
because, in the nature of things, it cannot be enforced.4 In
Section 65. Effect of decision in administrative case. - An official Gancho-on v. Secretary of Labor and Employment,5 the Court
or employee who has been penalized with dismissal from the ruled:
service is likewise not barred from entitlement to his terminal
leave benefits.1âwphi1 It is a rule of universal application that courts of justice
constituted to pass upon substantial rights will not consider
Jurisprudence is likewise replete with cases wherein dismissed questions in which no actual interests are involved; they decline
judges and government personnel or officials were allowed to jurisdiction of moot cases. And where the issue has become
claim their earned/accrued leave credits and other monetary moot and academic, there is no justiciable controversy, so that
benefits.23 a declaration thereon would be of no practical use or value.
There is no actual substantial relief to which petitioners would
WHEREFORE, premises considered, Hermin E. Arceo is hereby be entitled and which would be negated by the dismissal of the
GRANTED judicial clemency lifting the ban against his petition. (Citations omitted)
disqualification . from re-employment in any branch of the
government, including government-owned or -controlled Indeed, the main issue of whether the Impeachment Court
corporations . acted arbitrarily when it issued the assailed subpoena to obtain
information concerning the subject foreign currency deposits
The Fiscal Management and Budget Office is ordered to notwithstanding the confidentiality of such deposits under RA
compute the accrued leave credits of respondent, if any, and to 6426 has been overtaken by events. The supervening conviction
release the same to him. of Chief Justice Corona on May 29, 2012, as well as his
execution of a waiver against the confidentiality of all his bank
42. PHILIPPINE SAVINGS BANK (PSBANK) and PASCUAL M. accounts, whether in peso or foreign currency, has rendered
GARCIA III, as representative of Philippine Savings Bank and in the present petition moot and academic.
his personal capacity, Petitioners, vs.SENATE IMPEACHMENT
COURT, consisting of the senators of the republic of the On the basis of the foregoing, the Court finds it appropriate to
philippines acting as senator judges, namely: JUAN PONCE abstain from passing upon the merits of this case where legal
ENRILE, JINGGOY EJERCITO ESTRADA, VICENTE C. SOTTO III, relief is no longer needed nor called for.1âwphi1
ALAN PETER S. CAYETANO, EDGARDO J. ANGARA, JOKER P.
ARROYO, PIA S. CAYETANO, FRANKLIN M. DRILON, FRANCIS G. WHEREFORE, the petition is DISMISSED for having become
ESCUDERO, TEOFISTO GUINGONA III, GREGORIO B. HONASAN moot and academic and the temporary restraining order issued
II, PANFILO M. LACSON, MANUEL M. LAPID, LOREN B. by the Court on February 9, 2012 is LIFTED.
LEGARDA, FERDINAND R. MARCOS, JR., SERGIO R. OSMENA III,
FRANCIS "KIKO" PANGILINAN, AQUILINO PIMENTEL III, RALPH 43. GREAT WHITE SHARK ENTERPRISES, INC., Petitioner,
G. RECTO, RAMON REVILLA, JR., ANTONIO F. TRILLANES IV, vs.DANILO M. CARALDE, JR., Respondent.
MANNY VILLAR; and THE HONORABLE MEMBERS OF THE
PROSECUTION PANEL OF THE HOUSE OF REPRESENTATIVES, Assailed in this Petition for Review on Certiorari under Rule 45
Respondents. of the Rules of Court is the December 14, 2009 Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 105787, which reversed
Petitioners Philippine Savings Bank (PSBank) and Pascual M. and set aside the October 6, 2008 Decision2 of the Director
Garcia III, as President of PSBank, filed a Petition for Certiorari General of the Intellectual Property Office (IPO), and directed
and Prohibition seeking to nullity and set aside the Resolution1 him to grant the application for the mark "SHARK & LOGO" filed
of respondent Senate of the Republic of the Philippines, sitting by respondent Danilo M. Caralde, Jr. (Caralde).
as an Impeachment Court, which granted the prosecution's
requests for subpoena duces tecum ad testificandum2 to The Factual Antecedents
PSBank and/or its representatives requiring them to testify and
produce before the Impeachment Court documents relative to On July 31, 2002, Caralde filed before the Bureau of Legal
the foreign currency accounts that were alleged to belong to Affairs (BLA), IPO a trademark application seeking to register
then Suprerpe Court Chief Justice Renato C. Corona. the mark "SHARK & LOGO" for his manufactured goods under
Class 25, such as slippers, shoes and sandals. Petitioner Great
102
White Shark Enterprises, Inc. (Great White Shark), a foreign marks are indeed confusingly similar. Great White Shark's mark
corporation domiciled in Florida, USA, opposed3 the application is used in clothing and footwear, among others, while Caralde's
claiming to be the owner of the mark consisting of a mark is used on similar goods like shoes and slippers.
representation of a shark in color, known as "GREG NORMAN Moreover, Great White Shark was first in applying for
LOGO" (associated with apparel worn and promoted by registration of the mark on February 19, 2002, followed by
Australian golfer Greg Norman). It alleged that, being a world Caralde on July 31, 2002. Furthermore, Great White Shark’s
famous mark which is pending registration before the BLA since mark consisted of an illustration of a shark while Caralde's mark
February 19, 2002,4 the confusing similarity between the two had a composite figure forming a silhouette of a shark. Thus, as
(2) marks is likely to deceive or confuse the purchasing public to content, word, sound and meaning, both marks are similar,
into believing that Caralde's goods are produced by or barring the registration of Caralde's mark under Section
originated from it, or are under its sponsorship, to its damage 123.1(d) of Republic Act No. 8293, otherwise known as the
and prejudice. Intellectual Property Code (IP Code). Nonetheless, while Great
In his Answer,5 Caralde explained that the subject marks are White Shark submitted evidence of the registration of its mark
distinctively different from one another and easily in several other countries, the IPO Director General considered
distinguishable. When compared, the only similarity in the its mark as not well-known for failing to meet the other criteria
marks is in the word "shark" alone, differing in other factors laid down under Rule 10210 of the Rules and Regulations on
such as appearance, style, shape, size, format, color, ideas Trademarks, Service Marks, Trade Names and Marked or
counted by marks, and even in the goods carried by the parties. Stamped Containers.
Pending the inter partes proceedings, Great White Shark’s The Ruling of the Court of Appeals
trademark application was granted and it was issued Certificate
of Registration No. 4-2002-001478 on October 23, 2006 for However, on petition for review, the CA reversed and set aside
clothing, headgear and footwear, including socks, shoes and its the foregoing Decision and directed the IPO to grant Caralde's
components.6 application for registration of the mark "SHARK & LOGO." The
CA found no confusing similarity between the subject marks
The Ruling of the BLA Director notwithstanding that both contained the shape of a shark as
their dominant feature. It observed that Caralde's mark is more
On June 14, 2007, the BLA Director rendered a Decision7 fanciful and colorful, and contains several elements which are
rejecting Caralde's application, ratiocinating, as follows: easily distinguishable from that of the Great White Shark. It
further opined that considering their price disparity, there is no
Prominent in both competing marks is the illustration of a likelihood of confusion as they travel in different channels of
shark.1âwphi1 The dominant feature in opposer's mark is the trade.11
illustration of a shark drawn plainly. On the other hand, the
dominant feature in respondent's mark is a depiction of shark Issues Before The Court
shaded darkly, with its body designed in a way to contain the
letters "A" and "R" with the tail suggestive of the letter "K." THE COURT OF APPEALS ERRED IN RULING THAT THE
Admittedly, there are some differences between the competing RESPONDENT'S MARK SUBJECT OF THE APPLICATION BEING
marks. Respondent's mark contains additional features which OPPOSED BY THE PETITIONER IS NOT CONFUSINGLY SIMILAR
are absent in opposer's mark. Their dominant features, i.e., that TO PETITIONER'S REGISTERED MARK THE COURT OF APPEALS
of an illustration of a shark, however, are of such degree that ERRED IN RULING THAT THE COST OF GOODS COULD NEGATE
the overall impression it create [sic] is that the two competing LIKELIHOOD OF CONFUSION THE COURT OF APPEALS ERRED IN
marks are at least strikingly similar to each another [sic], hence, REVERSING THE PREVIOUS RESOLUTIONS OF THE DIRECTOR
the likelihood of confusion of goods is likely to occur. x x x x GENERAL AND THE BLA12
Moreover, the goods of the competing marks falls [sic] under The Court's Ruling
the same Class 25. Opposer's mark GREG NORMAN LOGO,
which was applied for registration on February 19, 2002, In the instant petition for review on certiorari, Great White
pertains to clothing apparel particularly hats, shirts and pants. Shark maintains that the two (2) competing marks are
Respondent, on the other hand, later applied for the confusingly similar in appearance, shape and color scheme
registration of the mark SHARK & LOGO on July 3, 2002 (should because of the dominant feature of a shark which is likely to
be July 31, 2002) for footwear products particularly slippers, deceive or cause confusion to the purchasing public, suggesting
shoes, sandals. Clearly, the goods to which the parties use their an intention on Caralde's part to pass-off his goods as that of
marks belong to the same class and are related to each other."8 Great White Shark and to ride on its goodwill. This,
(Italics ours) notwithstanding the price difference, targets market and
channels of trade between the competing products. Hence, the
The BLA Director, however, found no merit in Great White CA erred in reversing the rulings of the IPO Director General
Shark's claim that its mark was famous and well-known for and the BLA Director who are the experts in the
insufficiency of evidence. implementation of the IP Code.
The Ruling of the IPO Director General The petition lacks merit.
On appeal, the IPO Director General affirmed9 the final A trademark device is susceptible to registration if it is crafted
rejection of Caralde's application, ruling that the competing fancifully or arbitrarily and is capable of identifying and
103
distinguishing the goods of one manufacturer or seller from under Rule 102 of the Rules and Regulations on Trademarks,
those of another. Apart from its commercial utility, the Service Marks, Trade Names and Marked or Stamped
benchmark of trademark registrability is distinctiveness.13 Containers to establish that its mark is well-known, and the
Thus, a generic figure, as that of a shark in this case, if latter failed to show otherwise.
employed and designed in a distinctive manner, can be a
registrable trademark device, subject to the provisions of the IP WHEREFORE, the Court resolves to DENY the instant petition
Code. and AFFIRM the assailed December 14, 2009 Decision of the
Court of Appeals (CA) for failure to show that the CA committed
Corollarily, Section 123.1(d) of the IP Code provides that a mark reversible error in setting aside the Decision of the IPO Director
cannot be registered if it is identical with a registered mark General and allowing the registration of the mark "SHARK &
belonging to a different proprietor with an earlier filing or LOGO" by respondent Danilo M. Caralde, Jr.
priority date, with respect to the same or closely related goods
or services, or has a near resemblance to such mark as to likely 44. SAMEER OVERSEAS PLACEMENT AGENCY v. MARICEL N.
deceive or cause confusion. BAJARO
In determining similarity and likelihood of confusion, case law Assailed in this Petition for Review is the August 22, 2005
has developed the Dominancy Test and the Holistic or Totality Decision[1] and October 11, 2005 Resolution[2] of the Court of
Test. The Dominancy Test focuses on the similarity of the Appeals (CA) in CA-G.R. SP No. 87672 which nullified and set
dominant features of the competing trademarks that might aside the March 31, 2004 Decision[3] and September 22, 2004
cause confusion, mistake, and deception in the mind of the Resolution[4] of the National Labor Relations Commission
ordinary purchaser, and gives more consideration to the aural (NLRC) and reinstated in toto the July 12, 2002 Decision[5] of
and visual impressions created by the marks on the buyers of the Labor Arbiter in NLRC OFW CASE No. (M) 01-07-1366-00.
goods, giving little weight to factors like prices, quality, sales
outlets, and market segments. In contrast, the Holistic or The Facts
Totality Test considers the entirety of the marks as applied to
the products, including the labels and packaging, and focuses It is undisputed that sometime in 1999,[6] petitioner company
not only on the predominant words but also on the other Sameer Overseas Placement Agency, Inc. deployed respondents
features appearing on both labels to determine whether one is Maricel N. Bajaro (Bajaro), Pamela P. Morilla (Morilla), Daisy L.
confusingly similar to the other14 as to mislead the ordinary Magdaong, Leah J. Tabujara, Lea M. Cancino, Michiel D.
purchaser. The "ordinary purchaser" refers to one "accustomed Meliang, Raquel Sumigcay (Sumigcay), Rose R. Saria, Leona L.
to buy, and therefore to some extent familiar with, the goods in Angulo and Melody B. Ingal to Taiwan to work as operators for
question."15 its foreign principal, Mabuchi Motors Company, Ltd. under
individual two-year employment contracts,[7] with a monthly
Irrespective of both tests, the Court finds no confusing salary of Taiwan Dollars (NT$) 15,840.00 each. Prior to their
similarity between the subject marks. While both marks use the deployment, each respondent paid petitioner company the
shape of a shark, the Court noted distinct visual and aural amount of P47,900.00 as placement fee.
differences between them. In Great White Shark's "GREG
NORMAN LOGO," there is an outline of a shark formed with the However, after working for only a period of eleven (11) months
use of green, yellow, blue and red16 lines/strokes, to wit: and before the expiration of the two-year period, respondents'
employment contracts were terminated and they were
In contrast, the shark in Caralde's "SHARK & LOGO" mark17 is repatriated to the Philippines. This prompted the filing of a
illustrated in l et t er s outlined in the form of a shark with the complaint for illegal dismissal against petitioner company and
letter "S" forming the head, the letter "H" forming the fins, the its President and General Manager, individual petitioner
letters "A" and "R" forming the body, and the letter "K" forming Rizalina Lamson,[8] with prayer for the payment of salaries and
the tail. In addition, the latter mark includes several more wages covering the unexpired portion of their employment
elements such as the word "SHARK" in a different font contracts in lieu of reinstatement, and with allegations of illegal
underneath the shark outline, layers of waves, and a tree on deductions and illegal collection of placement fees.
the right side, and liberally used the color blue with some parts Respondents Bajaro, Morilla and Sumigcay likewise sought
in red, yellow, green and white.18 The whole design is enclosed reimbursement of the amount they personally expended for
in an elliptical shape with two linings, thus: their plane tickets for their return flight, alleging that their
employment contracts provided for free transportation
expenses in going to and from Taiwan. Collectively,
As may be gleaned from the foregoing, the visual dissimilarities respondents prayed for the award of damages as well as
between the two (2) marks are evident and significant, negating attorney's fees.
the possibility of confusion in the minds of the ordinary
purchaser, especially considering the distinct aural difference In defense, petitioners claimed that respondents were validly
between the marks. retrenched due to severe business losses suffered by their
foreign principal. They denied the alleged deductions
Finally, there being no confusing similarity between the subject amounting to NT$7,500.00 from petitioners' monthly salaries
marks, the matter of whether Great White Shark’s mark has and that, consequently, petitioners are not entitled to damages
gained recognition and acquired becomes unnecessary.19 and attorney's fees.
Besides, both the BLA Director and the IPO Director General
have ruled that Great White Shark failed to meet the criteria The Labor Arbiter's Ruling
104
(a)
In its July 12, 2002 Decision,[9] the Labor Arbiter found pay each complainant an amount equivalent to three (3)
respondents to have been illegally dismissed for petitioners' months salary which is NT$47,520 or a total of FOUR HUNDRED
failure to substantiate their defense of a valid retrenchment. SEVENTY FIVE THOUSAND TWO HUNDRED TAIWAN DOLLARS
Hence, the Labor Arbiter granted respondents' money claims, (NT$475,200) or its Philippine currency equivalent at the time
citing Section 10 of Republic Act (R.A.) No. 8042[10] as then of payment;
applicable,[11] which provides: (b)
pay each complainant NT$82,500.00 representing the amount
Section 10. Money claims. x x x that has been illegally deducted from their salaries for a period
of eleven (11) months or a total of EIGHT HUNDRED TWENTY
The liability of the principal/employer and the FIVE THOUSAND TAIWAN DOLLARS (NT$825,000) or its
recruitment/placement agency for any and all claims under this Philippine currency equivalent at the time of payment;
section shall be joint and several. This provision shall be (c)
incorporated in the contract for overseas employment and shall pay each complainant, Php47,900.00 by way of reimbursement
be a condition precedent for its approval. The performance of placement fees or a total of FOUR HUNDRED SEVENTY NINE
bond to be filed by the recruitment/placement agency, as THOUSAND PESOS (Php479,000.00) plus twelve percent (12%)
provided by law, shall be answerable for all money claims or interest per annum;
damages that may be awarded to the workers. If the (d)
recruitment/placement agency is a juridical being, the pay complainants MARICEL BAJARO; RAQUEL SUMIGCAY and
corporate officers and directors and partners as the case may PAMELA MORILLA NT$6,000.00 as and by way of
be, shall themselves be jointly and solidarily liable with the reimbursement to their transportation expenses in going home
corporation or partnership for the aforesaid claims and to the Philippines, or its Philippine currency at the time of
damages. payment;
(e)
Such liabilities shall continue during the entire period or pay attorney's fees equivalent to ten percent (10%) of the total
duration of the employment contract and shall not be affected monetary award.
by any substitution, amendment or modification made locally
or in a foreign country of the said contract. SO ORDERED.
Accordingly, petitioners were directed to pay each respondent, Lastly, the NLRC absolved petitioner Lamson of any personal
jointly and solidarily, the amount of P47,900.00 as full liability for dearth of evidence showing that she acted in bad
reimbursement of their individual placement fees, with an faith, following the oft-repeated principle that corporate
interest of 12% per annum; the amount of NT$47,520.00 each, officers cannot be held jointly and severally liable for the
representing three (3) months' worth of their salary amounting obligations of a corporation arising from employment-related
to NT$15,840.00; the amount of NT$7,500.00 which had been claims.
illegally deducted from respondents' monthly salaries; the
amount of NT$6,000.00 each as reimbursement for the Respondents sought reconsideration[13] of the NLRC's
transportation expenses of respondents Bajaro, Sumigcay and Decision, which was subsequently denied in the Resolution[14]
Morilla in going home to the Philippines; and attorney's fees of dated September 22, 2004.
10% of the total monetary award.
The Court of Appeals' Ruling
The dispositive portion of the Labor Arbiter's Decision reads:
Aggrieved, respondents elevated the case via petition for
WHEREFORE, all the foregoing premises considered, certiorari before the CA which, in its assailed August 22, 2005
respondents SAMEER OVERSEAS PLACEMENT AGENCY, Decision,[15] nullified and set aside the previous issuances of
INCORPORATED and RIZALINA LAMZON, are hereby ordered the NLRC and reinstated in toto the July 12, 2002 Decision of
jointly and severally to: the Labor Arbiter. The CA concurred with the findings of the
Labor Arbiter that petitioners failed to comply with the
105
substantive and procedural requirements to effect a valid allegations, Section 10 afore-quoted clearly applies in this
retrenchment. case.[19] As petitioners failed to establish a valid
retrenchment, respondents were clearly dismissed without just,
Petitioners' motion for reconsideration was likewise denied in valid or authorized cause.
the Resolution[16] dated October 11, 2005.
Consequently, petitioner Lamzon is jointly and severally liable
Issues Before The Court with petitioner company. To reiterate, Section 10 of R.A. 8042
provides that "[i]f the recruitment/placement agency is a
In this petition for review, petitioners impute reversible error juridical being, the corporate officers and directors x x x shall
on the part of the CA in nullifying the NLRC issuances and in themselves be jointly and solidarily liable with the corporation x
reinstating in toto the Decision of the Labor Arbiter, as the x x" for any claims and damages that may be due to the
latter failed to take into consideration the principles of private overseas workers.
international law, which form part of the law of the land, as
well as the labor standards laws of the Republic of China, in Notwithstanding the foregoing, however, the Court finds that a
resolving the complaint filed before it. Petitioners also contend modification of the monetary award in the amount of
that the Labor Arbiter misconstrued and misapplied Section 10 NT$47,520.00 per respondent corresponding to three (3)
of R.A. 8042. months' worth of salaries granted by the Labor Arbiter is in
order, conformably with the pronouncement in the case of
The Court's Ruling Serrano v. Gallant Maritime Services and Marlow Navigation
Co. Inc.[20] (Serrano case) where the Court En Banc declared
The petition is bereft of merit. unconstitutional, for being violative of the Constitutionally-
guaranteed rights to equal protection and due process of the
At the outset, the Court notes that petitioners are raising overseas workers, the clause "or for three months for every
before the Court for the first time, the applicability of the year of the unexpired term, whichever is less" found in Section
principles of private international law and the labor standards 10 of R.A. 8042, which originally reads:
laws of the Republic of China in the proper interpretation of
respondents' employment contracts. Records show that In case of termination of overseas employment without just,
petitioners never advanced this issue at the first opportunity valid or authorized cause as defined by law or contract, the
before the Labor Arbiter, and even in the subsequent workers shall be entitled to the full reimbursement of his
proceedings before the NLRC and the CA. Instead, petitioners' placement fee with interest of twelve percent (12%) per annum
arguments consistently centered on the existence of a valid plus his salaries for the unexpired portion of his employment
retrenchment and compliance with the requirements to legally contract or for three (3) months for every year of the unexpired
effect the same. It bears stressing that issues not raised in the term, whichever is less.
proceedings below cannot be raised for the first time on
appeal.[17] Specifically, points of law, theories and arguments In Skippers United Pacific, Inc. and Skippers Maritime Services,
not raised before the appellate court will not be considered by Inc. Ltd. v. Doza,[21] the Court declared that an
the Court.[18] unconstitutional clause in the law, being inoperative at the
outset, confers no rights, imposes no duties and affords no
The Court, therefore, shall limit the resolution of this case on protection. Hence, even if respondents' illegal dismissal
the sole question of whether the Labor Arbiter's Decision, as occurred sometime in August 2000,[22] the declaration of
reinstated in toto by the CA, properly applied and interpreted unconstitutionality found in the Serrano case promulgated in
Section 10 of R.A. 8042, the pertinent portions of which state: March 2009 shall retroactively apply.
Sec. 10. Money Claims. Notwithstanding any provision of law to Since the unexpired portion of respondents' individual two-year
the contrary, the Labor Arbiters of the National Labor Relations contracts is still for 13 months, as they worked in Taiwan for a
Commission (NLRC) shall have the original and exclusive period of only 11 months, each respondent is therefore entitled
jurisdiction to hear and decide, within ninety (90) calendar days to a total amount of NT$205,920.00[23] or its current
after filing of the complaint, the claims arising out of an equivalent in Philippine Peso, by way of unpaid salaries, in
employer-employee relationship or by virtue of any law or addition to the other monetary awards granted by the Labor
contract involving Filipino workers for overseas deployment Arbiter.
including claims for actual, moral, exemplary and other forms of
damages. WHEREFORE, the instant petition is DENIED. The assailed
Decision and Resolution of the Court of Appeals reinstating in
xxx toto the July 12, 2002 Decision of the Labor Arbiter is
AFFIRMED with the MODIFICATION awarding the amount of
In case of termination of overseas employment without just, NT$205,920.00 or its current equivalent in Philippine Peso to
valid or authorized cause as defined by law or contract, x x x each of the respondents by way of unpaid salaries for the
(Emphasis supplied) unexpired portion of their employment contracts. The rest of
the Decision stands.
Indisputably, respondents' illegal dismissal complaint with
money claims is anchored on the overseas employment 45. ILDEFONSO S. CRISOLOGO, Petitioner, vs.PEOPLE OF THE
contracts with petitioners and the allegations that they were PHILIPPINES and CHINA BANKING CORPORATION,
dismissed without just, valid or authorized cause. With these Respondents.
106
Chinabank, without need for a separate civil action, for the
This Petition for Review on Certiorari1 under Rule 45 of the amounts of P1,843,567.90 and P879,166.81 under L/C Nos.
Rules of Court assails the November 23, 2011 Decision2 of the 89/0301 and DOM-33041, respectively, less the payment of
Court of Appeals (CA) in CA-G.R. CV No. 80350, which affirmed P500,000.00 made during the preliminary investigation, with
the December 4, 2002 Decision3 of the Regional Trial Courtt legal interest from the filing of the informations on October 27,
(RTC); Manila, Branch 21. The RTC Decision acquitted petitioner 1994 until full payment, and for the costs.
Ildefonso S. Crisologo (petitioner) of the charges for violation of
Presidential Decree (P.D.) No. 115 (Trust Receipts Law) in The CA Ruling
relation to Article 315 1(b) of the Revised Penal Code (RPC), but
adjudged him civilly liable under the subject letters of credit. On appeal of the civil aspect, the CA affirmed12 the RTC
Decision holding petitioner civilly liable. It noted that petitioner
The Factual Antecedents signed the "Guarantee Clause" of the trust receipt agreements
in his personal capacity and even waived the benefit of
Sometime in January and February 1989, petitioner, as excussion against Novachem. As such, he is personally and
President of Novachemical Industries, Inc. (Novachem), applied solidarily liable with Novachem.
for commercial letters of credit from private respondent China
Banking Corporation (Chinabank) to finance the purchase of The Petition
1,6004 kgs. of amoxicillin trihydrate micronized from Hyundai
Chemical Company based in Seoul, South Korea and glass In the instant petition, petitioner contends that the CA erred in
containers from San Miguel Corporation (SMC). Subsequently, declaring him civilly liable under the subject L/Cs which are
Chinabank issued Letters of Credit Nos. 89/03015 and DOM- corporate obligations of Novachem, and that the adjudged
330416 in the respective amounts of US$114,400.007 amounts were without factual basis because the obligations
(originally US$135,850.00)8 with a peso equivalent of had already been settled. He also questions the unilaterally-
P2,139,119.809 and P1,712,289.90. After petitioner received imposed interest rates applied by Chinabank and, accordingly,
the goods, he executed for and in behalf of Novachem the prays for the application of the stipulated interest rate of 18%
corresponding trust receipt agreements dated May 24, 1989 per annum (p.a.) on the corporation’s obligations. He further
and August 31, 1989 in favor of Chinabank. assails the authority of Ms. De Mesa to prosecute the case
against him sans authority from Chinabank's Board of Directors.
On January 28, 2004, Chinabank, through its Staff Assistant, Ms.
Maria Rosario De Mesa (Ms. De Mesa), filed before the City The Court's Ruling
Prosecutor's Office of Manila a Complaint-Affidavit10 charging
petitioner for violation of P.D. No. 115 in relation to Article 315 The petition is partly meritorious.
1(b) of the RPC for his purported failure to turn-over the goods
or the proceeds from the sale thereof, despite repeated Section 13 of the Trust Receipts Law explicitly provides that if
demands. It averred that the latter, with intent to defraud, and the violation or offense is committed by a corporation, as in this
with unfaithfulness and abuse of confidence, misapplied, case, the penalty provided for under the law shall be imposed
misappropriated and converted the goods subject of the trust upon the directors, officers, employees or other officials or
agreements, to its damage and prejudice. person responsible for the offense, without prejudice to the
civil liabilities arising from the criminal offense.
In his defense, petitioner claimed that as a regular client of
Chinabank, Novachem was granted a credit line and letters of In this case, petitioner was acquitted of the charge for violation
credit (L/Cs) secured by trust receipt agreements. The subject of the Trust Receipts Law in relation to Article 315 1(b)13 of the
L/Cs were included in the special term-payment arrangement RPC. As such, he is relieved of the corporate criminal liability as
mutually agreed upon by the parties, and payable in well as the corresponding civil liability arising therefrom.
installments. In the payment of its obligations, Novachem However, as correctly found by the RTC and the CA, he may still
would normally give instructions to Chinabank as to what be held liable for the trust receipts and L/C transactions he had
particular L/C or trust receipt obligation its payments would be entered into in behalf of Novachem.
applied. However, the latter deviated from the special
arrangement and misapplied payments intended for the subject Settled is the rule that debts incurred by directors, officers, and
L/Cs and exacted unconscionably high interests and penalty employees acting as corporate agents are not their direct
charges. liability but of the corporation they represent, except if they
contractually agree/stipulate or assume to be personally liable
The City Prosecutor found probable cause to indict petitioner as for the corporation’s debts,14 as in this case.
charged and filed the corresponding informations before the
RTC of Manila, docketed as Criminal Case Nos. 94-139613 and The RTC and the CA adjudged petitioner personally and
94-139614. solidarily liable with Novachem for the obligations secured by
the subject trust receipts based on the finding that he signed
The RTC Ruling the guarantee clauses therein in his personal capacity and even
waived the benefit of excussion. However, a review of the
After due proceedings, the RTC rendered a Decision11 dated records shows that petitioner signed only the guarantee clauses
December 4, 2002 acquitting petitioner of the criminal charges of the Trust Receipt dated May 24, 198915 and the
for failure of the prosecution to prove his guilt beyond corresponding Application and Agreement for Commercial
reasonable doubt. It, however, adjudged him civilly liable to Letter of Credit No. L/C No. 89/0301.16 With respect to the
107
Trust Receipt17 dated August 31, 1989 and Irrevocable Letter set aside the July 23, 2009 Decision2 and March 23, 2010
of Credit18 No. L/C No. DOM-33041 issued to SMC for the glass Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
containers, the second pages of these documents that would 91971, which dismissed on jurisdictional grounds the
have reflected the guarantee clauses were missing and did not Department of Agrarian Reform Adjudication Board (DARAB)
form part of the prosecution's formal offer of evidence. In Regional Adjudicator Case No. 05-004-98 and DARAB Case No.
relation thereto, Chinabank stipulated19 before the CA that the 8902 for cancellation of the Certificate of Land Ownership
second page of the August 31, 1989 Trust Receipt attached to Award (CLOA) No. 00122354 and Original Certificate of Title
the complaint before the court a quo would serve as the (OCT) No. CLOA 0-16154 issued in the names of private
missing page. A perusal of the said page, however, reveals that respondents Romanito P. Lim and his sons, namely: Efren C. Lim
the same does not bear the signature of the petitioner in the and Allan C. Lim (private respondents).
guarantee clause. Hence, it was error for the CA to hold
petitioner likewise liable for the obligation secured by the said The Factual Antecedents
trust receipt (L/C No. DOM-33041). Neither was sufficient
evidence presented to prove that petitioner acted in bad faith On December 7, 1993, private respondents applied for the
or with gross negligence as regards the transaction that would issuance of a CLOA over a parcel of land with an area of 73,105
have held him civilly liable for his actions in his capacity as square meters located in Barangay Amotag, Aroroy, Masbate,
President of Novachem.1âwphi1 described as Lot No. 1493 of Cadastral Survey No. Pls-77of
Aroroy Public Subdivision, before the Department of Agrarian
On the matter of interest, while petitioner assailed the Reform (DAR) Secretary.5 Upon the recommendation of the
unilateral imposition of interest at rates above the stipulated Municipal Agrarian Reform Officer (MARO) of Aroroy, Masbate,
18% p.a., he failed to submit a summary of the pertinent dates the application was granted and they were issued CLOA No.
when excessive interests were imposed and the purported 00122354. Subsequently, on January 31, 1994, the Register of
over-payments that should be refunded. Having failed to prove Deeds of Masbate issued the corresponding OCT No. CLOA 0-
his affirmative defense, the Court finds no reason to disturb the 1615.
amount awarded to Chinabank. Settled is the rule that in civil
cases, the party who asserts the affirmative of an issue has the On November 23, 1994, petitioner filed a petition for the
onus to prove his assertion in order to obtain a favorable cancellation of the said CLOA and title before the Office of the
judgment. Thus, the burden rests on the debtor to prove Provincial Agrarian Reform Adjudicator (PARAD), docketed as
payment rather than on the creditor to prove non-payment.20 DARAB Case No. 05-077, assailing the validity of the said
issuances on the ground that the subject parcel of land is a
Lastly, the Court affirms Ms. De Mesa's capacity to sue on private land devoted to cattle raising which she inherited from
behalf of Chinabank despite the lack of proof of authority to her deceased father, Samuel Sutton, who, in turn, previously
represent the latter. The Court noted that as Staff Assistant of bought the subject parcel of land from RomanitoP. Lim and his
Chinabank, Ms. De Mesa was tasked, among others, to review wife, Lolita L. Cedillo, on August 7, 1958.6 Petitioner also
applications for L/Cs, verify the documents of title and claimed to have been denied due process for not receiving any
possession of goods covered by L/Cs, as well as pertinent notice of private respondents’ application proceedings for
documents under trust receipts (TRs); prepare/send/cause the CLOA. On March 5, 1998, the petition was amended7 to include
preparation of statements of accounts reflecting the the MARO of Aroroy, Masbate, Provincial Agrarian Reform
outstanding balance under the said L/Cs and/or TRs, and accept Officer (PARO) of Masbate and the Register of Deeds of
the corresponding payments; refer unpaid obligations to Masbate as additional respondents, and was re-docketed as
Chinabank's lawyers and follow-up results thereon. As such, she DARAB Case No. 05-004-98.
was in a position to verify the truthfulness and correctness of
the allegations in the Complaint-Affidavit. Besides, petitioner In their answer,8 private respondents averred that, being the
voluntarily submitted21 to the jurisdiction of the court a quo actual occupants and qualified beneficiaries of the subject lot
and did not question Ms. De Mesa's authority to represent which formed part of the alienable and disposable portion of
Chinabank in the instant case until an adverse decision was the public domain, the DAR Secretary correctly issued the CLOA
rendered against him. in their favor. While admitting having sold a lot in favor of
Samuel Sutton from whom petitioner purportedly inherited the
WHEREFORE, the assailed November 23, 2011 Decision of the subject parcel of land, they asserted that the lot sold was
Court of Appeals in CA-G.R. CV No. 80350 is AFFIRMED with the different from Lot No. 1493. Moreover, they interposed the
modification absolving petitioner lldefonso S. Crisologo from defense of prescription since the petition for cancellation was
any civil liability to private respondent China Banking filed after the subject title became indefeasible.
Corporation with respect to the Trust Receipt dated August 31,
1989 and L/C No. DOM-33041. The rest of the Decision stands. On the other hand, the MARO and PARO, in their Answer with
Motion to Dismiss,9 invoked the presumption of regularity in
46. DELIA T. SUTTON, Petitioner, vs.ROMANITO P. LIM, EFREN the performance of their official functions in issuing the CLOA,
C. LIM AND ALLAN C. LIM, MUNICIPAL AGRARIAN REFROM which according to them was issued in accordance with the
OFFICER OF AROROY, MASBATE, PROVINCIAL AGRARIAN implementing rules and regulations of Republic Act (R.A.) No.
REFORM OFFICER OF MASBATE, AND THE REGISTER OF DEEDS 6657.10 They also clarified that the subject parcel of land has
FOR THE PROVINCE OF MASBATE, Respondents. been classified as Government Owned Land (GOL) or Kilusang
Kabuhayan at Kaunlaran (KKK) areas pursuant to Presidential
In this Petition for Review on Certiorari1 under Rule 45 of the Proclamation No. 2282,11 hence, subject to the Comprehensive
Rules of Court, Delia Sutton (petitioner) seeks to reverse and
108
Agrarian Reform Program’simmediate coverage (CARP The Ruling of the Court
coverage). Moreover, petitioner was not able to prove that she
is the registered owner of the subject parcel of land and that it The petition is without merit.
is exempt from the CARP coverage.
Section 1, Rule II of the 1994 DARAB Rules of Procedure, the
The RARAD Ruling rule in force at the time of the filing of the petition, provides:
In its May 4, 1999 Decision,12 the Regional Agrarian Reform Section 1.Primary and Exclusive Original and Appellate
Adjudicator (RARAD)ordered, among others, the cancellation of Jurisdiction. The Board shall have primary and exclusive
CLOA No. 00122354 and the corresponding OCT No. CLOA 0- jurisdiction, both original and appellate, to determine and
1615 issued in the names of private respondents. The RARAD adjudicate all agrarian disputes involving the implementation of
found that public respondents failed to exercise due care in the Comprehensive Agrarian Reform Program (CARP) under
identifying the lots of the public domain and their actual Republic Act No. 6657, Executive Order Nos. 228, 229 and 129-
occupants, and accordingly, restored the ownership and A, Republic Act No. 3844 as amended by Republic Act No. 6389,
possession of the subject parcel of land to petitioner. Presidential Decree No. 27 and other agrarian laws and their
implementing rules and regulations. Specifically, such
The DARAB Ruling jurisdiction shall include but not be limited to cases involving
following:
In its December 29, 2004 Decision,13 the DARAB reversed the
ruling of the RARAD. It found no irregularities in the issuance of xxx
the subject CLOA or lawful ground to warrant its cancellation,
under Administrative Order No. 02, Series of 1994.14 It did not f) Those involving the issuance, correction and cancellation of
find the issue of ownership consequential in the Certificates of Land Ownership Award (CLOAs) and
implementation of the land reform program and brushed aside Emancipation Patents (EPs) which are registered with the Land
petitioner’s claim that since the landholding is devoted to cattle Registration Authority;
raising, it is exempt from the CARP coverage. It also emphasized
that the issue of whether or not the landholding is exempt from xxx
the CARP coverage falls within the exclusive jurisdiction of the
Office of the DAR Secretary in the exercise of its administrative While the DARAB may entertain petitions for cancellation of
function to implement R.A. No. 6657. Aggrieved, petitioner CLOAs, as in this case, its jurisdiction is, however, confined only
elevated the matter to the CA on petition for review. to agrarian disputes.As explained in the case of Heirs of Dela
The CA Ruling Cruz v. Heirs of Cruz16 and reiterated in the recent case of
Bagongahasa v. Spouses Cesar Caguin,17 for the DARAB to
In its July 23, 2009 Decision, the CA denied the petition on acquire jurisdiction, the controversy must relate to an agrarian
jurisdictional grounds and dismissed the case without prejudice dispute between the landowners and tenants in whose favor
to its re-filing. It held that the DARAB does not have jurisdiction CLOAs have been issued by the DAR Secretary, to wit:
over the instant controversy due to the absence of a landlord-
tenant relationship or any agrarian relations between the The Court agrees with the petitioners’ contention that, under
parties. It also ruled that since the issuance of the subject CLOA Section 2(f), Rule II of the DARAB Rules of Procedure, the
was made in the exercise of the DAR Secretary’s administrative DARAB has jurisdiction over cases involving the issuance,
powers and function to implement agrarian reform laws, the correction and cancellation of CLOAs which were registered
jurisdiction over the petition for its cancellation lies with the with the LRA. However, for the DARAB to have jurisdiction in
Office of the DAR Secretary. such cases, they must relate to an agrarian dispute between
landowner and tenants to whom CLOAs have been issued by
The Issues the DAR Secretary. The cases involving the issuance, correction
and cancellation of the CLOAs by the DAR in the administrative
Hence, the instant petition ascribing to the CA the following implementation of agrarian reform laws, rules and regulations
errors: to parties who are not agricultural tenants or lessees are within
the jurisdiction of the DAR and not the DARAB.(Emphasis
I. WHEN IT HELD THAT THE DAR PROVINCIAL/ REGIONAL supplied)
ADJUDICATOR (PARAD/RARAD) AND DARAB DO NOT HAVE
JURISDICTION TO ENTERTAIN THE PETITION FOR Thus, it is not sufficient that the controversy involves the
CANCELLATION OF THE CLOA AND CORRESPONDING TITLE cancellation of a CLOA already registered with the Land
ISSUED THEREFOR; Registration Authority. What is of primordial consideration is
the existence of an agrarian dispute between the parties.
II. WHEN IT FOUND THAT SINCE NO LANDLORD-TENANT
RELATIONSHIP EXISTED BETWEEN THE PARTIES, THERE IS NO As defined in Section 3(d) of R.A. No. 6657, an agrarian dispute
"AGRARIAN DISPUTE" INVOLVED; and relates to" any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship, or otherwise, over
III. WHEN IT DISREGARDED PETITIONER’S UNDISPUTED lands devoted to agriculture, including disputes concerning
OWNERSHIP AND POSSESSION OVER LOT 1493 AND DENIAL OF farmworkers’ associations or representation of persons in
DUE PROCESS OVER SAID LOT.15 negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of such tenurial arrangements. It includes
109
any controversy relating to compensation of lands acquired grounds that she is the lawful owner and possessor of the
under the said Act and other terms and conditions of transfer of subject lot and that it is exempt from the CARP coverage. In this
ownership from landowners to farmworkers, tenants and other regard, petitioner has not alleged any tenurial arrangement
agrarian reform beneficiaries, whether the disputants stand in between the parties, negating the existence of any agrarian
the proximate relation of farm operator and beneficiary, dispute and consequently, the jurisdiction of the DARAB.
landowner and tenant, or lessor and lessee." Indisputably, the controversy between the parties is not
agrarian in nature and merely involves the administrative
Based on the above-cited provision, however, petitioner posits implementation of the agrarian reform program which is
that an agrarian dispute can be dissected into purely tenurial cognizable by the DAR Secretary. Section 1, Rule II of the 1994
(paragraph 1 of Section 3d) and non-tenurial arrangements DARAB Rules of Procedure clearly provides that "matters
(paragraph 2, Section 3d). This theory deserves no credence. involving strictly the administrative implementation of R.A. No.
6657, and other agrarian reform laws and pertinent rules, shall
Verily, an agrarian dispute must be a controversy relating to a be the exclusive prerogative of and cognizable by the DAR
tenurial arrangement over lands devoted to agriculture.18 Secretary."
Tenurial arrangements pertain to agreements which set out the
rights between a landowner and a tenant, lessee, farm worker Furthermore, it bears to emphasize that under the new law,
or other agrarian reform beneficiary involving agricultural land. R.A. No. 9700,24 which took effect on July 1, 2009, all cases
Traditionally, tenurial arrangements are in the form of involving the cancellation of CLOAs and other titles issued
tenancy19 or leasehold arrangements.20 However, other forms under any agrarian reform program are now within the
such as a joint production agreement to effect the exclusive and original jurisdiction of the DAR Secretary. Section
implementation of CARP have been recognized as a valid 9 of the said law provides:
tenurial arrangement.21
Section 9. Section 24 of Republic Act No. 6657, as amended, is
Accordingly, paragraph 2 of Section 3(d), by its explicit further amended to read as follows:
reference to controversies between landowners and
farmworkers, tenants and other agrarian reform beneficiaries xxx
with respect to the compensation of lands acquired under R.A.
No. 6657 or other terms and conditions relating to the transfer All cases involving the cancellation of registered emancipation
of such lands, undoubtedly implies the existence of a tenurial patents, certificates of land ownership award, and other titles
arrangement.1âwphi1 Also, the phrase "whether the disputants issued under any agrarian reform program are within the
stand in the proximate relation of farm operator and exclusive and original jurisdiction of the Secretary of the DAR.
beneficiary, landowner and tenant, or lessor and lessee" in
paragraph 2 lists certain forms of tenurial arrangements Consequently, the DARAB is bereft of jurisdiction to entertain
consistent with the phrase "whether leasehold, tenancy or the herein controversy, rendering its decision null and void.
stewardship, or otherwise" stated in paragraph 1 of the same Jurisdiction lies with the Office of the DAR Secretary to resolve
section. the issues of classification of landholdings for coverage
(whether the subject property is a private or government
Moreover, it is a rule in statutory construction that every part owned land), and identification of qualified beneficiaries.
of the statute must be interpreted with reference to the Hence, no error can be attributed to the CA in dismissing the
context – particularly, that every part of the statute must be case without prejudice to its re-filing, in accordance to DAR
interpreted together with the other parts, and kept subservient Administrative Order No. 6, Series of 2000.
to the general intent of the whole enactment.22
WHEREFORE, the instant petition is DENIED and the assailed
Therefore, in line with the purpose of recognizing the right of July 23, 2009 Decision and March 23, 2010 Resolution of the
farmers, farmworkers and landowners under the agrarian Court of Appeals in CA G.R. SP No. 91971 are AFFIRMED.
reform program, both paragraphs 1 and 2of Section 3(d) of R.A.
No. 6657 should be understood within the context of tenurial 47. WILLEM BEUMER, Petitioner, vs.AVELINA AMORES,
arrangements, else the intent of the law be subverted. Respondent.
To be sure, the tenurial, leasehold, or agrarian relations Before the Court is a Petition for Review on Certiorari1 under
referred tomay be established with the concurrence of the Rule 45 of the Rules of CoLlli assailing the October 8, 2009
following: 1) the parties are the landowner and the tenant or Decision2 and January 24, 2011 Resolution3 of the court of
agricultural lessee; 2) the subject matter of the relationship is Appeals (CA) in CA-G.R. CV No. 01940, which affirmed the
an agricultural land; 3) there is consent between the parties to February 28, 2007 Decision4 of the Regional Trial Court (RTC) of
the relationship; 4) the purpose of the agricultural relationship Negros Oriental, Branch 34 in Civil Case No. I 2884. The
is to bring about agricultural production; 5) there is personal foregoing rulings dissolved the conjugal partnership of gains of
cultivation on the part of the tenant or agricultural lessee; and Willem Beumer (petitioner) and Avelina Amores (respondent)
6) the harvest is shared between the landowner and the tenant and distributed the properties forming part of the said property
or agricultural lessee.23 regime.
In this case, a punctilious examination reveals that petitioner’s The Factual Antecedents
allegations are solely hinged on the erroneous grant by the DAR
Secretary of CLOA No. 00122354 to private respondents on the
110
Petitioner, a Dutch National, and respondent, a Filipina, For her part, respondent maintained that the money used for
married in March 29, 1980. After several years, the RTC of the purchase of the lots came exclusively from her personal
Negros Oriental, Branch 32, declared the nullity of their funds, in particular, her earnings from selling jewelry as well as
marriage in the Decision5 dated November 10, 2000 on the products from Avon, Triumph and Tupperware.14 She further
basis of the former’s psychological incapacity as contemplated asserted that after she filed for annulment of their marriage in
in Article 36 of the Family Code. 1996, petitioner transferred to their second house and brought
along with him certain personal properties, consisting of drills, a
Consequently, petitioner filed a Petition for Dissolution of welding machine, grinders, clamps, etc. She alleged that these
Conjugal Partnership6 dated December 14, 2000 praying for the tools and equipment have a total cost of P500,000.00.15
distribution of the following described properties claimed to
have been acquired during the subsistence of their marriage, to The RTC Ruling
wit:
On February 28, 2007, the RTC of Negros Oriental, Branch 34
By Purchase: rendered its Decision, dissolving the parties’ conjugal
partnership, awarding all the parcels of land to respondent as
a. Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147 her paraphernal properties; the tools and equipment in favor of
of the Dumaguete Cadastre, covered by Transfer Certificate of petitioner as his exclusive properties; the two (2) houses
Title (TCT) No. 22846, containing an area of 252 square meters standing on Lots 1 and 2142 as co-owned by the parties, the
(sq.m.), including a residential house constructed thereon. dispositive of which reads:
b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No. WHEREFORE, judgment is hereby rendered granting the
21974, containing an area of 806 sq.m., including a residential dissolution of the conjugal partnership of gains between
house constructed thereon. petitioner Willem Beumer and respondent Avelina Amores
considering the fact that their marriage was previously annulled
c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No. by Branch 32 of this Court. The parcels of land covered by
21306, containing an area of 756 sq.m. Transfer Certificate of Titles Nos. 22846, 21974, 21306, 21307,
23567 and 23575 are hereby declared paraphernal properties
d. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147 of respondent Avelina Amores due to the fact that while these
of the Dumaguete Cadastre, covered by TCT No. 21307, real properties were acquired by onerous title during their
containing an area of 45 sq.m. marital union, Willem Beumer, being a foreigner, is not allowed
by law to acquire any private land in the Philippines, except
By way of inheritance: through inheritance.
e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by The personal properties, i.e., tools and equipment mentioned in
TCT No. 23567, containing an area of 2,635 sq.m. (the area that the complaint which were brought out by Willem from the
appertains to the conjugal partnership is 376.45 sq.m.). conjugal dwelling are hereby declared to be exclusively owned
by the petitioner.
f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by
TCT No. 23575, containing an area of 360 sq.m. (the area that The two houses standing on the lots covered by Transfer
appertains to the conjugal partnership is 24 sq.m.).7 Certificate of Title Nos. 21974 and 22846 are hereby declared
to be co-owned by the petitioner and the respondent since
In defense,8 respondent averred that, with the exception of these were acquired during their marital union and since there
their two (2) residential houses on Lots 1 and 2142, she and is no prohibition on foreigners from owning buildings and
petitioner did not acquire any conjugal properties during their residential units. Petitioner and respondent are, thereby,
marriage, the truth being that she used her own personal directed to subject this court for approval their project of
money to purchase Lots 1, 2142, 5845 and 4 out of her personal partition on the two houses aforementioned.
funds and Lots 2055-A and 2055-I by way of inheritance.9 She
submitted a joint affidavit executed by her and petitioner The Court finds no sufficient justification to award the
attesting to the fact that she purchased Lot 2142 and the counterclaim of respondent for attorney’s fees considering the
improvements thereon using her own money.10 Accordingly, well settled doctrine that there should be no premium on the
respondent sought the dismissal of the petition for dissolution right to litigate. The prayer for moral damages are likewise
as well as payment for attorney’s fees and litigation denied for lack of merit.
expenses.11
No pronouncement as to costs.
During trial, petitioner testified that while Lots 1, 2142, 5845
and 4 were registered in the name of respondent, these SO ORDERED.16
properties were acquired with the money he received from the
Dutch government as his disability benefit12 since respondent It ruled that, regardless of the source of funds for the
did not have sufficient income to pay for their acquisition. He acquisition of Lots 1, 2142, 5845 and 4, petitioner could not
also claimed that the joint affidavit they submitted before the have acquired any right whatsoever over these properties as
Register of Deeds of Dumaguete City was contrary to Article 89 petitioner still attempted to acquire them notwithstanding his
of the Family Code, hence, invalid.13 knowledge of the constitutional prohibition against foreign
ownership of private lands.17 This was made evident by the
111
sworn statements petitioner executed purporting to show that apply the Muller ruling and accordingly, deny petitioner’s claim
the subject parcels of land were purchased from the exclusive for reimbursement.
funds of his wife, the herein respondent.18 Petitioner’s plea for
reimbursement for the amount he had paid to purchase the As also explained in Muller, the time-honored principle is that
foregoing properties on the basis of equity was likewise denied he who seeks equity must do equity, and he who comes into
for not having come to court with clean hands. equity must come with clean hands. Conversely stated, he who
has done inequity shall not be accorded equity. Thus, a litigant
The CA Ruling may be denied relief by a court of equity on the ground that his
conduct has been inequitable, unfair and dishonest, or
Petitioner elevated the matter to the CA, contesting only the fraudulent, or deceitful.27
RTC’s award of Lots 1, 2142, 5845 and 4 in favor of respondent.
He insisted that the money used to purchase the foregoing In this case, petitioner’s statements regarding the real source of
properties came from his own capital funds and that they were the funds used to purchase the subject parcels of land dilute
registered in the name of his former wife only because of the the veracity of his claims: While admitting to have previously
constitutional prohibition against foreign ownership. Thus, he executed a joint affidavit that respondent’s personal funds
prayed for reimbursement of one-half (1/2) of the value of were used to purchase Lot 1,28 he likewise claimed that his
what he had paid in the purchase of the said properties, personal disability funds were used to acquire the same.
waiving the other half in favor of his estranged ex-wife.19 Evidently, these inconsistencies show his untruthfulness. Thus,
as petitioner has come before the Court with unclean hands, he
On October 8, 2009, the CA promulgated a Decision20 affirming is now precluded from seeking any equitable refuge.
in toto the judgment rendered by the RTC of Negros Oriental,
Branch 34. The CA stressed the fact that petitioner was "well- In any event, the Court cannot, even on the grounds of equity,
aware of the constitutional prohibition for aliens to acquire grant reimbursement to petitioner given that he acquired no
lands in the Philippines."21 Hence, he cannot invoke equity to right whatsoever over the subject properties by virtue of its
support his claim for reimbursement. unconstitutional purchase. It is well-established that equity as a
rule will follow the law and will not permit that to be done
Consequently, petitioner filed the instant Petition for Review on indirectly which, because of public policy, cannot be done
Certiorari assailing the CA Decision due to the following error: directly.29 Surely, a contract that violates the Constitution and
the law is null and void, vests no rights, creates no obligations
UNDER THE FACTS ESTABLISHED, THE COURT ERRED IN NOT and produces no legal effect at all.30 Corollary thereto, under
SUSTAINING THE PETITIONER’S ATTEMPT AT SUBSEQUENTLY Article 1412 of the Civil Code,31 petitioner cannot have the
ASSERTING OR CLAIMING A RIGHT OF HALF OR WHOLE OF THE subject properties deeded to him or allow him to recover the
PURCHASE PRICE USED IN THE PURCHASE OF THE REAL money he had spent for the purchase thereof. The law will not
PROPERTIES SUBJECT OF THIS CASE.22 (Emphasis supplied) aid either party to an illegal contract or agreement; it leaves the
parties where it finds them.32 Indeed, one cannot salvage any
The Ruling of the Court rights from an unconstitutional transaction knowingly entered
into.
The petition lacks merit.
Neither can the Court grant petitioner’s claim for
The issue to be resolved is not of first impression. In In Re: reimbursement on the basis of unjust enrichment.33 As held in
Petition For Separation of Property-Elena Buenaventura Muller Frenzel v. Catito, a case also involving a foreigner seeking
v. Helmut Muller23 the Court had already denied a claim for monetary reimbursement for money spent on purchase of
reimbursement of the value of purchased parcels of Philippine Philippine land, the provision on unjust enrichment does not
land instituted by a foreigner Helmut Muller, against his former apply if the action is proscribed by the Constitution, to wit:
Filipina spouse, Elena Buenaventura Muller. It held that Helmut
Muller cannot seek reimbursement on the ground of equity Futile, too, is petitioner's reliance on Article 22 of the New Civil
where it is clear that he willingly and knowingly bought the Code which reads:
property despite the prohibition against foreign ownership of
Philippine land24 enshrined under Section 7, Article XII of the Art. 22. Every person who through an act of performance by
1987 Philippine Constitution which reads: another, or any other means, acquires or comes into possession
of something at the expense of the latter without just or legal
Section 7. Save in cases of hereditary succession, no private ground, shall return the same to him.1âwphi1
lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands The provision is expressed in the maxim: "MEMO CUM
of the public domain. ALTERIUS DETER DETREMENTO PROTEST" (No person should
unjustly enrich himself at the expense of another). An action for
Undeniably, petitioner openly admitted that he "is well aware recovery of what has been paid without just cause has been
of the above-cited constitutional prohibition"25 and even designated as an accion in rem verso. This provision does not
asseverated that, because of such prohibition, he and apply if, as in this case, the action is proscribed by the
respondent registered the subject properties in the latter’s Constitution or by the application of the pari delicto doctrine. It
name.26 Clearly, petitioner’s actuations showed his palpable may be unfair and unjust to bar the petitioner from filing an
intent to skirt the constitutional prohibition. On the basis of accion in rem verso over the subject properties, or from
such admission, the Court finds no reason why it should not recovering the money he paid for the said properties, but, as
112
Lord Mansfield stated in the early case of Holman v. Johnson: application is not closed to mining applications as it is not a
"The objection that a contract is immoral or illegal as between proclaimed watershed area and no initial component of
the plaintiff and the defendant, sounds at all times very ill in the National Integrated Protected Areas Systems11 covers the
mouth of the defendant. It is not for his sake, however, that the same.12
objection is ever allowed; but it is founded in general principles
of policy, which the defendant has the advantage of, contrary The PA Ruling
to the real justice, as between him and the plaintiff."34
(Citations omitted) In a Resolution13 dated June 22, 1998, the PA dismissed
petitioner’s complaint for lack of jurisdiction, but remanded the
Nor would the denial of his claim amount to an injustice based same to the Mining Environment and Safety Division of the
on his foreign citizenship.35 Precisely, it is the Constitution Office of the Regional Director of MGB for appropriate
itself which demarcates the rights of citizens and non-citizens in action.14 It held that petitioner’s protest to the subject
owning Philippine land. To be sure, the constitutional ban application relates mainly to the issue of environment which it
against foreigners applies only to ownership of Philippine land has no jurisdiction to hear and decide pursuant to Section 2,
and not to the improvements built thereon, such as the two (2) Rule III of the Rules on Pleading, Practice and Procedure before
houses standing on Lots 1 and 2142 which were properly the PA and the MAB (Rules).15
declared to be co-owned by the parties subject to partition.
Needless to state, the purpose of the prohibition is to conserve Petitioner filed a Motion for Reconsideration16 dated July 28,
the national patrimony36 and it is this policy which the Court is 1998 which was, however, denied in an Order17 dated
duty-bound to protect. September 25, 1998. Aggrieved, petitioner appealed to the
MAB.18
WHEREFORE, the petition is DENIED. Accordingly, the assailed
October 8, 2009 Decision and January 24, 2011 Resolution of The MAB Ruling
the Court of Appeals in CA-G.R. CV No. 01940 are AFFIRMED.
In a Decision19 dated September 24, 2002, the MAB affirmed
48. SANGGUNIANG BARANGAY OF PANGASUGAN, BAYBAY, the dismissal of petitioner’s complaint, albeit on a different
LEYTE, PETITIONER, vs.EXPLORATION PERMIT APPLICATION ground. While it ruled that the PA has jurisdiction over the
(EXPA-000005-VIII) OF PHILIPPINE NATIONAL OIL COMPANY, complaint, the same is nevertheless dismissible for being
RESPONDENT. premature.20 The MAB opined that since the complaint is
primarily anchored on perceived environmental damages which
Assailed in this petition for review on certiorari1 is the Order2 are still abstract, anticipatory, and not ripe for determination,
dated January 21, 2004 of the Mines Adjudication Board (MAB) petitioner lacks a cause of action against PNOC-EDC.21
declaring its Decision3 dated September 24, 2002 final and Nonetheless, the MAB declared that such dismissal is without
executory. Such Decision, in turn, dismissed the protest of prejudice to any protest or opposition to PNOC-EDC’s non-
petitioner Sangguniang Barangay of Pangasugan, Baybay, Leyte compliance with its Environmental Work Program under any
(petitioner) against the application for exploration permit of exploration permit that may be issued to it.22
respondent Philippine National Oil Company–Energy
Development Corporation (PNOC-EDC). Petitioner filed a Manifestation and Motion for Time23 dated
October 30, 2002, praying for an extension to file a motion for
The Facts reconsideration of the aforesaid Decision.
On July 3, 1996, PNOC-EDC applied for an exploration permit, On September 17, 2003, PNOC-EDC, through its Chairman and
denominated as EXPA-000005-VIII (subject application) with the President/CEO Atty. Sergio A. F. Apostol, requested that an
Mines and Geosciences Bureau (MGB), Regional Office No. VIII, Order be issued declaring the MAB’s Decision dated September
covering a total area of 16,144 hectares in the Province of Leyte 24, 2002 final and executory for petitioner’s failure to file a
and located within the Leyte Geothermal Reservation.4 motion for reconsideration within the reglementary period.24
On November 19, 1996, petitioner passed Resolution No. 58, In an Order25 dated January 21, 2004, the MAB declared its
Series of 1996,5 expressing its deep concern for the possible Decision dated September 24, 2002 final and executory. It cited
environmental damages that may be brought about by PNOC- Section 11, Rule V of the Rules which provides that motions for
EDC’s activities. Thereafter, it filed a Complaint6 dated February reconsideration should be filed within 10 days from receipt of
18, 1997 praying for the denial of the subject application with the decision, resolution or order sought to be reconsidered.
the MGB Panel of Arbitrators (PA).7 Moreover, it noted that petitioner actually failed to file a
motion for reconsideration.26 Accordingly, the subject
In its Position Paper8 filed on August 15, 1997, petitioner application was given due course, subject to pertinent laws,
argued, inter alia, that the area covered by the subject rules, and regulations.27
application is within a watershed area that is protected under
existing laws, which, if granted, would endanger the water Hence, this petition.
supply of the residents and nearby municipalities and cause
damage to rivers and forests.9 The Issue Before the Court
For its part, in its Position Paper10 dated August 14, 1997,
PNOC-EDC argued that the area covered by the subject
113
The primordial issue raised for the Court’s resolution is whether Batangas Cadastre, which consist of 4,155 and 968 square
or not the MAB is correct in giving due course to the subject meters, respectively.6 The case was docketed as Land Reg. Case
application. No. N-1554 (LRA Rec. No. N-69624) and, as a matter of course,
was called for initial hearing. No oppositor appeared during the
The Court’s Ruling said hearing except Prosecutor Amelia Panganiban who
appeared in behalf of the Office of the Solicitor General
The petition is denied. (respondent). Consequently, the RTC issued the corresponding
Order of Special Default and the reception of evidence was
At the outset, it should be made clear that petitioner itself delegated to the Branch Clerk of Court.7
admits that it is assailing the MAB’s Order dated January 21,
2004.28 However, it is well to emphasize that such Order For land registration purposes, the subject lots were both
merely declared the MAB’s earlier Decision dated September investigated and inspected separately by Special Land
24, 2002 final and executory for failure of petitioner to either Investigator Rodolfo A. Fernandez and Forester I Loida Y.
move for reconsideration or appeal the same.1âwphi1 Maglinao of the Department of Environment and Natural
Resources (DENR) CENRO of Batangas City. Based on their
It is well-settled that under the doctrine of immutability of findings, the subject lots are within the alienable and
judgment, a decision that has acquired finality becomes disposable zone under project no. 13, lc map no. 718 issued on
immutable and unalterable, and may no longer be modified in March 16, 1928. Also, in a letter dated January 18, 1999 from
any respect, even if the modification is meant to correct Robert C. Pangyarihan, Chief of the Surveys Division of the
erroneous conclusions of fact and law, and whether it be made DENR Region IV – Land Management Sector, copy furnished the
by the court that rendered it or by the Highest Court of the RTC, it is stated that the subject lots are not portion of/nor
land.29 Any act which violates this principle must immediately identical to any approved isolated survey.8
be struck down.30 This doctrine has a two-fold purpose,
namely: (a) to avoid delay in the administration of justice and During the reception of evidence, the government, through
thus, procedurally, to make orderly the discharge of judicial respondent, was given the opportunity to examine the
business; and (b) to put an end to judicial controversies, at the authenticity of the documents presented by petitioner in
risk of occasional errors, which is precisely why courts exist.31 support of its application for land registration as well as cross-
Controversies cannot drag on indefinitely. The rights and examine the latter’s witnesses. Without any objection from the
obligations of every litigant must not hang in suspense for an former, all exhibits offered by petitioner were admitted by the
indefinite period of time.32 The doctrine is not a mere RTC. Meanwhile, respondent did not present any evidence to
technicality to be easily brushed aside, but a matter of public contradict petitioner’s application.9
policy as well as a time-honored principle of procedural law.33
The RTC Ruling and Subsequent Proceedings
A close perusal of the arguments in the instant petition readily
reveal petitioner’s attempt to re-litigate a subject matter of the In a Decision10 dated February 28, 2001, the RTC granted
MAB’s Decision dated September 24, 2002 which had long petitioner’s application for the registration of the subject lots. It
become final and executory. This audacious act of petitioner found that petitioner was able to substantiate its bona fide
should not be countenanced. claim of ownership over the subject lots as it was shown, inter
alia, that: (a) petitioner purchased Lot No. 1298 from its
WHEREFORE, the petition is DENIED. The Order dated January previous owner, Pio Benito Aguado, by virtue of a Deed of
21, 2004 of the Mines Adjudication Board is hereby AFFIRMED. Absolute Sale dated March 23, 1995, while Lot No. 1315 was
purchased from its previous owner, Glenn Manipis, as per Deed
49. FIRST GAS POWER CORPORATION, PETITIONER, of Absolute Sale dated March 2, 1995; (b) petitioner and its
vs.REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE predecessors-in-interest have been in open, peaceful,
OFFICE OF THE SOLICITOR GENERAL, RESPONDENT. continuous, public, and uninterrupted possession of the subject
lots even before 1945; and (c) the subject lots had already been
Assailed in this petition for review on certiorari1 are the declared for taxation purposes under the name of petitioner
Decision2 dated December 6, 2004 and Resolution3 dated and the corresponding realty taxes have been equally paid by
August 23, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. it.11 Finding petitioner’s application to be well-founded and
67635 which annulled and set aside the Decision4 dated fully substantiated by evidence sufficient under the law, the
February 28, 2001 and Amended Order5 dated September 4, RTC directed the registration of the subject lots in favor of
2001 of the Regional Trial Court of Batangas City, Branch 3 petitioner and the issuance of the corresponding decree by the
(RTC) in Land Reg. Case No. N-1554 (LRA Rec. No. N-69624), Land Registration Authority (LRA) upon finality of its decision.12
setting aside the final decree of registration issued in favor of
petitioner First Gas Power Corporation (petitioner) over the On July 17, 2001, petitioner filed a Manifestation with Motion
parcels of land subject of this case. (manifestation with motion), manifesting to the RTC the
existence of an LRA Report dated November 24, 1998 (LRA
The Facts Report) which states that the subject lots were previously
applied for registration and were both decided under Cadastral
Through a Petition dated April 17, 1998 filed before the RTC, Case No. 37 (Cad. Case No. 37) and, in this regard, moved that
petitioner sought for the original registration of two parcels of the aforesaid decision be set aside. The said manifestation with
land situated at Brgy. Sta. Rita, Batangas City, denominated as motion reads in part:
Lot Nos. 1298 and 1315 (subject lots), both of Cad. 264 of the
114
2. LRA Record Book of Cadastral Lots on file in this Authority At the outset, it noted that while the issue of the propriety of
shows that lots 1298 and 1315, Cad. 264, Batangas Cadastre setting aside the decision in Cad. Case No. 37 was raised, the CA
were previously applied for registration of title in the Cadastral was not furnished a copy of the said decision. Thus, in a
proceedings and were both decided under Cadastral Case No. Resolution dated September 30, 2004, it directed the LRA to
37, GLRO Record No. 1696, and are subject of the following submit a copy of the same and, in relation thereto, the LRA
annotation, to quote: submitted a certification of status and certification of non-
availability of the record for the subject lots.19 The LRA further
"Lots 1298 (45-1) informed the CA that decrees of registration had already been
1315 (61-1) Pte. De Nueva doc." issued for the subject lots.20 In view of these considerations,
the CA proceeded and ruled that petitioner should have raised
xxxx in its application for registration the existence of a decision in
Cad. Case No. 37 as it is required to prove its absolute
WHEREFORE, to avoid duplication in the issuance of titles ownership over the same and that no controversy regarding the
covering the same parcels of land, the foregoing is respectfully matter of its ownership exists.21 Moreover, the CA pronounced
submitted to the Honorable Court with the recommendation that the RTC’s Amended Order which set aside the decision in
that x x x should the instant application be granted, an order be Cad. Case No. 37 was in utter disregard of the policy of judicial
issued setting aside the decision in the cadastral proceeding stability, stating further that only the CA can annul judgments
with respect to lots 1298 and 1315, Cad[.] 264, under Cad. Case of the RTC.22 Finally, the CA held that it was erroneous for the
No. 37.13 (Emphasis and underscoring supplied) RTC to direct the issuance of the corresponding certificate of
titles without determining the bearing of the previous decision
In the same pleading, petitioner maintained its prayer for the in Cad. Case No. 37 to petitioner as the applicant.23
issuance of a decree of registration in its favor.14 Subsequently,
the RTC issued an Amended Order15 dated September 4, 2001, Aggrieved, petitioner moved for reconsideration which was,
(a) setting aside any decision affecting the subject lots in Cad. however, denied in a Resolution dated August 23, 2005.24
Case No. 37 in view of petitioner’s manifestation and motion Hence, this petition.
and upon the LRA’s recommendation; and (b) reiterating the
issuance of the corresponding decree of registration in favor of The Issue Before the Court
petitioner due to the finality of the RTC Decision, to wit:
The essential issue in this case is whether or not the CA erred in
In view of the Manifestation and Motion filed by the applicant annulling and setting aside the RTC Decision and Amended
thru counsel and upon recommendation of the Land Order as well as the final decree of registration issued in favor
Registration Authority in its Report dated November 24, 1998 of petitioner over the subject lots.
together with the letter dated June 18, 1999 from Robert C.
Pangyarihan, Chief Survey[s] Division, DENR, Region IV, Land The Court’s Ruling
Management Sector, stating that Lots 1298 and 1315 are not
portion of/nor identical to any approved isolated survey, this The petition is bereft of merit.
Court hereby sets aside any decision in the cadastral
proceedings for Lots 1298 and 1315, Cad. 264, under Case No. It is a long-standing rule that an applicant who seeks to have a
37, and hereby reiterates that the Land Registration Authority land registered in his name has the burden of proving that he is
may now issue the corresponding decree of registration and its owner in fee simple, even though there is no opposition
certificate of title as stated in the Decision dated February 28, thereto. As held in Republic v. Lee:25
2001 which had attained finality. This amends the Order dated
August 6, 2001. The most basic rule in land registration cases is that "no person
is entitled to have land registered under the Cadastral or
SO ORDERED.16 (Emphases and underscoring supplied) Torrens system unless he is the owner in fee simple of the
same, even though there is no opposition presented against
Claiming that the RTC’s Amended Order was tainted with grave such registration by third persons. x x x In order that the
abuse of discretion, respondent filed a petition for certiorari petitioner for the registration of his land shall be permitted to
(certiorari petition) before the CA which was initially denied have the same registered, and to have the benefit resulting
due course on November 26, 2001. Upon reconsideration, the from the certificate of title, finally, issued, the burden is upon
CA admitted respondent’s certiorari petition and directed him to show that he is the real and absolute owner, in fee
petitioner to file its comment thereto. The parties thereafter simple."26 (Citation omitted)
filed their respective memoranda.17
In this case, records disclose that petitioner itself manifested
The CA Ruling during the proceedings before the RTC that there subsists a
decision in a previous cadastral case, i.e., Cad. Case No. 37,
In a Decision18 dated December 6, 2004, the CA granted which covers the same lots it applied for registration. Petitioner
respondent’s certiorari petition and thereby, annulled and set even posits in the present petition that it was apprised of the
aside the RTC Decision and Amended Order as well as the final existence of the foregoing decision even before the rendition of
decree of registration issued in favor of petitioner over the the RTC Decision and Amended Order through the LRA Report
subject lots.1âwphi1 dated as early as November 24, 1998 which, as above-quoted,
states that the subject lots "were previously applied for
registration of title in the [c]adastral proceedings and were
115
both decided under [Cad. Case No. 37, GLRO Record No. 1969, RTC to set aside the ruling of a co-equal and coordinate court.
and are subject to the following annotation x x x: ‘Lots 1298 Based on these reasons, the Court is therefore constrained to
(45-1) [and] 1315 (61-1) Pte. Nueva doc.’"27 Since it had been sustain the nullification of the RTC Decision and Amended
duly notified of an existing decision which binds over the Order as well as the final decree of registration issued in favor
subject lots, it was incumbent upon petitioner to prove that the of petitioner. Notably, this course of action is without prejudice
said decision would not affect its claimed status as owner of the to the re-filing of another application for registration wherein
subject lots in fee simple. petitioner can prove, among others, that the decision in Cad.
Case No. 37 does not affect its title to the subject lots.
To note, the fact that the RTC did not order petitioner to Petitioner may also choose to pursue any other remedy
address the matter or that it did not properly determine the available to it under the law.
effects of the existing decision to petitioner’s application does
not justify the latter’s entitlement to have the subject lots In view of the foregoing, the Court deems it unnecessary to
registered in its name. Neither can the recommendation of the delve into the other ancillary issues raised before it.
LRA to have the case set aside be perceived as an ample
justification for the RTC’s dispositions since this action is WHEREFORE, the petition is DENIED. Accordingly, the Decision
precluded by the doctrine of judicial stability as will be dated December 6, 2004 and the Resolution dated August 23,
discussed below. These missteps just magnify the patent and 2005 of the Court of Appeals in CA-G.R. SP No. 67635 are
gross errors of the RTC in these proceedings. hereby AFFIRMED.
Further, as the CA correctly pointed out, land registration 50. BANCO FILIPINO SAVINGS AND MORTGAGE BANK,
proceedings are in rem in nature and, hence, by virtue of the Petitioner, vs.TALA REALTY SERVICES CORPORATION, PEDRO
publication requirement, all claimants and occupants of the B. AGUIRRE, REMEDIOS A. DUPASQUIER, PILAR D. ONGKING,
subject property are deemed to be notified of the existence of ELIZABETH H. PALMA, DOLLY W. LIM RUBENCITO M. DEL
a cadastral case involving the subject lots.28 In this regard, MUNDO, ADD INTERNATIONAL SERVICES, INCORPORATED,
petitioner cannot, therefore, take refuge on the lack of any and NANCY L. TY, Respondents.
personal knowledge on its part previous to its application. Case
law dictates that a cadastral proceeding is one in rem and binds x-----------------------x
the whole world.29 Under this doctrine, parties are precluded
from re-litigating the same issues already determined by final G.R. No. 181933
judgment.30
NANCY L. TY, Petitioner, vs.BANCO FILIPINO SAVINGS AND
Moreover, as amply addressed by the CA, the RTC’s Amended MORTGAGE BANK, Respondent.
Order was issued in violation of the doctrine of judicial stability.
This doctrine states that the judgment of a court of competent x-----------------------x
jurisdiction may not be interfered with by any court of
concurrent jurisdiction.31 The rationale for the same is founded G.R. No. 187551
on the concept of jurisdiction – verily, a court that acquires
jurisdiction over the case and renders judgment therein has BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Petitioner,
jurisdiction over its judgment, to the exclusion of all other vs.COURT OF APPEALS, TALA REALTY SERVICES
coordinate courts, for its execution and over all its incidents, CORPORATION, NANCY L. TY, PEDRO B. AGUIRRE, REMEDIOS
and to control, in furtherance of justice, the conduct of A. DUPASQUIER, PILAR D. ONGKING, ELIZABETH H. PALMA,
ministerial officers acting in connection with this judgment.32 DOLLY W. LIM, RUBENCITO M. DEL MUNDO, and ADD
Therefore, as the RTC’s Amended Order was issued in stark INTERNATIONAL SERVICES, INCORPORATED, Respondents.
contravention of this rule, the CA correctly ordered its
nullification. Assailed in there consolidated petitions for review on
certiorari1 are the separate issuances of the Court of Appeals
Finally, while petitioner points out to the fact that respondent (CA) in relation to several complaint for reconveyance filed by
belatedly filed its certiorari petition before the CA, it must be Banco Filipino Savings and Mortgage Bank (Banco Filipino).
observed that the CA had already exercised its discretion in
giving due course to the same. Jurisprudence dictates that the In particular, the petition in G.R. No. 158866 filed by Banco
strict application of the rules on filing a petition for certiorari Filipino assails the CA’s Decision2 dated June 23, 2003 in CA-
may be relaxed, among others, in the exercise of the sound G.R. SP No. 43550 which affirmed the Orders of the Regional
discretion by the judge (or the CA) as guided by all the Trial Court (RTC) of San Fernando, La Union, Branch 66 (RTC-La
attendant circumstances,33 as in this case. Union) dated November 25, 19963 and January 22, 1997,4
dismissing Banco Filipino’s complaint for reconveyance in Civil
Indeed, the Court can only commiserate with petitioner as it Case No. 4992.
has already gone through the rigors of proving its cause before
the RTC only to fall short of its ultimate objective. Yet, the Meanwhile, the petition in G.R. No. 181933 filed by Nancy L. Ty
Court’s duty to uphold the principles of law and jurisprudential (Nancy) assails the CA’s Decision5 dated June 19, 2007 and
pronouncements as herein discussed remains staunch and Resolution6 dated February 20, 2008 in CA-G.R. SP No. 78241
unyielding. Definitively, the Court cannot sanction the which affirmed the Orders of the RTC of Parañaque City, Branch
registration of the subject lots when there stands an existing 274 (RTC-Parañaque City)dated January 13, 20037 and May 16,
decision binding over the same. Neither can the Court allow the
116
2003,8 denying Nancy’s motion to dismiss Banco Filipino’s Tala Realty, Add International, and the individual defendants,
complaint for reconveyance in Civil Case No. 95-0230. with the exception of Nancy, moved29 for the dismissal of
these complaints on the common grounds of forum shopping,
Lastly, the petition in G.R. No. 187551 filed by Banco Filipino lack of cause of action, in pari delicto and the unenforceability
assails the CA’s Decision9 dated December 12, 2008 and of the trust agreement. On the other hand, Nancy separately
Resolution10 dated April3, 2009 in CA-G.R. CV No. 85159 which filed motions to dismiss30 the three complaints, raising the
affirmed the Orders of the RTC of Las Piñas City, Branch 255 grounds of lack of jurisdiction, lis pendens, lack of cause of
(RTC-Las Piñas City) dated August 31, 200411 and May 27, action as against her and prescription.
2005,12 dismissing Banco Filipino’s complaint for reconveyance
in Civil Case No. 96-0036. The Proceedings Antecedent to G.R. No. 158866
The Facts In an Order31 dated November 25, 1996, the RTC-La Union
granted the defendants’ motions to dismiss on the ground of
Sometime in 1979, in the course of the expansion of its forum shopping. Taking into consideration the various
operations, Banco Filipino found the necessity of acquiring real complaints for reconveyance filed by Banco Filipino which were
properties in order to open new branch sites. In view, however, all hinged upon the same trust agreement executed with Tala
of the restriction imposed by Sections 25(a) and 3413 of Realty, the RTC-La Union ratiocinated that the cause of action
Republic Act No. 33714 limiting a bank’s real estate as well as the evidence to be presented in the case before it are
investments to only 50% of its capital assets, Banco Filipino, the same as the cause of action and evidence in the other
through its board of directors, decided to "warehouse" several reconveyance cases, thereby falling under the prohibition
of its properties.15 against forum shopping.
Upon her behest and initiative, Nancy, together with Tomas Banco Filipino’s motion for reconsideration was denied by the
B.Aguirre (Tomas) and his brother Pedro B. Aguirre (Pedro) – all same court in an Order dated January 22, 1997,32 hence, the
major stockholders of Banco Filipino – organized and recourse to the CA via a petition for certiorari and
incorporated Tala Realty Services Corporation (Tala Realty) to mandamus,33 docketed as CA-G.R. SP No.43550.
purchase and hold the real properties owned by Banco Filipino
in trust.16 Subsequently, Tomas, upon the insistence of his In the said petition, Banco Filipino insisted that there could be
sister Remedios A. Dupasquier (Remedios), endorsed to the no forum shopping when the reconveyance cases that it filed
latter his shares in Tala Realty, which she eventually registered involved various sets of real properties found in different
in the name of her own corporation, Add International Services, locations and covered by separate contracts of sale and lease,
Inc. (Add International).17 As a result, Remedios, together with thus, giving rise to different causes of action.34
Nancy and Pedro, had control of Tala Realty: Remedios
exercised control through Add International and her nominee After due proceedings, the CA, through the assailed Decision35
Elizabeth H. Palma (Elizabeth); Nancy through her nominees dated June 23, 2003, dismissed Banco Filipino’s petition, finding
Pilar D. Ongking (Pilar), Dolly W. Lim (Dolly), and a certain that there conveyance suits filed by the latter were all based on
Cynthia E. Mesina (Cynthia);18 and Pedro through Tala Realty’s the same trust agreement with Tala Realty.1âwphi1 In this
President, Rubencito M. del Mundo (Rubencito).19 regard, the CA held that all of the said cases are anchored upon
an identical cause of action and would necessarily involve the
Banco Filipino entered into and, thereafter, proceeded to same evidence.36
implement a certain trust agreement (trust agreement) with
Tala Realty by selling to the latter some of its properties located Dissatisfied, Banco Filipino filed the instant petition for review
in various cities and provinces nationwide. In turn, Tala Realty on certiorari before the Court, docketed as G.R. No. 158866,
leased these properties to Banco Filipino.20 maintaining its stance that it did not engage in forum shopping.
In August 1992, however, Tala Realty repudiated the trust The Proceedings Antecedent to G.R. No. 181933
agreement, asserted ownership and claimed full title over the
properties, prompting Banco Filipino to institute a total of 17 In an Order37 dated January 13, 2003, the RTC-Parañaque City
complaints for the reconveyance of the said properties against denied the defendants’ motions to dismiss the complaint,
Tala Realty and Add International, as well as Nancy, Tomas, finding no concurrence of the elements of litis pendentia.38
Pedro, Remedios, Pilar, Dolly, Elizabeth, and Rubencito
(defendants) in the various RTCs where the subject properties Thus, it held that Banco Filipino committed no forum shopping
are found.21 in the filing of the reconveyance cases. The R Parañaque City
The present consolidated petitions22 stemmed from three of likewise found that the allegations in the complaint sufficiently
these reconveyance cases, in particular: (a) G.R. No. 158866 state a cause of action, and disregarded the question of in
originated from Civil Case No. 499223 which involved two paridelicto, not being a proper ground in a motion to dismiss.39
parcels of land situated in La Union;24 (b) G.R. No. 181933 was
derived from Civil Case No. 95-023025 which involved a total of The motions for reconsideration separately filed by the
12 properties located in Parañaque City;26 and (c) G.R. No. defendants were denied in the RTC-Parañaque City’s May 16,
187551 originated from Civil Case No. 96-003627 which 2003 Order.40 However, only Nancy elevated the case to the
involved one property found in Las Piñas City.28 CA via petition for certiorari,41 docketed as CA-G.R. SP No.
78241. In her petition, she ascribed grave abuse of discretion
on the part of the RTC-Parañaque City in denying her motion to
117
dismiss, insisting that Banco Filipino had only one cause of At the core of the consolidated petitions is the essential and
action and therefore, violated the rule on forum shopping when imperative question of whether the reconveyance complaints
it split a single cause of action. She also reiterated that the filed by Banco Filipino before the courts a quo can be allowed
complaint stated no cause of action as against her, and that to prosper.
Banco Filipino’s claim had already prescribed.42
The Court’s Ruling
In the assailed Decision43 dated June 19, 2007, the CA
dismissed Nancy’s petition, concurring with Banco Filipino’s At the outset, the basic facts as well as the issues raised in
posturing that while there may be similarities in the factual these petitions have already been passed upon by the Court in
antecedents of the reconveyance cases it had simultaneously its Decision55 dated April 7, 2009 in G.R. Nos. 130088, 131469,
instituted, the differences in the property locations, as well as 155171, 155201, and 166608 aswell as its more recent
in the manner by which the trusts were repudiated, gave rise to Decision56 dated June 27, 2012 in G.R. No. 188302.Pertinently,
a distinct cause of action in all the 17 reconveyance cases.44 in these cases, the Court applied the earlier case of Tala Realty
Services Corporation v. Banco Filipino Savings & Mortgage
Nancy’s motion for reconsideration was subsequently denied Bank, docketed as G.R. No. 137533,57 wherein it declared, in
by the CA in a Resolution dated February 20, 2008,45 hence, no uncertain terms, that the implied trust agreement between
the petition for review on certiorari in G.R. No. 181933, Banco Filipino and Tala Realty is "in existent and void for being
imputing error upon the CA for not finding that the allegations contrary to law." As such, Banco Filipino cannot demand the
in Banco Filipino’s complaint were insufficient to establish a reconveyance of the subject properties in the present cases;
cause of action as against her. She also maintained that Banco neither can any affirmative relief be accorded to one party
Filipino’s action had already prescribed and that the trust against the other since they have been found to have acted in
insisted upon by the latter was void due to the principle of in pari delicto,58 viz:
pari delicto, thus, no recovery can be made thereunder.
An implied trust could not have been formed between the Bank
The Proceedings Antecedent to G.R. No. 187551 and Tala as this Court has held that "where the purchase is
made in violation of an existing statute and in evasion of its
In an Order46 dated August 31, 2004, the RTC-Las Piñas City express provision, no trust can result in favor of the party who
granted the defendants’ motions to dismiss, finding that all the is guilty of the fraud." x x x.
elements of litis pendentia exist in the case before it: there was
an identity of parties in the 17reconveyance cases filed by xxxx
Banco Filipino and pending in different identity of rights or
causes of action founded on the same transaction and identity x x x The Bank cannot use the defense of nor seek enforcement
of reliefs sought, which is the recovery of its properties.47 of its alleged implied trust with Tala since its purpose was
contrary to law. As admitted by the Bank, it "warehoused" its
Banco Filipino’s motion for reconsideration was subsequently branch site holdings to Tala to enable it to pursue its expansion
denied in the RTC-Las Piñas City’s May 27, 2005 Order,48 program and purchase new branch sites including its main
hence, Banco Filipino appealed to the CA, docketed as CA-G.R. branch in Makati, and at the same time avoid the real property
CV No. 85159. holdings limit under Sections 25(a)and 34 of the General
Banking Act which it had already reached. x x x
In a Decision49 dated December 12, 2008, the CA dismissed
Banco Filipino’s appeal not on the ground of forum shopping Clearly, the Bank was well aware of the limitations on its real
but for lack of cause of action. In ruling that Banco Filipino estate holdings under the General Banking Act and that its
committed no forum shopping when it filed 17 reconveyance "ware housing agreement" with Tala was a scheme to
cases based on the same trust agreement, the CA considered circumvent the limitation. Thus, the Bank opted not to put the
the rulings of the Court in G.R. No. 130184,50 G.R. No. agreement in writing and call a spade a spade, but instead
13916651 and in G.R. No. 14470552 finding that the elements phrased its right to reconveyance of the subject property at any
of litis pendentia are not present. time as a "first preference to buy" at the "same transfer price."
This arrangement which the Bank claims to be an implied trust
Nonetheless, the CA dismissed Banco Filipino’s complaint on is contrary to law. Thus, while we find the sale and lease of the
the ground of lack of cause of action, taking into account the subject property genuine and binding upon the parties, we
Court’s Decision in G.R. No. 13753353 wherein it was cannot enforce the implied trust even assuming the parties
pronounced that the implied trust between Banco Filipino and intended to create it. x x x "The courts will not assist the pay or
Tala Realty was "in existent and void for being contrary to in achieving his improper purpose by enforcing a resultant trust
law."54 Consequently, Banco Filipino cannot demand there for him in accordance with the ‘clean hands’ doctrine." The
conveyance of its properties based on the said implied trust, Bank cannot thus demand reconveyance of the property based
effectively depriving it of any cause of action in these cases. on its alleged implied trust relationship with Tala. x x x.
Aggrieved, Banco Filipino filed before the Court its petition for xxxx
review on certiorari in G.R. No. 187551, raising the same issues
that it had priorly advanced before the appellate court. The Bank and Tala are in pari delicto, thus, no affirmative relief
should be given to one against the other. The Bank should not
The Issue Before the Court be allowed to dispute the sale of its lands to Tala nor should
Tala be allowed to further collect rent from the Bank. The clean
118
hands doctrine will not allow the creation or the use of a establish a commercial arcade for sublease to other
juridical relation such as a trust to subvert, directly or indirectly, businesses.5 She averred that MIAA failed to inform her that
the law. Neither the Bank nor Tala came to court with clean part of the leased premises is subject to an easement of public
hands; neither will obtain relief from the court as one who use6 (easement) since the same was adjacent to the Parañaque
seeks equity and justice must come to court with clean hands. River.7 As a result, she was not able to obtain a building permit
By not allowing Tala to collect from the Bank rent for the period as well as a certificate of electrical inspection from the Manila
during which the latter was arbitrarily closed, both Tala and the Electric Company, leading to her consequent failure to secure
Bank will be left where they are, each paying the price for its an electrical connection for the entire leased premises.8
deception.59 (Emphasis supplied; citations omitted)
Due to the lack of electricity, Cruz’s tenants did not pay rent;
Dictated by the principle of stare decisis et non quieta hence, she was unable to pay her own rental obligations to
movere,60 which enjoins adherence to judicial precedents, the MIAA from December 2004 onwards.9 Further, since some of
Court therefore enforces its ruling in G.R. No. 137533, as duly Cruz’s stalls were located in the easement area, the
applied in the succeeding cases, i.e., G.R. Nos. 130088, 131469, Metropolitan Manila Development Authority demolished them,
155171, 155201, and 166608; and G.R. No.188302, as the causing her to suffer actual damages in the amount of
controlling and binding doctrine in the resolution of these ₱633,408.64.10 In view of the foregoing, Cruz sent MIAA her
consolidated petitions. In view of the nullity of the trust rental computation, pegged at the amount of
agreement, Banco Filipino has no cause of action against Tala ₱629,880.02,wherein the aforesaid damages have been
Realty, thereby validating the dismissal of the former’s deducted. However, instead of accepting Cruz’s payment, MIAA
reconveyance complaints filed before the courts aquo. For sent a letter terminating the lease contract.11
these reasons, the Court denies the petitions in G.R. Nos.
158866and 187551 given that they both seek the reversal of For its part, MIAA filed a Motion to Dismiss12 (motion to
the CA’s Decision granting defendants’ motions to dismiss. On dismiss)hinged on the following grounds: (a) violation of the
the contrary, the Court grants the petition in G.R. No. 181933 certification requirement against forum shopping under Section
since it properly seeks to reverse the CA’s denial of Nancy’s 5,Rule 713 of the Rules of Court, given that the lease contract
motions to dismiss the reconveyance cases. subject of the Pasig case is the same actionable document
subject of Civil Case No. 1129918 (Manila case) which is a
WHEREFORE, the petitions in G.R. Nos. 158866 and 187551 are complaint for partial annulment of contract (complaint for
DENIED and the Court of Appeals’ Decision dated June 23, 2003 annulment of contract)also filed by Cruz before the RTC of
in CA-G.R. SP No. 43550 and the Decision dated December 12, Manila, Branch 1;14 and (b) improper venue, since in the
2008 and Resolution dated April 3, 2009 in CA-G.R. CV No. complaint for annulment of contract, as well as the
85159 are hereby verification/certification and the annexes attached there to, it is
indicated that Cruz is a resident of 506, 2nd Street, San Beda
AFFIRMED; while the petition in G.R. No. 181933 is GRANTED Subdivision, San Miguel, Manila.15
and the Court of Appeals’ Decision dated June 19, 2007 and
Resolution dated February 20, 2008 in CA-G.R. SP No. 78241 are The RTC Ruling
hereby REVERSED SET ASIDE. The complaint for reconveyance
filed by Banco Filipino Savings and Mortgage Bank before the On August 15, 2006, the RTC-Pasig City issued an Order16
courts a quo are the DISMISSED. dismissing Cruz’s complaint for breach of contract due to forum
shopping since both the Pasig and Manila cases are founded on
51. CORAZON S. CRUZ under the name and style, VILLA the same actionable document between the same parties. In
CORAZON CONDO DORMITORY, Petitioner, vs.MANILA addition, it observed that the Pasig case was not being
INTERNATIONAL AIRPORT AUTHORITY, Respondent. prosecuted by the real party-in-interest since the lessee named
in the lease contract is one Frederick Cruz and not Cruz. It did
Assailed in this petition for review on certiorari1 are the not, however, sustain MIAA’s argument on improper venue
Decision2 dated November 27, 2007 and Resolution3 dated since Cruz alleged to be a resident of San Juan, Metro Manila;
September 26, 2008 of the Court of Appeals in CA-G.R. CV No. therefore, unless proven otherwise, the complaint shall be
88308, which dismissed the appeal filed by petitioner Corazon taken on its face value.17
S. Cruz (Cruz), affirming with modification the court a quo’s
dismissal of Civil Case No. 70613 on the ground of improper Aggrieved, petitioner filed a motion for reconsideration18
venue. which was, however, denied by the RTC-Pasig City in an
Order19 dated October 2,2006.Thus, Cruz filed a notice of
The Facts appeal.20
On December 7, 2005, Cruz filed before the Regional Trial The Proceedings Before the CA
Court(RTC) of Pasig City, Branch 68 (RTC-Pasig City) a
complaint4 for breach of contract, consignation, and damages In her Appellant’s Brief,21 Cruz assigned the following errors:
(complaint for breach of contract)against respondent Manila (a) that the RTC-Pasig City erred in holding that there was
International Airport Authority (MIAA),docketed as Civil Case forum shopping, considering that the causes of action in the
No. 70613 (Pasig case). In her complaint, Cruz alleged that on complaints for breach of contract and annulment of contract
August 12, 2003, she executed a Contract of Lease (lease are separate and distinct; (b) that the RTC-Pasig City erred in
contract)with MIAA over a 1,411.98 square meter-property, ruling that Cruz is not the real party-in-interest considering that
situated at BAC 1-11,Airport Road, Pasay City, in order to Frederick Cruz merely signed the lease contract as her attorney-
119
in-fact; and(c) that the RTC-Pasig City erred in not denying granted in the decision of the court below. He cannot impugn
MIAA’s motion to dismiss since it was set for hearing more than the correctness of a judgment not appealed from by him. He
10 days from its filing.22 cannot assign such errors as are designed to have the judgment
modified. All that said appellee can do is to make a counter-
On the other hand, MIAA filed its Defendant-Appellee’s Brief23 assignment of errors or to argue on issues raised at the trial
refuting the foregoing arguments. In addition, MIAA raised only for the purpose of sustaining the judgment in his favor,
before the CA its argument on improper venue24 which had even on grounds not included in the decision of the court a quo
been previously denied by the RTC-Pasig City. nor raised in the appellant's assignment of errors or
arguments.35 (Emphasis supplied)
On November 27, 2007, the CA rendered a Decision,25
affirming with modification the RTC-Pasig City’s dismissal of the In the case at bar, the Court finds that the CA committed a
Pasig case. It held that while Cruz did not commit forum reversible error in sustaining the dismissal of the Pasig case on
shopping (since the Pasig and Manila cases involve distinct the ground of improper venue because the same was not an
causes of action and issues26) and that Cruz should be error raised by Cruz who was the appellant before it. Pursuant
considered as a real party-in-interest in the Pasig case (since to the above-mentioned principles, the CA cannot take
Frederick Cruz was merely her appointed attorney-in-fact in cognizance of MIAA’s position that the venue was improperly
connection with the execution of the lease contract27), the laid since, being the appellee, MIAA’s participation was
Pasig case remains dismissible on the ground of improper confined to the refutation of the appellant’s assignment of
venue as Cruz was bound by her judicial admission that her errors. As MIAA’s interest was limited to sustaining the RTC-
residence was actually in Manila and not in San Juan.28 Pasig City’s judgment, it cannot, without pursuing its own
appeal, deviate from the pronouncements made therein. In
Dissatisfied, Cruz moved for reconsideration29 but was denied particular, records bear out that the RTC-Pasig City, while
by the CA in a Resolution30 dated September 26, 2008.Hence, granting MIAA’s motion to dismiss, found the latter’s argument
this petition. on improper venue to be erroneous. Hence, given that the said
conclusion was not properly contested by MIAA on appeal, the
The Issue Before the Court RTC-Pasig City’s ruling on the matter should now be deemed as
conclusive. Corollary, the CA should not have taken this ground
The essential issue in this case is whether or not the CA erred in into consideration when it appreciated the case before it. By
dismissing Cruz’s appeal on the basis of improper venue. acting otherwise, it therefore committed a reversible error,
which thereby warrants the reversal of its Decision.1âwphi1
Cruz contends that the CA may only resolve errors assigned by
the appellant and, conversely, cannot rule on a distinct issue WHEREFORE, the petition is GRANTED. The Decision dated
raised by the appellee.31 In this accord, she argues that in November 27, 2007 and Resolution dated September 26, 2008
ruling on the issue of improper venue, the CA practically of the Court of Appeals in CA-G.R. CV No. 88308 are hereby SET
allowed MIAA to pursue a lost appeal, although the latter did ASIDE. Accordingly, the case is REMANDED to the Regional Trial
not file a notice of appeal within the proper reglementary Court of Pasig City, Branch 68 for further proceedings.
period nor pay the prescribed docket fees.32
52. JOSEPHINE L. OROLA, MYRNA L. OROLA, MANUEL L.
On the other hand, MIAA maintains, inter alia, that despite OROLA, MARY ANGELYN OROLA-BELARGA, MARJORIE MELBA
raising the issue on improper venue before the CA, the RTC- OROLA-CALIP, and KARENOROLA, Complainants, vs.ATTY.
Pasig City did not categorically rule on the said issue. As such, it JOSEPH ADOR RAMOS, Respondent.
claims that it could raise the foregoing ground as one of the
issues before the CA.33 For the Court’s resolution is a disbarment complaint1 filed
against respondent Atty. Joseph Ador Ramos (respondent) for
The Court’s Ruling his violation of Rule 15.03, Canon 15 (Rule 15.03) of the Code of
Professional Responsibility (Code) and Section 20(e), Rule 138
The petition is meritorious. of the Rules of Court (Rules).
Jurisprudence dictates that the appellee’s role in the appeal The Facts
process is confined only to the task of refuting the assigned
errors interposed by the appellant. Since the appellee is not the Complainants Josephine, Myrna, Manuel, (all surnamed Orola),
party who instituted the appeal and accordingly has not Mary Angelyn Orola-Belarga (Mary Angelyn), and Marjorie
complied with the procedure prescribed therefor, he merely Melba Orola-Calip (Marjorie) are the children of the late
assumes a defensive stance and his interest solely relegated to Trinidad Laserna-Orola (Trinidad), married to Emilio Q. Orola
the affirmance of the judgment appealed from. Keeping in mind (Emilio).2
that the right to appeal is essentially statutory in character, it is
highly erroneous for the appellee to either assign any error or Meanwhile, complainant Karen Orola (Karen) is the daughter of
seek any affirmative relief or modification of the lower court’s Maricar Alba-Orola (Maricar) and Antonio L. Orola (Antonio),
judgment without interposing its own appeal. As held in the the deceased brother of the above-named complainants and
case of Medida v. CA:34 the son of Emilio.3
An appellee who has not himself appealed cannot obtain from In the settlement of Trinidad’s estate, pending before the
the appellate court any affirmative relief other than the ones Regional Trial Court of Roxas City, Branch 18 (RTC) and
120
docketed as Special Proceeding No. V-3639, the parties were Rama, Jr.(Investigating Commissioner), respondent was found
represented by the following: (a) Atty. Roy M. Villa (Atty. Villa) guilty of representing conflicting interests only with respect to
as counsel for and in behalf of Josephine, Myrna, Manuel, Mary Karen as the records of the cases how that he never acted as
Angelyn, and Marjorie (Heirs of Trinidad); (b) Atty.Ely F. counsel for the other complainants. The Investigating
Azarraga, Jr. (Atty. Azarraga) as counsel for and in behalf of Commissioner observed that while respondent's withdrawal of
Maricar, Karen, and the other heirs4 of the late Antonio (Heirs appearance was with the express conformity of Maricar,
of Antonio), with respondent as collaborating counsel; and (c) respondent nonetheless failed to obtain the consent of Karen,
Atty. Aquiliana Brotarlo as counsel for and in behalf of Emilio, who was already of age and one of the Heirs of Antonio, as
the initially appointed administrator of Trinidad’s estate. In the mandated under Rule 15.03 of the Code.20
course of the proceedings, the Heirs of Trinidad and the Heirs
of Antonio moved for the removal of Emilio as administrator On the other hand, the Investigating Commissioner held that
and, in his stead, sought the appointment of the latter’s son, there was no violation of Section 20, Rule 138 of the Rules as
Manuel Orola, which the RTC granted in an Order5 dated complainants themselves admitted that respondent "did not
September 20, 2007 (RTC Order). Subsequently, or on October acquire confidential information from his former client nor did
10, 2007, respondent filed an Entry of Appearance as he use against the latter any knowledge obtained in the course
collaborating counsel for Emilio in the same case and moved for of his previous employment."21 Considering that it was
the reconsideration of the RTC Order.6 respondent's first offense, the Investigating Commissioner
found the imposition of disbarment too harsh a penalty and,
Due to the respondent’s new engagement, complainants filed instead, recommended that he be severely reprimanded for his
the instant disbarment complaint before the Integrated Bar of act with warning that a repetition of the same or similar acts
the Philippines(IBP), claiming that he violated: (a) Rule 15.03 of would be dealt with more severely.22
the Code, as he undertook to represent conflicting interests in
the subject case;7 and (b) Section 20(e), Rule 138 of the Rules, The IBP Board of Governors adopted and approved with
as he breached the trust and confidence reposed upon him by modification the aforementioned report in its Resolution No.
his clients, the Heirs of Antonio.8 Complainants further claimed XVIII-2008-64123 dated December 11, 2008 (Resolution No.
that while Maricar, the surviving spouse of Antonio and the XVIII-2008-641), finding the same to be fully supported by the
mother of Karen, consented to the withdrawal of respondent’s evidence on record and the applicable laws and rules but
appearance, the same was obtained only on October 18, 2007, imposed against respondent the penalty of six (6) months
or after he had already entered his appearance for Emilio on suspension from the practice of law.
October 10, 2007.9 In this accord, respondent failed to disclose
such fact to all the affected heirs and, as such, was not able to Respondent's motion for reconsideration24 was denied in IBP
obtain their written consent as required under the Rules.10 Resolution No. XX-2013-1725 dated January 3, 2013.
For his part, respondent refuted the abovementioned charges, The Issue Before the Court
contending that he never appeared as counsel for the Heirs of
Trinidad or for the Heirs of Antonio. He pointed out that the The sole issue in this case is whether or not respondent is guilty
records of the case readily show that the Heirs of Trinidad were of representing conflicting interests in violation of Rule 15.03 of
represented by Atty. Villa, while the Heirs of Antonio were the Code.
exclusively represented by Atty. Azarraga.11 He averred that he
only accommodated Maricar's request to temporarily appear The Court’s Ruling
on her behalf as their counsel of record could not attend the
scheduled June16 and July 14, 2006 hearings and that his The Court concurs with the IBP’s finding that respondent
appearances thereat were free of charge.12 In fact, he obtained violated Rule 15.03 of the Code, but reduced the recommended
Maricar’s permission for him to withdraw from the case as no period of suspension to three (3) months.
further communications transpired after these two hearings.
Likewise, he consulted Maricar before he undertook to Rule 15.03 of the Code reads:
represent Emilio in the same case.13 He added that he had no
knowledge of the fact that the late Antonio had other heirs and, CANON 15 – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS
in this vein, asserted that no information was disclosed to him AND LOYALTY IN ALL HIS DEALINGS ANDTRANSACTIONS WITH
by Maricar or their counsel of record at any instance.14 Finally, HIS CLIENTS.
he clarified that his representation for Emilio in the subject case
was more of a mediator, rather than a litigator,15 and that Rule 15.03 - A lawyer shall not represent conflicting interests
since no settlement was forged between the parties, he except by written consent of all concerned given after a full
formally withdrew his appearance on December 6, 2007.16 In disclosure of the facts. (Emphasis supplied)
support of his assertions, respondent submitted the affidavits
of Maricar17 and Atty. Azarraga18 relative to his limited Under the afore-cited rule, it is explicit that a lawyer is
appearance and his consultation with Maricar prior to his prohibited from representing new clients whose interests
engagement as counsel for Emilio. oppose those of a former client in any manner, whether or not
they are parties in the same action or on totally unrelated
The Recommendation and Action of the IBP cases. The prohibition is founded on the principles of public
policy and good taste.26 It behooves lawyers not only to keep
In the Report and Recommendation19 dated September 15, inviolate the client's confidence, but also to avoid the
2008submitted by IBP Investigating Commissioner Jose I. De La appearance of treachery and double-dealing for only then can
121
litigants be encouraged to entrust their secrets to their lawyers, if the lawyer has acted in good faith and with no intention to
which is of paramount importance in the administration of represent conflicting interests.31
justice.27 In Hornilla v. Salunat28 (Hornilla), the Court
explained the concept of conflict of interest, to wit: Neither can respondent's asseveration that his engagement by
Emilio was more of a mediator than a litigator and for the
There is conflict of interest when a lawyer represents purpose of forging a settlement among the family members
inconsistent interests of two or more opposing parties. The test render the rule inoperative. In fact, even on that assertion, his
is" whether or not in behalf of one client, it is the lawyer's duty conduct is likewise improper since Rule 15.04,32 Canon 15 of
to fight for an issue or claim, but it is his duty to oppose it for the Code similarly requires the lawyer to obtain the written
the other client. In brief, if he argues for one client, this consent of all concerned before he may act as mediator,
argument will be opposed by him when he argues for the other conciliator or arbitrator in settling disputes. Irrefragably,
client." This rule covers not only cases in which confidential respondent failed in this respect as the records show that
communications have been confided, but also those in which respondent was remiss in his duty to make a full disclosure of
no confidence has been bestowed or will be used. Also, there is his impending engagement as Emilio’s counsel to all the Heirs
conflict of interests if the acceptance of the new retainer will of Antonio – particularly, Karen – and equally secure their
require the attorney to perform an act which will injuriously express written consent before consummating the same.
affect his first client in any matter in which he represents him Besides, it must be pointed out that a lawyer who acts as such
and also whether he will be called upon in his new relation to in settling a dispute cannot represent any of the parties to it.33
use against his first client any knowledge acquired through their Accordingly, for respondent’s violation of the aforestated rules,
connection. Another test of the inconsistency of interests is disciplinary sanction is warranted.
whether the acceptance of a new relation will prevent an
attorney from the full discharge of his duty of undivided fidelity In this case, the penalty recommended by the Investigating
and loyalty to his client or invite suspicion of unfaithfulness or Commissioner was increased from severe reprimand to a
double dealing in the performance thereof.29 (Emphasis suspension of six(6) months by the IBP Board of Governors in its
supplied; citations omitted) Resolution No. XVIII-2008-641. However, the Court observes
that the said resolution is bereft of any explanation showing the
It must, however, be noted that a lawyer’s immutable duty to a bases of the IBP Board of Governors’ modification; as such, it
former client does not cover transactions that occurred beyond contravened Section 12(a), Rule 139-B of the Rules which
the lawyer’s employment with the client. The intent of the law specifically mandates that "the decision of the Board upon such
is to impose upon the lawyer the duty to protect the client’s review shall be in writing and shall clearly and distinctly state
interests only on matters that he previously handled for the the facts and the reasons on which it is based."34 Verily, the
former client and not for matters that arose after the lawyer- Court looks with disfavor the change in the recommended
client relationship has terminated.30 penalty without any ample justification therefor. To this end,
the Court is wont to remind the IBP Board of Governors of the
Applying the above-stated principles, the Court agrees with the importance of the requirement to announce in plain terms its
IBP’s finding that respondent represented conflicting interests legal reasoning, since the requirement that its decision in
and, perforce, must be held administratively liable therefor. disciplinary proceedings must state the facts and the reasons
on which the same is based is akin to what is required of courts
Records reveal that respondent was the collaborating counsel in promulgating their decisions. The reasons for handing down
not only for Maricar as claimed by him, but for all the Heirs of a penalty occupy no lesser station than any other portion of the
Antonio in Special Proceeding No. V-3639. In the course ratio.35
thereof, the Heirs of Trinidad and the Heirs of Antonio
succeeded in removing Emilio as administrator for having In the foregoing light, the Court finds the penalty of suspension
committed acts prejudicial to their interests. Hence, when from the practice of law for a period of three (3) months to be
respondent proceeded to represent Emilio for the purpose of more appropriate taking into consideration the following
seeking his reinstatement as administrator in the same case, he factors:
clearly worked against the very interest of the Heirs of Antonio
– particularly, Karen – in violation of the above-stated rule. first, respondent is a first time offender; second, it is
undisputed that respondent merely accommodated Maricar's
Respondent's justification that no confidential information was request out of gratis to temporarily represent her only during
relayed to him cannot fully exculpate him for the charges the June 16 and July 14, 2006 hearings due to her lawyer's
against him since the rule on conflict of interests, as enunciated unavailability; third, it is likewise undisputed that respondent
in had no knowledge that the late Antonio had any other heirs
aside from Maricar whose consent he actually acquired (albeit
Hornilla, provides an absolute prohibition from representation shortly after his first appearance as counsel for and in behalf of
with respect to opposing parties in the same case.1âwphi1 In Emilio), hence, it can be said that he acted in good faith; and
other words, a lawyer cannot change his representation from fourth, complainants admit that respondent did not acquire
one party to the latter’s opponent in the same case. That confidential information from the Heirs of Antonio nor did he
respondent’s previous appearances for and in behalf of the use against them any knowledge obtained in the course of his
Heirs of Antonio was only a friendly accommodation cannot previous employment, hence, the said heirs were not in any
equally be given any credence since the aforesaid rule holds manner prejudiced by his subsequent engagement with Emilio.
even if the inconsistency is remote or merely probable or even Notably, in Ilusorio-Bildner v. Lakin, Jr.,36 the Court similarly
imposed the penalty of suspension from the practice of law for
122
a period of three months to the counsel therein who Unicapital, through its real estate development arm, URI. In
represented parties whose interests are hostile to his other view of the foregoing, the loan and mortgage over the subject
clients in another case. property was later on modified into an Option to Buy Real
Property14 and, after further negotiations, Dela Cruz decided
WHEREFORE, respondent Atty. Joseph Ador Ramos is hereby to sell the same to Unicapital and PBI. For this purpose, Dela
held GUILTY of representing conflicting interests in violation of Cruz appointed Consing, Jr. as her attorney-in-fact.15
Rule 15.03,Canon 15 of the Code of Professional Responsibility.
Accordingly, he is hereby SUSPENDED from the practice of law Eventually, Unicapital, through URI, purchased one-half of the
for a period of three (3) months, with WARNING that a subject property for a consideration of ₱21,221,500.00 (against
repetition of the same or similar acts in the future will be dealt which Dela Cruz’s outstanding loan obligations were first
with more severely. offset), while PBI bought the remaining half for the price of
₱21,047,000.00.16 In this relation, Dela Cruz caused TCT No. T-
53. UNICAPITAL, INC., UNICAPITAL REALTY, INC., and JAIME J. 687599 to be divided into three separate titles as follows: (a)
MARTINEZ, Petitioners, vs.RAFAEL JOSE CONSING, JR., and TCT No. T-851861 for URI;17 (b) TCT No. T-851862 for PBI;18
THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF and (c)TCT No. T-51863 which was designated as a road lot.19
PASIG CITY, BRANCH 168, Respondents. However, even before URI and PBI were able to have the titles
transferred to their names, Juanito Tan Teng (Teng) and Po
x-----------------------x Willie Yu (Yu) informed Unicapital that they are the lawful
owners of the subject property as evidenced by TCT No.T-
G.R. No. 192073 114708;20 that they did not sell the subject property; and that
Dela Cruz’s title, i.e., TCT No. T-687599, thereto was a mere
RAFAEL JOSE CONSING, JR., Petitioner, vs.HON. MARISSA forgery.21 Prompted by Teng and Yu’s assertions, PBI
MACARAIG-GUILLEN, in her capacity as the Presiding Judge of conducted further investigations on the subject property which
the Regional Trial Court of Makati City, Branch 60 and later revealed that Dela Cruz's title was actually of dubious
UNICAPITAL, INC., Respondents. origin. Based on this finding, PBI and Unicapital sent separate
demand letters22 to Dela Cruz and Consing, Jr., seeking the
Before the Court are consolidated petitions for review on return of the purchase price they had paid for the subject
certiorari1 assailing separate issuances of the Court of Appeals property.
(CA) as follows:
From the above-stated incidents stemmed the present
(a) The petitions in G.R. Nos. 175277 and 175285 filed by controversies as detailed hereunder.
Unicapital, Inc., (Unicapital), Unicapital Realty, Inc. (URI), and
Unicapital Director and Treasurer Jaime J. Martirez The Proceedings Antecedent to G.R. Nos. 175277 & 175285
(Martirez)assail the CA’s Joint Decision2 dated October 20,
2005 and Resolution3 dated October 25, 2006 in CA-G.R. SP On May 3, 1999, Consing, Jr. filed a complaint, denominated as
Nos. 64019and 64451 which affirmed the Resolution4 dated a Complex Action for Declaratory Relief23 and later amended
September 14,1999 and Order5 dated February 15, 2001 of the to Complex Action for Injunctive Relief24 (Consing, Jr.’s
Regional Trial Court (RTC) of Pasig City, Branch 68 (RTC-Pasig complaint) before the RTC-Pasig City against Unicapital, URI,
City) in SCA No. 1759, upholding the denial of their motion to PBI, Martirez, PBI General Manager Mariano Martinez
dismiss; and (Martinez), Dela Cruz and Does 1-20, docketed as SCA No. 1759.
In his complaint, Consing, Jr. claimed that the incessant
(b) The petition in G.R. No. 192073 filed by Rafael Jose Consing, demands/recovery efforts made upon him by Unicapital and
Jr. (Consing, Jr.) assails the CA’s Decision6 dated September 30, PBI to return to them the purchase price they had paid for the
2009 and Resolution7 dated April 28, 2010 inCA-G.R. SP No. subject property constituted harassment and oppression which
101355 which affirmed the Orders dated July16, 20078 and severely affected his personal and professional life.25 He also
September 4, 20079 of the RTC of Makati City, Branch 60 (RTC- averred that he was coerced to commit a violation of Batas
Makati City) in Civil Case No. 99-1418,upholding the denial of Pambansa Blg. 2226 as Unicapital and PBI, over threats of filing
his motion for consolidation. acase against him, kept on forcing him to issue a post-dated
check in the amount sought to be recovered, notwithstanding
The Facts their knowledge that he had no funds for the same.27 He
further alleged that Unicapital and URI required him to sign
In 1997, Consing, Jr., an investment banker, and his mother, blank deeds of sale and transfers without cancelling the old one
Cecilia Dela Cruz (Dela Cruz), obtained an ₱18,000,000.00 loan sin violation of the laws on land registration and real estate
from Unicapital,₱12,000,000.00 of which was acquired on July development.28 Likewise, Consing, Jr. added that Unicapital
24, 1997 and the remaining₱6,000,000.00 on August 1, 1997. and PBI’s representatives were" speaking of him in a manner
The said loan was secured by Promissory Notes10 and a Real that was inappropriate and libelous,"29 and that some John
Estate Mortgage11 over a 42,443 square meter-parcel of land Does "deliberately engaged in a fraudulent scheme to
located at Imus, Cavite, registered in the name of Dela Cruz as compromise Consing, Jr.’s honor, integrity and fortune x x x
per Transfer Certificate of Title (TCT) No. T-687599 (subject consisting of falsifying or causing to be falsified, or attempting
property).12 Prior to these transactions, Plus Builders, Inc. to present as falsified certain transfers of Land Titles and Deeds
(PBI), a real estate company, was already interested to develop for profit,"30 classifying the foregoing as ultra vires acts which
the subject property into a residential subdivision.13 In this should warrant sanctions under the corporation law, Revised
regard, PBI entered into a joint venture agreement with Securities Act and related laws.31 Accordingly, Consing, Jr.
123
prayed that: (a) he be declared as a mere agent of Dela Cruz, rejoinder of September 9, 1999regarding the supposed filing of
and as such, devoid of any obligation to Unicapital, URI, and PBI an identical case in Makati City,"37 i.e., Civil Case No. 99-1418.
for the transactions entered into concerning the subject Unperturbed, Unicapital and PBI, et al. moved for
property; (b) Unicapital, URI, and PBI be enjoined from reconsideration therefrom which was, however, denied by the
harassing or coercing him, and from speaking about him in a RTC-Pasig City in an Order38 dated February 15, 2001 for lack
derogatory fashion; and (c) Unicapital, URI, and PBI pay him of merit. Aggrieved, they elevated the denial of their motions to
actual and consequential damages in the amount of dismiss before the CA via a petition for certiorari and
₱2,000,000.00, moral damages of at least ₱1,000,000.00, prohibition,39 docketed as CA-G.R. SP Nos. 64019 and 64451.
exemplary damages of ₱1,000,000.00, all per month, reckoned
from May 1, 1999 and until the controversy is resolved, and On October 20, 2005, the CA rendered a Joint Decision40
attorney's fees and costs of suit.32 holding that no grave abuse of discretion was committed by the
RTC-Pasig City in refusing to dismiss Consing, Jr.'s
For their part, Unicapital, URI, and Martirez (Unicapital, et al.) complaint.1âwphi1 At the outset, it ruled that while the
filed separate Motions to Dismiss33 Consing, Jr.’s complaint payment of the prescribed docket fee is a jurisdictional
(Unicapital, et al.’s motion to dismiss) on the ground of failure requirement, its non-payment will not automatically cause the
to state a cause of action, considering that: (a) no document dismissal of the case. In this regard, it considered that should
was attached against which Consing, Jr. supposedly derived his there be any deficiency in the payment of such fees, the same
right and against which his rights may be as certained; (b) the shall constitute a lien on the judgment award.41 It also refused
demands to pay against Consing, Jr. and for him to tender post- to dismiss the complaint for lack of proper verification upon a
dated checks to cover the amount due were well within the finding that the copy of the amended complaint submitted to
rights of Unicapital as an unpaid creditor, as Consing, Jr. had the RTC-Pasig City was properly notarized.42 Moreover, it
already admitted his dealings with them; (c) the utterances upheld the order of the RTC-Pasig City for Unicapital and PBI, et
purportedly constituting libel were not set out in the complaint; al. to submit their comment due to the alleged existence of a
and (d) the laws supposedly violated were not properly similar case filed before the RTC-Makati City.43
identified. Moreover, Unicapital, et al. posited that the RTC-
PasigCity did not acquire jurisdiction over the case given that Anent the substantive issues of the case, the CA concurred with
Consing, Jr. failed to pay the proper amount of docket fees. In the RTC-Pasig City that Consing Jr.'s complaint states a cause of
the same vein, they maintained that the RTC-Pasig City had no action. It found that Unicapital and PBI, et al.’s purportedly
jurisdiction over their supposed violations of the Corporation abusive manner in enforcing their claims against Consing, Jr.
Code and Revised Securities Act, which, discounting its merits, was properly constitutive of a cause of action as the same, if
should have been supposedly lodged with the Securities and sufficiently proven, would have subjected him to "defamation
Exchange Commission. Finally, they pointed out that Consing, of his name in business circles, the threats and coercion against
Jr.’s complaint suffers from a defective verification and, thus, him to reimburse the purchase price, fraud and falsification and
dismissible.34 breach of fiduciary obligation." It also found that the fact that
Consing Jr.'s complaint contains "nebulous" allegations will not
Similar to Unicapital et al.’s course of action, PBI and its General warrant its dismissal as any vagueness therein can be clarified
Manager, Martinez (Unicapital and PBI, et al.), sought the through a motion for a bill of particulars."44 Furthermore, it
dismissal of Consing, Jr.’s complaint on the ground that it does noted that Consing, Jr. does not seek to recover his claims
not state a cause of action. They also denied having singled out against any particular provision of the corporation code or the
Consing, Jr. because their collection efforts were directed at securities act but against the actions of Unicapital and PBI, et
both Consing, Jr. and Dela Cruz, which should be deemed as al.; hence, Consing, Jr.’s complaint was principally one for
valid and, therefore, should not be restrained.35 damages over which the RTC has jurisdiction, and, in turn, there
lies no misjoinder of causes of action.45
On September 14, 1999, the RTC-Pasig City issued a
Resolution36 denying the above mentioned motions to dismiss, Dissatisfied, only Unicapital, et al. sought reconsideration
holding that Consing, Jr.’s complaint sufficiently stated a cause therefrom but the same was denied by the CA in a Resolution46
of action for tort and damages pursuant to Article 19 of the Civil dated October 25,2006. Hence, the present petitions for review
Code. It ruled that where there is abusive behavior, a on certiorari in G.R. Nos.175277 and 175285.
complainant, like Consing, Jr., has the right to seek refuge from
the courts. It also noted that the elements of libel in a criminal The Proceedings Antecedent to G.R. No. 192073
case are not the same as those for a civil action founded on the
provisions of the Civil Code, and therefore, necessitates a On the other hand, on August 4, 1999, Unicapital filed a
different treatment. It equally refused to dismiss the action on complaint47 for sum of money with damages against Consing,
the ground of non-payment of docket fees, despite Consing, Jr. and Dela Cruz before the RTC-Makati City, docketed as Civil
Jr.’s escalated claims for damages therein, as jurisdiction was Case No. 99-1418, seeking to recover (a) the amount of
already vested in it upon the filing of the original complaint. ₱42,195,397.16, representing the value of their indebtedness
Moreover, it resolved to apply the liberal construction rule as based on the Promissory Notes (subject promissory notes) plus
regards the subject complaint’s verification and certification, interests; (b) ₱5,000,000.00 as exemplary damages; (c)
despite its improper wording, considering further that such attorney's fees; and (d) costs of suit.48
defect was not raised at the first opportunity. Consequently, it
ordered Unicapital and PBI, et al. to file their Answer and, in PBI also filed a complaint for damages and attachment against
addition, to submit" any Comment or Reaction within five (5) Consing, Jr. and Dela Cruz before the RTC of Manila, Branch 12,
days from receipt hereof on the allegations of Consing, Jr. in his docketed as Civil Case No. 99-95381, also predicated on the
124
same set of facts as above narrated.49 In its complaint, PBI 175285 (Pasig case), these cases were ordered consolidated per
prayed that it be allowed to recover the following: (a) the Court's Resolution59 dated November 17, 2010. On March
₱13,369,641.79, representing the total amount of installment 9, 2011, the Court resolved to give due course to the instant
payments made as actual damages plus interests; (b) petitions and required the parties to submit their respective
₱200,000.00 as exemplary damages; (c) ₱200,000.00 as moral memoranda.60
damages; (d) attorney's fees; and (e) costs of suit.50 Civil Case
No. 99-95381 was subsequently consolidated with SCA No. The Issues Before the Court
1759 pending before the RTC-Pasig City.51
The essential issues in these cases are as follows: (a) in G.R.
For his part, Consing, Jr. filed a Motion to Dismiss Civil Case No. Nos.175277 and 175285, whether or not the CA erred in
99-1418 which was, however, denied by the RTC-Makati City in upholding the RTC-Pasig City’s denial of Unicapital, et al.’s
an Order52 dated November 16, 1999. Thereafter, he filed a motion to dismiss; and (b) in G.R. No. 192073, whether or not
Motion for Consolidation53 (motion for consolidation) of Civil the CA erred in upholding the RTC-Makati City’s denial of
Case No. 99-1418 with his own initiated SCA No. 1759 pending Consing, Jr.’s motion for consolidation.
before the RTC-Pasig City.
The Court’s Ruling
In an Order54 dated July 16, 2007, the RTC-Makati City
dismissed Consing, Jr.’s motion for consolidation and, in so A. Propriety of the denial of
doing, ruled that the cases sought to be consolidated had no Unicapital, et al.’s motion to
identity of rights or causes of action and the reliefs sought for dismiss and ancillary issues.
by Consing, Jr. from the RTC-Pasig City will not bar Unicapital
from pursuing its money claims against him. Moreover, the A cause of action is defined as the act or omission by which a
RTC-Makati City noted that Consing, Jr. filed his motion only as party violates a right of another.61 It is well-settled that the
an after thought as it was made after the mediation existence of a cause of action is determined by the allegations
proceedings between him and Unicapital failed. Consing, Jr.'s in the complaint.62 In this relation, a complaint is said to
motion for reconsideration therefrom was denied in an sufficiently assert a cause of action if, admitting what appears
Order55 dated September 4, 2007. Hence, he filed a petition for solely on its face to be correct, the plaintiff would be entitled to
certiorari before the CA, docketed as CA-G.R. SP No. 101355, the relief prayed for.63 Thus, if the allegations furnish adequate
ascribing grave abuse of discretion on the part of the RTC- basis by which the complaint can be maintained, then the same
Makati City in refusing to consolidate Civil Case No. 99-1418 should not be dismissed, regardless of the defenses that may
with SCA No. 1759 in Pasig City. be averred by the defendants.64 As edified in the case of
Pioneer Concrete Philippines, Inc. v. Todaro,65 citing Hongkong
On September 30, 2009, the CA rendered a Decision56 and Shanghai Banking Corporation, Limited. v. Catalan66
sustaining the Orders dated July 16, 2007 and September 4, (HSBC):
2007 of the RTC-Makati City which denied Consing, Jr.’s motion
for consolidation. It held that consolidation is a matter of sound The elementary test for failure to state a cause of action is
discretion on the part of the trial court which could be gleaned whether the complaint alleges facts which if true would justify
from the use of the word "may" in Section 1, Rule38 of the the relief demanded. Stated otherwise, may the court render a
Rules of Court. Considering that preliminary steps (such as valid judgment upon the facts alleged therein? The inquiry is
mediation) have already been undertaken by the parties in Civil into the sufficiency, not the veracity of the material allegations.
Case No.99-1418 pending before the RTC-Makati City, its If the allegations in the complaint furnish sufficient basis on
consolidation with SCA No. 1759 pending before the RTC-Pasig which it can be maintained, it should not be dismissed
City "would merely result in complications in the work of the regardless of the defense that may be presented by the
latter court or squander the resources or remedies already defendants.67 (Emphasis supplied)
utilized in the Makati case."57 Moreover, it noted that the
records of the consolidated Pasig and Manila cases, i.e., SCA Stated otherwise, the resolution on this matter should stem
No. 1759 and Civil Case No. 99-95381, respectively, had already from an analysis on whether or not the complaint is able to
been elevated to the Court, that joint proceedings have been convey a cause of action; and not that the complainant has no
conducted in those cases and that the pre-trial therein had cause of action. Lest it be misunderstood, failure to state a
been terminated as early as October 23, 2007.Therefore, due to cause of action is properly a ground for a motion to dismiss
these reasons, the consolidation prayed for would be under Section 1(g), Rule 1668 of the Rules of Court(Rules),
impracticable and would only cause a procedural faux pas. while the latter is not a ground for dismissal under the same
Undaunted, Consing, Jr. filed a motion for reconsideration rule.
therefrom but was denied by the CA in a Resolution58 dated
April 28, 2010. Hence, the present petition for review on In this case, the Court finds that Consing, Jr.’s complaint in SCA
certiorari in G.R. No. 192073. No.1759 properly states a cause of action since the allegations
there insufficiently bear out a case for damages under Articles
The Proceedings Before the Court 19 and 26 of the Civil Code.
After the filing of the foregoing cases, the parties were required Records disclose that Consing, Jr.’s complaint contains
to file their respective comments and replies. Further, allegations which aim to demonstrate the abusive manner in
considering that G.R. No.192073 (Makati case) involves the which Unicapital and PBI, et al. enforced their demands against
same parties and set of facts with those in G.R. Nos. 175277 & him. Among others, the complaint states that Consing, Jr. "has
125
constantly been harassed and bothered by Unicapital and PBI, humiliated, in short, if human personality is not exalted - then
et al.; x x x besieged by phone calls from them; x x x has had the laws are indeed defective. Thus, under this article, the
constant meetings with them variously, and on a continuing rights of persons are amply protected, and damages are
basis, such that he is unable to attend to his work as an provided for violations of a person's dignity, personality, privacy
investment banker."69 In the same pleading, he also alleged and peace of mind.74
that Unicapital and PBI, et al.’s act of "demanding a postdated
check knowing fully well that he does not have the necessary To add, a violation of Article 26 of the Civil Code may also lead
funds to cover the same, nor is he expecting to have them is to the payment of moral damages under Article 2219(10)75 of
equivalent to asking him to commit a crime under unlawful the Civil Code.
coercive force."70 Accordingly, these specific allegations, if
hypothetically admitted, may result into the recovery of Records reveal that Consing, Jr., in his complaint, alleged that
damages pursuant to Article 19 of the Civil Code which states "he has come to discover that Unicapital and PBI, et al. are
that "every person must, in the exercise of his rights and in the speaking of him in a manner that is inappropriate and libelous;
performance of his duties, act with justice, give everyone his and that they have spread their virulent version of events in the
due, and observe honesty and good faith." As explained in the business and financial community such that he has suffered and
HSBC case: continues to suffer injury upon his good name and reputation
which, after all, is the most sacred and valuable wealth he
When a right is exercised in a manner which does not conform possesses - especially considering that he is an investment
with the norms enshrined in Article 19 and results in damage to banker."76 In similar regard, the hypothetical admission of
another, a legal wrong is thereby committed for which the these allegations may result into the recovery of damages
wrongdoer must beheld responsible. But a right, though by pursuant to Article 26, and even Article2219(10), of the Civil
itself legal because it is recognized or granted by law as such, Code.
may nevertheless become the source of some illegality. A
person should be protected only when he acts in the legitimate Corollary thereto, Unicapital, et al.’s contention77 that the case
exercise of his right, that is, when he acts with prudence and in should be dismissed on the ground that it failed to set out the
good faith; but not when he acts with negligence or abuse. actual libelous statements complained about cannot be given
There is an abuse of right when it is exercised for the only credence. These incidents, as well as the specific circumstances
purpose of prejudicing or injuring another. The exercise of a surrounding the manner in which Unicapital and PBI, et al.
right must be in accordance with the purpose for which it was pursued their claims against Consing, Jr. may be better
established, and must not be excessive or unduly harsh; there ventilated during trial. It is a standing rule that issues that
must be no intention to injure another.71 (Emphasis supplied) require the contravention of the allegations of the complaint,
as well as the full ventilation, in effect, of the main merits of the
Likewise, Consing, Jr.’s complaint states a cause of action for case, should not be within the province of a mere motion to
damages under Article 26 of the Civil Code which provides that: dismiss,78 as in this case. Hence, as what is only required is that
the allegations furnish adequate basis by which the complaint
Article 26. Every person shall respect the dignity, personality, can be maintained, the Court – in view of the above-stated
privacy and peace of mind of his neighbors and other persons. reasons – finds that the RTC-Pasig City’s denial of Unicapital, et
The following and similar acts, though they may not constitute al.’s motion to dismiss on the ground of failure to state a cause
a criminal offense, shall produce a cause of action for damages, of action was not tainted with grave abuse of discretion which
prevention and other relief: would necessitate the reversal of the CA’s ruling. Verily, for
grave abuse of discretion to exist, the abuse of discretion must
(1) Prying into the privacy of another's residence; be patent and gross so as to amount to an evasion of a positive
duty or a virtual refusal to perform a duty enjoined by law, or to
(2) Meddling with or disturbing the private life or family act at all in contemplation of law.79 This the Court does not
relations of another; perceive in the case at bar.
(3) Intriguing to cause another to be alienated from his friends; Further, so as to obviate any confusion on the matter, the Court
equally finds that the causes of action in SCA No. 1759 were not
(4) Vexing or humiliating another on account of his religious – as Unicapital, et al. claim – misjoined even if Consing, Jr.
beliefs, lowly station in life, place of birth, physical defect, or averred that Unicapital and PBI, et al. violated certain
other personal condition. provisions of the Corporation Law and the Revised Securities
Act.80
The rationale therefor was explained in the case of Manaloto v.
Veloso III,72 citing Concepcion v. CA,73 to wit: The rule is that a party’s failure to observe the following
conditions under Section 5, Rule 2 of the Rules results in a
The philosophy behind Art. 26 underscores the necessity for its misjoinder of causes of action:81
inclusion in our civil law. The Code Commission stressed in no
uncertain terms that the human personality must be exalted. SEC. 5. Joinder of causes of action . - A party may in one
The sacredness of human personality is a concomitant pleading assert, in the alternative or otherwise, as many causes
consideration of every plan for human amelioration. The of action as he may have against an opposing party, subject to
touchstone of every system of law, of the culture and the following conditions:
civilization of every country, is how far it dignifies man. If the
statutes insufficiently protect a person from being unjustly
126
(a) The party joining the causes of action shall comply with the Indeed, while the Court acknowledges Unicapital, et al.'s
rules on joinder of parties; apprehension that Consing, Jr.'s "metered" claim for damages
to the tune of around ₱2,000,000.00 per month88 may balloon
(b) The joinder shall not include special civil actions governed to a rather huge amount by the time that this case is finally
by special rules; disposed of, still, any amount that may by then fall due shall be
subject to assessment and any additional fees determined shall
(c) Where the causes of action are between the same parties constitute as a lien against the judgment as explicitly provided
but pertain to different venues or jurisdictions, the joinder may under Section 2,89 Rule 141 of the Rules.
be allowed in the Regional Trial Court provided one of the
causes of action falls within the jurisdiction of said court and Finally, on the question of whether or not Consing, Jr.'s
the venue lies therein; and complaint was properly verified, suffice it to state that since the
copy submitted to the trial court was duly notarized by one
(d) Where the claims in all the causes of action are principally Atty. Allan B. Gepty and that it was only Unicapital, et al.’s copy
for recovery of money the aggregate amount claimed shall be which lacks the notarization, then there was sufficient
the test of jurisdiction. (Emphasis supplied) compliance with the requirements of the rules on pleadings.90
A careful perusal of his complaint discloses that Consing, Jr. did In fine, the Court finds no reversible error on the part of the CA
not seek to hold Unicapital and PBI, et al. liable for any specific in sustaining the RTC-Pasig City’s denial of Unicapital et al.’s
violation of the Corporation Code or the Revised Securities Act. motion to dismiss. As such, the petitions in G.R. Nos. 175277
Rather, he merely sought damages for Unicapital and PBI, et and 175285 must be denied.
al.’s alleged acts of making him sign numerous documents and
their use of the same against him. In this respect, Consing, Jr. B. Propriety of the denial of
actually advances an injunction and damages case82 which Consing, Jr.’s motion for
properly falls under the jurisdiction of the RTC-Pasig City.83 consolidation.
Therefore, there was no violation of Section 5, Rule 2 of the
Rules, particularly, paragraph (c) thereof. Besides, even on the The crux of G.R. No. 192073 is the propriety of the RTC-Makati
assumption that there was a misjoinder of causes of action, City’s denial of Consing, Jr.’s motion for the consolidation of the
still, such defect should not result in the dismissal of Consing, Pasig case, i.e., SCA No. 1759, and the Makati case, i.e., Civil
Jr.’s complaint. Section 6, Rule 2 of the Rules explicitly states Case No. 99-1418.Records show that the CA upheld the RTC-
that a "misjoinder of causes of action is not a ground for Makati City’s denial of the foregoing motion, finding that the
dismissal of an action" and that "a misjoined cause of action consolidation of these cases was merely discretionary on the
may, on motion of a party or on the initiative of the court, be part of the trial court. It added that it was "impracticable and
severed and proceeded with separately." would cause a procedural faux pas
Neither should Consing, Jr.’s failure to pay the required docket "if it were to "allow the RTC-Pasig City to preside over the
fees lead to the dismissal of his complaint.1âwphi1 It has long Makati case."91
been settled that while the court acquires jurisdiction over any
case only upon the payment of the prescribed docket fees, its The CA’s ruling is proper.
non-payment at the time of the filing of the complaint does not
automatically cause the dismissal of the complaint provided It is hornbook principle that when or two or more cases involve
that the fees are paid within a reasonable period.84 the same parties and affect closely related subject matters, the
Consequently, Unicapital, et al.’s insistence that the stringent same must be consolidated and jointly tried, in order to serve
rule on non-payment of docket fees enunciated in the case of the best interest of the parties and to settle the issues between
Manchester Development Corporation v. CA85 should be them promptly, thus, resulting in a speedy and inexpensive
applied in this case cannot be sustained in the absence of proof determination of cases. In addition, consolidation serves the
that Consing, Jr. intended to defraud the government by his purpose of avoiding the possibility of conflicting decisions
failure to pay the correct amount of filing fees. As pronounced rendered by the courts in two or more cases, which otherwise
in the case of Heirs of Bertuldo Hinog v. Hon. Melicor:86 could be disposed of in a single suit.92 The governing rule is
Section 1, Rule 31 of the Rules which provides:
Plainly, while the payment of the prescribed docket fee is a
jurisdictional requirement, even its SEC. 1. Consolidation. - When actions involving a common
question of law or fact are pending before the court, it may
non-payment at the time of filing does not automatically cause order a joint hearing or trial of any or all the matters in issue in
the dismissal of the case, as long as the fee is paid within the the actions; it may order all the actions consolidated; and it
applicable prescriptive or reglementary period, more so when may make such orders concerning proceedings therein as may
the party involved demonstrates a willingness to abide by the tend to avoid unnecessary costs or delay.
rules prescribing such payment.
In the present case, the Court observes that the subject cases,
Thus, when insufficient filing fees were initially paid by the i.e., SCA No. 1759 and Civil Case No. 99-1418, although
plaintiffs and there was no intention to defraud the involving the same parties and proceeding from a similar
government, the Manchester rule does not apply.87 (Emphasis factual milieu, should remain unconsolidated since they
and italics in the original) proceed from different sources of obligations and, hence,
would not yield conflicting dispositions. SCA No. 1759 is an
127
injunction and damages case based on the Civil Code provisions deed, which was supposedly executed on October 7, 1974,8
on abuse of right and defamation, while Civil Case No. 99-1418 bore the signature of Eligia who could not have affixed her
is a collection and damages suit based on actionable signature thereon as she had long been dead since August 21,
documents, i.e., the subject promissory notes. In particular, SCA 1971.9 By virtue of the same instrument, however, the Bagayas
No. 1759 deals with whether or not Unicapital and BPI, et al, brothers were able to secure in their favor TCT Nos. 37565710
abused the manner in which they demanded payment from and 37565811 over the subject lands.
Consing, Jr., while Civil Case No. 99-1418 deals with whether or
not Unicapital may demand payment from Consing, Jr. based As a matter of course, trial ensued on the merits of the case.
on the subject promissory notes. Clearly, a resolution in one Petitioner presented herself and five other witnesses to prove
case would have no practical effect as the core issues and the allegations in her complaint. Respondents likewise testified
reliefs sought in each case are separate and distinct from the in their defense denying any knowledge of the alleged adoption
other. of petitioner by Maximino and Eligia, and pointing out that
petitioner had not even lived with the family.12 Furthermore,
Likewise, as the CA correctly pointed out, the RTC-Makati City Rogelio claimed13 that after their parents had died, he and
could not have been failured in retaining Civil Case No. 99-1418 Orlando executed a document denominated as Deed of Extra
in its dockets since pre-trial procedures have already been judicial Succession14 (deed of extra judicial succession) over
undertaken therein and, thus, its consolidation with SCA No. the subject lands toeffect the transfer of titles thereof to their
1759 pending before the RTC-Pasig City would merely result in names. Before the deed of extra judicial succession could be
complications on the part of the latter court or squander the registered, however, a deed of absolute sale transferring the
resources or remedies already utilized in Civil Case No. 99- subject lands to them was discovered from the old files of
1418.93 In this light, aside from the perceived improbability of Maximino, which they used by "reason of convenience" to
having conflicting decisions, the consolidation of SCA No. 1759 acquire title to the said lands.15
and Civil Case No. 99-1418 would, contrary to its objective, only
delay the proceedings and entail unnecessary costs. In a Decision16 dated March 24, 2008 dismissing the case a quo
, the RTC summarized the threshold issues for resolution, to
All told, the Court finds the consolidation of SCA No. 1759 and wit:
Civil Case No. 99-1418 to be improper, impelling the affirmance
of the CA’s ruling. Consequently, the petition in G.R. No. [1] Whether or not petitioner is an adopted child of the late
192073 must also be denied. spouses Maximino Bagayas and Eligia Clemente;
WHEREFORE, the petitions in G.R. Nos. 175277, 175285 and [2] Whether or not the Deed of Absolute Sale dated October 7,
192073 are DENIED. Accordingly, the Court of Appeals’ Joint 1974 is valid;
Decision dated October 20, 2005 and Resolution dated October
25, 2006 in CA-G.R. SP Nos. 64019 and 64451 and the Decision [3] Whether or not plaintiff can ask for partition of the subject
dated September 30, 2009 and Resolution dated April 28, 2010 properties assuming that she is an adopted child of the late
in CA-G.R. No. 101355 are hereby AFFIRMED. spouses Maximino Bagayas and Eligia Clemente and assuming
further that the subject deed of sale is invalid; and
54. HILARIA BAGAYAS, Petitioner, vs.ROGELIO BAGAYAS,
FELICIDAD BAGAYAS, ROSALINA BAGAYAS, MICHAEL [4] Is the prevailing party entitled to damages?17
BAGAYAS, and MARIEL BAGAYAS, Respondents.
With respect to the first issue, the RTC declared petitioner to be
Assailed in this petition for review on certiorari1 are the anadopted child of Maximino and Eligia on the strength of the
Resolutions2 dated January 6, 20093 and Order4 dated March order of adoption, which it considered as more reliable than
16, 2009 of the Regional Trial Court of Camiling, Tarlac, Branch the oral testimonies of respondents denying the fact of
68 (RTC) which dismissed on the ground of res judicata the twin adoption.18 On the issue of the validity of the questioned deed
petitions of Hilaria Bagayas (petitioner) for amendment of of absolute sale, the RTC ruled that Eligia's signature thereon
Transfer Certificate of Title (TCT) Nos. 375657 and was a mere surplusage, as the subject lands belonged
375658,docketed as Land Registration Case (LRC) Nos. 08-34 exclusively to Maximino who could alienate the same without
and 08-35. the consent of his wife.19
The Facts The RTC further held that, even though petitioner is an adopted
child, she could not ask for partition of the subject lands as she
On June 28, 2004, petitioner filed a complaint5 for annulment was not able to prove any of the instances that would invalidate
of sale and partition before the RTC, docketed as Civil Case No. the deed of absolute sale. Moreover, the action for annulment
04-42, claiming that Rogelio, Felicidad, Rosalina, Michael, and of sale was improper as it constituted a collateral attack on the
Mariel, all surnamed Bagayas (respondents) intended to title of Rogelio and Orlando.20
exclude her from inheriting from the estate of her legally
adoptive parents, Maximino Bagayas (Maximino) and Eligia Insisting that the subject lands were conjugal properties of
Clemente (Eligia), by falsifying a deed of absolute sale (deed of Maximino and Eligia, petitioner filed a motion for
absolute sale) purportedly executed by the deceased spouses reconsideration21 from the aforesaid Decision, which was
(Maximino and Eligia) transferring two parcels of land (subject denied by the RTC in a Resolution22 dated June 17,2008
lands) registered in their names to their biological children, holding that while it may have committed a mistake in declaring
respondent Rogelio and Orlando Bagayas6 (Orlando).7 Said the subject lands as exclusive properties of Maximino (since the
128
defendants therein already admitted during the pre-trial subject lands and, eventually, the partition thereof.31 Since
conference that the subject lands are the conjugal properties of judgment had already been rendered on the matter, and
Maximino and Eligia), the action was nevertheless dismissible petitioner had allowed the same to attain finality, the principle
on the ground that it was a collateral attack on the title of of res judicata barred further litigation thereon.32
Rogelio and Orlando.23 Citing the case of Tapuroc v. Loquellano
Vda.de Mende,24 it observed that the action for the Dissatisfied, petitioner argued in her motion for
declaration of nullity of deed of sale is not the direct reconsideration33 that the dismissal of Civil Case No. 04-42 (for
proceeding required by law to attack a Torrens certificate of annulment of sale and partition)on the ground that it was a
title.25 collateral attack on the title of Rogelio and Orlando did not
amount to a judgment on the merits, thus, precluding the
No appeal was taken from the RTC’s Decision dated March 24, applicability of res judicata.34 The motion was resolved against
2008or the Resolution dated June 17, 2008, thereby allowing petitioner, and the dismissal of LRC Nos. 08-34 and 08-35 (for
the same to lapse into finality. amendment of TCT Nos. 375657 and 375658) was upheld by
the RTC in an Order35 dated March16, 2009. Hence, the instant
Subsequently, however, petitioner filed, on August 1, 2008, petition.
twin petitions26 before the same RTC, docketed as LRC Nos. 08-
34 and 08-35, for the amendment of TCT Nos. 375657 and The Issue Before the Court
375658 to include her name and those of her heirs and
successors-in-interest as registered owners to the extent of The essential issue in this case is whether or not the dismissal
one-third of the lands covered therein.27 The petitions were of the earlier complaint on the ground that it is in the nature of
anchored on Section 108 of Presidential Decree No. (PD) a collateral attack on the certificates of title constitutes a bar to
1529,28 otherwise known as the "Property Registration a subsequent petition under Section 108 of PD 1529.
Decree," which provides as follows:
The Court's Ruling
Section 108. Amendment and alteration of certificates. No
erasure, alteration, or amendment shall be made upon the At the outset, it must be stressed that Civil Case No. 04-42 was
registration book after the entry of a certificate of title or of a a complaint for annulment of sale and partition. In a complaint
memorandum thereon and the attestation of the same be [sic] for partition, the plaintiff seeks, first, a declaration that he is a
Register of Deeds, except by order of the proper Court of First co-owner of the subject properties; and second, the
Instance. A registered owner [sic] of other person having an conveyance of his lawful shares. An action for partition is at
interest in registered property, or, in proper cases, the [sic] once an action for declaration of co-ownership and for
Register of Deeds with the approval of the Commissioner of segregation and conveyance of a determinate portion of the
Land Registration, may apply by petition to the court upon the properties involved.36 The determination, therefore, as to the
ground that x x x existence of co-ownership is necessary in the resolution of an
action for partition. As held in the case of Municipality of Biñan
new interest not appearing upon the certificate have arisen or v. Garcia:37
been created; x x x; or upon any other reasonable ground; and
the court may hear and determine the petition after notice to The first phase of a partition and/or accounting suit is taken up
all parties in interest, and may order the entry or cancellation of with the determination of whether or not a co-ownership in
a new certificate, the entry or cancellation of a memorandum fact exists, and a partition is proper (i.e., not otherwise legally
upon a certificate, or grant of any other relief upon such terms proscribed) and may be made by voluntary agreement of all the
and conditions, requiring security or bond if necessary, as it parties interested in the property. This phase may end with a
may consider proper; Provided, however, That this section shall declaration that plaintiff is not entitled to have a partition
not be construed to give the court authority to reopen the either because a co-ownership does not exist, or partition is
judgment or decree of registration, and that nothing shall be legally prohibited. It may end, on the other hand, with an
done or ordered by the court which shall impair the title or adjudgment that a co-ownership does in truth exist, partition is
other interest of a purchaser holding a certificate for value and proper in the premises and an accounting of rents and profits
in good faith, or his heirs and assigns, without his or their received by the defendant from the real estate in question is in
written consent. x x x. order. In the latter case, the parties may, if they are able to
agree, make partition among themselves by proper instruments
x x x x (Emphasis supplied) of conveyance, and the court shall confirm the partition so
agreed upon. In either case – i.e., either the action is dismissed
To substantiate her "interest" in the subject lands, petitioner or partition and/or accounting is decreed – the order is a final
capitalized on the finding of the RTC in its Decision dated March one, and may be appealed by any party aggrieved thereby.38
24, 2008that she is the adopted child of Maximino and Eligia, (Emphasis supplied; citations omitted)
and that the signature of the latter in the deed of absolute sale
transferring the subject lands to Rogelio and Orlando was In dismissing Civil Case No. 04-42, the RTC declared that
falsified.29 petitioner could not ask for the partition of the subject lands,
even though she is an adopted child, because "she was not able
The petitions were dismissed30 by the RTC, however, on the to prove any of the instances that would invalidate the deed of
ground of res judicata . The RTC ruled that the causes of action absolute sale"39 purportedly executed by Maximino and Eligia.
in the two cases filed by petitioner are similar in that the This conclusion came about as a consequence of the RTC’s
ultimate objective would be her inclusion as co-owner of the finding that, since the subject lands belonged exclusively to
129
Maximino, there was no need to secure the consent of his wife decreed.45 Corollary thereto, it is a well-known doctrine that
who was long dead before the sale took place. For this reason, the issue as to whether the certificate of title was procured by
the forgery of Eligia's signature on the questioned deed was falsification or fraud can only be raised in an action expressly
held to be inconsequential. However, on reconsideration, the instituted for such purpose. As explicated in Borbajo v. Hidden
RTC declared that it committed a mistake in holding the subject View Homeowners, Inc.:46
lands as exclusive properties of Maximino "since there was
already an admission by the defendants during the pre-trial It is a well-known doctrine that the issue as to whether the
conference that the subject properties are the conjugal certificate of title was procured by falsification or fraud can only
properties of the spouses Maximino Bagayas and Eligia be raised in an action expressly instituted for the purpose. A
Clemente."40 Nonetheless, the RTC sustained its dismissal of Torrens title can be attacked only for fraud, within one year
Civil Case No. 04-42 on the ground that it constituted a after the date of the issuance of the decree of registration. Such
collateral attack upon the title of Rogelio and Orlando. attack must be direct, and not by a collateral proceeding. The
title represented by the certificate cannot be changed, altered,
In Lacbayan v. Samoy, Jr.41 (Lacbayan) which is an action for modified, enlarged, or diminished in a collateral proceeding.
partition premised on the existence or non-existence of co- The certificate of title serves as evidence of an indefeasible title
ownership between the parties, the Court categorically to the property in favor of the person whose name appears
pronounced that a resolution on the issue of ownership does therein.47 (Citations omitted)
not subject the Torrens title issued over the disputed realties to
a collateral attack. It must be borne in mind that what cannot Contrary to the foregoing characterization, Section 108 of PD
be collaterally attacked is the certificate of title and not the title 1529 explicitly states that said provision "shall not be construed
itself. As pronounced in Lacbayan: to give the court authority to reopen the judgment or decree of
registration." In fact, based on settled jurisprudence, Section
There is no dispute that a Torrens certificate of title cannot be 108 of PD 1529 is limited only to seven instances or situations,
collaterally attacked, but that rule is not material to the case at namely: (a) when registered interests of any description,
bar. What cannot be collaterally attacked is the certificate of whether vested, contingent, expectant, or inchoate, have
title and not the title itself. The certificate referred to is that terminated and ceased; (b) when new interests have arisen or
document issued by the Register of Deeds known as the TCT. In been created which do not appear upon the certificate; (c)
contrast, the title referred to bylaw means ownership which is, when any error, omission or mistake was made in entering a
more often than not, represented by that document. Petitioner certificate or any memorandum thereon or on any duplicate
apparently confuses title with the certificate of title. Title as a certificate; (d) when the name of any person on the certificate
concept of ownership should not be confused with the has been changed; (e) when the registered owner has been
certificate of title as evidence of such ownership although both married, or, registered as married, the marriage has been
are interchangeably used.42 (Emphases supplied) terminated and no right or interest of heirs or creditors will
thereby be affected; (f) when a corporation, which owned
Thus, the RTC erroneously dismissed petitioner’s petition for registered land and has been dissolved, has not conveyed the
annulment of sale on the ground that it constituted a collateral same within three years after its dissolution; and (g) when
attack since she was actually assailing Rogelio and Orlando’s there is reasonable ground for the amendment or alteration of
title to the subject lands and not any Torrens certificate of title title.48 Hence, the same cannot be said to constitute an attack
over the same. on a certificate of title as defined by case law.1âwphi1 That
said, the Court proceeds to resolve the issue as to whether or
Be that as it may, considering that petitioner failed to appeal not the dismissal of petitioner’s twin petitions for the
from the dismissal of Civil Case No. 04-42, the judgment therein amendment of TCT Nos. 375657 and 375658 was proper.
is final and may no longer be reviewed.
Petitioner claims that the determination of the RTC in Civil Case
The crucial issue, therefore, to be resolved is the propriety of No.04-42 that she is an adopted child and that the signature of
the dismissal of LRC Nos. 08-34 and 08-35 on the ground of res her adoptive mother Eligia in the deed of absolute sale
judicata. transferring the subject land to Rogelio and Orlando was forged
amounts to a new interest that should be reflected on the
It must be pointed out that LRC Nos. 08-34 and 08-35 praying certificates of title of said land, or provides a reasonable ground
that judgment be rendered directing the Registry of Deeds of for the amendment thereof.
Tarlac to include petitioner's name, those of her heirs and
successors-in-interest as registered owners to the extent of The Court disagrees for two reasons:
one-third of the lands covered by TCT Nos. 375657and 375658,
were predicated on the theory43 that Section 108 of PD 1529 is First. While the RTC may have made a definitive ruling on
a mode of directly attacking the certificates of title issued to the petitioner's adoption, as well as the forgery of Eligia's signature
Bagayas brothers. On the contrary, however, the Court on the questioned deed, no partition was decreed, as the action
observes that the amendment of TCT Nos. 375657 and 375658 was, in fact, dismissed. Consequently, the declaration that
under Section 108 of PD 1529 is actually not the direct attack petitioner is the legally adopted child of Maximino and Eligia
on said certificates of title contemplated under Section 4844 of did not amount to a declaration of heirship and co-ownership
the same law. Jurisprudence instructs that an action or upon which petitioner may institute an action for the
proceeding is deemed to be an attack on a certificate of title amendment of the certificates of title covering the subject land.
when its objective is to nullify the same, thereby challenging More importantly, the Court has consistently ruled that the trial
the judgment pursuant to which the certificate of title was court cannot make a declaration of heirship in an ordinary civil
130
action, for matters relating to the rights of filiation and heirship all made and perfected at Citibank Binondo in the presence of
must be ventilated in a special proceeding instituted precisely its officers and employees.12 Later on, petitioners discovered
for the purpose of determining such rights.49 that the securities sold to them were not registered with the
Securities and Exchange Commission (SEC)and that the terms
Second. Petitioner cannot avail of the summary proceedings and conditions covering the subscription were not likewise
under Section 108 of PD 1529 because the present controversy submitted to the SEC for evaluation, approval, and
involves not the amendment of the certificates of title issued in registration.13 Asserting that respondent’s actions are in
favor of Rogelio and Orlando but the partition of the estate of violation of Republic Act No.8799, entitled the "Securities
Maximino and Eligia who are both deceased. As held in Regulation Code" (SRC), they assailed the validity of the
Philippine Veterans Bank v. Valenzuela,50 the prevailing rule is subscription agreements and the terms and conditions thereof
that proceedings under Section 108 of PD 1529 are summary in for being contrary to law and/or public policy.14
nature, contemplating corrections or insertions of mistakes
which are only clerical but certainly not controversial issues.51 For its part, respondent filed a motion to dismiss15 alleging,
Relief under said legal provision can only be granted if there is inter alia, that petitioners’ complaint should be dismissed
unanimity among the parties, or hat there is no adverse claim outright for violation of the doctrine of primary jurisdiction. It
or serious objection on the part of any party in interest. This is pointed out that the merits of the case would largely depend on
now the controlling precedent, and the Court should no longer the issue of whether or not there was a violation of the SRC, in
digress from such ruling.52 Therefore, petitioner may not avail particular, whether or not there was a sale of unregistered
of the remedy provided under Section 108 of PD 1529. securities. In this regard, respondent contended that the SRC
conferred upon the SEC jurisdiction to investigate compliance
In fine, while LRC Nos. 08-34 and 08-35 are technically not with its provisions and thus, petitioners’ complaint should be
barred by the prior judgment in Civil Case No. 04-42 as they first filed with the SEC and not directly before the RTC.16
involve different causes of action, the dismissal of said petitions
for the amendment of TCT Nos.375657 and 375658 is Petitioners opposed17 respondent’s motion to dismiss,
nonetheless proper for reasons discussed above. The remedy maintaining that the RTC has jurisdiction over their complaint.
then of petitioner is to institute intestate proceedings for the They asserted that Section 63of the SRC expressly provides that
settlement of the estate of the deceased spouses Maximino the RTC has exclusive jurisdiction to hear and decide all suits to
and Eligia. recover damages pursuant to Sections 56 to 61 of the same
law.18
WHEREFORE, the petition is DENIED.
The RTC Ruling
56. JOSE U. PUA and BENJAMIN HANBEN U. PUA,
Petitioners,vs.CITIBANK, N. A., Respondent. In an Order19 dated May 14, 2003, the RTC denied
respondent’s motion to dismiss. It noted that petitioners’
Assailed in this petition for review on certiorari1 are the complaint is for declaration of nullity of contract and sums of
Decision2 dated May 21, 2007 and Resolution3 dated October money with damages and, as such, it has jurisdiction to hear
16, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79297, and decide upon the case even if it involves the alleged sale of
which reversed and set aside the Orders dated May 14, 20034 securities. It ratiocinated that the legal questions or issues
and July 16, 20035 of the Regional Trial Court of Cauayan City, arising from petitioners’ causes of action against respondent
Isabela, Branch 19 (RTC), dismissing petitioners Jose(Jose) and are more appropriate for the judiciary than for an
Benjamin Hanben U. Pua's (petitioners) complaint against administrative agency to resolve.20
respondent Citibank, N. A. (respondent).
Respondent filed an omnibus motion21 praying, among others,
The Facts for there consideration of the aforesaid ruling, which
petitioners, in turn, opposed.22 In an Order23 dated July 16,
On December 2, 2002, petitioners filed before the RTC a 2003, the RTC denied respondent’s omnibus motion with
Complaint6 for declaration of nullity of contract and sums of respect to its prayer for reconsideration. Dissatisfied,
money with damages against respondent,7 docketed as Civil respondent filed a petition for certiorari before the CA.24
Case No. 19-1159.8 In their complaint, petitioners alleged that
they had been depositors of Citibank Binondo Branch (Citibank The CA Ruling
Binondo) since 1996. Sometime in 1999, Guada Ang, Citibank
Binondo’s Branch Manager, invited Jose to a dinner party at the In a Decision25 dated May 21, 2007, the CA reversed and set
Manila Hotel where he was introduced to several officers and aside the RTC’s Orders and dismissed petitioners’ complaint for
employees of Citibank Hongkong Branch (Citibank Hongkong).9 violation of the doctrine of primary jurisdiction. The CA agreed
A few months after, Chingyee Yau (Yau), Vice-President of with respondent’s contention that since the case would largely
Citibank Hongkong, came to the Philippines to sell securities to depend on the issue of whether or not the latter violated the
Jose. They averred that Yau required Jose to open an account provisions of the SRC, the matter is within the special
with Citibank Hongkong as it is one of the conditions for the competence or knowledge of the SEC. Citing the case of Baviera
sale of the aforementioned securities.10 After opening such v. Paglinawan26 (Baviera), the CA opined that all complaints
account, Yau offered and sold to petitioners numerous involving violations of the SRC should be first filed before the
securities11 issued by various public limited companies SEC.27
established in Jersey, Channel I sands. The offer, sale, and
signing of the subscription agreements of said securities were
131
Aggrieved, petitioners moved for reconsideration,28 which was, In this light, when the Court ruled in Baviera that "all
however, denied by the CA in a Resolution29 dated October 16, complaints for any violation of the [SRC] x x x should be filed
2007.Hence, this petition. with the SEC,"33 it should be construed as to apply only to
criminal and not to civil suits such as petitioners’ complaint.
The Issue Before the Court
Moreover, it is a fundamental rule in procedural law that
The essential issue in this case is whether or not petitioners’ jurisdiction is conferred by law;34 it cannot be inferred but
action falls within the primary jurisdiction of the SEC. must be explicitly stated therein. Thus, when Congress confers
exclusive jurisdiction to a judicial or quasi-judicial entity over
Petitioners reiterate their original position that the SRC itself certain matters by law, this, absent any other indication to the
provides that civil cases for damages arising from violations of contrary, evinces its intent to exclude other bodies from
the same law fall within the exclusive jurisdiction of the exercising the same.
regional trial courts.30
It is apparent that the SRC provisions governing criminal suits
On the contrary, respondent maintains that since petitioners’ are separate and distinct from those which pertain to civil suits.
complaint would necessarily touch on the issue of whether or On the one hand, Section 53 of the SRC governs criminal suits
not the former violated certain provisions of the SRC, then the involving violations of the said law, viz.:
said complaint should have been first filed with the SEC which
has the technical competence to resolve such dispute.31 SEC. 53. Investigations, Injunctions and Prosecution of Offenses.
–
The Court’s Ruling
53.1. The Commission may, in its discretion, make such
The petition is meritorious. investigations as it deems necessary to determine whether any
person has violated or is about to violate any provision of this
At the outset, the Court observes that respondent erroneously Code, any rule, regulation or order thereunder, or any rule of
relied on the Baviera ruling to support its position that all an Exchange, registered securities association, clearing agency,
complaints involving purported violations of the SRC should be other self-regulatory organization, and may require or permit
first referred to the SEC. A careful reading of the Baviera case any person to file with it a statement in writing, under oath or
would reveal that the same involves a criminal prosecution of a otherwise, as the Commission shall determine, as to all facts
purported violator of the SRC, and not a civil suit such as the and circumstances concerning the matter to be investigated.
case at bar. The pertinent portions of the Baviera ruling thus The Commission may publish information concerning any such
read: violations, and to investigate any fact, condition, practice or
matter which it may deem necessary or proper to aid in the
A criminal charge for violation of the Securities Regulation Code enforcement of the provisions of this Code, in the prescribing of
is a specialized dispute. Hence, it must first be referred to an rules and regulations thereunder, or in securing information to
administrative agency of special competence, i.e., the SEC. serve as a basis for recommending further legislation
Under the doctrine of primary jurisdiction, courts will not concerning the matters to which this Code relates: Provided,
determine a controversy involving a question within the however, That any person requested or subpoenaed to produce
jurisdiction of the administrative tribunal, where the question documents or testify in any investigation shall simultaneously
demands the exercise of sound administrative discretion be notified in writing of the purpose of such investigation:
requiring the specialized knowledge and expertise of said Provided, further, That all criminal complaints for violations of
administrative tribunal to determine technical and intricate this Code, and the implementing rules and regulations enforced
matters of fact. The Securities Regulation Code is a special law. or administered by the Commission shall be referred to the
Its enforcement is particularly vested in the SEC. Department of Justice for preliminary investigation and
prosecution before the proper court:
Hence, all complaints for any violation of the Code and its
implementing rules and regulations should be filed with the Provided, furthermore, That in instances where the law allows
SEC. Where the complaint is criminal in nature, the SEC shall independent civil or criminal proceedings of violations arising
indorse the complaint to the DOJ for preliminary investigation from the same act, the Commission shall take appropriate
and prosecution as provided in Section 53.1 earlier quoted. action to implement the same: Provided, finally, That the
investigation, prosecution, and trial of such cases shall be given
We thus agree with the Court of Appeals that petitioner priority.
committed a fatal procedural lapse when he filed his criminal
complaint directly with the DOJ. Verily, no grave abuse of On the other hand, Sections 56, 57, 58, 59, 60, 61, 62, and 63 of
discretion can be ascribed to the DOJ in dismissing petitioner’s the SRC pertain to civil suits involving violations of the same
complaint.32 (Emphases and underscoring supplied) law. Among these, the applicable provisions to this case are
Sections 57.1 and 63.1 of the SRC which provide:
Records show that petitioners’ complaint constitutes a civil suit
for declaration of nullity of contract and sums of money with SEC. 57. Civil Liabilities Arising in Connection With Prospectus,
damages, which stemmed from respondent’s alleged sale of Communications and Reports.
unregistered securities, in violation of the various provisions of
the SRC and not a criminal case such as that involved in Baviera. – 57.1. Any person who:
132
(a) Offers to sell or sells a security in violation of Chapter III; REMANDED to the Regional Trial Court of Cauayan City, Isabela,
Branch 19 for further proceedings.
or
57. JUANITO VICTOR C. REMULLA, Petitioner, vs.ERINEO S.
(b) Offers to sell or sells a security, whether or not exempted by MALIKSI, in his capacity as Governor of the Province of Cavite,
the provisions of this Code, by the use of any means or RENATO A. IGNACIO, in his capacity as Provincial Legal Officer
instruments of transportation or communication, by means of a of the Province of Cavite, MARIETTA O'HARA DE VILLA, HEIRS
prospectus or other written or oral communication, which OF HIGINO DE VILLA, GOLDENROD, INC., SONYA G. MATHAY,
includes an untrue statement of a material fact or omits to AND ELEUTERO M. PASCUAL, Respondents.
state a material fact necessary in order to make the statements,
in the light of the circumstances under which they were made, Assailed in this petition for review on certiorari1 are the
not misleading (the purchaser not knowing of such untruth or Resolutions dated May 18, 20052 and February 16, 20053 of
omission), and who shall fail in the burden of proof that he did the Court of Appeals (CA) in CA-G.R. SP No. 86465 which
not know, and in the exercise of reasonable care could not have dismissed petitioner Juanito Victor C. Remulla’s (Remulla)
known, of such untruth or omission, shall be liable to the petition for annulment of judgment.
person purchasing such security from him, who may sue to
recover the consideration paid for such security with interest The Facts
thereon, less the amount of any income received thereon, upon
the tender of such security, or for damages if he no longer owns On May 7, 1957, Marietta O’Hara de Villa (de Villa), in her
the security. personal capacity and as administratix of the estate of her late
husband Guillermo, ceded, through a deed of donation4 (1957
xxxx deed of donation), 134,957 square meters (sq. m.) (donated
portion) of their 396,622 sq. m. property (subject property) in
SEC. 63. Amount of Damages to be Awarded. – 63.1. All suits to favor of the Province of Cavite, on which now stands various
recover damages pursuant to Sections 56, 57, 58, 59, 60 and 61 government offices and facilities.5
shall be brought before the Regional Trial Court which shall
have exclusive jurisdiction to hear and decide such suits. The On December 28, 1981 and February 1, 1982,6 the Province of
Court is hereby authorized to award damages in an amount not Cavite respectively filed a Complaint and an Amended
exceeding triple the amount of the transaction plus actual Complaint, before the then Court of First Instance of Cavite,
damages. Trece Martires City, Branch 1 – now, Regional Trial Court of
Trece Martires City, Branch 23 (RTC), docketed as Civil Case No.
x x x x (Emphases and underscoring supplied) TM-955 (expropriation case) – seeking to expropriate, for the
amount of ₱215,050.00, the remaining 261,665 sq. m. of the
Based on the foregoing, it is clear that cases falling under subject property which the former intends to develop as the
Section 57of the SRC, which pertain to civil liabilities arising Provincial Capitol Site. Accordingly, the Province of Cavite made
from violations of the requirements for offers to sell or the sale a preliminary deposit of the amount of ₱21,505.00 and, on
of securities, as well as other civil suits under Sections 56, 58, January 4, 1982, the RTC issued a Confirmatory Writ of
59, 60, and 61 of the SRC shall be exclusively brought before Immediate Possession7 in its favor, by virtue of which the
the regional trial courts. It is a well-settled rule in statutory Province of Cavite took possession of the entire property.8
construction that the term "shall" is a word of command, and
one which has always or which must be given a compulsory For her part, de Villa, through her Answer,9 opposed the
meaning, and it is generally imperative or mandatory.35 expropriation proceedings, claiming that there are still areas
Likewise, it is equally revelatory that no SRC provision of similar within the donated portion which the Province of Cavite failed
import is found in its sections governing criminal suits; quite the to develop.10 She also alleged that the fair market value of the
contrary, the SRC states that criminal cases arising from subject property should be pegged at the amount of
violations of its provisions should be first referred to the ₱11,272,500.00, or at ₱45.00 per sq. m.11 On June 9, 1989,
SEC.1âwphi1 while the expropriation case was still pending, de Villa sold, for
the amount of ₱2,000,000.00,12 the 261,665 sq. m. portion of
Therefore, based on these considerations, it stands to reason the subject property to Goldenrod, Inc. (Goldenrod), a joint
that civil suits falling under the SRC are under the exclusive venture company owned by Sonya G. Mathay (Mathay) and
original jurisdiction of the regional trial courts and hence, need Eleuterio M. Pascual, Jr. (Pascual).13 Subsequently, Mathay and
not be first filed before the SEC, unlike criminal cases wherein Pascual intervened in the expropriation case.14
the latter body exercises primary jurisdiction.
On November 4, 2003, respondent then Cavite Governor Erineo
All told, petitioners' filing of a civil suit against respondent for S.Maliksi (Maliksi) issued Executive Order No. 00415 authorizing
purported violations of the SRC was properly filed directly the creation of a committee which recommended the terms
before the RTC. and conditions for the proper settlement of the expropriation
case. The said committee thereafter submitted its Committee
WHEREFORE, the petition is GRANTED. Accordingly, the Court Report16 dated November 24, 2003 recommending that: (a)
of Appeals' Decision dated May 21, 2007 and Resolution dated the just compensation be pegged at the amount of ₱495.00 per
October 16,2007 in CA-G.R. SP No. 79297 are hereby REVERSED sq. m. plus 6% annual interest for 22 years,17 for a total net
and SET ASIDE. Let Civil Case No. 19-1159 be REINSTATED and consideration of ₱50,000,000.00, which amount shall be
equally shouldered by the Province of Cavite and Trece
133
Martires City; (b) the total area to be expropriated be limited to Aggrieved, Remulla filed a motion for reconsideration which
only 116,287 sq. m. and the donated portion be reduced to was, however, denied by the CA in a Resolution33 dated
48,429sq. m.; and (c) 193,662 sq. m. of the subject property be February 16, 2006.Hence, the instant petition.
reverted to Goldenrod which include a fenced stadium, one-
half of the Trece Martires Cemetery, the forest park; a The Issue Before The Court
residential area, and some stalls; in turn, Goldenrod will
construct a commercial/business center, an art/historical The essential issue in this case is whether or not the CA
museum, and an educational institution within five years from properly denied Remulla’s petition for annulment of judgment
the signing of the compromise agreement, among others. due to his lack of legal standing.
BATCO further admitted that only a portion (about 100 has.) of The essential issue in this case is whether or not the CA gravely
the subject lands was devoted to livestock raising, for which the abused its discretion in excluding/exempting the subject lands
corresponding exemption was prayed.53 It explained that the from CARP coverage despite BATCO's admission that only a
necessary documents were in the possession of the previous portion thereof was devoted to livestock raising and
owner, hence, it was unable to produce the same before the considering its previous voluntary offer of the lands to the
DAR Regional Director.54 In support of the foregoing motions, government under the VOS scheme.
BATCO submitted,55 among others, Certificates of Ownership
of Large Cattle Nos. B-3144051 to B-314415056 dated between The Court's Ruling
July 10, 1987 to August 15, 1987,57 and the Joint Affidavit58 of
barangay officials of Barangays Tumakid, Maloong San Jose, The petition is meritorious.
Maloong Canal, and Buahan, all in Lamitan, Basilan declaring
that BATCO is engaged in large cattle raising. Nonetheless, Under RA 6657, the CARP shall cover all public and private
BATCO affirmed that it is still offering 100 has. of the subject agricultural lands, including other lands of the public domain
lands for the CARP.59 suitable for agriculture, regardless of tenurial arrangement and
commodity produced.75 Section 3(c) thereof defines
On August 31, 1999, Secretary Morales issued an Order60 "agricultural land" as land devoted to agricultural activity and
denying BATCO's motion for reconsideration. He gave no not classified as mineral, forest, residential, commercial or
credence to the certificates of livestock ownership belatedly industrial land. Lands devoted to livestock, poultry, and swine
submitted by BATCO, observing that the absence of a sufficient raising are classified as industrial, not agricultural lands and,
justification for its failure to present such certificates earlier thus, exempt from agrarian reform. As such, the DAR has no
casts doubt to their veracity and genuineness.61 Further, he power to regulate livestock farms.76
held that laches had set in, especially considering that the
petition was filed only in 1998, or long after the orders for Nevertheless, the determination of the land’s classification as
coverage were issued in 1992.62 Finally, he pointed out that either an agricultural or industrial land – and, in turn, whether
BATCO failed to present proof that it has met the infrastructure or not the land falls under agrarian reform exemption – must
requirements under DAR AO 09-93.63 be preliminarily threshed out before the DAR, particularly,
before the DAR Secretary. Verily, issues of exclusion or
The Proceedings Before the CA exemption partake the nature of Agrarian Law Implementation
(ALI)cases which are well within the competence and
BATCO's appeal was initially dismissed64 but subsequently jurisdiction of the DAR Secretary.77 Towards this end, the latter
reinstated by the CA.65 is ordained to exercise his legal mandate of excluding or
exempting a property from CARP coverage based on the factual
On September 6, 2005, the CA issued a Decision66 reversing circumstances of each case and in accordance with the law and
and setting aside Secretary Morales’ February 25, 1999 Order. applicable jurisprudence.78 Thus, considering too his technical
It ruled that estoppel does not lie against BATCO considering expertise on the matter, courts cannot simply brush aside his
that the pertinent law and regulations did not provide for a pronouncements regarding the status of the land in dispute,
prescriptive period for the filing of exemption from CARP i.e., as to whether or not it falls under CARP coverage. As held
coverage.67 Moreover, in the light of Luz Farms, a petition for in DAR v. Oroville Development Corp.:79
exemption is not even necessary so long as the landholdings are
devoted to livestock, poultry, and swine raising, thus, rendering We cannot simply brush aside the DAR’s pronouncements
DAR AO09-93 ineffective and inconsequential.68 regarding the status of the subject property as not exempt from
CARP coverage considering that the DAR has unquestionable
The CA gave credence to BATCO's documentary evidence to technical expertise on these matters. Factual findings of
support its claim of the existence and presence of livestock in administrative agencies are generally accorded respect and
the lands in question starting the year 1987 consisting of: (a) even finality by this Court, if such findings are supported by
the Certification69 dated March 26,1998 of the Municipal substantial evidence, a situation that obtains in this case. The
Agriculturist of Lamitan, Basilan (Municipal Agriculturist factual findings of the Secretary of Agrarian Reform who, by
136
reason of his official position, has acquired expertise in specific Under DAR AO 09-93, in order to be entitled to exemption, the
matters within his jurisdiction, deserve full respect and, without applicant must prove that: (a) the land sought to be excluded
justifiable reason, ought not to be altered, modified or from CARP coverage is exclusively, directly and actually used for
reversed. (Emphases supplied) livestock, poultry and swine raising as of June 15, 1988; (b)
there should be one head of cattle per hectare of land and
It is settled that in order to be entitled to exclusion/exemption, seven heads of goat per hectare of land; and (c) there should be
it must be shown that the land is exclusively devoted to 21 heads of cattle for every 1.7815 has. of infrastructure,
livestock, swine or poultry raising.80 The land must be shown 147heads of goat or sheep for every 0.7205 hectare of
to have been used for such purposes as of the effectivity of RA infrastructure, and 21heads of swine for every 0.5126 hectare
6657, or on June 15, 1988,81 in order to prevent any fraudulent of infrastructure. Consistent with the prohibition under Section
declaration of areas supposedly used for these purposes as well 73(c) of RA 6657, DAR AO 09-93 likewise provided that "any act
as to protect the rights of agrarian beneficiaries therein. This is of a landowner to change or convert his agricultural and to
in consonance with Section 73(c) of RA 6657 which prohibits livestock, poultry and swine raising after June 15, 1988, with
the conversion by any landowner of his agricultural land into the intent to avoid the application of [RA 6657] to his
any non-agricultural use with intent to avoid the application of landholdings, shall be considered invalid and illegal and shall
RA 6657 to his landholdings and to dispossess his tenant not affect the coverage of his land holding under CARP."
farmers of the land tilled by them.
It bears noting that the denial of the petition for exemption by
A thorough review of the records reveals no substantial the DAR Regional Director was based on an ocular
evidence to show that the entirety of the subject lands were inspection/investigation conducted by the DAR provincial
exclusively devoted to livestock production since June 15, 1988 personnel in Basilan.94 The rationale for the denial of the
so as to warrant their exclusion/exemption from CARP coverage petition was also clearly outlined in the February 25, 1999
and the consequent cancellation of MCFARMCO's certificates of Order95 of the DAR Secretary who observed that: (a) none of
title. In fact, contrary to its original submission that almost all of the 156certificates of livestock ownership submitted by BATCO
the entire 206.5694 has. landholding has been devoted to cattle predates the effectivity of RA 6657;96 (b) more than half (80
and livestock production since their acquisition in 1987,82 out of 156)97 of the cattle was brought into the property only a
BATCO subsequently admitted in its Supplemental Motion for few months before the petition was filed; (c) the municipal
Reconsideration of the Order dated 25 February 199983 agriculturist certified the presence of only 120 heads of
(supplemental motion for reconsideration) that only a portion cattle,98 which is short of the minimum requirement under
of the subject lands was actually devoted to livestock raising, DAR AO 09-93;99 and (d) no evidence was presented to prove
for which the exemption of not less than 100 has. was the presence of hogs and goats as well as of BATCO having met
sought.84 On this score alone, the CA gravely abused its the infrastructure requirements under DAR AO 09-93.100 There
discretion in declaring the subject lands as exempt from CARP being no cogent reason to deviate from the foregoing, the
coverage and ordering the cancellation of MCFARMCO's Court is impelled to sustain the DAR Secretary’s findings.
certificates of title and the issuance of new titles in BATCO's
favor. To note, in denying BATCO's motion for reconsideration, the
DAR Secretary also observed that, contrary to BATCO's claim
It must be further pointed out that the subject lands were that the additional certificates of livestock ownership it
offered by BATCO to the government under the VOS scheme on undertook to produce further were in the name of the
September 20, 1989,85 which offer was reiterated on January Mendoza Plantation from which it purchased the subject lands
6, 199386 without any claim of exemption, notwithstanding the in 1987, the certificates eventually submitted with its
existence of the Luz Farms ruling (which was promulgated on supplemental motion for reconsideration were actually under
December 4, 1990). In fact, the subject portion was acquired by its name. Accordingly, the DAR Secretary cannot be faulted for
the government in 1992 and still BATCO never sought not giving credence to the same.
exemption under Luz Farms. While it protested the valuation of
the DAR87 during its VOS, it did not, at that time, seek any In fact, even if the Court were to apply Sutton retroactively and
exemption from CARP coverage. BATCO only raised the claimed disregard DAR AO 09-93, the pieces of evidence relied upon by
exemption when it filed the petition for exemption before the the CA actually failed to establish the theory that the entirety of
DAR Regional Director on May 6, 1998.However, the petition the subject lands or specific portions thereof are exclusively
was filed on the basis of DAR AO 09-93,88 and accordingly devoted to the raising of cattle, swine and goat as of June 15,
denied by the DAR Regional Director 89 and the DAR 1988. The Court notes that the Municipal Agriculturist
Secretary90 for failing to meet the requirements set forth Certification101 dated March 26, 1998, which the CA
therein. While the Court struck down DAR AO 09-93 as appreciated in favor of BATCO, merely stated that the subject
unconstitutional in the case of DAR v. Sutton91 lands are "suitable for cattle production since before it was
acquired and transferred to BATCO PLANTATION."102 On the
(Sutton) on October 19, 2005, the DAR Decisions and even the other hand, the Affidavits103 of former municipal mayors
CA Decision dated September 6, 2005 in CA-G.R. SP No. 55377 confirming their issuance of several certificates of livestock
were all rendered at the time that the said AO was still ownership during their respective terms were only presented
subsisting and in full force and effect. Consequently, in view of before the CA and were not backed up by copies of the
the prospectivity principle of judicial decisions92 and the certificates themselves. Moreover, while the former municipal
operative fact doctrine,93 the petition for exemption must be mayors attested to the existence and presence of livestock in
resolved under the provisions of the said AO. the subject lands starting the year 1987, they commonly
described the subject lands as a vast tract of land principally
137
devoted to coconut production, which was extensively inter- 59. REPUBLIC OF THE G.R. No. 204603 PHILIPPINES,
cropped with coffee, rubber, black pepper, and cacao trees represented by THE EXECUTIVE SECRETARY, THE SECRETARY
after BATCO's acquisition.104 These descriptions are OF JUSTICE, THE SECRETARY OF FOREIGN AFFAIRS, THE
insufficient to establish BATCO’s claimed exemption as what is SECRETARY OF NATIONALDEFENSE, THE SECRETARY OF THE
required is exclusive devotion of the lands to the raising of INTERIOR AND LOCAL GOVERNMENT THE SECRETARY OF
cattle, swine and goat as of June 15, 1988. FINANCE, THE NATIONAL SECURITY ADVISER, THE SECRETARY
OF BUDGET AND MANAGEMENT THE TREASURER OF THE
More pertinently, the Court further notes that contrary to PHILIPPINES, THE CHIEF OF STAFF OF THE ARMED FORCES OF
BATCO's representations in its petition for exemption, the THE PHILIPPINES, and THE CHIEFOF THE PHILIPPINE NATIONAL
primary land use of the subject lands105 as declared by BATCO POLICE, Petitioners, vs.HERMINIO HARRY ROQUE, MORO
itself in its landowner's reply to notice of land valuation and CHRISTIAN PEOPLE'S ALLIANCE, FR. JOE DIZON, RODINIE
acquisition106 (landowners reply) dated May 6,1997, negates SORIANO, STEPHANIE ABIERA, MARIA LOURDES ALCAIN,
its own claim that the said lands were exclusively devoted for VOLTAIRE ALFEREZ, CZARINA MAYALTEZ, SHERYL BALOT,
the raising of cattle, swine and goat, viz.: RENIZZA BATACAN, EDAN MARRI CAÑETE, LEANA
CARAMOAN, ALDWIN CAMANCE, RENE DELORINO, PAULYN
In this accord, the Court finds that BATCO's claim of a different MAY DUMAN, RODRIGO FAJARDO III, ANNAMARIE GO, ANNA
land use in its petition for exemption was only a mere ARMINDA JIMENEZ, MARY ANN LEE,LUISA MANALAYSAY,
afterthought which, therefore, cannot be countenanced. MIGUEL MUSNGI, MICHAEL OCAMPO, NORMAN ROLAND
OCANA III, WILLIAM RAGAMAT, MARICAR RAMOS, CHERRY
Finally, the Court cannot give credence to BATCO's claim of LOU REYES, MELISSA ANN SICAT, CRISTINE MAE TABING,
denial of due process when its certificates of title were VANESSA TORNO, and HON. JUDGE ELEUTERIO L. BATHAN, as
cancelled and new ones were issued in favor of the Republic Presiding Judge of Regional Trial Court, Quezon City, Branch
prior to the issuance of the DAR Regional Director's August 12, 92, Respondents.
1998 Order. While the final resolution of petitions for
exemption, as a rule, should precede the placing of the Assailed in this petition for certiorari1 are the April 23, 20122
property under the CARP and the issuance of the CLOA to the and July 31, 20123 Orders of the Regional Trial Court of Quezon
beneficiaries,108 it bears stressing that the subject lands had City, Branch 92(RTC) in Special Civil Action (SCA) No. Q-07-
already been placed under the CARP coverage in1992, or long 60778, denying petitioners’ motion to dismiss (subject motion
before the petition for exemption was filed by BATCO on May6, to dismiss) based on the following grounds: (a) that the Court
1998. In the meantime, the actions undertaken by BATCO such had yet to pass upon the constitutionality of Republic Act No.
as the VOS on January 6, 1993,109 the counter-offer of (RA) 9372,4 otherwise known as the "Human Security Act of
valuation for the subject lands according to their declared land 2007," in the consolidated cases of Southern Hemisphere
uses as contained in the afore-mentioned landowner’s reply110 Engagement Network, Inc. v. Anti-Terrorism Council5 (Southern
dated May 6, 1997, the letter-protest dated May 23, 1997 Hemisphere); and (b) that private respondents’ petition for
(which challenged the survey of the lands), and the declaratory relief was proper.
identification of the beneficiaries grounded on its alleged
failure to choose the retention area,111 all affirmed the The Facts
coverage of the subject lands under the CARP. Considering
further that the claim of denial of due process was never raised On July 17, 2007, private respondents filed a Petition6 for
in the proceedings before the DAR but belatedly brought up declaratory relief before the RTC, assailing the constitutionality
only in its Memorandum112 dated July 28, 2005 filed before of the following sections of RA 9372: (a) Section 3,7 for being
the CA113 and in the absence of showing that the same void for vagueness;8 (b) Section 7,9 for violating the right to
prevented it from presenting its case before the DAR officials, it privacy of communication and due process and the privileged
cannot be said that BATCO was denied due process. Neither nature of priest-penitent relationships;10 (c)Section 18,11 for
was it deprived of its properties without just compensation violating due process, the prohibition against ex post facto laws
given that after it rejected the DAR's valuation on May 6, 1997, or bills of attainder, the Universal Declaration of Human Rights,
the DAR immediately caused the deposit of the compensation and the International Covenant on Civil and Political Rights, as
in cash and in agrarian reform bonds on June 11, 1997.114 All well as for contradicting Article 12512 of the Revised Penal
told, the denial of BATCO’s petition for exemption was proper. Code, as amended;13 (d) Section 26,14 for violating the right to
In view of its contrary ruling, and the absence of any substantial travel;15 and (e) Section 27,16 for violating the prohibition
bases therefor, the Court finds that the CA gravely abused its against unreasonable searches and seizures.17
discretion in reversing the DAR Secretary’s February 25, 1999
Order. Petitioners moved to suspend the proceedings,18 averring that
certain petitions (SC petitions) raising the issue of RA 9372’s
WHEREFORE, the petition is GRANTED. The Decision dated constitutionality have been lodged before the Court.19 The said
September 6, 2005 of the Court of Appeals in CA-G.R. SP No. motion was granted in an Order dated October 19, 2007.20
55377 is hereby REVERSED AND SET ASIDE and a new judgment
is rendered REINSTATING the Order dated February 25, 1999 of On October 5, 2010, the Court promulgated its Decision21 in
the Department of Agrarian Reform Secretary dismissing the Southern Hemisphere cases and thereby dismissed the SC
private respondent Basilan Agricultural Trading Corporation’s petitions.
petition for exemption.
On February 27, 2012, petitioners filed the subject motion to
dismiss,22 contending that private respondents failed to satisfy
138
the requisites for declaratory relief. Likewise, they averred that it, however, exceeded its jurisdiction when it ruled that private
the constitutionality of RA 9372 had already been upheld by the respondents’ petition had met all the requisites for an action
Court in the Southern Hemisphere cases. for declaratory relief. Consequently, its denial of the subject
motion to dismiss was altogether improper.
In their Comment/Opposition,23 private respondents
countered that: (a) the Court did not resolve the issue of RA To elucidate, it is clear that the Court, in Southern Hemisphere,
9372’s constitutionality in Southern Hemisphere as the SC did not make any definitive ruling on the constitutionality of RA
petitions were dismissed based purely on technical grounds; 9372. The certiorari petitions in those consolidated cases were
and (b) the requisites for declaratory relief were met. dismissed based solely on procedural grounds, namely: (a) the
remedy of certiorari was improper;31 (b) petitioners therein
The RTC Ruling lack locus standi;32 and (c) petitioners therein failed to present
an actual case or controversy.33 Therefore, there was no grave
On April 23, 2012, the RTC issued an Order24 which denied the abuse of discretion.
subject motion to dismiss, finding that the Court did not pass
upon the constitutionality of RA 9372 and that private The same conclusion cannot, however, be reached with regard
respondents’ petition for declaratory relief was properly filed. to the RTC’s ruling on the sufficiency of private respondents’
petition for declaratory relief.
Petitioners moved for reconsideration25 which was, however,
denied by the RTC in an Order dated July 31, 2012.26 The RTC Case law states that the following are the requisites for an
observed that private respondents have personal and action for declaratory relief:
substantial interests in the case and that it would be illogical to
await the adverse consequences of the aforesaid law’s first , the subject matter of the controversy must be a deed,
implementation considering that the case is of paramount will, contract or other written instrument, statute, executive
impact to the Filipino people.27 order or regulation, or ordinance; second , the terms of said
documents and the validity thereof are doubtful and require
Hence, the instant petition. judicial construction; third , there must have been no breach of
the documents in question; fourth , there must be an actual
The Issues Before the Court justiciable controversy or the "ripening seeds" of one between
persons whose interests are adverse; fifth , the issue must be
The present controversy revolves around the issue of whether ripe for judicial determination; and sixth , adequate relief is not
or not the RTC gravely abused its discretion when it denied the available through other means or other forms of action or
subject motion to dismiss. proceeding.34
Asserting the affirmative, petitioners argue that private Based on a judicious review of the records, the Court observes
respondents failed to satisfy the requirements for declaratory that while the first,35 second,36 and third37 requirements
relief and that the Court had already sustained with finality the appear to exist in this case, the fourth, fifth, and sixth
constitutionality of RA 9372. requirements, however, remain wanting.
On the contrary, private respondents maintain that the As to the fourth requisite, there is serious doubt that an actual
requirements for declaratory relief have been satisfied and that justiciable controversy or the "ripening seeds" of one exists in
the Court has yet to resolve the constitutionality of RA 9372, this case.
negating any grave abuse of discretion on the RTC’s part.
Pertinently, a justiciable controversy refers to an existing case
The Court’s Ruling or controversy that is appropriate or ripe for judicial
determination, not one that is conjectural or merely
The petition is meritorious. anticipatory.38 Corollary thereto, by "ripening seeds" it is
meant, not that sufficient accrued facts may be dispensed with,
An act of a court or tribunal can only be considered as with but that a dispute may be tried at its inception before it has
grave abuse of discretion when such act is done in a capricious accumulated the asperity, distemper, animosity, passion, and
or whimsical exercise of judgment as is equivalent to lack of violence of a full blown battle that looms ahead. The concept
jurisdiction.28 It is well-settled that the abuse of discretion to describes a state of facts indicating imminent and inevitable
be qualified as "grave" must be so patent or gross as to litigation provided that the issue is not settled and stabilized by
constitute an evasion of a positive duty or a virtual refusal to tranquilizing declaration.39
perform the duty or to act at all in contemplation of law.29 In
this relation, case law states that not every error in the A perusal of private respondents’ petition for declaratory relief
proceedings, or every erroneous conclusion of law or fact, would show that they have failed to demonstrate how they are
constitutes grave abuse of discretion.30 The degree of gravity, left to sustain or are in immediate danger to sustain some
as above-described, must be met. direct injury as a result of the enforcement of the assailed
provisions of RA 9372. Not far removed from the factual milieu
Applying these principles, the Court observes that while no in the Southern Hemisphere cases, private respondents only
grave abuse of discretion could be ascribed on the part of the assert general interests as citizens, and taxpayers and
RTC when it found that the Court did not pass upon the infractions which the government could prospectively commit if
constitutionality of RA 9372 in the Southern Hemisphere cases, the enforcement of the said law would remain untrammeled.
139
As their petition would disclose, private respondents’ fear of
prosecution was solely based on remarks of certain government All told, in view of the absence of the fourth and fifth requisites
officials which were addressed to the general public.40 They, for an action for declaratory relief, as well as the irrelevance of
however, failed to show how these remarks tended towards the sixth requisite, private respondents’ petition for declaratory
any prosecutorial or governmental action geared towards the relief should have been dismissed. Thus, by giving due course to
implementation of RA 9372 against them. In other words, there the same, it cannot be gainsaid that the RTC gravely abused its
was no particular, real or imminent threat to any of them. As discretion.
held in Southern Hemisphere:
WHEREFORE, the petition is GRANTED. Accordingly, the April23,
Without any justiciable controversy, the petitions have become 2012 and July 31, 2012 Orders of the Regional Trial Court of
pleas for declaratory relief, over which the Court has no original Quezon City, Branch 92 in SCA No. Q-07-60778 are REVERSED
jurisdiction. Then again, declaratory actions characterized by and SET ASIDE and the petition for declaratory relief before the
"double contingency," where both the activity the petitioners said court is hereby DISMISSED.
intend to undertake and the anticipated reaction to it of a
public official are merely theorized, lie beyond judicial review 60. HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and
for lack of ripeness.1âwphi1 SALUD ADAZA-MAGLASANG, namely, OSCAR A. MAGLASANG,
EDGAR A. MAGLASANG, CONCEPCION CHONA A.
The possibility of abuse in the implementation of RA 9372does MAGLASANG, GLENDA A. MAGLASANG-ARNAIZ, LERMA A.
not avail to take the present petitions out of the realm of the MAGLASANG, FELMA A. · MAGLASANG, FE DORIS A.
surreal and merely imagined. Such possibility is not peculiar to MAGLASANG, LEOLINO A. MAGLASANG, MARGIE LEILA A.
RA 9372 since the exercise of any power granted by law may be MAGLASANG,MA. MILALIE A. MAGLASANG, SALUD A.
abused. Allegations of abuse must be anchored on real events MAGLASANG, and MA. FLASALIE A. MAGLASANG,
before courts may step in to settle actual controversies REPRESENTING THE ESTATES OF THEIR AFORE-
involving rights which are legally demandable and NAMEDDECEASED PARENTS, Petitioners, vs.MANILA BANKING
enforceable.41 (Emphasis supplied; citations omitted) CORPORATION, now substituted by FIRST SOVEREIGN ASSET
MANAGEMENT SPV-AMC, INC. FSAMI, Respondent.
Thus, in the same light that the Court dismissed the SC petitions
in the Southern Hemisphere cases on the basis of, among Assailed in this petition for review on certiorari1 are the
others, lack of actual justiciable controversy (or the ripening Decision2 dated July 20, 2005 and Resolution3 dated January 4,
seeds of one), the RTC should have dismissed private 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 50410
respondents’ petition for declaratory relief all the same. which dismissed petitioners’ appeal and affirmed the Decision4
dated April 6, 1987 of the Regional Trial Court of Ormoc City,
It is well to note that private respondents also lack the required Branch 12 (RTC) directing petitioners to jointly and severally
locus standi to mount their constitutional challenge against the pay respondent Manila Banking Corporation the amount of
implementation of the above-stated provisions of RA 9372 ₱434,742.36, with applicable interests, representing the
since they have not shown any direct and personal interest in deficiency of the former’s total loan obligation to the latter
the case.42 While it has been previously held that after the extra-judicial foreclosure of the real estate mortgage
transcendental public importance dispenses with the subject of this case, including attorney’s fees and costs of suit.
requirement that the petitioner has experienced or is in actual
danger of suffering direct and personal injury,43 it must be The Facts
stressed that cases involving the constitutionality of penal
legislation belong to an altogether different genus of On June 16, 1975, spouses Flaviano and Salud Maglasang
constitutional litigation.44 Towards this end, compelling State (Sps.Maglasang) obtained a credit line from respondent5 in the
and societal interests in the proscription of harmful conduct amount of ₱350,000.00 which was secured by a real estate
necessitate a closer judicial scrutiny of locus standi,45 as in this mortgage6 executed over seven of their properties7 located in
case. To rule otherwise, would be to corrupt the settled Ormoc City and the Municipality of Kananga, Province of
doctrine of locus standi, as every worthy cause is an interest Leyte.8 They availed of their credit line by securing loans in the
shared by the general public.46 amounts of ₱209,790.50 and ₱139,805.83 on October 24,
1975and March 15, 1976, respectively,9 both of which
As to the fifth requisite for an action for declaratory relief, becoming due and demandable within a period of one year.
neither can it be inferred that the controversy at hand is ripe Further, the parties agreed that the said loans would earn
for adjudication since the possibility of abuse, based on the interest at 12% per annum (p.a.) and an additional 4% penalty
above-discussed allegations in private respondents’ petition, would be charged upon default.10
remain highly-speculative and merely theorized.1âwphi1 It is
well-settled that a question is ripe for adjudication when the After Flaviano Maglasang (Flaviano) died intestate on February
act being challenged has had a direct adverse effect on the 14,1977, his widow Salud Maglasang (Salud) and their surviving
individual challenging it.47 This private respondents failed to children, herein petitioners Oscar (Oscar), Concepcion Chona,
demonstrate in the case at bar. Lerma, Felma, FeDoris, Leolino, Margie Leila, Ma. Milalie, Salud
and Ma. Flasalie, all surnamed Maglasang, and Glenda
Finally, as regards the sixth requisite, the Court finds it Maglasang-Arnaiz, appointed11 their brother petitioner Edgar
irrelevant to proceed with a discussion on the availability of Maglasang (Edgar) as their attorney-in-fact.12 Thus, on March
adequate reliefs since no impending threat or injury to the 30, 1977, Edgar filed a verified petition for letters of
private respondents exists in the first place. administration of the intestate estate of Flaviano before the
140
then Court of First Instance of Leyte, Ormoc City, Branch 5 even on the assumption that it has not so waived its right to
(probate court), docketed as Sp. Proc. No. 1604-0.13 On August foreclose, it is nonetheless barred from filing any claim for any
9, 1977, the probate court issued an Order14 granting the deficiency amount.
petition, thereby appointing Edgar as the administrator15 of
Flaviano’s estate. During the pendency of the appeal, Flaviano’s widow, Salud,
passed away on July 25, 1997.28
In view of the issuance of letters of administration, the probate
court, on August 30, 1977, issued a Notice to Creditors16 for The CA Ruling
the filing of money claims against Flaviano’s estate.
Accordingly, as one of the creditors of Flaviano, respondent In a Decision29 dated July 20, 2005, the CA denied the
notified17 the probate court of its claim in the amount of petitioners’ appeal and affirmed the RTC’s Decision. At the
₱382,753.19 as of October 11, 1978, exclusive of interests and outset, it pointed out that the probate court erred when it,
charges. through the December 14, 1978 Order, closed and terminated
the proceedings in Sp. Proc. No. 1604-0 without first satisfying
During the pendency of the intestate proceedings, Edgar and the claims of the creditors of the estate – in particular,
Oscar were able to obtain several loans from respondent, respondent – in violation of Section 1, Rule 90 of the Rules.30
secured by promissory notes18 which they signed. As a consequence, respondent was not able to collect from the
petitioners and thereby was left with the option of foreclosing
In an Order19 dated December 14, 1978 (December 14, 1978 the real estate mortgage.31 Further, the CA held that Section 7,
Order),the probate court terminated the proceedings with the Rule 86 of the Rules does not apply to the present case since
surviving heirs executing an extra-judicial partition of the the same does not involve a mortgage made by the
properties of Flaviano’s estate. The loan obligations owed by administrator over any property belonging to the estate of the
the estate to respondent, however, remained unsatisfied due decedent.32 According to the CA, what should apply is Act No.
to respondent’s certification that Flaviano’s account was 313533 which entitles respondent to claim the deficiency
undergoing a restructuring. Nonetheless, the probate court amount after the extra-judicial foreclosure of the real estate
expressly recognized the rights of respondent under the mortgage of Sps. Maglasang’s properties.34
mortgage and promissory notes executed by the Sps.
Maglasang, specifically, its "right to foreclose the same within Petitioners’ motion for reconsideration was subsequently
the statutory period."20 denied in a Resolution35 dated January 4, 2006. Hence, the
present recourse.
In this light, respondent proceeded to extra-judicially foreclose
the mortgage covering the Sps. Maglasang’s properties and The Issue Before the Court
emerged as the highest bidder at the public auction for the
amount of ₱350,000.00.21 There, however, remained a The essential issue in this case is whether or not the CA erred in
deficiency on Sps. Maglasang’s obligation to respondent. Thus, affirming the RTC’s award of the deficiency amount in favor of
on June 24, 1981, respondent filed a suit to recover the respondent.
deficiency amount of ₱250,601.05 as of May 31, 1981 against
the estate of Flaviano, his widow Salud and petitioners, Petitioners assert36 that it is not Act No. 3135 but Section 7,
docketed as Civil Case No. 1998-0.22 Rule 86of the Rules which applies in this case. The latter
provision provides alternative and exclusive remedies for the
The RTC Ruling and Subsequent Proceedings satisfaction of respondent’s claim against the estate of
Flaviano.37 Corollarily, having filed its claim against the estate
After trial on the merits, the RTC (formerly, the probate during the intestate proceedings, petitioners argue that
court)23 rendered a Decision24 on April 6, 1987 directing the respondent had effectively waived the remedy of foreclosure
petitioners to pay respondent, jointly and severally, the amount and, even assuming that it still had the right to do so, it was
of ₱434,742.36 with interest at the rate of 12% p.a., plus a 4% precluded from filing a suit for the recovery of the deficiency
penalty charge, reckoned from September 5,1984 until fully obligation.38
paid.25 The RTC found that it was shown, by a preponderance
of evidence, that petitioners, after the extra-judicial foreclosure Likewise, petitioners maintain that the extra-judicial foreclosure
of all the properties mortgaged, still have an outstanding of the subject properties was null and void, not having been
obligation in the amount and as of the date as above-stated. conducted in the capital of the Province of Leyte in violation of
The RTC also found in order the payment of interests and the stipulations in the real estate mortgage contract.39 They
penalty charges as above-mentioned as well as attorney’s fees likewise deny any personal liability for the loans taken by their
equivalent to 10% of the outstanding obligation.26 deceased parents.40
Dissatisfied, petitioners elevated the case to the CA on appeal, The Court’s Ruling
contending,27 inter alia, that the remedies available to
respondent under Section 7, Rule 86 of the Rules of Court The petition is partly meritorious.
(Rules) are alternative and exclusive, such that the election of
one operates as a waiver or abandonment of the others. Thus, Claims against deceased persons should be filed during the
when respondent filed its claim against the estate of Flaviano in settlement proceedings of their estate.41 Such proceedings are
the proceedings before the probate court, it effectively primarily governed by special rules found under Rules 73 to 90
abandoned its right to foreclose on the mortgage. Moreover, of the Rules, although rules governing ordinary actions may, as
141
far as practicable, apply suppletorily.42 Among these special claim; and (c) rely on the mortgage exclusively, or other
rules, Section 7, Rule 86 of the Rules (Section 7, Rule86) security and foreclose the same before it is barred by
provides the rule in dealing with secured claims against the prescription, without the right to file a claim for any
estate: deficiency.45 It must, however, be emphasized that these
remedies are distinct, independent and mutually exclusive from
SEC. 7. Mortgage debt due from estate. – A creditor holding a each other; thus, the election of one effectively bars the
claim against the deceased secured by a mortgage or other exercise of the others. With respect to real properties, the
collateral security, may abandon the security and prosecute his Court in Bank of America v. American Realty Corporation46
claim in the manner provided in this rule, and share in the pronounced:
general distribution of the assets of the estate; or he may
foreclose his mortgage or realize upon his security, by action in In our jurisdiction, the remedies available to the mortgage
court, making the executor or administrator a party defendant, creditor are deemed alternative and not cumulative. Notably,
and if there is a judgment for a deficiency, after the sale of the an election of one remedy operates as a waiver of the other.
mortgaged premises, or the property pledged, in the For this purpose, a remedy is deemed chosen upon the filing of
foreclosure or other proceeding to realize upon the security, he the suit for collection or upon the filing of the complaint in an
may claim his deficiency judgment in the manner provided in action for foreclosure of mortgage, pursuant to the provision of
the preceding section; or he may rely upon his mortgage or Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial
other security alone, and foreclose the same at any time within foreclosure, such remedy is deemed elected by the mortgage
the period of the statute of limitations, and in that event he creditor upon filing of the petition not with any court of justice
shall not be admitted as a creditor, and shall receive no share in but with the Office of the Sheriff of the province where the sale
the distribution of the other assets of the estate; but nothing is to be made, in accordance with the provisions of Act No.
herein contained shall prohibit the executor or administrator 3135, as amended by Act No.4118.47 (Emphasis supplied)
from redeeming the property mortgaged or pledged, by paying
the debt for which it is held as security, under the direction of Anent the third remedy, it must be mentioned that the same
the court, if the court shall adjudged it to be for the best includes the option of extra-judicially foreclosing the mortgage
interest of the estate that such redemption shall be made. under Act No. 3135,as availed of by respondent in this case.
(Emphasis and underscoring supplied) However, the plain result of adopting the last mode of
foreclosure is that the creditor waives his right to recover any
As the foregoing generally speaks of "a creditor holding a claim deficiency from the estate.48 These precepts were discussed in
against the deceased secured by a mortgage or other collateral the PNB case, citing Perez v. Philippine National Bank49 which
security" as above-highlighted, it may be reasonably concluded overturned the earlier Pasno v. Ravina ruling:50
that the aforementioned section covers all secured claims,
whether by mortgage or any other form of collateral, which a Case law now holds that this rule grants to the mortgagee three
creditor may enforce against the estate of the deceased debtor. distinct, independent and mutually exclusive remedies that can
On the contrary, nowhere from its language can it be fairly be alternatively pursued by the mortgage creditor for the
deducible that the said section would – as the CA interpreted – satisfaction of his credit in case the mortgagor dies, among
narrowly apply only to mortgages made by the administrator them:
over any property belonging to the estate of the decedent. To
note, mortgages of estate property executed by the (1) to waive the mortgage and claim the entire debt from the
administrator, are also governed by Rule 89 of the Rules, estate of the mortgagor as an ordinary claim;
captioned as "Sales, Mortgages, and Other Encumbrances of
Property of Decedent." (2) to foreclose the mortgage judicially and prove any
deficiency as an ordinary claim; and
In this accord, it bears to stress that the CA’s reliance on
Philippine National Bank v. CA43 (PNB) was misplaced as the (3) to rely on the mortgage exclusively, foreclosing the same at
said case did not, in any manner, limit the scope of Section 7, anytime before it is barred by prescription without right to file a
Rule 86. It only stated that the aforesaid section equally applies claim for any deficiency
to cases where the administrator mortgages the property of the
estate to secure the loan he obtained.44 Clearly, the In Perez v. Philippine National Bank, reversing Pasno vs. Ravina,
pronouncement was a ruling of inclusion and not one which we held:
created a distinction. It cannot, therefore, be doubted that it is
Section 7, Rule 86which remains applicable in dealing with a The ruling in Pasno v. Ravina not having been reiterated in any
creditor’s claim against the mortgaged property of the other case, we have carefully reexamined the same, and after
deceased debtor, as in this case, as well as mortgages made by mature deliberation have reached the conclusion that the
the administrator, as that in the PNB case. dissenting opinion is more in conformity with reason and law.
Of the three alternative courses that section 7, Rule 87 (now
Jurisprudence breaks down the rule under Section 7, Rule 86 Rule 86), offers the mortgage creditor, to wit, (1) to waive the
and explains that the secured creditor has three mortgage and claim the entire debt from the estate of the
remedies/options that he may alternatively adopt for the mortgagor as an ordinary claim; (2) foreclose the mortgage
satisfaction of his indebtedness. In particular, he may choose judicially and prove any deficiency as an ordinary claim; and (3)
to: (a) waive the mortgage and claim the entire debt from the to rely on the mortgage exclusively, foreclosing the same at any
estate of the mortgagor as an ordinary claim; (b) foreclose the time before it is barred by prescription, without right to file a
mortgage judicially and prove the deficiency as an ordinary claim for any deficiency, the majority opinion in Pasno v.
142
Ravina, in requiring a judicial foreclosure, virtually wipes out As may be gleaned from the records, the stipulation under the
the third alternative conceded by the Rules to the mortgage real estate mortgage54 executed by Sps. Maglasang which fixed
creditor, and which would precisely include extra-judicial the place of the foreclosure sale at Tacloban City lacks words of
foreclosures by contrast with the second alternative. exclusivity which would bar any other acceptable for a wherein
the said sale may be conducted, to wit:
The plain result of adopting the last mode of foreclosure is that
the creditor waives his right to recover any deficiency from the It is hereby agreed that in case of foreclosure of this mortgage
estate. Following the Perez ruling that the third mode includes under Act 3135, the auction sale shall be held at the capital of
the province if the property is within the territorial jurisdiction
extrajudicial foreclosure sales, the result of extrajudicial of the province concerned, or shall be held in the city if the
foreclosure is that the creditor waives any further deficiency property is within the territorial jurisdiction of the city
claim. x x x.51 (Emphases and underscoring supplied; italics in concerned; x x x.55
the original)
Case law states that absent such qualifying or restrictive words
To obviate any confusion, the Court observes that the to indicate the exclusivity of the agreed forum, the stipulated
operation of Act No. 3135 does not entirely discount the place should only be as an additional, not a limiting venue.56 As
application of Section 7, Rule 86, or vice-versa. Rather, the two a consequence, the stipulated venue and that provided under
complement each other within their respective spheres of Act No. 3135 can be applied alternatively.
operation. On the one hand, Section 7, Rule 86 lays down the
options for the secured creditor to claim against the estate and, In particular, Section 2 of Act No. 3135 allows the foreclosure
according to jurisprudence, the availment of the third option sale to be done within the province where the property to be
bars him from claiming any deficiency amount. On the other sold is situated, viz.:
hand, after the third option is chosen, the procedure governing
the manner in which the extra-judicial foreclosure should SEC. 2. Said sale cannot be made legally outside of the province
proceed would still be governed by the provisions of Act No. which the property sold is situated; and in case the place within
3135.Simply put, Section 7, Rule 86 governs the parameters and said province in which the sale is to be made is subject to
the extent to which a claim may be advanced against the stipulation, such sale shall be made in said place or in the
estate, whereas Act No. 3135sets out the specific procedure to municipal building of the municipality in which the property or
be followed when the creditor subsequently chooses the third part thereof is situated. (Italics supplied) ..
option – specifically, that of extra-judicially foreclosing real
property belonging to the estate. The application of the In this regard, since the auction sale was conducted in Ormoc
procedure under Act No. 3135 must be concordant with Section City, which is within the territorial jurisdiction of the Province of
7, Rule 86 as the latter is a special rule applicable to claims Leyte, then the Court finds sufficient compliance with the
against the estate, and at the same time, since Section 7, Rule above-cited requirement.
86 does not detail the procedure for extra-judicial foreclosures,
the formalities governing the manner of availing of the third All told, finding that the extra-judicial foreclosure subject of this
option – such as the place where the application for extra- case was properly conducted in accordance with the formalities
judicial foreclosure is filed, the requirements of publication and of Act No. 3135,the Court upholds the same as a valid exercise
posting and the place of sale – must be governed by Act No. of respondent's third option under Section 7, Rule 86. To
3135. reiterate, respondent cannot, however, file any suit to recover
any deficiency amount since it effectively waived its right
In this case, respondent sought to extra-judicially foreclose the thereto when it chose to avail of extra-judicial foreclosure as
mortgage of the properties previously belonging to Sps. jurisprudence instructs.
Maglasang (and now, their estates) and, therefore, availed of
the third option. Lest it be misunderstood, it did not exercise WHEREFORE, the petition is PARTLY GRANTED. The complaint
the first option of directly filing a claim against the estate, as for the recovery of the deficiency amount after extra-judicial
petitioners assert, since it merely notified52 the probate court foreclosure filed by respondent Manila Banking Corporation is
of the outstanding amount of its claim against the estate of hereby DISMISSED. The extra-judicial foreclosure of the
Flaviano and that it was currently restructuring the account.53 mortgaged properties, however, stands.
Thus, having unequivocally opted to exercise the third option of
extra-judicial foreclosure under Section 7, Rule 86, respondent 61. RAMONITO O. ACAAC, PETALFOUNDATION, INC.,
is now precluded from filing a suit to recover any deficiency APOLINARIO M. ELORDE, HECTOR ACAAC, and ROMEO
amount as earlier discussed. BULAWIN, Petitioners, vs.MELQUIADES D. AZCUNA, JR., in his
capacity as Mayor, and MARIETES B. BONALOS, in her capacity
As a final point, petitioners maintain that the extra-judicial as Municipal Engineer and Building Official-Designate, both of
foreclosure of the subject properties was null and void since the Lopez Jaena Municipality, Misamis Occidental, Respondents.
same was conducted in violation of the stipulation in the real
estate mortgage contract stating that the auction sale should Assailed in this petition for review on certiorari1 are the
be held in the capital of the province where the properties are Decision2 dated September 30, 2008 and Resolution3 dated
located, i.e., the Province of Leyte. March 9, 2009 of the Court of Appeals (CA) in CA-G.R. CV No.
00284-MIN which reversed and set aside the Decision4 dated
The Court disagrees. November 26, 2004 of the Regional Trial Court of Oroquieta
City, Branch 2 (RTC) in Civil Case No. 4684 for injunction.
143
of 1991" (LGC);and (c) it was not approved by the SP. Therefore,
The Facts its implementation should be enjoined.17
Petitioner People’s Eco-Tourism and Livelihood Foundation, In their Answer,18 respondents averred that petitioners have
Inc.(PETAL) is a non-governmental organization, founded by no cause of action against them since they are not the lawful
petitioner Ramonito O. Acaac, which is engaged in the owners or lessees of Capayas Island, which was classified as
protection and conservation of ecology, tourism, and livelihood timberland and property belonging to the public domain.
projects within Misamis Occidental.5 In line with its objectives, Further, they maintained that they have complied with all the
PETAL built some cottages made of indigenous materials on publication and hearing requirements for the passage of the
Capayas Island (a 1,605 square meter islet) in 1995 as well as a subject ordinance, which was deemed approved by operation
seminar cottage in 20016 which it rented out to the public and of law for failure of the SP to take any positive action thereon
became the source of livelihood of its beneficiaries,7 among as provided under the LGC. As such, it is valid and enforceable.
whom are petitioners Hector Acaac and Romeo Bulawin.
The RTC Ruling
On April 11 and May 20, 2002, however, respondents Mayor
Melquiades D. Azcuna, Jr. (Azcuna) and Building Official On November 26, 2004, the RTC rendered a Decision19
Marietes B. Bonalos issued separate Notices of Illegal declaring the subject ordinance as invalid/void based on the
Construction against PETAL for its failure to apply for a building following grounds: (a) PETAL’s protest has not been resolved
permit prior to the construction of its buildings in violation of and that the subject ordinance was not duly approved by the
Presidential Decree No. 1096,8 otherwise known as the SP; (b) the said ordinance was not published in a newspaper of
"National Building Code of the Philippines," ordering it to stop general circulation nor was it posted in public places; (c)
all illegal building activities on Capayas Island. When PETAL Capayas Island is classified as timberland, hence, not suited to
failed to comply with the requirements for the issuance of a be a bird or fish sanctuary; and (d) the authority and control
building permit, a Third and Final Notice of Illegal Construction over timberlands belong to the national government, through
was issued by respondents against it on July 8, 2002,9 but still the Department of Environment and Natural Resources
the same remained unheeded. (DENR).20 Based on the foregoing, respondents were ordered,
among others, to desist from closing Capayas Island to the
It was also on July 8, 2002 that the Sangguniang Bayan of Lopez public.21 However, the petitioners were ordered to remove the
Jaena (SB) adopted Municipal Ordinance No. 02, Series of structures they built thereon without valid building permits22
200210 (subject ordinance) which prohibited, among others: (a) since they were found to have no title over the disputed
the entry of any entity, association, corporation or organization property.23
inside the sanctuaries;11 and (b) the construction of any
structures, permanent or temporary, on the premises, except if Aggrieved, respondents appealed the foregoing
authorized by the local government.12 On July 12, 2002, pronouncement before the CA, docketed as CA-G.R. CV No.
Azcuna approved the subject ordinance; hence, the same was 00284-MIN.
submitted to the Sangguniang Panlalawigan of Misamis
Occidental (SP), which in turn, conducted a joint hearing on the The Proceedings Before the CA
matter. Thereafter, notices were posted at the designated
areas, including Capayas Island, declaring the premises as On September 30, 2008, the CA rendered a Decision24 granting
government property and prohibiting ingress and egress respondents’ appeal.
thereto.13
Contrary to the RTC’s ruling, it held that the subject ordinance
On August 23, 2002, a Notice of Voluntary Demolition was was deemed approved upon failure of the SP to declare the
served upon PETAL directing it to remove the structures it built same invalid within30 days after its submission in accordance
on Capayas Island. Among the reasons cited was its violation of with Section 56 of the LGC.25 It also gave credence to Azcuna’s
the subject ordinance. A similar notice was also served against testimony that the subject ordinance was posted and published
individual petitioners on October 25, 2002. in conspicuous places in their municipality, and in the bulletin
board.26 Moreover, public consultations were conducted with
On October 29, 2002, petitioners filed an action praying for the various groups before the subject ordinance was passed.27 The
issuance of a temporary restraining order, injunction and CA further ruled that the Municipality of Lopez Jaena was
damages15 against respondents before the RTC, docketed as vested with sufficient power and authority to pass and adopt
Civil Case No. 4684, alleging that they have prior vested rights the subject ordinance under Section 447 in relation to Section
to occupy and utilize Capayas Island. PETAL claimed that its 16 of the LGC.28 Therefore, it is not only the DENR that could
predecessors-in-interest have been in possession thereof since create and administer sanctuaries.29 Having enacted the
1961, with whom it entered into a Memorandum of Agreement subject ordinance within its powers as a municipality and in
for the operation of the said island as a camping, tourism, and accordance with the procedure prescribed by law, the CA
recreational resort; thus, the issuance of the subject ordinance pronounced that the subject ordinance is valid.30
was prejudicial to their interest as they were deprived of their
livelihood. Moreover, PETAL assailed the validity of the subject On the other hand, the CA upheld the RTC’s finding that
ordinance on the following grounds: (a) it was adopted without petitioner shave no proprietary rights over the Capayas Island,
public consultation; (b) it was not published in a newspaper of thereby rendering their action for injunction improper.31
general circulation in the province as required by Republic Act
No.7160,16 otherwise known as "The Local Government Code
144
Petitioners’ motion for reconsideration32 therefrom was declaration of the sangguniang panlalawigan that the ordinance
denied by the CA in a Resolution33 dated March 9, 2009. is invalid in whole or in part. x x x.
Hence, the instant petition.
This construction would be more in consonance with the rule of
The Issue Before the Court statutory construction that the parts of a statute must be read
together in such a manner as to give effect to all of them and
The essential issue in this case is whether or not the subject that such parts shall not be construed as contradicting each
ordinance is valid and enforceable against petitioners.34 other. x x x laws are given a reasonable construction such that
apparently conflicting provisions are allowed to stand and given
The Court’s Ruling effect by reconciling them, reference being had to the moving
spirit behind the enactment of the statute.37
The petition lacks merit.
Neither can the Court give credence to petitioners’ contentions
Section 56 of the LGC provides: that the subject ordinance was not published nor posted in
accordance with the provisions of the LGC.38 It is noteworthy
SEC. 56. Review of Component City and Municipal Ordinances that petitioners’ own evidence reveals that a public hearing39
or Resolutions by the Sangguniang Panlalawigan. – (a) Within was conducted prior to the promulgation of the subject
three (3) days after approval, the secretary to the Sangguniang ordinance. Moreover, other than their bare allegations,
Panlungsod or Sangguniang Bayan shall forward to the petitioners failed to present any evidence to show that no
Sangguniang Panlalawigan for review, copies of approved publication or posting of the subject ordinance was made. In
ordinances and the resolutions approving the local contrast, Azcuna had testified that they have complied with the
development plans and public investment programs formulated publication and posting requirements.40 While it is true that he
by the local development councils. likewise failed to submit any other evidence thereon, still, in
accordance with the presumption of validity in favor of an
(b) Within thirty (30) days after receipt of copies of such ordinance, its constitutionality or legality should be upheld in
ordinances and resolutions, the Sangguniang Panlalawigan shall the absence of any controverting evidence that the procedure
examine the documents or transmit them to the provincial prescribed by law was not observed in its enactment. Likewise,
attorney, or if there be none, to the provincial prosecutor for petitioners had the burden of proving their own allegation,
prompt examination. The provincial attorney or provincial which they, however, failed to do. In the similar case of
prosecutor shall, within a period of ten (10) days from receipt Figuerres v. CA,41 citing United States v. Cristobal,42 the Court
of the documents, inform the Sangguniang Panlalawigan in upheld the presumptive validity of the ordinance therein
writing his comments or recommendations, which may be despite the lack of controverting evidence on the part of the
considered by the Sangguniang Panlalawigan in making its local government to show that public hearings were conducted
decision. in light of: (a) the oppositor’s equal lack of controverting
evidence to demonstrate the local government’s non-
(c) If the Sangguniang Panlalawigan finds that such an compliance with the said public hearing; and (b) the fact that
ordinance or resolution is beyond the power conferred upon the local government’s non-compliance was a negative
the Sangguniang Panlungsod or Sangguniang Bayan concerned, allegation essential to the oppositor’s cause of action:
it shall declare such ordinance or resolution invalid in whole or
in part. The Sangguniang Panlalawigan shall enter its action in However, it is noteworthy that apart from her bare assertions,
the minutes and shall advise the corresponding city or petitioner Figuerres has not presented any evidence to show
municipal authorities of the action it has taken. that no public hearings were conducted prior to the enactment
of the ordinances in question. On the other hand, the
(d) If no action has been taken by the Sangguniang Municipality of Mandaluyong claims that public hearings were
Panlalawigan within thirty (30) days after submission of such an indeed conducted before the subject ordinances were adopted,
ordinance or resolution, the same shall be presumed consistent although it likewise failed to submit any evidence to establish
with law and therefore valid. this allegation. However, in accordance with the presumption
of validity in favor of an ordinance, their constitutionality or
In this case, petitioners maintain that the subject ordinance legality should be upheld in the absence of evidence showing
cannot be deemed approved through the mere passage of time that the procedure prescribed by law was not observed in their
considering that the same is still pending with the Committee enactment. In an analogous case, United States v. Cristobal, it
on Fisheries and Aquatic Resources of the SP.35 It, however, was alleged that the ordinance making it a crime for anyone to
bears to note that more than 30 days have already elapsed obstruct waterways had not been submitted by the provincial
from the time the said ordinance was submitted to the latter board as required by §§2232-2233 of the Administrative Code.
for review by the SB;36 hence, it should be deemed approved In rejecting this contention, the Court held:
and valid pursuant to Section 56 (d) above. As properly
observed by the CA: From the judgment of the Court of First Instance the defendant
appealed to this court upon the theory that the ordinance in
Par. (d) should be read in conjunction with par. (c), in order to question was adopted without authority on the part of the
arrive at the meaning of the disputed word, "action." It is clear, municipality and was therefore unconstitutional. The appellant
based on the foregoing provision, that the action that must be argues that there was no proof adduced during the trial of the
entered in the minutes of the sangguniang panlalawigan is the cause showing that said ordinance had been approved by the
provincial board. Considering the provisions of law that it is the
145
duty of the provincial board to approve or disapprove unlawfully and feloniously use personal violence on the
ordinances adopted by the municipal councils of the different complainant, by pulling her hair, punching complainant’s back,
municipalities, we will assume, in the absence of proof to the shoulder and left eye, thereby demeaning and degrading the
contrary, that the law has been complied with. complainant’s intrinsic worth and dignity as a human being, in
violation of Section 5(a) of the Republic Act 9262.4
We have a right to assume that officials have done that which
the law requires them to do, in the absence of positive proof to After examining the supporting evidence, the RTC found
the contrary. probable cause and consequently, issued a warrant of arrest
against petitioner on November 19, 2009. The latter posted a
Furthermore, the lack of a public hearing is a negative cash bond for his provisional liberty and on August 12, 2010,
allegation essential to petitioner's cause of action in the filed a Motion for Judicial Determination of Probable Cause
present case. Hence, as petitioner is the party asserting it, she with Motion to Quash the Information. Petitioner averred that
has the burden of proof. Since petitioner failed to rebut the at the time of the alleged incident on July 13, 2009, he was no
presumption of validity in favor of the subject ordinances and longer in a dating relationship with private respondent; hence,
to discharge the burden of proving that no public hearings were RA 9262 was inapplicable.
conducted prior to the enactment thereof, we are constrained
to uphold their constitutionality or legality.43 (Emphases In her affidavit, private respondent admitted that her
supplied, citation omitted) relationship with petitioner had ended prior to the subject
incident. She narrated that on July 13, 2009, she sought
All told, the Court finds no reversible error committed by the payment of the money she had lent to petitioner but the latter
CA in upholding the validity of the subject ordinance. could not pay. She then inquired from petitioner if he was
responsible for spreading rumors about her which he admitted.
In any event, petitioners have not shown any valid title44 to the Thereupon, private respondent slapped petitioner causing the
property in dispute to be entitled to its possession. Besides, the latter to inflict on her the physical injuries alleged in the
RTC’s order directing the removal of the structures built by Information.
petitioners on Capayas Island without building permits was not
appealed. As such, the same should now be deemed as final The RTC Ruling
and conclusive upon them.
The RTC denied petitioner’s motion. It did not consider material
WHEREFORE, the petition is DENIED. The Decision dated the fact that the parties’ dating relationship had ceased prior to
September 30, 2008 and Resolution dated March 9, 2009 of the the incident, ratiocinating that since the parties had admitted a
Court of Appeals in CA-G.R. CV No. 00284-MIN are hereby prior dating relationship, the infliction of slight physical injuries
AFFIRMED. constituted an act of violence against women and their children
as defined in Sec. 3(a) of RA 9262.
62. KARLO ANGELO DABALOS y SAN DIEGO, Petitioner,
vs.REGIONAL TRIAL COURT,BRANCH 59, ANGELES CITY Issues
(PAMPANGA), REPRESENTED BY ITS PRESIDING JUDGE MA.
ANGELICA T. PARAS-QUIAMBAO; THE OFFICE OF THE CITY Hence, the instant petition raising the following issues: 1)
PROSECUTOR, ANGELES CITY (PAMPANGA); AND ABC,1 whether the RTC has jurisdiction over the offense; 2) whether
Respondents. RA 9262 should be construed in a manner that will favor the
accused; and 3) whether the Information alleging a fact
The Court will not read into Republic Act (RA) No. 9262 a contrary to what has been admitted should be quashed.
provision that would render it toothless in the pursuit of the
declared policy of the State to protect women and children The Court’s Ruling
from violence and threats to their personal safety and security.
The petition has no merit.
Before the Court is a petition for certiorari and prohibition
assailing the Orders dated September 13, 20102 and October 5, Petitioner insists that the act which resulted in physical injuries
20103 of the Regional Trial Court (RTC) of Angeles City, Branch to private respondent is not covered by RA 9262 because its
59 in Criminal Case No. 09-5210 which denied petitioner’s proximate cause was not their dating relationship. Instead, he
Motion for Judicial Determination of Probable Cause with claims that the offense committed was only slight physical
Motion to Quash the Information. injuries under the Revised Penal Code which falls under the
jurisdiction of the Municipal Trial Court.
The Facts
The Court is not persuaded.
Petitioner was charged with violation of Section 5(a) of RA 9262
before the RTC of Angeles City, Branch 59, in an Information Sec. 3(a) of RA 9262 reads:
which states:
SEC. 3. Definition of Terms.- As used in this Act, (a) "Violence
That on or about the 13th day of July, 2009, in the City of against women and their children" refers to any act or a series
Angeles, Philippines, and within the jurisdiction of this of acts committed by any person against a woman who is his
Honorable Court, the above-named accused, being then the wife, former wife, or against a woman with whom the person
boyfriend of the complainant, x x x did then and there willfully, has or had a sexual or dating relationship, or with whom he has
146
a common child, or against her child whether legitimate or harm to private respondent, the offense is covered by RA 9262
illegitimate, within or without the family abode, which result in which falls under the jurisdiction of the RTC in accordance with
or is likely to result in physical, sexual, psychological harm or Sec. 7 of the said law which reads:
suffering, or economic abuse including threats of such acts,
battery, assault, coercion, harassment or arbitrary deprivation SEC. 7. Venue – The Regional Trial Court designated as a Family
of liberty. x x x. Court shall have original and exclusive jurisdiction over cases of
violence against women and their children under this law. In
The law is broad in scope but specifies two limiting the absence of such court in the place where the offense was
qualifications for any act or series of acts to be considered as a committed, the case shall be filed in the Regional Trial Court
crime of violence against women through physical harm, where the crime or any of its elements was committed at the
namely: 1) it is committed against a woman or her child and the option of the complainant.
woman is the offender’s wife, former wife, or with whom he
has or had sexual or dating relationship or with whom he has a Finally, the Court finds the Order9 of the RTC, giving the
common child; and 2) it results in or is likely to result in physical prosecutor a period of two (2) days to amend the Information
harm or suffering. to reflect the cessation of the dating relationship between the
petitioner and the offended party, to be in accord with Sec. 4 of
In Ang v. Court of Appeals,5 the Court enumerated the Rule 117 of the Rules of Court, to wit:
elements of the crime of violence against women through
harassment, to wit: SEC. 4. Amendment of complaint or information.- If the motion
to quash is based on an alleged defect of the complaint or
1. The offender has or had a sexual or dating relationship with information which can be cured by amendment, the court shall
the offended woman; order that an amendment be made.1âwphi1
2. The offender, by himself or through another, commits an act Furthermore, Sec. 14 of Rule 110 of the Rules of Court provides
or series of acts of harassment against the woman; and that an information may be amended, in form or in substance,
without leave of court, at any time before the accused enters
3. The harassment alarms or causes substantial emotional or his plea. In the present case, the accused petitioner has not yet
psychological distress to her.6 been arraigned, hence, the RTC was correct in directing the
amendment of the Information and in denying the motion to
Notably, while it is required that the offender has or had a quash the same.
sexual or dating relationship with the offended woman, for RA
9262 to be applicable, it is not indispensable that the act of WHEREFORE, the petition is DISMISSED. The Orders dated
violence be a consequence of such relationship. Nowhere in the September 13, 2010 and October 5, 2010 of the Regional Trial
law can such limitation be inferred. Hence, applying the rule on Court ( RTC) of Angeles City, Branch 59 in Criminal Case No. 09-
statutory construction that when the law does not distinguish, 5210 are AF.FI RM ED. The Temporary Restraining Order issued
neither should the courts, then, clearly, the punishable acts by the Court is LIFTED and the RTC is directed to continue with
refer to all acts of violence against women with whom the the proceedings in Criminal Case No. 09-5210.
offender has or had a sexual or dating relationship. As correctly
ruled by the RTC, it is immaterial whether the relationship had 63. MARIANO T. ONG, Complainant, vs.EVA G. BASIYA-
ceased for as long as there is sufficient evidence showing the SARATAN, CLERK OF COURT, REGIONAL TRIAL COURT, ILOILO
past or present existence of such relationship between the CITY, BRANCH 32, Respondent.
offender and the victim when the physical harm was
committed. Consequently, the Court cannot depart from the On June 13, 2011, Mariano T. Ong (complainant) filed a verified
parallelism in Ang and give credence to petitioner's assertion letter-complaint1 before the Office of the Court Administrator
that the act of violence should be due to the sexual or dating (OCA), charging Clerk of Court Eva G. Basiya-Saratan
relationship. (respondent) of the Regional Trial Court (RTC) of Iloilo City,
Branch 32 for inefficiency and/or negligence in the
Neither can the Court construe the statute in favor of petitioner performance of her official duties. Complainant averred that
using the rule of lenity7 because there is no ambiguity in RA respondent repeatedly failed to issue Alias Writs of Execution
9262 that would necessitate any construction. While the degree for almost three (3) years from the time she was first directed
of physical harm under RA 9262 and Article 2668 of the Revised to do so by the RTC in its Order2 dated September 26, 2008 in
Penal Code are the same, there is sufficient justification for Civil Case No. 18978.
prescribing a higher penalty for the former. Clearly, the
legislative intent is to purposely impose a more severe sanction The Facts
on the offenders whose violent act/s physically harm women
with whom they have or had a sexual or dating relationship, Complainant is one of the defendants/judgment obligees in the
and/or their children with the end in view of promoting the Decision dated June 21, 1999 rendered in the aforementioned
protection of women and children. case,3 in the amount of ₱800,000.00 representing damages and
attorney’s fees. To implement the judgment, the RTC issued the
Accordingly, the Information having sufficiently alleged the Order dated April 24, 2006 granting the issuance of the writ of
necessary elements of the crime, such as: a dating relationship execution. Since the judgment has remained unsatisfied,
between the petitioner and the private respondent; the act of complainant moved for the issuance of an Alias Writ of
violence committed by the petitioner; and the resulting physical Execution, which was granted by the RTC in its Order dated
147
September 26, 2008, with a further directive to the Sheriff of
the RTC of Valenzuela City, Branch 72 to proceed against The Court finds the recommendation of the OCA to be well-
plaintiff's attachment bond issued by Prudential Guarantee and taken.
Assurance, Inc.4
Section 1, Canon IV of the Code of Conduct for Court
On November 26, 2010 or after the lapse of more than two (2) Personnel16 enjoins court personnel to perform their official
years with no action on the part of respondent, the RTC again duties properly and with diligence at all times. Clerks of Court
directed the issuance of an Alias Writ of Execution and its like respondent are primarily responsible for the speedy and
implementation by Sheriff Romero L. Rivera (Sheriff Rivera).5 efficient service of all court processes and writs. Hence, they
Notwithstanding, respondent did not issue any, prompting cannot be allowed to slacken on their work since they are
complainant to file a "Very Urgent Motion to Be Furnished charged with the duty of keeping the records and the seal of
Certified True Copy of Alias Writ of Execution,"6 which the RTC the court, issuing processes, entering judgments and orders,
granted in its Order dated January 14, 2011.7 and giving certified copies of records upon request. As such,
they are expected to possess a high degree of discipline and
On February 7, 2011, complainant filed a Manifestation and efficiency in the performance of their functions to help ensure
Motion,8 followed by a subsequent urgent motion9 dated April that the cause of justice is done without delay.17
27, 2011, seeking to compel respondent to comply with the
court's directive. He also averred that on February 1, 2011, he As an officer of the court, respondent was duty-bound to use
received an unsigned and uncertified copy of the Alias reasonable skill and diligence in the performance of her
Amended Writ of Execution10 dated June 7, 2007, addressed to officially-designated duties as clerk of court,18 failing which,
"The Provincial Sheriff of Iloilo or any of his Lawful Deputies" warrants the imposition of administrative sanctions. In this
and not to Sheriff Rivera, the deputized sheriff. case, respondent unjustifiably failed to issue the alias writs of
execution to implement the judgment in Civil Case No. 18978
On August 15, 2011, the RTC issued an Amended Order11 despite orders from the RTC. Moreover, she failed to file the
enjoining respondent to issue a certified true copy of the required comment in disregard of the duty of every employee
Amended Writ of Execution to complainant and to Sheriff in the judiciary to obey the orders and processes of the Court
Rivera. But up to the filing of the instant administrative without delay. Such act evinces lack of interest in clearing her
complaint, no action has been taken by respondent. name, constituting an implied admission of the charges.19
The Action and Recommendation of the OCA Consequently, the Court finds her guilty of refusal to perform
official duty classified as a grave offense under Section
In the 1st Indorsement12 dated June 17, 2011, the OCA 52(A)(18) of the Revised Uniform Rules on Administrative Cases
required respondent to file her comment to the complaint in the Civil Service, punishable with suspension of six (6)
which was reiterated in the 1st Tracer13 dated October 25, months and one (1) day to one (1) year for the first offense and
2011. However, no comment was submitted. by dismissal for the second offense.1âwphi1
Upon evaluation of the complaint, the OCA found respondent WHEREFORE, the Court finds respondent ATTY. EVA G. BASIYA-
to have been remiss in the performance of her duties as Clerk SARATAN GUILTY of refusal to perform official duty and
of Court of the RTC of Iloilo City, Branch 32, in violation of accordingly, SUSPENDS her from office for six (6) months and
Section 1, Canon IV of the Code of Conduct for Court Personnel, one (1) day without pay effective immediately upon receipt of
underscoring her failure to issue the corresponding Alias Writs this resolution. She is STERNLY WARNED once again that a
of Execution as directed by the RTC as well as her failure to commission of the same or similar offense in the future shall be
comment on the allegations of the complainant. The OCA also dealt with more severely.
noted that this is not the first time respondent had failed to
perform her official functions. In another complaint filed Let a copy of this resolution be attached to the personal records
against her by Atty. Raul A. Muyco,14 she was reprimanded by of respondent in the Office of Administrative Services, Office of
the Court for her failure to issue on time a certification the Court Administrator.
requested by the complainant, and sternly warned that the
commission of similar acts would be dealt with more severely. 64. ROMEO A. GONTANG, IN HIS OFFICIAL CAPACITY AS
Accordingly, the OCA, applying Rule IV of the Uniform Rules on MAYOR OF GAINZA, CAMARINES SUR, Petitioner, vs.ENGR.
Administrative Cases in the Civil Service,15 recommended her CECILIA ALAYAN, Respondent.
suspension from the service for six (6) months and one (1) day
without pay, with a stern warning that a repetition of the same Before the Court is a petition filed under Rule 45 of the Rules of
or any similar act will warrant a more severe penalty. Court seeking to set aside the May 26, 20091 and March 22,
20102 Resolutions of the Court of Appeals (CA) in CA-G.R. SP
The Issue No. 107366 which dismissed the case due to the lack of legal
authority of the private attorneys to represent the Municipality
The sole issue before the Court is whether respondent should of Gainza, Camarines Sur.
be imposed the penalty as recommended by the OCA for her
repeated failure to issue the corresponding alias writs of The Facts
execution despite directives from the RTC.
Respondent Engr. Cecilia Alayan (respondent) was appointed in
The Court’s Ruling 2000 as Municipal Government Department Head (Municipal
148
Assessor) on temporary status. In May 2001, she applied for Petitioner’s motion for reconsideration was denied in the
change of status from temporary to permanent, which the Civil assailed March 22, 2010 Resolution.
Service Commission-Camarines Sur Field Office (CSC-CSFO)
denied for lack of relevant experience. On appeal, the CSC- Issue Before the Court
Regional Office in its August 13, 2001 Order approved her
application effective May 22, 2001. Thus, she reported for work Hence, the instant petition raising the issue of whether the CA
and sought recognition of her appointment and the grant of the erred in dismissing the petition for certiorari on the ground of
emoluments of the position from petitioner, then incumbent unauthorized representation of petitioner by private lawyers.
Mayor Romeo A. Gontang (petitioner). Her requests having
been denied, she filed before the Regional Trial Court (RTC) of The Ruling of the Court
Naga City on February 5, 2002 a petition for mandamus,
docketed as Special Civil Action No. 2002-0019, against The petition is meritorious.
petitioner, in his official capacity as Municipal Mayor of Gainza,
Camarines Sur. However, the RTC dismissed the petition for The present case stemmed from Special Civil Action No. 2002-
having been prematurely filed as the Order of the CSC-Regional 0019 for mandamus and damages.13 The damages sought
Office had not attained finality due to the pendency of the therein could have resulted in personal liability, hence,
appeal before the CSC. Respondent appealed to the CA which, petitioner cannot be deemed to have been improperly
in its June 20, 2003 decision,3 ruled in her favor holding that represented by private counsel.14 In Alinsug v. RTC Br. 58, San
the pendency of an appeal is not a justification to prevent her Carlos City, Negros Occidental,15 the Court ruled that in
from assuming office. Said decision attained finality on August instances like the present case where personal liability on the
10, 20074 with the denial of petitioner’s petition before the part of local government officials is sought, they may properly
Supreme Court.5 However, prior to the CA decision, the CSC set secure the services of private counsel, explaining:
aside the August 13, 2001 Order of the CSC-Regional Office on
May 8, 20036 upon a finding that there was no permanent It can happen that a government official, ostensibly acting in his
appointment as the concurrence of the local Sanggunian was official capacity and sued in that capacity, is later held to have
not obtained. Respondent’s appeal of the CSC decision was exceeded his authority. On the one hand, his defense would
denied by the CA7 and such denial became final on October 6, have then been underwritten by the people’s money which
2006.8 ordinarily should have been his personal expense. On the other
hand, personal liability can attach to him without, however, his
On March 17, 2008, respondent moved for the issuance of an having had the benefit of assistance of a counsel of his own
alias writ of execution by the RTC in Special Civil Action No. choice. In Correa v. CFI, the Court held that in the discharge of
2002-0019for the alleged unsatisfied judgment award in the governmental functions, ‘municipal corporations are
amount of P837,022.50 representing her unpaid salaries and responsible for the acts of its officers, except if and when, and
allowances from May 8, 2003 to October 6, 2006 during the only to the extent that, they have acted by authority of the law,
pendency of her appeal of the CSC Resolutions.9 and in conformity with the requirements thereof.
Petitioner opposed the motion claiming full satisfaction of the In such instance, this Court has sanctioned the representation
judgment after having already paid respondent the net sum of by private counsel.1âwphi1 In one case, We held that where
P391,040.6010 covering all benefits for the period from the rigid adherence to the law on representation of local officials in
date the CSC-CSFO approved her request for change of status court actions could deprive a party of his right to redress for a
on August 13, 2001 to May 7, 2003, the day before the CSC valid grievance, the hiring of a private counsel would be proper.
denied her application for permanent appointment. And in Albuera v. Torres, this Court also said that a provincial
governor sued in his official capacity may engage the services of
Ruling of the Regional Trial Court private counsel when "the complaint contains other allegations
and a prayer for moral damages, which, if due from the
Finding that the May 8, 2003 CSC Resolution became final and defendants, must be satisfied by them in their private
executory only on October 6, 2006 after respondent’s appeal capacity.16 (Citations omitted)
was resolved by the CA and with no appeal having been taken
therefrom, the RTC ordered the issuance of an alias writ of Consequently Attys. Fandiño and Saulon had the authority to
execution in the order dated October 22, 2008.11 It also represent petitioner at the initial stages of the litigation and
subsequently denied petitioner’s motion for reconsideration.12 this authority continued even up to his appeal17 and the filing
of the petition for certiorari with the CA respecting the
Dissatisfied, petitioner, through Attorneys Joselito I. Fandiño execution of the RTC judgment.18It was therefore an error for
(Atty. Fandiño) and Voltaire V. Saulon (Atty. Saulon), the the CA to have dismissed the said petition for certiorari on the
counsels he had retained since the initial stage of the litigation, ground of unauthorized representation.
filed a petition for certiorari seeking to annul and set aside the
two (2) Orders of the RTC. WHEREFORE, the petition is GRANTED. The assailed May 26,
2009 and March 22, 2010 Resolutions of the Court of Appeals
Ruling of the Court of Appeals (CA) in CA-G.R. SP No. 107366 are hereby SET ASIDE. The case is
REMANDED to the CA for further proceedings.
The CA dismissed the petition on the ground of lack of legal
authority on the part of Atty. Saulon, a private attorney, to 65. RE: VERIFIED COMPLAINT OF AMA LAND, INC. AGAINST
represent the Municipality of Gainza, Camarines Sur. HON. DANTON Q. BUESER, HON. SESINANDO E. VILLON and
149
HON. RICARDO R. ROSARIO, ASSOCIATE JUSTICES OF THE petition for corporate rehabilitation, which was later approved.
COURT OF APPEALS. Among the recommendations contained in the approved
rehabilitation plan was the conversion of the use of the 37-floor
On October 2, 2012, AMA Land, Inc. (AMALI) filed an commercial/residential tower (AMA Tower) to a 34-floor
administrative complaint before the Office of the Court residential condominium. AMALI thus, prayed that the City of
Administrator (OCA), charging respondent Honorable Court of Mandaluyong be ordered to issue an amended building
Appeals (CA) Associate Justices Danton Q. Bueser, Sesinando E. permit.6
Villon, and Ricardo R. Rosario (respondent CA Justices) with the
following violations: (a) Section 8, Rule 140 of the Rules of In a bid to stop AMALI from continuing with its project
Court, specifically for dishonesty and violation of the Anti-Graft construction, WWRAI sought from the RTC-Pasig in January
and Corrupt Practices Law (Republic Act No. 3019), gross 2010, the hearing of its application for TRO and/or writ of
misconduct constituting violations of the Code of Judicial preliminary mandatory injunction prayed for in its
Conduct, and knowingly rendering an unjust judgment or order; counterclaim. After due proceedings, the court denied the
and (b) pertinent provisions of the Code of Judicial Conduct1 application in the Order7 dated October 28, 2010, and directed
and Canons of Judicial Ethics, for issuing the Decision2 dated the building officials of
June 14, 2012 in CA-G.R. SP No. 118994 filed by Wack Wack
Residents Association, Inc. (WWRAI) enjoining AMALI from Mandaluyong City to act on AMALI's application for permit to
continuing with its project construction pending the construct. The concerned officials, however, denied AMALI's
determination of its petition for declaration of right of way application for an amended building permit on November 5,
against WWRAI before the Regional Trial Court of Pasig City, 2010 due to the expiration of the previously issued building
Branch 264 (RTC-Pasig). permit, non-compliance with the prescribed height and open
space limitations, and failure to submit the required new
The Facts locational and barangay clearance. Notwithstanding, the RTC-
Pasig refused to reconsider8 the denial of WWRAI's application
The controversy started in the mid-1990s when AMALI for injunction.
commenced the construction of a 37-floor
commercial/residential building located at Epifanio Delos On the other hand, the RTC-Muntinlupa, where AMALI's
Santos Avenue (EDSA) corner Fordham Street, Wack Wack petition for corporate rehabilitation was pending, directed the
Village, Mandaluyong City. After securing the required licenses Office of the Building Official and/or Office of the City Engineer
and permits, AMALI notified WWRAI, the owner of Fordham of Mandaluyong City, in the Orders dated September 9, 2010
Street, of its intention to use the said street as an access road and November 12, 2010,9 to issue an amended building permit.
and staging area of the project. Not having received any Thus, Building Permit No. 08-2011-004810 was issued on
response, AMALI proceeded to temporarily enclose the job site February 4, 2011. But even with such issuance, the Building
and set up a field office along Fordham Street. However, Official and/or Mandaluyong City Engineer filed a petition for
WWRAI fenced off the said street which prompted AMALI to file certiorari before the CA (docketed as CA-G.R. SP No. 117037)
before the RTC-Pasig a petition3 to enforce an easement of assailing the above Orders which, however, was denied in the
right of way pursuant to Article 649 in relation to Article 656 of Decision11 dated June 28, 2012.
the Civil Code. AMALI also prayed for a temporary restraining
order (TRO) and a writ of preliminary mandatory injunction to Meanwhile, WWRAI assailed the Orders of the RTC-Pasig
enjoin WWRAI from demolishing and removing its temporary denying its application for injunction through a petition for
field office, fencing off Fordham Street, and preventing its certiorari12 before the CA. The case (docketed as CA-G.R. SP
access to the construction site. No. 118994) was raffled to the Special Former Tenth Division
composed of the respondent CA Justices. WWRAI also filed a
In its Answer,4 WWRAI averred that AMALI's project violated separate complaint (docketed as NBCDO Case No. 12-11-93
applicable zoning ordinances; the licenses and permits secured MAND CITY) before the Department of Public Works and
therefor were irregular and unlawful; the project is a nuisance; Highways seeking the revocation of the amended building
and EDSA should instead be utilized as the staging area of the permit as well as the imposition of administrative sanctions
project. Apart from praying for the dismissal of the complaint, against the issuing officials which, however, was denied.13
WWRAI interposed a counterclaim for actual and exemplary
damages, attorney's fees and costs of suit, and prayed for a On June 10, 2011, the CA granted WWRAI's application for
TRO and writ of preliminary mandatory injunction for AMALI to TRO14 and subsequently, its application for writ of preliminary
immediately cease and desist with its project construction. injunction15 pending resolution of the petition. On the other
hand, AMALI, in its Comment,16 prayed for the dismissal of the
After hearing AMALI’s application for injunctive relief, the RTC- complaint for lack of merit and on the ground of forum
Pasig, in its Order5 dated July 24, 1997, granted AMALI's prayer shopping.
and directed WWRAI to allow the use of Fordham Street as a
temporary easement of right of way. Apparently, WWRAI's On June 14, 2012, the CA rendered a Decision17 granting
application for TRO and/or writ of preliminary injunction in its WWRAI's petition and directing the RTC-Pasig to issue the
counterclaim was not heard. injunctive writ in favor of WWRAI pending determination of the
petition for the declaration of permanent easement of right of
In 1998, however, AMALI suffered financial setbacks, forcing way filed by AMALI.
the suspension of its project construction. In 2002, it filed
before the RTC of Muntinlupa, Branch 256 (RTC-Muntinlupa) a The Issue
150
Justices in this administrative proceeding would be
In the instant administrative complaint, AMALI questions, premature.23 Besides, even if the subject decision or portions
among others, the jurisdiction of the respondent CA Justices to thereof turn out to be erroneous, administrative liability will
act on WWRAI's petition assailing the denial of its application only attach upon proof that the actions of the respondent CA
for injunctive relief to stop AMALI from proceeding with its Justices were motivated by bad faith, dishonesty or hatred, or
project construction, claiming this issue as irrelevant to the attended by fraud or corruption,24 which were not sufficiently
principal action to enforce an easement of right of way pending shown to exist in this case. Neither was bias as well as partiality
before the RTC Pasig. It also raises the non-payment by WWRAI established. Acts or conduct of the judge clearly indicative of
of the docket fees on its counterclaim and the forum shopping arbitrariness or prejudice must be clearly shown before he can
the latter committed in filing various suits before different fora be branded the stigma of being biased and partial. In the same
on the same issue involving the legality of the project. In any vein, bad faith or malice cannot be inferred simply because the
event, AMALI asserts that the respondent CA Justices acted in judgment or order is adverse to a party.25 Here, other than
bad faith and knowingly rendered an unjust judgment in AMALI's bare and self-serving claim that respondent CA Justices
granting WWRAI's petition, which effectively declared the "conspired with WWRAI's counsel in knowingly and in bad faith
project construction illegal and granted the latter's rendering an unjust judgment and in committing x x x other
counterclaim before the RTC-Pasig could have finally disposed misconduct,"26 no act clearly indicative of bias and partiality
of the case. was alleged except for the claim that respondent CA Justices
misapplied the law artd jurisprudence. Thus, the presumption
In their Comment,18 the respondent CA Justices pray for the that the respondent judge has regularly performed his duties
outright dismissal of the instant administrative complaint in shall prevail. Moreover, the matters raised are best addressed
view of the pendency of AMALI's petition for review on to the evaluation of the Court in the resolution of AMALI's
certiorari before the Court based on substantially the same petition for review on certiorari.
grounds raised herein. They likewise averred that the purported
lack of jurisdiction was never raised in the proceedings before Finally, resort to administrative disciplinary action prior to the
the RTC, the CA or in their petition for review on certiorari final resolution of the judicial issues involved constitutes an
before the Court, but only in this administrative complaint. abuse of court processes that serves to disrupt rather than
Finally, they denied having rendered an unjust decision citing promote the orderly administration of justice and further clog
the failure of AMALI to show that the assailed judgment is the courts' dockets. Those who seek relief from the courts must
contrary to law or unsupported by evidence or that it was not be allowed to ignore basic legal rules and abuse court
rendered with bad faith, malice, greed, ill-will or corruption. processes in their efforts to vindicate their rights.27
The Court's Ruling WHEREFORE, the Court DISMISSES the administrative complaint
against the Honorable Court of Appeals Associate Justices
The Court finds no merit in the complaint. DANTON Q. BUESER, SESINANDO E. VILLON AND RICARDO-R.
ROSARIO for utter lack of merit; and CAUTIONS complainant
A perusal of the records of the case as well as the parties’ AMA Land, Inc. against the filing of similar unfounded and
respective allegations disclosed that the acts complained of baseless actions in the future, WITH STERN
relate to the validity of the proceedings before the respondent
CA Justices and the propriety of their orders in CA-G.R. SP No. WARNING that a repetition thereof shall be dealt with more
118994 which were done in the exercise of their judicial severely.
functions. Jurisprudence is replete with cases holding that
errors, if any, committed by a judge in the exercise of his 66. RE: COMPLAINT OF LEONARDO A. VELASCO AGAINST
adjudicative functions cannot be corrected through ASSOCIATE JUSTICES FRANCISCO H. VILLARUZ, JR., ALEX L.
administrative proceedings, but should instead be assailed QUIROZ, AND SAMUEL R. MARTIRES OF THE
through available judicial remedies.19 Disciplinary proceedings SANDIGANBAYAN.
against judges do not complement, supplement or substitute
judicial remedies and, thus, cannot be pursued simultaneously Before the Court is an administrative complaint filed by
with the judicial remedies accorded to parties aggrieved by Leonardo A. Velasco against the respondents, Honorable
their erroneous orders or judgments.20 Associate Justices Francisco H. Villaruz, Jr. (Justice Villaruz, Jr.),
Alex L. Quiroz (Justice Quiroz), and Samuel R. Martires (Justice
In Equitable PCI Bank, Inc. v. Laviña,21 we ruled that resort to Martires) of the Third Division of the Sandiganbayan for grave
and exhaustion of judicial remedies and a final ruling on the misconduct and violation of the Code of Judicial Conduct.
matter, are prerequisites for the taking of appropriate
measures against the judges concerned, whether of criminal, The Facts
civil or administrative nature. If the assailed act is subsequently
found and declared to be correct, there would be no occasion On December 10, 2008, the Third Division of the
to proceed against him at all.1âwphi1 Sandiganbayan, then composed of respondent Justice Villaruz,
Jr. as Chairman and Associate Justices Efren N. Dela Cruz and
In this case, AMALI had already filed a petition for review on Norberto Y. Geraldez as Members, rendered a Decision1
certiorari22 challenging the questioned order of the convicting accused Pacifico C. Velasco2 (accused Velasco) in
respondent CA Justices, which is still pending final action by the Criminal Case No. 27564 for violation of Section 3(e) of Republic
Court. Consequently, a decision on the validity of the Act (RA) No. 3019.3 The fallo of the Decision reads:
proceedings and propriety of the orders of the respondent CA
151
WHEREFORE, this court finds MAYOR PACIFICO C. VELASCO necessitating hospitalization and post-operation treatment. He
GUILTY, beyond reasonable doubt, for violation of Section 3 (e) also averred that he had filed, on even date, a petition for
of R.A. 3019, and is hereby sentenced to suffer the penalty of: certiorari, prohibition and mandamus before the Court,
(I.) Imprisonment of, after applying the Indeterminate Sentence docketed as G.R. No. 194263, to restrain the execution of
Law, six (6) years and one (1) month as minimum, up to eight judgment, and prayed that his motion be granted pending
(8) years, as maximum; and, (II.) Perpetual Disqualification from action on his petition.
Public Office.
On January 17, 2011, during the rescheduled hearing for the
SO ORDERED. execution of the judgment, the Sandiganbayan Justices
ordered15 the issuance of a warrant of arrest for failure of
Accused Velasco sought its reconsideration, which the accused Velasco to appear despite due notice and the forfeiture
Sandiganbayan denied in its March 13, 2009 Resolution.4 He, of his cash bond.
then, elevated the case before the Court via a petition for
review on certiorari, docketed as G.R. No. 187277, which was On March 9, 2011, the Court dismissed the petition filed by
denied in a minute resolution5 dated June 3, 2009. His motion accused Velasco in G.R. No. 19426316 and on March 30, 2011,
for reconsideration was also denied in the Resolution dated noted without action his second supplement to petition and
August 17, 2009 which further contained a directive that no urgent motion to resolve his petition for certiorari.17 Accused
further pleadings shall be entertained and that entry of Velasco filed a motion for reconsideration and the prosecution
judgment be made in due course. was given until February 6, 2012 to file its comment.18
Subsequently, accused Velasco filed a motion for leave to file Meanwhile, in another hearing before the Sandiganbayan
and to admit a second motion for reconsideration of the Court’s Justices on January 18, 2012, accused Velasco was directed to
June 3, 2009 Resolution, which the Court merely noted without post a new cash bail bond in the amount of ₱70,000.00 on the
action in its January 11, 2010 Resolution.6 The Court’s June 3, verbal motion of his counsel, and the hearing was reset once
2009 Resolution became final and executory on September 25, more to March 19, 2012.19
2009.7
Hence, the instant administrative complaint20 for grave
Notwithstanding, however, the finality of accused Velasco’s misconduct and violation of the Code of Judicial Conduct filed
conviction, the execution of his sentence did not immediately by Leonardo A. Velasco (complainant Velasco) against the
take place due to the numerous motions and pleadings he Sandiganbayan Justices. In his verified complaint, complainant
subsequently filed. Velasco asserts that, the conviction of accused Velasco having
attained finality on September 25, 2009, the Sandiganbayan
On May 26, 2010,8 in the hearing for the execution of accused Justices should have merely performed the ministerial duty of
Velasco’s sentence before the Sandiganbayan, his counsel executing his final sentence of conviction and not entertained
manifested that he was confined at the San Juan De Dios his motions or pleadings that forestalled its execution. In doing
Hospital in Pasay City and was due for surgery. The hearing was so, they have shown evident partiality, bias and impropriety in
reset to June 9, 2010 upon agreement of the parties, with a favor of accused Velasco.
directive to accused Velasco’s attending physician to submit a
medical bulletin relative to his physical fitness. Nonetheless, a In their Comment,21 the Sandiganbayan Justices claimed that
warrant of arrest was issued, but as agreed by the parties, the repeated resetting of the hearings for the execution of
accused Velasco shall remain in the hospital until further order judgment against accused Velasco was mainly due to medical
by the Sandiganbayan. By this time, the Third Division of the reasons and the pendency of incidents before the Court.
Sandiganbayan was already composed of respondents Justice Vehemently denying that their questioned orders were issued
Villaruz, Jr., Justice Quiroz and Justice Martires (Sandiganbayan to unduly favor accused Velasco, they insisted that these were
Justices). prompted by circumstances which were not at their instance
and that the instant complaint consists of unfounded
Thereafter or on June 9, 2010, accused Velasco filed an Urgent allegations and suspicions of partiality. They also argued that
Motion to Recall Warrant of Arrest,9 invoking humanitarian since accused Velasco had already been committed to the
consideration, having allegedly just undergone a rigid and national penitentiary on May 10, 2012, this case is now moot
serious surgical operation. However, the Sandiganbayan and academic and therefore, should be dismissed.
Justices, on June 17, 2010, instead issued an Order of Arrest10
which they eventually recalled11 on June 25, 2010, conditioned Issue Before The Court
on the posting of a bail bond in the amount of ₱30,000.00.
The sole issue to be determined by the Court is whether the
On September 30, 2010, the Sandiganbayan Justices set aside12 respondent Sandiganbayan Justices may be held
their earlier order recalling the warrant of arrest and issued administratively liable for their actions which unduly delayed
anew an Order of Arrest13 for failure of accused Velasco to the execution of the final sentence of conviction of accused
attend the hearing of even date. Velasco.
Subsequently, or on November 15, 2010, accused Velasco filed The Court’s Ruling
a Motion to Defer Promulgation of Sentence, to Suspend
Proceedings and/or Recall Warrant of Arrest14 claiming, once After a judicious review of the records, the Court finds no grave
again, that he had just undergone a major operation misconduct or violation of a specific provision of the Code of
152
Judicial Conduct to have been committed by the Sandiganbayan
Justices. 67. ELEAZAR S. PADILLO,** Petitioner vs.RURAL BANK OF
NABUNTURAN, INC. and MARK S. OROPEZA, Respondents.
"Misconduct means intentional wrongdoing or deliberate
violation of a rule of law or a standard of behavior.22 To Before the Court is a Petition for Review on Certiorari1 assailing
constitute an administrative offense, misconduct should relate the June 28, 2011 Decision2 and October 27, 2011 Resolution3
to or be connected with the performance of the official of the Cagayan de Oro City Court of Appeals (CA) in CA-G.R. SP
functions of a public officer.23 In grave misconduct, as No 03669-MIN which revoked and set aside the National Labor
distinguished from simple misconduct, the elements of Relations Commission's (NLRC’s) Resolutions dated December
corruption, clear intent to violate the law or flagrant disregard 29, 20094 and March 31, 20105 and reinstated the Labor
of an established rule must be established."24 Arbiter's (LA's) Decision dated March 13, 20096 with
modification.
In this case, the actions of the Sandiganbayan Justices
respecting the execution of the final judgment against accused The Facts
Velasco were shown to be in respectful deference to the
Court’s action on the various petitions filed by the former, who On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo),
apparently exhausted what he perceived were valid available was employed by respondent Rural Bank of Nabunturan, Inc.
remedies under the law. Records are bereft of evidence (Bank) as its SA Bookkeeper. Due to liquidity problems which
showing any trace of corruption, clear intent to violate the law arose sometime in 2003, the Bank took out
or flagrant disregard of the rules as to hold them retirement/insurance plans with Philippine American Life and
administratively liable for grave misconduct.1âwphi1 General Insurance Company (Philam Life) for all its employees
in anticipation of its possible closure and the concomitant
However, the becoming modesty that the Sandiganbayan severance of its personnel. In this regard, the Bank procured
Justices have exhibited in this case cannot detract from the fact Philam Plan Certificate of Full Payment No. 88204, Plan Type
that the judgment of conviction of accused Velasco should have 02F₱10SC, Agreement No. P₱98013771 (Philam Life Plan) in
been immediately executed, absent any restraining order from favor of Padillo for a benefit amount of ₱100,000.00 and which
the Court, in violation of the Court's directive in A.M. Circular was set to mature on July 11, 2009.7
No. 07-7-12-SC,25 adopting amendments to Rule 65 of the
Rules of Court, inter alia. Thus, Section 7 of Rule 65 now states: On October 14, 2004, respondent Mark S. Oropeza (Oropeza),
the President of the Bank, bought majority shares of stock in
SEC. 7. Expediting proceedings; injunctive relief. – The court in the Bank and took over its management which brought about
which the petition is filed may issue orders expediting the its gradual rehabilitation. The Bank’s finances improved and
proceedings, and it may also grant a temporary restraining eventually, its liquidity was regained.8
order or a writ of preliminary injunction for the preservation of
the rights of the parties pending such proceedings. The petition During the latter part of 2007, Padillo suffered a mild stroke
shall not interrupt the course of the principal case, unless a due to hypertension which consequently impaired his ability to
temporary restraining order or a writ of preliminary injunction effectively pursue his work. In particular, he was diagnosed
has been issued, enjoining the public respondent from further with Hypertension S/P CVA (Cerebrovascular Accident) with
proceeding with the case. short term memory loss, the nature of which had been
classified as a total disability.9 On September 10, 2007, he
The public respondent shall proceed with the principal case wrote a letter addressed to respondent Oropeza expressing his
within ten (10) days from the filing of a petition for certiorari intention to avail of an early retirement package. Despite
with a higher court or tribunal, absent a temporary restraining several follow-ups, his request remained unheeded.
order or a preliminary injunction, or upon its expiration. Failure
of the public respondent to proceed with the principal case may On October 3, 2007, Padillo was separated from employment
be a ground for an administrative charge. (Emphasis supplied) due to his poor and failing health as reflected in a Certification
dated December 4, 2007 issued by the Bank. Not having
Thus, judicial courtesy may no longer be invoked by the received his claimed retirement benefits, Padillo filed on
Sandiganbayan Justices in the execution of the final judgment September 23, 2008 with the NLRC Regional Arbitration Branch
against accused Velasco. This lapse in judgment on the part of No. XI of Davao City a complaint for the recovery of unpaid
the Sandiganbayan Justices deserves admonition.1âwphi1 retirement benefits. He asserted, among others, that the Bank
had adopted a policy of granting its aging employees early
WHEREFORE, Honorable Associate Justices Francisco H. Villaruz, retirement packages, pointing out that one of his co-
Jr., Alex L. Quiroz, and Samuel R. Martires of the Third Division employees, Nenita Lusan (Lusan), was accorded retirement
of the Sandiganbayan are hereby ADMONISHED to be ·more benefits in the amount of ₱348,672.7210 when she retired at
circumspect and prudent in observing the proper rules and the age of only fifty-three (53). The Bank and Oropeza
procedures for the execution of judgments of conviction in the (respondents) countered that the claim of Padillo for
absence of restraining orders or injunctive writs from the Court. retirement benefits was not favorably acted upon for lack of
They are STERNLY WARNED that repetition of the same or any basis to grant the same.11
similar acts will be dealt with more severely.
The LA Ruling
Let a copy of this Decision be attached to respondents Justices'
records with this Court.
153
On March 13, 2009, the LA issued a Decision12 dismissing case; (c) drastically reduced the computation of financial
Padillo’s complaint but directed the Bank to pay him the assistance awarded by the NLRC; (d) failed to rule on the
amount of ₱100,000.00 as financial assistance, treated as an consequences of respondents’ bad faith; and (e) reversed and
advance from the amounts receivable under the Philam Life set aside the NLRC’s December 29, 2009 Resolution.23
Plan.13 It found Padillo disqualified to receive any benefits
under Article 300 (formerly, Article 287) of the Labor Code of The Ruling of the Court
the Philippines (Labor Code)14 as he was only fifty-five (55)
years old when he resigned, while the law specifically provides The petition is partly meritorious.
for an optional retirement age of sixty (60) and compulsory
retirement age of sixty-five (65). Dissatisfied with the LA’s At the outset, it must be maintained that the Labor Code
ruling, Padillo elevated the matter to the NLRC. provision on termination on the ground of disease under Article
29724 does not apply in this case, considering that it was the
The NLRC Ruling petitioner and not the Bank who severed the employment
relations. As borne from the records, the clear import of
On December 29, 2009, the NLRC’s Fifth Division reversed and Padillo’s September 10, 2007 letter25 and the fact that he
set aside the LA’s ruling and ordered respondents to pay Padillo stopped working before the foregoing date and never reported
the amount of ₱164,903.70 as separation pay, on top of the for work even thereafter show that it was Padillo who
₱100,000.00 Philam Life Plan benefit.15 Relying on the case of voluntarily retired and that he was not terminated by the Bank.
Abaquin Security and Detective Agency, Inc. v. Atienza
(Abaquin),16 the NLRC applied the Labor Code provision on As held in Villaruel,26 a precedent which the CA correctly
termination on the ground of disease – particularly, Article 297 applied, Article 297 of the Labor Code contemplates a situation
thereof (formerly, Article 323) – holding that while Padillo did where the employer, and not the employee, initiates the
resign, he did so only because of his poor health condition.17 termination of employment on the ground of the latter’s
Respondents moved for reconsideration but the same was disease or sickness, viz:
denied by the NLRC in its Resolution dated March 31, 2010.18
Aggrieved, respondents filed a petition for certiorari with the A plain reading of the [Article 297 of the Labor Code] clearly
CA. presupposes that it is the employer who terminates the
services of the employee found to be suffering from any
The CA Ruling disease and whose continued employment is prohibited by law
or is prejudicial to his health as well as to the health of his co-
On June 28, 2011, the CA granted respondents’ petition for employees. It does not contemplate a situation where it is the
certiorari and rendered a decision setting aside the NLRC’s employee who severs his or her employment ties. This is
December 29, 2009 and March 31, 2010 Resolutions, thereby precisely the reason why Section 8, Rule 1, Book VI of the
reinstating the LA’s March 13, 2009 Decision but with Omnibus Rules Implementing the Labor Code, directs that an
modification. It directed the respondents to pay Padillo the employer shall not terminate the services of the employee
amount of ₱50,000.00 as financial assistance exclusive of the unless there is a certification by a competent public health
₱100,000.00 Philam Life Plan benefit which already matured on authority that the disease is of such nature or at such a stage
July 11, 2009. that it cannot be cured within a period of six (6) months even
with proper medical treatment. (Emphasis, underscoring and
The CA held that Padillo could not, absent any agreement with words in brackets supplied)
the Bank, receive any retirement benefits pursuant to Article
300 of the Labor Code considering that he was only fifty-five Thus, given the inapplicability of Article 297 of the Labor Code
(55) years old when he retired.19 It likewise found the evidence to the case at bar, it necessarily follows that petitioners’ claim
insufficient to prove that the Bank has an existing company for separation pay anchored on such provision must be denied.
policy of granting retirement benefits to its aging employees.
Finally, citing the case of Villaruel v. Yeo Han Guan (Villaruel),20 Further, it is noteworthy to point out that the NLRC’s
it pronounced that separation pay on the ground of disease application of Abaquin27 was gravely misplaced considering its
under Article 297 of the Labor Code should not be given to dissimilar factual milieu with the present case.
Padillo because he was the one who initiated the severance of
his employment and that even before September 10, 2007, he To elucidate, a careful reading of Abaquin shows that the Court
already stopped working due to his poor and failing health. 21 merely awarded termination pay on the ground of disease in
Nonetheless, Padillo was still awarded the amount of favor of security guard28 Antonio Jose because he belonged to
₱50,000.00 as financial assistance, in addition to the benefits a "special class of employees x x x deprived of the right to
accruing under the Philam Life Plan, considering his twenty-nine ventilate demands collectively."29 Thus, notwithstanding the
(29) years of service with no derogatory record and that he was fact that it was Antonio Jose who voluntarily resigned because
severed not by reason of any infraction on his part but because of his sickness and it was not the security agency which
of his failing physical condition.22 terminated his employment, the Court held that Jose
"deserve[d] the full measure of the law’s benevolence" and still
Displeased with the CA’s ruling, Padillo (now substituted by his granted him separation pay because of his situation,
legal heirs due to his death on February 24, 2012) filed the particularly, the fact that he could not have organized with
instant petition contending that the CA erred when it: (a) other employees belonging to the same class for the purpose of
deviated from the factual findings of the NLRC; (b) misapplied bargaining with their employer for greater benefits on account
the case of Villaruel vis-à-vis the factual antecedents of this of the prohibition under the old law.
154
Neither was it proven that there exists an established company
In this case, it cannot be said that Padillo belonged to the same policy of giving early retirement packages to the Bank’s aging
class of employees prohibited to self-organize which, at employees. In the case of Metropolitan Bank and Trust
present, consist of: (1) managerial employees;30 and (2) Company v. National Labor Relations Commission, it has been
confidential employees who assist persons who formulate, pronounced that to be considered a company practice, the
determine, and effectuate management policies in the field of giving of the benefits should have been done over a long period
labor relations.31 Therefore, absent this equitable peculiarity, of time, and must be shown to have been consistent and
termination pay on the ground of disease under Article 297 of deliberate. 34 In this relation, petitioners’ bare allegation of the
the Labor Code and the Court’s ruling in Abaquin should not be solitary case of Lusan cannot – assuming such fact to be true –
applied. sufficiently establish that the Bank’s grant of an early
retirement package to her (Lusan) evolved into an established
What remains applicable, however, is the Labor Code provision company practice precisely because of the palpable lack of the
on retirement. In particular, Article 300 of the Labor Code as element of consistency. As such, petitioners’ reliance on the
amended by Republic Act Nos. 764132 and 855833 partly Lusan incident cannot bolster their claim.
provides:
All told, in the absence of any applicable contract or any
Art. 300. Retirement. — Any employee may be retired upon evolved company policy, Padillo should have met the age and
reaching the retirement age established in the collective tenure requirements set forth under Article 300 of the Labor
bargaining agreement or other applicable employment Code to be entitled to the retirement benefits provided therein.
contract. Unfortunately, while Padillo was able to comply with the five
(5) year tenure requirement – as he served for twenty-nine (29)
In case of retirement, the employee shall be entitled to receive years – he, however, fell short with respect to the sixty (60)
such retirement benefits as he may have earned under existing year age requirement given that he was only fifty-five (55) years
laws and any collective bargaining agreement and other old when he retired. Therefore, without prejudice to the
agreements: Provided, however, That an employee's retirement proceeds due under the Philam Life Plan, petitioners’ claim for
benefits under any collective bargaining and other agreements retirement benefits must be denied.
shall not be less than those provided herein.1âwphi1
Nevertheless, the Court concurs with the CA that financial
In the absence of a retirement plan or agreement providing for assistance should be awarded but at an increased amount.
retirement benefits of employees in the establishment, an With a veritable understanding that the award of financial
employee upon reaching the age of sixty (60) years or more, assistance is usually the final refuge of the laborer, considering
but not beyond sixty-five (65) years which is hereby declared as well the supervening length of time which had sadly
the compulsory retirement age, who has served at least five (5) overtaken the point of Padillo’s death – an employee who had
years in the said establishment, may retire and shall be entitled devoted twenty-nine (29) years of dedicated service to the
to retirement pay equivalent to at least one-half (1/2) month Bank – the Court, in light of the dictates of social justice, holds
salary for every year of service, a fraction of at least six (6) that the CA’s financial assistance award should be increased
months being considered as one whole year. from ₱50,000.00 to ₱75,000.00, still exclusive of the
₱100,000.00 benefit receivable by the petitioners under the
Unless the parties provide for broader inclusions, the term one Philam Life Plan which remains undisputed.1âwphi1
half (1/2) month salary shall mean fifteen (15) days plus one-
twelfth (1/12) of the 13th month pay and the cash equivalent of Finally, the Court finds no bad faith in any of respondents’
not more than five (5) days of service incentive leaves. actuations as they were within their right, absent any proof of
(Emphasis and underscoring supplied) its abuse, to ignore Padillo’s misplaced claim for retirement
benefits. Respondents’ obstinate refusal to accede to Padillo’s
Simply stated, in the absence of any applicable agreement, an request is precisely justified by the fact that there lies no basis
employee must (1) retire when he is at least sixty (60) years of under any applicable agreement or law which accords the latter
age and (2) serve at least (5) years in the company to entitle the right to demand any retirement benefits from the Bank.
him/her to a retirement benefit of at least one-half (1/2) month While the Court mindfully notes that damages may be
salary for every year of service, with a fraction of at least six (6) recoverable due to an abuse of right under Article 2135 in
months being considered as one whole year. conjunction with Article 19 of the Civil Code of the
Philippines,36 the following elements must, however, obtain: (
Notably, these age and tenure requirements are cumulative 1) there is a legal right or duty; (2) exercised in bad faith; and
and non-compliance with one negates the employee’s (3) for the sole intent of prejudicing or injuring another.37
entitlement to the retirement benefits under Article 300 of the Records reveal that none of these elements exists in the case at
Labor Code altogether. bar and thus, no damages on account of abuse of right may he
recovered.
In this case, it is undisputed that there exists no retirement
plan, collective bargaining agreement or any other equivalent Neither can the grant of an early retirement package to Lusan
contract between the parties which set out the terms and show that Padillo was unfairly discriminated upon. Records
condition for the retirement of employees, with the sole show that the same was merely an isolated incident and
exception of the Philam Life Plan which premiums had already petitioners have failed to show that any had faith or motive
been paid by the Bank. attended such disparate treatment between Lusan and Padillo.
lrrefragably also, there is no showing that other Bank
155
employees were accorded the same benefits as that of Lusan 1. There must be proof of remorse and reformation. These shall
which thereby dilutes the soundness of petitioners' imputation include but should not be limited to certifications or
of discrimination and bad faith. Verily, it is axiomatic that held testimonials of the officer(s) or chapter(s) of the Integrated Bar
f8ith can never be presumed – it must be proved by clear and of the Philippines, judges or judges associations and prominent
convincing evidence.38 This petitioners were unable to prove in members of the community with proven integrity and probity.
the case at bar. A subsequent finding of guilt in an administrative case for the
same or similar misconduct will give rise to a strong
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the presumption of non-reformation.
assailed Court of Appeals' Decision dated June 28, 2011
Decision and October 27, 2011 Resolution in CA-G.R. SP No. 2. Sufficient time must have lapsed from the imposition of the
03669-MIN are hereby MODIFIED, increasing the 8Ward of penalty to ensure a period of reform.
financial assist8nce of F50,000.00 to ₱75,000.00, exclusive of
the P 100,000.00 benefit under the Phil am Life Plan. 3. The age of the person asking for clemency must show that he
still has productive years ahead of him that can be put to good
68. FLORENCE TEVES MACARUBBO, Complainant, vs.ATTY. use by giving him a chance to redeem himself.
EDMUNDO L. MACARUBBO, Respondent. RE: PETITION (FOR
EXTRAORDINARY MERCY) OF EDMUNDO L. MACARUBBO. 4. There must be a showing of promise (such as intellectual
aptitude, learning or legal acumen or contribution to legal
For resolution is the Petition (For Extraordinary Mercy) filed by scholarship and the development of the legal system or
respondent Edmundo L. Macarubbo (respondent) who seeks to administrative and other relevant skills), as well as potential for
be reinstated in the Roll of Attorneys. public service.
Records show that in the Decision1 dated February 27, 2004, 5. There must be other relevant factors and circumstances that
the Court disbarred respondent from the practice of law for may justify clemency.9 (Citations omitted)
having contracted a bigamous marriage with complainant
Florence Teves and a third marriage with one Josephine Moreover, to be reinstated to the practice of law, the applicant
Constantino while his first marriage to Helen Esparza was still must, like any other candidate for admission to the bar, satisfy
subsisting, which acts constituted gross immoral conduct in the Court that he is a person of good moral character.10
violation of Canon 1, Rule 1.01 and Canon 7, Rule 7.03 of the
Code of Professional Responsibility. The dispositive portion of Applying the foregoing standards to this case, the Court finds
the subject Decision reads: the instant petition meritorious.
WHEREFORE, respondent Edmundo L. Macarubbo is found Respondent has sufficiently shown his remorse and
guilty of gross immorality and is hereby DISBARRED from the acknowledged his indiscretion in the legal profession and in his
practice of law. He is likewise ORDERED to show satisfactory personal life. He has asked forgiveness from his children by
evidence to the IBP Commission on Bar Discipline and to this complainant Teves and maintained a cordial relationship with
Court that he is supporting or has made provisions for the them as shown by the herein attached pictures.11 Records also
regular support of his two children by complainant. show that after his disbarment, respondent returned to his
hometown in Enrile, Cagayan and devoted his time tending an
Let respondent’s name be stricken off the Roll of Attorneys. orchard and taking care of his ailing mother until her death in
2008.12 In 2009, he was appointed as Private Secretary to the
SO ORDERED.2 Mayor of Enrile, Cagayan and thereafter, assumed the position
of Local Assessment Operations Officer II/ Office-In-Charge in
Aggrieved, respondent filed a Motion for the Assessor’s Office, which office he continues to serve to
Reconsideration/Appeal for Compassion and Mercy3 which the date.13 Moreover, he is a part-time instructor at the University
Court denied with finality in the Resolution4 dated June 1, of Cagayan Valley and F.L. Vargas College during the School
2004. Eight years after or on June 4, 2012, respondent filed the Year 2011-2012.14 Respondent likewise took an active part in
instant Petition (For Extraordinary Mercy)5 seeking socio-civic activities by helping his neighbors and friends who
are in dire need.
judicial clemency and reinstatement in the Roll of Attorneys.
The Court initially treated the present suit as a second motion The following documents attest to respondent’s reformed
for reconsideration and accordingly, denied it for lack of merit ways: (1) Affidavit of Candida P. Mabborang;15 (2) Affidavit of
in the Resolution dated September 4, 2012.6 On December 18, Reymar P. Ramirez;16 (3) Affidavit of Roberto D. Tallud;17 (4)
2012, the same petition was endorsed to this Court by the Certification from the Municipal Local Government Office;18 (5)
Office of the Vice President7 for re-evaluation, prompting the Certification by the Office of the Municipal Agriculturist/Health
Court to look into the substantive merits of the case. Officer, Social Welfare Development Officer;19 (6) Certification
from the Election Officer of Enrile, Cagayan;20 (7) Affidavit of
In Re: Letter of Judge Augustus C. Diaz, Metropolitan Trial Court Police Senior Inspector Jacinto T. Tuddao;21 (8) Certifications
of Quezon City, Branch 37, Appealing for Clemency,8 the Court from nine (9) Barangay Chairpersons;22 (9) Certification from
laid down the following guidelines in resolving requests for the Office of the Provincial Assessor;23 (10) Certification from
judicial clemency, to wit: the Office of the Manager, Magsaka ca Multi-Purpose
Cooperative;24 and (11) Certification of the Office of the
Federation of Senior Citizens, Enrile Chapter.25 The Office of
156
the Municipal Treasurer also certified that respondent has no electorate in the Second Legislative District of Camarines Norte
monetary accountabilities in relation to his office26 while the in the May 10, 2010 elections, which was "the maiden run for
Office of the Human Resource Management Officer attested full automation,"1 as authorized by Republic Act (R.A.) No.
that he has no pending administrative case.27 He is not known 93692 amending R.A. No. 8436 that called for the adoption of
to be involved in any irregularity and/or accused of a crime. an automated election system in national and local elections.
Even the National Bureau of Investigation (NBI) attested that he
has no record on file as of May 31, 2011.28 The Factual Antecedents
Furthermore, respondent’s plea for reinstatement is duly Liwayway Vinzons-Chato (Chato) renewed her bid in the May
supported by the Integrated Bar of the Philippines, Cagayan 10, 2010 elections as representative of the Second Legislative
Chapter29 and by his former and present colleagues.30 His District of Camarines Norte, composed of the seven (7)
parish priest, Rev. Fr. Camilo Castillejos, Jr., certified that he is Municipalities of Daet, Vinzons, Basud, Mercedes, Talisay, San
faithful to and puts to actual practice the doctrines of the Vicente, and San Lorenzo, with a total of 205 clustered
Catholic Church.31 He is also observed to be a regular precincts. She lost to Elmer E. Panotes (Panotes) who was
churchgoer.32 Records further reveal that respondent has proclaimed the winner on May 12, 2010 having garnered a total
already settled his previous marital squabbles,33 as in fact, no of 51,707 votes as against Chato's 47,822 votes, or a plurality of
opposition to the instant suit was tendered by complainant 3,885 votes,3 summarized in the petition4 as follows:
Teves. He sends regular support34 to his children in compliance
with the Court’s directive in the Decision dated February 27, TOTAL 51,707 47,822
2004. On May 24, 2010, Chato filed an electoral protest before the
House of Representatives Electoral Tribunal (HRET), which was
The Court notes the eight (8) long years that had elapsed from docketed as HRET Case No. 10-040, assailing the results in all
the time respondent was disbarred and recognizes his the 160 clustered precincts in four (4) municipalities, namely:
achievement as the first lawyer product of Lemu National High Daet, Vinzons, Basud and Mercedes.5 No counter-protest was
School,35 and his fourteen (14) years of dedicated government interposed by Panotes.
service from 1986 to July 2000 as Legal Officer of the
Department of Education, Culture and Sports; Supervising Civil Pursuant to Rule 37 of the 2011 Rules of the HRET, Chato
Service Attorney of the Civil Service Commission; Ombudsman designated forty (40) pilot clustered precincts, equivalent to
Graft Investigation Officer; and State Prosecutor of the 25% of the total number of protested clustered precincts, in
Department of Justice.36 From the attestations and which revision of ballots shall be conducted. The initial revision
certifications presented, the Court finds that respondent has of ballots, conducted on March 21 - 24, 2011, showed a
sufficiently atoned for his transgressions. At 5837 years of age, substantial discrepancy between the votes of the parties per
he still has productive years ahead of him that could physical count vis-a-vis their votes per election returns in the
significantly contribute to the upliftment of the law profession following precincts of the Municipalities of Basud and Daet:6
and the betterment of society. While the Court is ever mindful
of its duty to discipline and even remove its errant officers, On March 24, 2011, Panotes lost no time in moving7 for the
concomitant to it is its duty to show compassion to those who suspension of the proceedings in the case, and praying that a
have reformed their ways,38 as in this case. preliminary hearing be set in order to determine first the
integrity of the ballots and the ballot boxes used in the
Accordingly, respondent is hereby ordered .reinstated to the elections. He further urged that, should it be shown during such
practice of law.1âwphi1 He is, however, reminded that such hearing that the ballots and ballot boxes were not preserved,
privilege is burdened with conditions whereby adherence. to the HRET should direct the printing of the picture images of the
the rigid standards of intellect, moral uprightness, and strict ballots of the questioned precincts stored in the data storage
compliance with the rules and the law are continuing device for said precincts.
requirements.39
The motion was prompted by certain irregularities8 in the
WHEREFORE, premises considered, the instant petition is condition of the ballot boxes subject of the revision, which
GRANTED. Respondent Edmundo L. Macarubbo is hereby Panotes described as follows:
ordered REINSTATED in the Roll of Attorneys.
Outer condition:
69. LIWAYWAY VINZONS-CHATO, Petitioner, vs.HOUSE OF
REPRESENTATIVES ELECTORAL TRIBUNAL and ELMER E. a. The top cover of the ballot box is loose and can be lifted, so
PANOTES, Respondents. the election documents – e.g. ballots, minutes of voting,
election returns – can be taken out.
x-----------------------x
b. In some ballot boxes, when the key was inserted into the
G.R. No. 201350 ELMER E. PANOTES, Petitioner, vs.HOUSE OF padlock, the upper portion of the lock disconnected from its
REPRESENTATIVES ELECTORAL TRIBUNAL and body, which means that the lock had been previously tampered
LIWAYWAYVINZONS-CHATO, Respondents. with.
Before us are consolidated cases involving the use of the c. In the municipalities where Petitioner (Panotes) was able to
picture images of ballots as the equivalent of the original paper seal the ballot boxes with packing tape, this tape seal was
ballots for purposes of determining the true will of the
157
broken/cut/sliced, which means that the ballot boxes had been REP. VINZONS-CHATO: Yes, I requested the presence of the
opened prior to the initial revision. other two members because the information that I gathered
would be that there was a time log of about six hours where
d. Some of the self-locking security seal was not properly you would stop the canvassing, and the information that we got
attached. from our lawyers there was that there were certain cards that
had no memory and had to be reconfigured from some
Inner condition: precincts, and that, in the meantime, you stopped the
canvassing and resumed after six hours.
a. The contents of the ballot box – e.g. ballots and the
documents – were in total disarray, which means that it was ATTY. ROMERO-CORTEZ: This is what happened. Because of the
tampered with. municipalities of Labo, Vinzons, and Basud, there were CF cards
that had to be replaced because they were defective.
b. Some of the Minutes of Voting and Election Returns were
MISSING and only the ballots were found inside the ballot box. REP. VINZONS-CHATO: But, that was after the voting had
closed, right? The voting had closed and those cards were
c. The ballots were unnecessarily folded and/or crumpled in the defective and you had to replace them.
clustered precincts where the votes of (Panotes) were
substantially reduced. ATTY. ROMERO-CORTEZ: To my recollection, Your Honor, that
was during May 10.13
Consequently, in its Resolution9 No. 11-208, the HRET directed
the copying of the picture image files of ballots relative to the Panotes, on the other hand, stressed in his Opposition14 to the
protest, which was scheduled to commence on April 25, 2011 foregoing motion that the decryption and copying of the ballot
and everyday thereafter until completion.10 Chato, however, images was at the behest of the HRET itself, acting through
moved11 for the cancellation of the decryption and copying of Atty. Marie Grace T. Javier-Ibay, who formally requested on
ballot images arguing inter alia that there was no legal basis February 10, 2011 the copying of the picture image files of
therefor and that the HRET had not issued any guidelines ballots and election returns in 13 election protests pending
governing the exercise thereof. before it. Should he then decide to use the decrypted and
copied ballot images, there is nothing in the HRET rules that
Notwithstanding, the decryption and copying proceeded as prohibit the same.
scheduled.
With respect to the allegation that certain defective CF cards
Chato then filed an Urgent Motion to Prohibit the Use by were replaced, Panotes argued15 that it was during the
Protestee of the Decrypted and Copied Ballot Images in the election day, May 10, 2010, that the CF cards were found to be
Instant Case12 reiterating the lack of legal basis for the not working so they had to be re-configured. Consequently, the
decryption and copying of ballot images inasmuch as no voting in some precincts in the Municipalities of Labo, Vinzons
preliminary hearing had been conducted showing that the and Basud started late, but the voting period was extended
integrity of the ballots and ballot boxes was not preserved. She accordingly. For this reason, the canvassing before the
cited Section 10(d) of the HRET Guidelines on the Revision of Provincial Board of Canvassers was halted in order to wait for
Ballots, which reads: the transmission of the results from the Municipal Board of
Canvassers, which could not be done until each and every
(d) When it has been shown, in a preliminary hearing set by the clustered precinct was duly accounted for.
parties or by the Tribunal, that the integrity of the ballots and
ballot boxes used in the May 10, 2010 elections was not The case was subsequently set for preliminary hearing on May
preserved, as when there is proof of tampering or substitutions, 27, 2011 in order to determine the integrity of the CF cards
the Tribunal shall direct the printing of the picture images of used in the questioned elections.16 In said hearing, Chato
the ballots of the subject precinct stored in the data storage presented the following witnesses: (1) Oscar Villafuerte, Vice-
device for the same precinct. The Tribunal shall provide a non- Chairman of the Provincial Board of Canvassers of Camarines
partisan technical person who shall conduct the necessary Norte; (2) Reynaldo Mago, a media practitioner; and (3) Angel
authentication process to ensure that the data or image stored Abria, an Information Technology (IT) expert.17
is genuine and not a substitute. It is only upon such
determination that the printed picture image can be used for On June 8, 2011, the HRET issued the assailed Resolution18 No.
the revision, (as amended per Resolution of February 10, 2011). 11-321 denying Chato's Urgent Motion to Prohibit the Use by
Protestee of the Decrypted and Copied Ballot Images in the
Moreover, Chato alleged that the ballot images were taken Instant Case on the ground that she failed to show proof that
from polluted Compact Flash (CF) cards. Atty. Anne A. Romero- the CF cards used in the twenty (20) precincts in the
Cortez (Atty. Cortez), the Camarines Norte Provincial Elections Municipalities of Basud and Daet with substantial variances
Supervisor, was said to have admitted during canvassing were not preserved or were violated. The Tribunal stressed
proceedings that the CF cards for the Municipalities of Labo, that, since Atty. Cortez was not presented in court to clarify the
Vinzons and Basud were defective and had to be replaced. The matter of the alleged replacement of CF cards, it remained
pertinent portion of the Transcript of Stenographic Notes (TSN) unclear whether the replacement was done before or after the
taken during the canvassing proceedings for President and Vice- elections, and which precincts were involved. Moreover, the
President held on June 2, 2010 is reproduced hereunder: testimonies of the witnesses that were actually presented were
found to be irrelevant and immaterial.
158
9369 THE PICTURE IMAGES OF THE BALLOTS ARE NOT THE
Significantly, the HRET declared that, although the actual "OFFICIAL BALLOTS" SINCE THE AUTOMATED ELECTION SYSTEM
ballots used in the May 10, 2010 elections are the best (AES) USED DURING THE MAY 2010 ELECTIONS WAS PAPER
evidence of the will of the voters, the picture images of the BASED.
ballots are regarded as the equivalent of the original, citing Rule
4 of the Rules on Electronic Evidence, which reads: II.
Sec. 1. Original of an electronic document. – An electronic THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-
document shall be regarded as the equivalent of an original 321 (DATED 08 JUNE 2011) REGARDED THE PICTURE IMAGES OF
document under the Best Evidence Rule if it is a printout or THE BALLOTS AS THE EQUIVALENT OF THE ORIGINAL, AND
output readable by sight or other means, shown to reflect the USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
data accurately. SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER
2011) – EVEN IF THE PICTURE IMAGES OF THE BALLOTS
Sec. 2. Copies as equivalent of the originals. – When a CANNOT BE REGARDED AS THE EQUIVALENT OF THE ORIGINAL
document is in two or more copies executed at or about the PAPER BALLOTS UNDER THE RULES ON ELECTRONIC EVIDENCE.
same time with identical contents, or is a counterpart produced IN THE FIRST PLACE, THE RULES ON ELECTRONIC EVIDENCE DO
by the same impression as the original, or from the same NOT EVEN APPLY TO THE PICTURE IMAGES OF THE BALLOTS.
matrix, or by mechanical or electronic re-recording, or by
chemical reproduction, or by other equivalent techniques III.
which accurately reproduces the original, such copies or
duplicates shall be regarded as the equivalent of the original. THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-
321 (DATED 08 JUNE 2011) REGARDED THE PICTURE IMAGES OF
Notwithstanding the foregoing, copies or duplicates shall not be THE BALLOTS AS THE EQUIVALENT OF THE ORIGINAL, AND
admissible to the same extent as the original if: USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER
(a) a genuine question is raised as to the authenticity of the 2011) – EVEN IF UNDER THE ELECTRONIC COMMERCE ACT OF
original; or 2000, THE PICTURE IMAGES OF THE PAPER BALLOTS ARE NOT
THE EQUIVALENT OF THE ORIGINAL PAPER BALLOTS.
(b) in the circumstances it would be unjust or inequitable to
admit the copy in lieu of the original. IV.
Aggrieved, Chato filed a Motion for Reconsideration19, which THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-
was denied in the Resolution20 No. 11-487 dated September 321 (DATED 08 JUNE 2011) REGARDED THE PICTURE IMAGES OF
15, 2011. The HRET categorically held that: THE BALLOTS AS THE EQUIVALENT OF THE ORIGINAL, AND
USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
x x x (T)he votes determined after the revision in the 20 SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER
precincts in Basud and Daet, which yielded reversal of votes, 2011) – EVEN IF PETITIONER HAS SHOWN BY SUBSTANTIAL
cannot be relied upon, as they do not reflect the true will of the EVIDENCE THAT THE CF CARDS USED IN THE MAY 2010
electorate. Hence, the Tribunal has to rely on what is reflected ELECTIONS WERE NOT PRESERVED OR WERE VIOLATED.
in the election returns and/or statement of votes by precinct
the same being the best evidence of the results of the election V.
in said precincts in lieu of the altered ballots.
THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11-
The Issues 321 (DATED 08 JUNE 2011) REGARDED THE PICTURE IMAGES OF
THE BALLOTS AS THE EQUIVALENT OF THE ORIGINAL, AND
G.R. No. 199149 USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER
In this petition for certiorari and prohibition with prayer for a 2011) – EVEN IF THERE IS NO LEGAL BASIS FOR THE
temporary restraining order and/or writ of prohibitory HONORABLE TRIBUNAL TO CONSIDER THE PICTURE IMAGE OF
injunction, Chato claims that the HRET committed grave abuse THE BALLOTS AS EVIDENCE, SINCE SUCH PICTURE IMAGES ARE
of discretion amounting to lack or excess of jurisdiction in NOT EVEN RECOGNIZED AND THEIR APPRECIATION ARE NOT
issuing Resolution No. 11-321 dated June 8, 2011 and PROVIDED FOR, UNDER THE OMNIBUS ELECTION CODE.
Resolution No. 11-487 dated September 15, 2011. Her petition
is anchored on the following grounds:
VI.
I.
THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO.
THE HON. PUBLIC RESPONDENT HRET IN RESOLUTION NO. 11- 11-487 (DATED 15 SEPTEMBER 2011) DESPITE THE PENDENCY
321 (DATED 08 JUNE 2011) REGARDED THE PICTURE IMAGES OF OF THE COMELEC INVESTIGATION ON THE MAIN CF CARD FOR
THE BALLOTS AS THE EQUIVALENT OF THE ORIGINAL, AND CLUSTERED PRECINCT 44 OF THE MUNICIPALITY OF DAET.
USED THE PICTURE IMAGES OF THE BALLOTS IN ITS
SUBSEQUENT RESOLUTION NO. 11-487 (DATED 15 SEPTEMBER VII.
2011) – DESPITE THE FACT THAT UNDER REPUBLIC ACT NO.
159
THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO. 4.THE PICTURE IMAGE OF THE BALLOTS MAY BE USED AS
11-487 (DATED 15 SEPTEMBER 2011) BASED ON VILLAFUERTE PROOF OF THE INTEGRITY OF THE PAPER BALLOTS;
VS. JACOB (15 HRET REPORT 754), WHICH IS ONLY AN HRET
CASE WHICH HAS NO PRECEDENTIAL VALUE. 5.RESOLUTION NO. 12-079 HAS NO LEGAL AND FACTUAL BASES
TO STAND ON BECAUSE PRIVATE RESPONDENT FAILED TO
VIII. ESTABLISH THE MERIT OR LEGITIMARY [sic] OF HER PROTEST
CONSIDERING THAT SHE FAILED TO MAKE A REASONABLE
THE HON. PUBLIC RESPONDENT HRET ISSUED RESOLUTION NO. RECOVERY OR MUCH LESS, ANY RECOVERY AT ALL;
11-321 (DATED 08 JUNE 2011) AND RESOLUTION NO. 11-487
(DATED 15 SEPTEMBER 2011) – IN CONTRAVENTION OF CASE 6.RESOLUTION NO. 12-079 IS CONTRADICTORY TO THE
LAW THAT THERE SHOULD BE A FULL BLOWN TRIAL FINDINGS OF THE PUBLIC RESPONDENT HRET IN ITS
CONCERNING THE INTEGRITY OF THE BALLOTS.21 RESOLUTION NO. 11-487;
G.R. No. 201350 7.THE PENDENCY OF THE PETITION FOR CERTIORARI FILED BY
PRIVATE RESPONDENT BEFORE THE SUPREME COURT IS A
After the initial revision of the pilot protested clustered PRELIMINARY MATTER THAT MUST BE RESOLVED FIRST BEFORE
precincts, Chato moved,22 as early as March 24, 2011, for the THE HONORABLE TRIBUNAL MAY ORDER THE REVISION OF THE
revision of ballots in all of the protested clustered precincts REMAINING 75% OF THE PROTESTED PRECINCTS;
arguing that the results of the revision of twenty-five percent
(25%) of said precincts indicate a reasonable recovery of votes 8.THE RELIABILITY OF THE COMPACT FLASH CARDS HAS NOT
in her favor. On May 12, 2011, she filed a second motion23 BEEN SHOWN TO BE QUESTIONABLE;
reiterating her prayer for the continuance of the revision. The
HRET denied the motion "until the Tribunal shall have 9.THE RESULT OF THE RECOUNT CANNOT BE USED TO
determined the merit or legitimacy of the protest, relative to OVERTURN THE RESULTS AS REFLECTED IN THE ELECTION
the revised forty (40) pilot protested clustered precincts."24 For RETURNS BECAUSE THE BALLOTS IN EP CASE NO. 10-040 HAVE
the same reason, the HRET denied two (2) other similar BEEN TAMPERED.29
motions25 filed by Chato.
The Ruling of the Court
However, on March 22, 2012, the HRET issued the assailed
Resolution26 No. 12-079 directing the continuation of the "It is hornbook principle that our jurisdiction to review
revision of ballots in the remaining seventy-five percent (75%) decisions and orders of electoral tribunals is exercised only
protested clustered precincts, or a total of 120 precincts. upon showing of grave abuse of discretion committed by the
Expectedly, Panotes moved27 for reconsideration of Resolution tribunal;" otherwise, we shall not interfere with the electoral
No. 12-079, which was denied in the Order28 dated April 10, tribunal’s exercise of its discretion or jurisdiction. "Grave abuse
2012 for lack of merit. The HRET further warned that any of discretion has been defined as the capricious and whimsical
attempt on the part of the revisors to delay the revision exercise of judgment, or the exercise of power in an arbitrary
proceedings or to destroy the integrity of the ballots and other manner, where the abuse is so patent and gross as to amount
election documents involved, including but not limited to, to an evasion of positive duty."30
marking or tearing of ballots shall be sufficient ground(s) for
immediate disqualification. The acts complained of in these cases pertain to the HRET’s
exercise of its discretion, an exercise which we find to be well
Panotes is now before Us via the instant petition for certiorari within the bounds of its authority and, therefore, beyond our
and prohibition alleging grave abuse of discretion amounting to power to restrict or curtail.
lack or excess of jurisdiction on the part of the HRET in issuing
Resolution No. 12-079 and Order dated April 10, 2012 G.R. No. 199149
considering that –
Chato assails in this petition the following issuances of the
1.THE HONORABLE TRIBUNAL ALREADY CATEGORICALLY RULED HRET: (1) Resolution No. 11-321 dated June 8, 2011 denying her
IN ITS OWN RESOLUTION NO. 11-487 THAT THE VOTES Urgent Motion to Prohibit the Use by Protestee of the
DETERMINED IN THE REVISION CANNOT BE RELIED UPON SINCE Decrypted and Copied Ballot Images in the Instant Case; and (2)
THEY ARE THE PRODUCT OF ALTERED BALLOTS; Resolution No. 11-487 dated September 15, 2011 denying her
Motion for Reconsideration of Resolution No. 11-321.
2.THE ISSUES RESOLVED IN RESOLUTION NO. 11-487 DATED
SEPTEMBER 8, 2011 AND THOSE IN RESOLUTION NO. 12-079 The crucial issue posed by Chato is whether or not the picture
DATED MARCH 22, 2012 ARE INTERRELATED; images of the ballots may be considered as the "official ballots"
or the equivalent of the original paper ballots which the voters
3.PURSUANT TO THE RULING OF THIS MOST HONORABLE filled out. She maintains that, since the automated election
COURT IN THE CASE OF VARIAS VS. COMELEC (G.R. NO. 189078 system (AES) used during the May 10, 2010 elections was
FEBRUARY 11, 2010), THE RESULTS OF THE REVISION OF paper-based,31 the "official ballot" is only the paper ballot that
QUESTIONABLE BALLOTS CANNOT PREVAIL OVER ELECTION was printed by the National Printing Office and/or the Bangko
RETURNS; Sentral ng Pilipinas pursuant to Section 15 of R.A. No. 8436, as
amended by R.A. No. 9369, which reads in part as follows:
160
With respect to a paper-based election system, the official scheme, the message or information (referred to as plaintext) is
ballots shall be printed by the National Printing Office and/or encrypted using an encryption algorithm, turning it into an
the Bangko Sentral ng Pilipinas at the price comparable with unreadable ciphertext. This is usually done with the use of an
that of private printers under proper security measures which encryption key, which specifies how the message is to be
the Commission shall adopt. The Commission may contact the encoded. Any adversary that can see the ciphertext, should not
services of private printers upon certification by the National be able to determine anything about the original message. An
Printing Office/Bangko Sentral ng Pilipinas that it cannot meet authorized party, however, is able to decode the ciphertext
the printing requirements. Accredited political parties and using a decryption algorithm, that usually requires a secret
deputized citizen's arms of the Commission shall assign decryption key, that adversaries do not have access to."39
watchers in the printing, storage and distribution of official
ballots. Despite this security feature, however, the possibility of
tampering or substitution of the CF cards did not escape the
xxxx HRET, which provided in its Guidelines on the Revision of
Ballots that:
Section 2 (3) of R.A. No. 9369 defines "official ballot" where AES
is utilized as the "paper ballot, whether printed or generated by Sec. 11. Printing of the picture images of the ballots in lieu of
the technology applied, that faithfully captures or represents photocopying. – Unless it has been shown, in a preliminary
the votes cast by a voter recorded or to be recorded in hearing set by the parties or motu propio, that the integrity of
electronic form." any of the Compact Flash (CF) Cards used in the May 10, 2010
elections was not preserved or the same was violated, as when
An automated election system, or AES, is a system using there is proof of tampering or substitution, the Tribunal, in lieu
appropriate technology which has been demonstrated in the of photocopying of ballots upon any motion of any of the
voting, counting, consolidating, canvassing, and transmission of parties, shall direct the printing of the picture image of the
election result, and other electoral process.32 There are two ballots of the subject precinct stored in the data storage device
types of AES identified under R.A. No. 9369: (1) paper-based for the same precinct. The Tribunal shall provide a non-partisan
election system; and (2) direct recording electronic election technical person who shall conduct the necessary
system. A paper-based election system, such as the one authentication process to ensure that the data or image stored
adopted during the May 10, 2010 elections, is the type of AES is genuine and not a substitute.
that "use paper ballots, records and counts votes, tabulates,
consolidates/canvasses and transmits electronically the results Accordingly, the HRET set the instant case for preliminary
of the vote count."33 On the other hand, direct recording hearing on May 27, 2011, and directed Chato, the protestant,
electronic election system "uses electronic ballots, records, to present testimonial and/or documentary evidence to show
votes by means of a ballot display provided with mechanical or proof that the integrity of the CF cards used in the May 10,
electro-optical component that can be activated by the voter, 2010 elections was not preserved or was violated.40
processes data by means of computer programs, record voting
data and ballot images, and transmits voting results However, in the assailed Resolution No. 11-321, the HRET
electronically."34 found Chato's evidence insufficient. The testimonies of the
witnesses she presented were declared irrelevant and
As earlier stated, the May 10, 2010 elections used a paper- immaterial as they did not refer to the CF cards used in the 20
based technology that allowed voters to fill out an official paper precincts in the Municipalities of Basud and Daet with
ballot by shading the oval opposite the names of their chosen substantial variances. Pertinent portions of the transcripts of
candidates. Each voter was then required to personally feed his stenographic notes during the May 27, 2011 preliminary
ballot into the Precinct Count Optical Scan (PCOS) machine hearing are quoted hereunder:41
which scanned both sides of the ballots simultaneously,35
meaning, in just one pass.36 As established during the required REYNANTE B. MAGO:
demo tests, the system captured the images of the ballots in
encrypted format which, when decrypted for verification, were Q: Do you have any knowledge regarding the municipalities of
found to be digitized representations of the ballots cast.37 Basud and Daet?
We agree, therefore, with both the HRET and Panotes that the A: Wala po kasi hindi naman yung ang aking bet [sic, should
picture images of the ballots, as scanned and recorded by the have been "beat", a journalistic jargon for the reporter's official
PCOS, are likewise "official ballots" that faithfully captures in place of assignment]
electronic form the votes cast by the voter, as defined by
Section 2 (3) of R.A. No. 9369. As such, the printouts thereof Q: Wala kang nalalaman regarding the municipalities of Basud
are the functional equivalent of the paper ballots filled out by and Daet?
the voters and, thus, may be used for purposes of revision of
votes in an electoral protest. A: Wala po.
It bears stressing that the digital images of the ballots captured Q: Are you sure?
by the PCOS machine are stored in an encrypted format in the
CF cards.38 "Encryption is the process of encoding messages (or A: Sure na sure po kasi hindi ko naman po yun bet [sic] noong
information) in such a way that eavesdroppers or hackers mga panahon na yun. Wala po akong direct na knowledge o
cannot read it, but that authorized parties can. In an encryption participation regarding that during the time of election period.
161
witness the verification and backing-up of the contents of the
PROVINCIAL PROSECUTOR OSCAR J. VILAFUERTE: main CF card for CP No. 44 of Daet, Camarines Norte.
To substitute our own judgment to the findings of the HRET will Verily, the case of the alleged missing CF Card for Clustered
doubtless constitute an intrusion into its domain and a Precinct No. 44 is no mystery at all.
curtailment of its power to act of its own accord on its G.R. No. 201350
evaluation of the evidentiary weight42 of testimonies
presented before it. Thus, for failure of Chato to discharge her In the main, Panotes ascribes grave abuse of discretion on the
burden of proving that the integrity of the questioned CF cards part of the HRET in ordering the continuation of the revision of
had not been preserved, no further protestations to the use of ballots in the remaining 75% of the protested clustered
the picture images of the ballots as stored in the CF cards precincts despite having previously ruled that the votes
should be entertained. determined after the revision in the 20 precincts in the
Municipalities of Basud and Daet, which yielded reversal of
Moreover, after having participated and presented her votes, cannot be relied upon, as they do not reflect the true will
evidence at the May 27, 2011 preliminary hearing, Chato of the electorate.
cannot now be heard to complain that the proceedings therein
did not amount to a full blown trial on the merits required in The Constitution mandates that the HRET "shall be the sole
the case of Tolentino v. COMELEC43 for weighing the integrity judge of all contests relating to the election, returns and
of ballots. qualifications" of its members. By employing the word "sole",
the Constitution is emphatic that the jurisdiction of the HRET in
Her allegation with respect to the pendency of the COMELEC the adjudication of election contests involving its members is
investigation on the main CF card for Clustered Precinct 44 of intended to be its own – full, complete and unimpaired.47 The
the Municipality of Daet, which was previously ordered by the Tribunal, thus, unequivocally asserted its exclusive control in
HRET itself when the election officer submitted only the back- Rule 7 of the 2011 HRET Rules, as follows:
up CF card that did not, however, contain picture images of the
ballots,44 could not in the least bit affect the resolution of this Rule 7. Exclusive Control of Functions. – The Tribunal shall have
case. As correctly pointed out by the HRET, the same concerns exclusive control, direction, and supervision of all matters
only one (1) precinct out of the 20 precincts with substantial pertaining to its own functions and operation.
variances.45 At any rate, the following explanation46 proferred
by the HRET should put the issue to rest, viz: There can be no challenge, therefore, to such exclusive control
absent any clear showing, as in this case, of arbitrary and
x x x On November 2, 2011, John Rex C. Laudiangco of the improvident use by the Tribunal of its power that constitutes a
COMELEC Law Department, filed Comelec's Compliance with denial of due process of law, or upon a demonstration of a very
Manifestation and Motion to Admit the Attached Fact-Finding clear unmitigated error, manifestly constituting such grave
Investigation Report explaining the delay in the conduct of the abuse of discretion that there has to be a remedy therefor.48
investigation which was duly conducted on October 7, 2011,
and submitting therewith a comprehensive Fact-Finding Contrary to Panotes' posturing, there existed legal and factual
Investigation Report on the said investigation which was bases for the revision of the remaining 75% of the protested
docketed in the Law Department as Case No. FF.INV. (LD) 11-46 clustered precincts. Rule 37 of the 2011 HRET Rules clearly
entitled "In the Matter of Investigation on What Happened to provides that, after post-revision determination of the merit or
the Main CF (Compact Flash) card for Clustered Precinct No. 44 legitimacy of the protest, the Tribunal may proceed with the
for the Municipality of Daet, Camarines Norte." revision of the ballots in the remaining contested precincts,
thus:
In sum, the investigation revealed that the main CF Card for CP
No. 44 of the Municipality of Daet could possibly be located Rule 37. Post-Revision Determination of the Merit or Legitimacy
inside the ballot box of the Municipal Board of Canvassers of Protest Prior to Revision of Counter-Protest; Pilot Precincts;
(MBOC) of Daet, Camarines Norte (serial no. CE-07-166991), Initial Revision. – Any provision of these Rules to the contrary
after having been allegedly submitted in an improvised notwithstanding, as soon as the issues in any contest before the
envelope, by the Board of Election Inspectors (BEI) of said CP 44 Tribunal have been joined, the Protestant, in case the protest
to the MBOC. It was, therefore, recommended that said ballot involves more than 50% of the total number of precincts in the
box be opened to retrieve the said CF card. district, shall be required to state and designate in writing
within a fixed period at most twenty five (25%) percent of the
Accordingly, in her January 6, 2012 letter to public respondent, total number of precincts involved in the protest which said
Atty. Anne A. Romero-Cortez submitted certain documents party deems as best exemplifying or demonstrating the
relative to the opening of the ballot box of the MBOC of Daet, electoral irregularities or fraud pleaded by him; and the revision
Camarines Norte (serial no. CE-07-166991) so the main CF Card of the ballots or the examination, verification or re-tabulation
for CP 44 of Daet may be retrieved and its custody turned over of election returns and/or reception of evidence shall begin
to the Election Records and Statistics Department (ERSD), with such pilot precincts designated. Otherwise, the revision of
COMELEC. ballots or the examination, verification and re-tabulation of
election returns and/or reception of evidence shall begin with
Likewise, in her January 6, 2012 letter to public respondent, all the protested precincts. The revision of ballots or the
ERSD Director Ester L. Villaflor-Roxas requested that a examination, verification and re-tabulation of election returns
representative from public respondent be present on the day to in the counter-protested precincts shall not be commenced
162
until the Tribunal shall have determined through appreciation precincts had already been conducted from May 2-9, 2012
of ballots or election documents and/or reception of evidence, thereby rendering the issue moot and academic.
which reception shall not exceed ten (10) days, the merit or
legitimacy of the protest, relative to the pilot protested Having, thus, established the futility of Panotes' case, we need
precincts. Based on the results of such post-revision not belabor the other issues raised in this petition.
determination, the Tribunal may dismiss the protest without
further proceedings, if and when no reasonable recovery was WHEREFORE, the petitions are hereby DISMISSED for lack of
established from the pilot protested precincts, or proceed with merit.
the revision of the ballots or the examination, verification and
re-tabulation of election returns in the remaining contested 70. PEOPLE OF THE PHILIPPINES, Appellee, vs.CAMALOUING
precincts. SAMANODING, LARA y BRION, Appellant.
Panotes argues that Chato had not made a reasonable recovery This is an appeal from the April 7, 2011 Decision1 of the Court
in the initial revision of ballots in the 25% pilot protested of Appeals (CA) in CA-G.R. CR-HC No. 02479 which affirmed in
clustered precincts and, as such, the HRET should have toto the August 29, 2006 Decision2 of the Regional Trial Court
dismissed the protest in accordance with the aforequoted (RTC) of Pasay City, Branch 231, convicting appellant
provision instead of ordering further the revision of the Camaloding Laba y Samanoding (appellant) for violation of
remaining 75% of the protested clustered precincts.1âwphi1 Section 5, Article II of Republic Act (RA) No. 91653 and
sentencing him to suffer the penalty of life imprisonment and
It should be pointed out, however, that the provision in to pay a fine of ₱500,000.00 without subsidiary imprisonment
question is couched in the permissive term "may" instead of in case of insolvency, and costs.
the mandatory word "shall." Therefore, it is merely directory,
and the HRET is not without authority to opt to proceed with The Facts
the revision of ballots in the remaining contested precincts
even if there was no reasonable recovery made by the On July 18, 2005, at around 10:45 in the morning, appellant
protestant in the initial revision. arrived at the Manila Domestic Airport in Pasay City to take his
flight bound for Davao City. When he approached the initial
In the assailed Resolution49 No. 12-079, the HRET justified its check-in area, Mark Anthony Villocillo (Villocillo), a non-
action by its need "to re-examine what appears to be a peculiar uniformed personnel (NUP)4 frisker assigned thereat,5
design to impede the will of the electorate," and that a revision physically searched the person of appellant and suspected that
of all the protested clustered precincts will allow it "to see the the latter’s oversized white rubber shoes, with the identifying
whole picture of the controversy." Thus said the HRET: mark "Spicer,"6 seemed to contain what felt like rice.7 Upon
inspection of the rubber shoes, which Villocillo asked appellant
The evidence as presented by the parties involving the twenty- to remove,8 the former discovered three (3) plastic sachets
five percent (25%) pilot protested clustered precincts is still containing shabu– two plastic sachets were inside the left shoe
insufficient to justify an indubitable conclusion. There are still while one was inside the right shoe.9
material issues that should be taken into account. The
substantial increase in the number of ballots for protestant and When Villocillo extracted the plastic sachets from appellant’s
the substantial decrease in the number of ballots for protestee shoes, the latter told Villocillo, "Baka pwedeng pag-usapan ito"
after comparing the election returns with the physical counts of while simultaneously handing him a rolled wad of paper bills.10
the ballots are prima facie findings that should not be Eventually, Villocillo called the attention of his supervisor, SPO2
trivialized. Also, the reliability of the compact flash cards Nolasco Peji11 (SPO2 Peji), who apprehended appellant and
including its admissibility was raised by the protestant as an apprised him of his rights.12 Subsequently, appellant was
area of concern which needs precise and definitive ruling by the brought to their office and investigated by PO2 Edwin
Tribunal. A complete disavowal of the constitutional duty will Caimoso,13 who thereafter indorsed appellant, together with
be debased if the Tribunal is not going to see the whole picture the confiscated plastic sachets, to Philippine Drug Enforcement
of the controversy. After all, the revision proceedings will not Agency (PDEA) agents who had eventually arrived at the
unduly toll the precious time of the Tribunal. All of the ballot scene.14
boxes involved in this protest are already in the custody of the
Tribunal and will not require sizeable manpower to revise it. On the same day, the PDEA, through Police Inspector Peter P.
Alvarez, requested15 that a laboratory examination on the
At the risk of unduly encroaching on the exclusive prerogative three (3) plastic sachets be conducted, which were accordingly
of the HRET as the sole judge of election contests involving its marked as follows:
members, we cannot substitute our own judgment for that of
the HRET on the issues of whether the evidence presented (a) EXH-A MTV ECC NSP 18/06/05 and signatures – 98.81 grams
during the initial revision could affect the officially proclaimed
results and whether the continuation of the revision (b) EXH-B MTV ECC NSP 18/06/05 and signatures – 96.65 grams
proceedings could lead to a determination of the true will of
the electorate. 50 (c) EXH-C MTV ECC NSP 18/06/05 and signatures – 1.17
grams16
In any case, as pointed out by the HRET, the revision
proceedings for the remaining 75% protested clustered The following day, or on June 19, 2005, upon qualitative
examination by forensic chemist Police Senior Inspector Stella
163
Garciano Ebuen (Police Senior Inspector Ebuen) on the police officers were extorting money from him. The fallo of the
confiscated sachets, which contained a total of 196.63 grams of judgment of conviction reads: WHEREFORE, on the evidence
white crystalline substance, the same tested positive for adduced and the facts and conclusions drawn therefrom, the
methylamphetamine hydrochloride, a dangerous drug.17 accused CAMALODING LABA y SAMANODING is hereby found
Guilty beyond reasonable doubt of the offense charged in the
Consequently, appellant was charged with violation of Sec. 5, Information and is sentenced to suffer the penalty of LIFE
Art. II of RA 9165 in an Information18 which reads: IMPRISONMENT and PAY A FINE OF FIVE HUNDRED THOUSAND
PESOS (Php500,000.00) WITHOUT SUBSIDIARY IMPRISONMENT
That on or about the 18th day of June 2005, in Pasay City, IN CASE OF INSOLVENCY, AND COSTS.
Metro-Manila, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being a departing SO ORDERED.32
passenger via Cebu Pacific Airlines flight no. 5J-965 239 bound
for Davao, without authority of law, did then and there willfully, Ruling of the CA
unlawfully and feloniously transport 196.63 grams of
Methylamphetamine hydrochloride (SHABU), a dangerous On appeal, the CA affirmed33 the RTC Decision in toto, holding
drugs, by concealing it inside his worn colored white rubber that the identity of the seized substance had been adequately
shoes with marking "SPICER." proved and that the chain of custody was properly established,
from the time that it was recovered from the person of the
Contrary to law. appellant, tested at the laboratory for a qualitative
examination, and its actual presentation in court. While the CA
When arraigned on June 27, 2005 with the assistance of conceded that the arresting officers were unable to strictly
counsel, appellant entered a plea of not guilty to the offense comply with the requirements set forth under Sec. 21,Par. (1) of
charged.19 RA 9165 by failing to photograph the seized items, it
nonetheless found that the evidentiary value of the confiscated
In defense, appellant claimed that on the date and time in substance had been preserved. It also did not find the non-
question, he was at the Manila Domestic Airport20 for his flight presentation of the forensic chemist as fatal to the cause of the
to Davao City. After passing through the metal detector and prosecution.
while walking towards the ticketing counter to check-in, a
police officer, whom he later identified as SPO2 Peji,21 called Issue Before The Court
his attention and asked him to stay for a while22 because
something was allegedly recovered from him. At the same time, The core issue to be resolved by the Court is whether the CA
appellant noticed that someone had been arrested, and he and the RTC committed any reversible error in convicting
heard SPO2 Peji tell that person to settle the case so that they appellant as charged.
could just "pass" the "thing" to appellant, which turned out to
be shabu.23 The Court’s Ruling
Thereafter, SPO2 Peji and Villocillo brought appellant to an
office24 where SPO2 Peji forced him toadmit ownership of the Appellant was convicted of violation of Sec. 5, Art. II of RA 9165,
shabu.25 When appellant refused, SPO2 Peji suggested the which reads:
settlement of the case for ₱100,000.00, an amount which
appellant could not afford.26 Later, he was brought to a PDEA Sec. 5. Sale, Trading, Administration, Dispensation, Delivery,
office where PDEA agents took his statement and once again Distribution and Transportation of Dangerous Drugs and/or
asked him to admit ownership of the confiscated shabu.27 Controlled Precursors and Essential Chemicals. ―The penalty of
Appellant averred that SPO2 Peji confiscated his wallet which life imprisonment to death and a fine ranging from Five
contained ₱1,600.00 in cash, as well as ₱2,000.00 found in the hundred thousand pesos (₱500,000.00) to Ten million pesos
pocket of his pants.28 Finally, appellant denied wearing the (₱10,000,000.00) shall be imposed upon any person, who,
white rubber shoes with the label "Spicer" at the time he was unless authorized by law, shall sell, trade, administer, dispense,
arrested.29 deliver, give away to another, distribute, dispatch in transit or
transport any dangerous drug, including any and all species of
Ruling of the RTC opium poppy regardless of the quantity and purity involved, or
shall act as a broker in any such transactions. (Emphasis
On August 29, 2006, after trial on the merits, the RTC supplied)
convicted30 appellant as charged upon a finding that all the
elements for transportation of drugs, i.e., actual physical In adjudging appellant guilty beyond reasonable doubt of the
possession and control of the prohibited drugs, coupled with said offense, the RTC, as affirmed by the CA, considered the fact
the presentation of the corpus delicti in court,31 have been that he was caught in flagrante delicto in possession of an
established by the prosecution. It found the testimonies of extremely large amount of prohibited drugs inside the airport,
prosecution witnesses Villocillo and SPO2 Peji to be candid, before boarding his flight bound for Davao City. The RTC
forthright and reliable. Moreover, as law enforcers, they were explained34 that Sec. 5, Art. II of RA 9165 penalizes the act of
presumed to have regularly performed their official duties. transporting shabu, under which provision appellant must
clearly be convicted.
On the other hand, the RTC refused to give credence to
appellant’s bare and unsubstantiated denials, as well as his The Court sustains appellant’s conviction.
claim that he was merely framed-up, and his insistence that the
164
"Transport" as used under the Dangerous Drugs Act is defined of regularity in its preparation.42 Corollarily, under Sec. 4443 of
to mean "to carry or convey from one place to another."35 The Rule 130, Revised Rules of Court, entries in official records
essential element of the charge is the movement of the made in the performance of official duty are prima facie
dangerous drug from one place to another.36 evidence of the facts they state. WHEREFORE, the Court
AFFIRMS the April 7, 2011 Decision of the Court of Appeals in
In this case, appellant was apprehended inside the airport, as CA G.R. CR-HC No. 02479.
he was intending to board his flight bound for Davao City with a
substantial amount or 196.63 grams of methylamphetamine 71. RE: REQUEST OF (RET.) CHIEF JUSTICE ARTEMIO V.
hydrochloride or shabu in his possession, concealed in separate PANGANIBAN FOR RECOMPUTATION OF HIS CREDITABLE
plastic bags inside his oversized Spicer rubber shoes. While it SERVICE FOR THE PURPOSE OF RECOMPUTING HIS
may be argued that appellant was yet to board the aircraft or RETIREMENT BENEFITS.
travel some distance with the illegal drugs in his possession, it
cannot be denied that his presence at the airport at that The Court is asked to pass upon the request of former Chief
particular instance was for the purpose of transporting or Justice Artemio V. Panganiban (CJ Panganiban) to include as
moving the dangerous drugs from one place to another. creditable government service the period from January 1962 to
December 1965 when he served the Department of Education
Moreover, it may be reasonably inferred from the deliberations (DepEd), its Secretary, and the Board of National Education
of the Congress that if a person is found to have more than five (BNE) to enable him to meet the present service requirement of
(5) grams of shabu in his possession, then his purpose in fifteen (15) years for entitlement to retirement benefits.
carrying them is to dispose, traffic, or sell it, as follows:
When CJ Panganiban reached the compulsory age of retirement
REPRESENTATIVE AQUINO (B.). We agree with the premises, on
Mr. Speaker.1âwphi1 But just for the sake of our education, in
terms of volume, somebody informed this Representation that December 7, 2006, he was credited with eleven (11) years, one
one gram of shabu would probably be the same size as a single (1) month and twenty-seven (27) days or 11.15844 years of
kernel of corn. Would that be correct? government service. The Office of Administrative Services (OAS)
did not include in the computation his 4-year service as Legal
REPRESENTATIVE CUENCO. The technical committee that has Counsel to the DepEd and its then Secretary, Alejandro R. Roces
been assisting us in carpentering this bill tells us that a habitual (Former Education Secretary Roces), and as Consultant to the
user of, let’s say, shabu, one of the dangerous substances BNE in a concurrent capacity, from January 1962 to December
provided for here, a habitual user of shabu, even if we say daily 1965, on the ground that consultancy "is not considered
taker of shabu consumes only 1/5 of a gram, .02 grams a day. government service pursuant to Rule XI (Contract of
So that means, if he has with him one gram of shabu, that is Services/Job Orders) of the Omnibus Rules Implementing Book
good for five days; if he has five grams, that is good for 25 days. V of Executive Order No. 292."1 Having failed to meet the
Now if he is a user, he won’t need more than five grams to twenty (20) years length of service then required under
carry with him or her. So the presumption of the law is that, if Republic Act (R.A.) No. 910,2 the OAS considered him eligible to
he carries with him or her more than five grams, that is not for receive only the 5-year lump sum payment under said law.
his personal consumption. He is out to traffic the rest of it.37
(Underscoring supplied) On January 10, 2010, then President Gloria Macapagal-Arroyo
approved R.A. 9946,3 which not only reduced the requisite
With respect to the chain of custody of the confiscated drugs, length of service under R.A. 910 from twenty (20) years to
the Court likewise finds no reason to disturb the findings of the fifteen (15) years to be entitled to the retirement benefits with
CA that the same had been faithfully observed by the arresting lifetime annuity, but provided also for a survivorship clause,
officers: from the time that the illegal substance was seized among others.
from appellant and properly marked by the arresting officers, to
its laboratory examination until its presentation in open court Thus, the instant letter-request of CJ Panganiban seeking a
for identification purposes.38 Considering that the integrity of recomputation of his creditable government service to include
the seized substance has been duly preserved, failure to strictly the previouslyexcluded 4-year government service to enable
comply with Sec. 21, Par. (a)39 of RA 9165 requiring the him to meet the reduced service requirement of fifteen (15)
apprehending officers to physically inventory and photograph years for entitlement to retirement benefits under R.A. 9946.
the confiscated items shall not render the evidence
inadmissible.10 On December 14, 2010, the Court issued a Resolution4
directing CJ Panganiban to submit additional documentary
Neither will the non-presentation in court of Police Senior evidence to support his appointment as Legal Counsel to the
Inspector Ebuen, the forensic chemist who conducted the DepEd and its Secretary and Consultant to the BNE. In
laboratory examination on the confiscated substance, operate compliance, he submitted the January 19, 2011 Certifications5
to acquit appellant. The matter of presentation of witnesses by of Former Education Secretary Roces and Retired Justice
the prosecution is not for the court to decide. It has the Bernardo P. Pardo (Retired Justice Pardo) attesting to the fact
discretion as to how to present its case and it has the right to of his tenure as Legal Counsel to the DepEd and its Secretary
choose whom it wishes to present as witnesses.41 Besides, and Consultant to the BNE.
corpus delicti has nothing to do with the testimony of the
chemical analyst, and the report of an official forensic chemist The Court finds merit in CJ Panganiban’s request.
regarding a recovered prohibited drug enjoys the presumption
165
A careful perusal of the actual functions and responsibilities of now, did not require a specific job description and job
CJ Panganiban as outlined in his compliance with attached specification. Thus, the absence of a specific position in a
Sworn Statements of Former Education Secretary Roces and governmental structure is not a hindrance for the Court to give
Retired Justice Pardo reveal that he performed actual works weight to CJ Panganiban’s government service as legal counsel
and was assigned multifarious tasks necessary and desirable to and consultant. It must be remembered that retired Chief
the main purpose of the DepEd and the BNE. Justice Andres R. Narvasa’s (CJ Narvasa) stint in a non-plantilla
position as Member of the Court Studies Committee of the
Former Education Secretary Roces certified that: Supreme Court, created under Administrative Order No. 164 of
then Chief Justice Querube C. Makalintal, was considered
[C]hief Justice Panganiban rendered actual services to the BNE sufficient for purposes of crediting him with an additional five
and the Department [of Education] and to me in my official (5) years of government service, reckoned from September 2,
capacity as Secretary of Education for said period [from January 1974 to 1979.11
1962 to December 1965], having been officially appointed by
me as then Secretary of Education and as Chairman of the In any case, having previously ruled to include as creditable
Board of Education, he having been paid officially by the government service the post-retirement work of Justice
government a monthly compensation for rendering such Abraham T. Sarmiento as Special Legal Counsel to the
services to the government specifically to the Department of University of the Philippines System12 and to credit former CJ
Education and to the Board of National Education. He worked Narvasa with the legal counselling work he did for the Agrava
with the Office of the Solicitor General on legal matters Fact-Finding Board to which he was appointed General Counsel
affecting the Department and the Board, collaborating closely by then President Marcos,13 the Court sees no reason not to
with then Solicitor Bernardo P. Pardo who was assigned by the likewise credit in CJ Panganiban’s favor the work he had
Office of the Solicitor General to the Department of Education. performed as Legal Counsel to the DepEd and its Secretary, not
to mention his concurrent work as consultant to the BNE, and
Apart from legal issues, he devoted time and attention to accordingly, qualify him for entitlement to retirement benefits.
matters assigned to him by the Department or by the Board,
like the development of educational policies, the selection and In A.M. No. 07-6-10-SC,14 apart from his work as Member of
distribution of textbooks and other educational materials, the the Court Studies Committee of the Supreme Court, CJ Narvasa
setting of school calendars, the procurement of equipment and was credited his term as General Counsel to the Agrava Fact-
supplies, management of state schools, etc.6 Finding Board for one (1) year (from October 29, 1983 to
October 24, 1984), as well as his 10-month post-retirement
His services both as Legal Counsel to the DepEd and its service as Chairperson of the Preparatory Commission on
Secretary and as Consultant to the BNE during the period 1962- Constitutional Reforms created under Executive Order No. 43,
1965 was corroborated by Retired Justice Pardo who, in his thus, entitling him to monthly pension computed from
affidavit, certified that in his "capacity as Solicitor assigned by December 1, 2003. In A.M. No. 03-12-08-SC,15 the Court
the Office of Solicitor General to the Department of Education favorably considered Justice Sarmiento's post-retirement work
and Board of National Education"7 he and CJ Panganiban as Special Legal Counsel to the University of the Philippines
"collaborated in many cases representing both the Board of (from August 24, 2000 to January 15, 2002) as part of his
National Education and Department of Education, particularly creditable government service apart from his service as
then Secretary of Education Alejandro R. Roces, as well as in Member of the UP Board of Regents (from January 16, 2002 to
rendering legal opinions to such offices."8 December 31, 2003) and Chairman of the UP Board of Regents
CJ Panganiban performed work ranging from high level (from January 1, 2004 to December 31, 2005).
assignments involving policy development and implementation
to the more humble tasks of selection and distribution of Justice Brion views the Court’s favorable disposition of CJ
educational materials and setting of school calendars. He Panganiban’s request for lifetime annuity as another case of
himself views his work, thus: "[u]nlike some present day flip-flopping, believing that the Court already denied former
consultants or counsels of government offices and officials, I Chief Justice Panganiban’s request for full retirement benefits
rendered full and actual service to the Philippine government, under R.A. No. 910 and would, thus, be making a complete
working daily at an assigned desk near the Office of the turnabout even as CJ Panganiban makes a request for the
Secretary of Education throughout the full term of Secretary second time and for the same previously-denied services.16
Alejandro R. Roces, January 1962 to December 1965."9
Associate Justice Arturo D. Brion (Justice Brion) is not Justice Brion, however, is mistaken in his belief that the Court is
persuaded by the evidence. He holds the view that there must reversing itself in this case. There is no flip-flopping situation to
be an appointment to a position that is part of a government speak of since this is the first instance that the Court En Banc is
organizational structure before any work rendered can be being asked to pass upon a request concerning the
considered government service. computation of CJ Panganiban’s creditable service for purposes
of adjusting his retirement benefits. It may be recalled that
Under the old Administrative Code (Act No. 2657),10 a Deputy Clerk of Court and OAS Chief Atty. Eden T. Candelaria
government "employee" includes any person in the service of had simply responded to a query made by CJ Panganiban when
the Government or any branch thereof of whatever grade or she wrote17 him, thus:
class. A government "officer," on the other hand, refers to
officials whose duties involve the exercise of discretion in the June 10, 2008
performance of the functions of government, whether such
duties are precisely defined or not. Clearly, the law, then and Hon. Artemio V. Panganiban
166
Retired Chief Justice It bears emphasis that treatment must be without preference
especially between persons similarly situated or in equal
Your Honor: footing. Just as CJ Narvasa’s work as General Counsel to the
Agrava Board, and Justice Sarmiento’s service as Special Legal
This refers to your query through Ms. Vilma M. Tamoria on why Counsel to UP were considered creditable government service,
your Honor’s service in the Board of National Education was not so should the consideration be for CJ Panganiban’s work, at
included in the computation of retirement benefits. least, as Legal Counsel to the DepEd and its Secretary.
In connection with his Honor’s Application for Compulsory Justice Brion asserts that CJ Panganiban’s own claim in his Bio-
Retirement, a Certification dated November 14, 2006 issued by Data and Personal Data Sheet that he remained in active
former Secretary of Education, the Honorable Alejandro R. private law practice at the same time that he acted as Legal
Roces, was submitted attesting that you had served as Counsel to the DepEd and its Secretary and as Consultant to the
consultant to the Board of National Education and concurrently BNE prevents him from asserting any claim to the contrary. It
Legal Counsel to the Secretary of Education from January 1962 should be stressed that CJ Panganiban only filed his request for
to December 1965. re-computation of his retirement benefits in the hope that the
Court will credit in his favor the work he rendered both as Legal
Consultancy or Contract of Service is not considered Counsel to the DepEd and its Secretary and as Consultant to the
government service pursuant to Rule XI (Contract of BNE in the same way that it credited retired Justice Sarmiento’s
Services/Job Orders) of the Omnibus Rules Implementing Book and retired CJ Narvasa’s services as Special Legal Counsel to the
V of Executive Order No. 292. Hence, your Honor’s service as UP and General Counsel to the Agrava Board,
consultant to the Board of National Education from January respectively.1âwphi1 When CJ Panganiban submitted his claims
1962 to December 1965 was not credited in the computation of to the Court’s sense of fairness and wisdom, it was the Court
creditable government service. that directed him to present additional evidence in support of
the true nature of the services he rendered to these
Your Honor is therefore entitled only to the benefits under government agencies.
Section 2 of R.A. 910 as amended which provides for a lump
sum equivalent to five (5) years salary based on the last salary The alleged inconsistency between his earlier statements of
you were receiving at the time of retirement considering that being in private law practice in his Bio-Data and Personal Data
you did not attain the length of service as required in Section 1. Sheet and his proffered evidence now showing the nature and
Thus, you Honor only has a total of 11 years, 1 month and 27 extent of his services to the DepEd and its Secretary and to the
days or 11.15844 government service. BNE is more apparent than real. The perception of continuous
and uninterrupted exercise of one's legal profession, despite
Very truly yours, periodic interruptions foisted by public service, is not
uncommon among legal practitioners. After all, legal
(Sgd.) counselling work, even if rendered to a government agency, is
EDEN T. CANDELARIA part of legal practice. During the time that CJ Narvasa served as
Deputy Clerk of Court and Member of the Court Studies Committee of the Supreme Court
Chief Administrative Officer from 1974 to 1979, prior to his appointment as General Counsel
to the Agrava Board, he likewise appeared to have regarded
CJ Panganiban no longer pursued the matter with the OAS himself in constant active law practice18 and yet this did not
presumably because a converse ruling allowing credit for his deter the Court from considering the weight of the work he
service with the BNE would still have left his total length of actually rendered to the government and, thus, credited him
government service short of the 20-year requirement as to not only his one-year stint as General Counsel of the Agrava
entitle him to a lifetime annuity under Section 1 of R.A. 910. Board but even the full term of his earlier involvement as
However, in view of the passage of R.A. 9946, which reduced Member of the Court Studies Committee of the Supreme Court.
the requisite period of service from twenty (20) years to fifteen
(15) years to benefit from a grant of lifetime annuity, CJ Nonetheless, Justice Brion insists that no substantial proof has
Panganiban sought the Court’s approval to include his 4-year been presented to support the inference that the work
service as Legal Counsel to the DepEd and its Secretary, and as rendered by CJ Panganiban constituted government service
Consultant to the BNE as creditable government service. and, hence, the application of liberality in the appreciation and
interpretation of the law is unjustified. Admittedly, the only
Besides, nothing prevents the Court from taking a second look evidence presented to support CJ Panganiban's claim that he
into the merits of a request and overturning a ruling worked as Legal Counsel to the DepEd and its Secretary and as
determined to be inconsistent with principles of fairness and Consultant to the BNE are the Sworn Statements of Retired
equality. In particular, the grant of life annuity benefit to Justice Justice Pardo and Former Education Secretary Roces and the
Sarmiento was a result of the Court’s reversal of its earlier submissions of CJ Panganiban but this evidence can hardly be
Resolution denying the request for re-computation. Notably, considered undeserving of weight and lacking in substance,
the Court found merit in Justice Sarmiento’s plea for liberality coming from a retired member of the Court, a former Cabinet
and considered his post-retirement work creditable Secretary and a former Chief Justice of the Supreme Court,
government service to complete the 20- year length of service whose credibility remains untarnished and is beyond question.
required for him to avail of full retirement benefits under R.A. Justice Brion himself does not dispute the veracity of their
910. claims that CJ Panganiban did, in fact, render actual service.
Hence, notwithstanding the absence of any other record of CJ
167
Panganiban’s appointment to a position or item within the Article II of Republic Act No. 9165 (RA 9165) otherwise known
DepEd and the BNE, his actual service to these government as the "Comprehensive Dangerous Drugs Act of 2002.’’
agencies must be regarded as no less than government service
and should, therefore, be credited in his favor consistent with The Factual Antecedents
the Court's liberal rulings in the cases of CJ Narvasa and Justice
Sarmiento. At around 9:15 in the evening of December 29, 2007, PO2
Roberto Soque (PO2 Soque), PO2 Alejandro Cepe(PO2 Cepe)
The Supreme Court has unquestionably followed the practice of and PO3Edilberto Zeta (PO3 Zeta), who wereall assigned tothe
liberal treatment in passing upon retirement claims of judges Station Anti-Illegal Drugs (SAID) Section of the Malate Police
and justices, thus: (1) waiving the lack of required length of Station 9 (Police Station 9), conducted a routine foot patrol
service in cases of disability or death while in actual service19 along Balingkit Street, Malate, Manila. In the process, they
or distinctive service; (2) adding accumulated leave credits to heard a man shouting "Putanginamo! Limangdaannabaito?"
the actual length of government service in order to qualify one Forpurportedly violating Section 844 of the Revised Ordinance
for retirement; (3) tacking post-retirement service in order to of the City of Manila (Manila City Ordinance)which punishes
complete the years of government service required; (4) breaches of the peace, the man, later identified as Ramon,was
extending the full benefits of retirement upon compassionate apprehended and asked to empty his pockets. In the course
and humanitarian considerations;20 and (5) considering legal thereof, the police officers were able to recover from him a
counselling work for a government body or institution as small transparent plastic sachet containing white crystalline
creditable government service. substance suspected to beshabu.PO2 Soque confiscated the
sachet and brought Ramon to Police Station 9 where the former
The generous extent of the Court’s liberality in granting markedthe item with the latter’s initials, "RMG." There, Police
retirement benefits is obvious in Re: Justice Efren I. Plana:21 Superintendent Ferdinand RicafrenteQuirante(PSuptQuirante)
prepared a request for laboratory examination which, together
It may also be stressed that under the beneficient provisions of with the specimen, was brought by PO2 Soque to the PNP
Rep. Act 910, as amended, a Justice who reaches age 70 is Crime Laboratory for examination.
entitled to full retirement benefits with no length of service
required. Thus, a 69 year old lawyer appointed to the bench will Forensic Chemist Police Senior Inspector Erickson Calabocal
get full retirement benefits for the rest of his life upon reaching (PSInspCalabocal)examinedthe specimen which contained
age 70, even if he served in the government for only one year. 0.173 gram of white crystalline substanceand found the same
Justice Plana served the government with distinction for 33 positive for methylamphetamine hydrochloride (or shabu).
years, 5 months, and 11 days, more than 5 years of which were
served as a Justice of the Court of Appeals of this Court. Consequently, Ramon was charged with possession of
dangerous drugs under Section 11(3), Article II of RA 9165
In the instant case, no liberal construction is even necessary to throughan Information dated January 3, 2008 which states:
resolve the merits of CJ Panganiban's request. The Court need
only observe consistency in its rulings. That on or about December 29, 2007, in the City of Manila,
Philippines, the said accused, without being authorized by law
WHEREFORE, the Court resolves to GRANT former Chief Justice to possess any dangerous drug, did then and there willfully,
Artemio V. Panganiban’s request for a re-computation of his unlawfully and knowingly have in his possession and under his
creditable government service to include the 4-year period custody and control one (1) heat sealed transparent plastic
from January 1962 to December 1965 that he served as Legal sachet containing ZERO POINT ONE SEVEN THREE (0.173) gram
Counsel to the Department of Education and its then Secretary of white crystalline substance containing methylamphetamine
and Consultant to the Board of National Education, as duly hydrochloride known as SHABU, a dangerous drug.5
attested to by retired Justice Bernardo P. Pardo and then
Secretary of Education himself, Alejandro R. Roces. In defense, Ramon denied the charge and gave his version of
the incident. He narrated that on December 29, 2007, at
ACCORDINGLY, the Office of Administrative Services is hereby around 4:00 in the afternoon, whilewalking alongBalingkit
DIRECTED to re-compute former Chief Justice Artemio V. Street to borrow a welding machine from one Paez Garcia, a
Panganiban's creditable government service and his man in civilian clothing approached and asked him if he is
corresponding retirement benefits. Ramon Goco. Upon affirming his identity, he was immediately
handcuffed by the man who eventually introduced himself as a
72. RAMON MARTINEZ y GOCO/RAMON GOCO y police officer. Together, they boarded a tricycle (sidecar)
MARTINEZ@MON, Petitioner, vs.PEOPLE OF THE PHILIPPINES, wherethe said officer asked him if he was carrying illegal drugs.
Respondent. Despite his denial, he was still brought to a precinct to be
detained. Thereafter, PO2 Soquepropositioned Ramon and
Assailed in this Petition for Review on Centiorari1 under Rule 45 asked for ₱20,000.00 in exchange for his release.When Ramon’s
of the Rules of Court are the June 30, 2011 Decision2 and wife,AmaliaGoco, was unable to produce the ₱20,000.00 which
September 20, 2011 Resolution3 of the Court of Appeals (CA) in PO2 Soquehad asked for, he (Ramon) was brought to the
CA-G.R. No. 32544 which affirmed the April 30, 2009 Decision4 Manila City Hall for inquest proceedings.
of the Regional Trial Court of Manila Branch 2 (RTC) in Criminal
Case No. 08-358669 convicting petitioner Ramon Martinez y The RTC Ruling
Goco/Ramon Goco y Martinez (Ramon) of the crime of
possession of dangerous drugs punished under Section 11(3)
168
In its April 30, 2009 Decision, the RTCconvicted Ramon of the Accordingly, so as to ensure that the same sacrosanct right
crime of possession of dangerous drugs as charged, finding all remains revered, effects secured by government authoritiesin
its elements tohave been established through the testimonies contraventionof the foregoingarerendered inadmissible in
of the prosecution’sdisinterested witnesses. In this relation,it evidence for any purpose, in any proceeding. In this regard,
alsoupheld the legality of Ramon’s warrantless arrest, observing Section 3(2), Article III of the Constitution provides that:
that Ramon was disturbing the peace in violation of the Manila
City Ordinance during the time of his apprehension. 2. Any evidence obtained in violation of this or the preceding
Consequently, Ramon was sentenced to suffer the penalty of section [referring to Section 2] shall be inadmissible for any
imprisonment oftwelve (12) years and one (1) day as minimum purpose in any proceeding.
to seventeen (17) years and four (4) months as maximum and
to pay a fine of ₱300,000.00. Aggrieved, Ramon elevated his Commonly known as the "exclusionary rule," the above-cited
conviction to the CA. proscription is not, however, an absolute and rigid one.7 As
found in jurisprudence, the traditional exceptions are customs
The CA Ruling searches,8 searches of moving vehicles,9 seizure of evidence in
plain view,10 consented searches,11 "stop and frisk"
In its June 30, 2011 Decision,the CA denied Ramon’s appeal and measures12 andsearches incidental to a lawful arrest.13 This
thereby affirmedhis conviction. Itupheld the factual findings of last-mentioned exception is of particular significance to this
the RTC which found that the elements of the crime of case and thus, necessitates further disquisition.
possession of dangerous drugs were extant, to wit: (1) that the
accused is in possession of a prohibited drug; (2) that such A valid warrantless arrest which justifies a subsequent search is
possession is not authorized by law; and (3) that the accused one that is carried out under the parameters of Section 5(a),
freely and consciously possessed the said drug.6 Rule 113 of the Rules of Court14 which requires that the
apprehending officer must have been spurred by probable
Likewise, the CA sustained the validity of the body search made cause to arresta person caught in flagrante delicto. To be
on Ramon as an incident of alawful warrantless arrest for sure,the term probable cause has been understood to mean a
breach of the peace which he committed in the presence of the reasonable ground of suspicion supported by circumstances
police officers, notwithstanding its (the case for breach of the sufficiently strong in themselves to warrant a cautious man's
peace)subsequent dismissal for failure to prosecute. belief that the person accused is guilty of the offense with
which he is charged.15 Specifically with respect to arrests, it is
Moreover, the CAobserved that every link in the chain of such facts and circumstances which would lead a reasonably
custody of the prohibited drug wassufficiently establishedfrom discreet and prudent man to believe that an offense has been
the time PO2Soque took the sameup to its actual presentation committed by the person sought to be arrested.16 In this light,
in court. the determination of the existence or absence of probable
cause necessitates a re-examination of the factual incidents.
Finally, it did not give credence to Ramon’s claim of extortion as
his asseverationsfailed to overcome the presumption of Records show that PO2 Soque arrested Ramon for allegedly
regularity in the performance of the police officers’ official violating Section 844 of the Manila City Ordinance which
duties. provides as follows:
The Issue Sec. 844. – Breaches of the Peace. – No person shall make, and,
countenance, or assist in making any riot, affray, disorder,
The sole issue raised in this petition is whether or not the CA disturbance, or breach of the peace; or assault, beat or use
erred in affirming the Decision of the RTC convicting Ramon of personal violence upon another without just cause in any public
the crime of possession of dangerous drugs. place; or utter any slanderous, threatening or abusive language
or expression or exhibit or display any emblem, transparency,
The Ruling of the Court representation, motto, language, device, instrument, or thing;
or do any act, in any public place, meeting or procession,
The petition is meritorious. tending to disturb the peace or excite a riot, or collect with
other persons in a body or crowd for any unlawful purpose; or
Enshrined in the fundamental law is a person’s right against disturbance or disquiet any congregation engaged in any lawful
unwarranted intrusions by the government. Section 2, Article III assembly.1âwphi1
of the 1987 Philippine Constitution (Constitution) states that:
PENALTY: Imprisonment of not more than six (6) months and /
Section 2.The right of the people to be secure in their persons, or fine not more than Two Hundred pesos (PHP 200.00)
houses, papers, and effects against unreasonable searches and
seizures of whatever nature and for any purpose shall be As may be readily gleaned, the foregoing ordinancepenalizes
inviolable, and no search warrant or warrant of arrest shall the following acts: (1) making, countenancing, or assisting in
issue except upon probable cause to be determined personally making any riot, affray, disorder, disturbance, or breach of the
by the judge after examination under oath or affirmation of the peace; (2) assaulting, beating or using personal violence upon
complainant and the witnesses he may produce, and another without just cause in any public place; (3) uttering any
particularly describing the place to be searched and the persons slanderous, threatening or abusive language or expression or
or things to be seized. exhibiting or displaying any emblem, transparency,
representation, motto, language, device, instrument, or thing;
169
and (4) doing any act, in any public place, meeting or probable cause should be clothed with utmost
procession, tending to disturb the peace or excite a riot, or conscientiousness as well as impelled by a higher sense of
collect with other persons in a body or crowd for any unlawful public accountability.
purpose, or disturbance or disquiet any congregation engaged
in any lawful assembly. Evidently, the gravamen of these Consequently, as it cannot be said that Ramon was validly
offenses is the disruption of communal tranquillity. Thus, to arrested the warantless search that resulted from it was also
justify a warrantless arrest based on the same, it must be illegal. Thus, the subject shabu purportedly seized from Ramon
established that the apprehension was effected after a is inadmissible in evidence for being the proverbial fruit of the
reasonable assessment by the police officer that a public poisonous tree as mandated by the above discussed
disturbance is being committed. constitutional provision. In this regard, considering that the
confiscated shabuis the very corpus delicitof the crime charged,
In this regard, PO2 Soque’s testimony detailed the surrounding Ramon's acquital should therefore come as a matter of course.
circumstances leading to Ramon’s warrantless warrant, viz:
WHEREFORE, the petition is GRANTED. The June 30, 2011
Clearly, a perusal of the foregoing testimony negates the Decision and September 20, 2011 Resolution of the Court of
presence of probable cause when the police officers conducted Appeals in CA-G.R. CR No. 32544 are REVERSED and SET ASIDE.
their warrantless arrest of Ramon. Petitioner Ramon Martinez y Goco/Ramon Goco y Martinez is
hereby ACQUITTED of the crime charged.
To elucidate, it cannot be said that the act of shouting in a
thickly-populated place, with many people conversing with 73. PEPSI-COLA PRODUCTS PHILIPPINES, INC., Petitioner, vs.
each other on the street, would constitute any of the acts ANECITO MOLON, AUGUSTO TECSON, JONATHAN VILLONES,
punishable under Section 844 of the Manila City Ordinance as BIENVENIDO LAGARTOS, JAIME CADION, EDUARDO TROYO,
above-quoted. Ramon was not making or assisting in any riot, RODULFO MENDIGO, AURELIO MORALITA, ESTANISLAO
affray, disorder, disturbance, or breach of the peace; he was MARTINEZ, REYNALDO VASQUEZ, ORLANDO GUANTERO,
not assaulting, beating or using personal violence upon EUTROPIO MERCADO, FRANCISCO GABON, ROLANDO
another; and, the words he allegedly shouted – "Putanginamo! ARANDIA, REYNALDO TALBO, ANTONIO DEVARAS,
Limangdaannabaito?" –are not slanderous, threatening or HONORATO ABARCA, SALVADOR MAQUILAN, REYNALDO
abusive, and thus, could not have tended to disturb the peace ANDUYAN, VICENTE CINCO, FELIX RAPIZ, ROBERTO CATAROS,
or excite a riot considering that at the time of the incident, ROMEO DOROTAN, RODOLFO ARROPE, DANILO CASILAN, and
Balingkit Street was still teeming with people and alive with SAUNDER SANTIAGO REMANDABAN III, Respondents.
activity.
Assailed in this Petition for Review on Certiorari1 are the March
Further, it bears stressing that no one present at the place of 31, 2006 Decision2 and September 18, 2006 Resolution3 of the
arrest ever complained that Ramon’s shouting disturbed the Court of Appeals (CA) in CA-G.R. S.P. No. 82354 which reversed
public. On the contrary, a disinterested member of the and set aside the September 11, 2002 Decision4 of the National
community (a certain Rosemarie Escobal) even testified that Labor Relations Commission (NLRC) in NLRC Certified Case No.
Ramon was merely standing in front of the store of a certain V-000001-2000.5 The assailed CA issuances declared the
MangRomy when a man in civilian clothes, later identified as illegality of respondents’ retrenchment as well as held
PO2 Soque, approached Ramon, immediately handcuffed and petitioner guilty of unfair labor practice (ULP), among others.
took him away.19
The Facts
In its totality, the Court observes that these facts and
circumstances could not have engendereda well-founded belief Petitioner Pepsi-Cola Products Philippines, Inc. (Pepsi) is a
that any breach of the peace had been committed by Ramon at domestic corporation engaged in the manufacturing, bottling
the time that his warrantless arrest was effected. All told, and distribution of soft drink products. In view of its business,
noprobable cause existedto justify Ramon’s warrantless arrest. Pepsi operates plants all over the Philippines, one of which is
located in Sto. Niño, Tanauan, Leyte (Tanauan Plant).
Indeed, while it is true that the legality of arrest depends upon
the reasonable discretion of the officer or functionary to whom Respondents, on the other hand, are members of the Leyte
the law at the moment leaves the decision to characterize the Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-
nature of the act or deed of the person for the urgent purpose ALU), a legitimate labor organization composed of rank-and-file
of suspending his liberty,20 this should not be exercised in a employees in Pepsi's Tanauan Plant, duly registered with the
whimsical manner, else a person’s liberty be subjected to Department of Labor and Employment (DOLE) Regional Office
ubiquitous abuse. Aslaw enforcers, it is largely expectedof them No. 8.6
to conduct a more circumspect assessment of the situation at
hand. The determination of probable cause is not a blanket- In 1999, Pepsi adopted a company-wide retrenchment program
license to withhold liberty or to conduct unwarranted fishing denominated as Corporate Rightsizing Program.7 To commence
expeditions. It demarcates the line between legitimate human with its program, it sent a notice of retrenchment to the DOLE8
conduct on the one hand, and ostensible criminal activity, on as well as individual notices to the affected employees
the other. In this respect, it must be performedwisely and informing them of their termination from work.9 Subsequently,
cautiously, applying the exacting standards of a reasonably on July 13, 1999, Pepsi notified the DOLE of the initial batch of
discreet and prudent man. Surely, as constitutionally forty-seven (47) workers to be retrenched.10 Among these
guaranteed rightslie at the fore, the duty to determine employees were six (6) elected officers and twenty-nine (29)
170
active members of the LEPCEU-ALU, including herein
respondents.11 (1) In NCMB RBVIII-NS-0710-99 and NCMB-RBVIIINS-07-14-99,
the NLRC absolved Pepsi of the charge of union busting/ULP as
On July 19, 1999, LEPCEU-ALU filed a Notice of Strike before the it was not shown that it (Pepsi) had any design to bust the
National Conciliation and Mediation Board (NCMB) due to union;24
Pepsi’s alleged acts of union busting/ULP.12 It claimed that
Pepsi’s adoption of the retrenchment program was designed (2) In NLRC Case No. 7-0301-99, the NLRC declared LEPCEU-
solely to bust their union so that come freedom period, Pepsi’s ALU’s July 23, 1999 strike as illegal for having been conducted
company union, the Leyte Pepsi-Cola Employees Union-Union without legal authority since LEPCEU-ALU was not the certified
de Obreros de Filipinas #49 (LEPCEU-UOEF#49) – which was bargaining agent of the company. It was also observed that
also the incumbent bargaining union at that time – would LEPCEU-ALU failed to comply with the seven (7)-day strike vote
garner the majority vote to retain its exclusive bargaining notice requirement. However, the NLRC denied Pepsi’s prayer
status.13 Hence, on July 23, 1999, LEPCEU-ALU went on to declare loss of employment status of the union officers and
strike.14 members who participated in the strike for its failure to
sufficiently establish the identity of the culpable union officers
On July 27, 1999, Pepsi filed before the NLRC a petition to as well as their illegal acts;25
declare the strike illegal with a prayer for the loss of
employment status of union leaders and some union (3) In NLRC RAB VIII Case No. 9-0459-00, the NLRC ordered
members.15 On even date, then DOLE Secretary Bienvenido A. Pepsi to reinstate Remandaban to his former position without
Laguesma certified the labor dispute to the NLRC for loss of seniority rights but without backwages considering the
compulsory arbitration.16 A return-to-work order was also lack of evidence showing that he willfully intended to disregard
issued.17 the July 27, 1999 return-to-work order;26
On September 11, 2002, the NLRC rendered a Decision23 in It observed that Pepsi could not have been in good faith when it
NLRC Certified Case No. V-000001-2000. Among the cases retrenched the respondents given that they were chosen
subsumed and consolidated therein are the following with the because of their union membership with LEPCEU-ALU. In this
pertinent dispositions involving herein respondents: accord, it ruled that the subject retrenchment was invalid
171
because there was no showing that Pepsi employed fair and corporate rightsizing program, integrity and binding effect of
reasonable criteria in ascertaining who among its employees the executed quitclaims as well as the issues relating to union
would be retrenched.36 busting and ULP constitute factual matters which have already
been resolved by the NLRC and are now beyond the authority
Moreover, the CA held that Pepsi was guilty of ULP in the form of the CA to pass upon on certiorari.
of union busting as its retrenchment scheme only served to
defeat LEPCEUALU’s right to self-organization. It also pointed In contrast, respondents aver that the CA was clothed with
out that the fact that Pepsi hired twenty-six (26) replacements ample authority to review the factual findings and conclusions
and sixty-five (65) new employees right after they were of the NLRC, especially in this case where the latter
retrenched contravenes Pepsi’s claim that the retrenchment misappreciated the factual circumstances and misapplied the
was necessary to prevent further losses.37 law.
Further, the CA pronounced that the respondents’ signing of Pepsi’s arguments are untenable.
the individual release and quitclaims did not have the effect of
settling all issues between them and Pepsi considering that the Parenthetically, in a special civil action for certiorari, the CA is
same should have been read in conjunction with the September authorized to make its own factual determination when it finds
17, 1999 Agreement.38 that the NLRC gravely abused its discretion in overlooking or
disregarding evidence which are material to the controversy.
Finally, the CA upheld the validity of LEPCEU-ALU’s July 23, 1999 The Court, in turn, has the same authority to sift through the
strike, ruling that LEPCEU-ALU "was sure to be the certified factual findings of both the CA and the NLRC in the event of
collective bargaining agent in the event that a certification their conflict. Thus, in Plastimer Industrial Corporation v.
election will be conducted" and thus, was authorized to Gopo,46 the Court explained:
conduct the aforesaid strike.39 It added that there was no need
for LEPCEU-ALU to comply with the fifteen (15) day cooling off In a special civil action for certiorari, the Court of Appeals has
period requirement given that the July 23, 1999 strike was ample authority to make its own factual determination. Thus,
conducted on account of union busting.40 In support thereof, the Court of Appeals can grant a petition for certiorari when it
the CA noted41 that in a related case involving the same finds that the NLRC committed grave abuse of discretion by
retrenchment incident affecting, however, other members of disregarding evidence material to the controversy. To make this
LEPCEU-ALU – entitled "George C. Beraya, Arsenio B. Mercado, finding, the Court of Appeals necessarily has to look at the
Romulo A. Orongan, Pio V. Dado and Primo C. Palana v. Pepsi evidence and make its own factual determination. In the same
Cola Products Philippines, Inc. (PCPPI), Pres. Jorge G. Sevilla and manner, this Court is not precluded from reviewing the factual
Area GM Edgar D. Del Mar" (Beraya)42 – the NLRC issued a issues when there are conflicting findings by the Labor Arbiter,
Decision dated November 24, 200343 finding Pepsi guilty of the NLRC and the Court of Appeals. x x x x (Citations omitted.)
union busting/ULP. Notably, in Beraya, the NLRC ruled that
Pepsi’s retrenchment program and the consequent dismissal of In this light, given the conflicting findings of the CA and NLRC in
the retrenched employees were valid.44 this case, the Court finds it necessary to examine the same in
order to resolve the substantive issues.
Dissatisfied with the CA’s ruling, Pepsi moved for
reconsideration which was, however, denied by the CA in its Separately, it must be pointed out that the CA erred in resolving
September 18, 2006 Resolution.45 Hence, the instant petition. the issues pertaining to LEPCEU-ALU’s July 23, 1999 strike in its
March 31, 2006 Decision47 and September 18, 2006
Issues Before the Court Resolution48 (in CA-G.R. SP No. 82354) considering that the
parties therein – now, the respondents in this case – do not
As culled from the records, the following issues have been have any legal interest in the said issue. To be clear, NLRCRAB
raised for the Court’s resolution: (1) whether the CA may VIII Case Nos. 9-0432-99 to 9-0458-99 are the cases which
reverse the factual findings of the NLRC; (2) whether involve herein respondents; their concern in those cases was
respondents’ retrenchment was valid; (3) whether Pepsi the illegality of their retrenchment. On the other hand, the
committed ULP in the form of union busting; (4) whether strike issue was threshed out in RAB Case No. VIII-7-0301-99
respondents’ execution of quitclaims amounted to a final which involved other members of LEPCEU-ALU. Although all
settlement of the case; and (5) whether Remandaban was these cases were subsumed under NLRC Certified Case No. V-
illegally dismissed. 000001-2000, the legality of the July 23, 1999 strike was not
raised by the respondents in NLRC-RAB VIII Case Nos. 9-0432-99
The Court’s Ruling to 9-0458-99. In view of these incidents, given that the CA has
taken cognizance of a matter (i.e., the legality of the strike)
The petition is meritorious. where the parties (i.e., respondents) are devoid of any legal
interest, the Court sees no reason to perpetuate the misstep
A. Appellate Court’s Evaluation and delve upon the same.
of the NLRC’s Findings
B. Validity of Retrenchment
Pepsi contends that the CA erred in evaluating and examining
anew the evidence and in making its own finding of facts when Retrenchment is defined as the termination of employment
the findings of the NLRC have been fully supported by initiated by the employer through no fault of the employee and
substantial evidence. It therefore claims that the validity of the without prejudice to the latter, resorted by management during
172
periods of business recession, industrial depression or seasonal (3) That the employer pays the retrenched employees
fluctuations or during lulls over shortage of materials. It is a separation pay equivalent to one (1) month pay or at least one-
reduction in manpower, a measure utilized by an employer to half (½) month pay for every year of service, whichever is
minimize business losses incurred in the operation of its higher;
business.49
(4) That the employer exercises its prerogative to retrench
Under Article 297 of the Labor Code,50 retrenchment is one of employees in good faith for the advancement of its interest and
the authorized causes to validly terminate an employment. It not to defeat or circumvent the employees’ right to security of
reads: tenure; and
ART. 297. Closure of Establishment and Reduction of Personnel. (5) That the employer used fair and reasonable criteria in
– The employer may also terminate the employment of any ascertaining who would be dismissed and who would be
employee due to the installation of labor saving devices, retained among the employees, such as status, efficiency,
redundancy, retrenchment to prevent losses or the closing or seniority, physical fitness, age, and financial hardship for certain
cessation of operation of the establishment or undertaking workers.53
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the In due regard of these requisites, the Court observes that Pepsi
workers and the Ministry of Labor and Employment at least one had validly implemented its retrenchment program:
(1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or (1) Records disclose that both the CA and the NLRC had already
redundancy, the worker affected thereby shall be entitled to a determined that Pepsi complied with the requirements of
separation pay equivalent to at least his one (1) month pay or substantial loss and due notice to both the DOLE and the
to at least one (1) month pay for every year of service, workers to be retrenched. The pertinent portion of the CA’s
whichever is higher. In case of retrenchment to prevent losses March 31, 2006 Decision reads:
and in cases of closure or cessation of operations of
establishment or undertaking not due to serious business losses In the present action, the NLRC held that PEPSI-COLA’s financial
or financial reverses, the separation pay shall be equivalent to statements are substantial evidence which carry great
one (1) month pay or to at least one-half (1/2) month pay for credibility and reliability viewed in light of the financial crisis
every year of service, whichever is higher. A fraction of at least that hit the country which saw multinational corporations
six (6) months shall be considered one (1) whole year. closing shops and walking away, or adapting [sic] their own
(Emphasis supplied.) corporate rightsizing program. Since these findings are
supported by evidence submitted before the NLRC, we resolve
As may be gleaned from the afore-cited provision, to properly to respect the same. x x x x The notice requirement was also
effect a retrenchment, the employer must: (a) serve a written complied with by PEPSI-COLA when it served notice of the
notice both to the employees and to the DOLE at least one (1) corporate rightsizing program to the DOLE and to the fourteen
month prior to the intended date of retrenchment; and (b) pay (14) employees who will be affected thereby at least one (1)
the retrenched employees separation pay equivalent to one (1) month prior to the date of retrenchment. (Citations omitted)54
month pay or at least one-half (½) month pay for every year of
service, whichever is higher. It is axiomatic that absent any clear showing of abuse,
arbitrariness or capriciousness, the findings of fact by the NLRC,
Essentially, the prerogative of an employer to retrench its especially when affirmed by the CA – as in this case – are
employees must be exercised only as a last resort, considering binding and conclusive upon the Court.55 Thus, given that
that it will lead to the loss of the employees' livelihood. It is there lies no discretionary abuse with respect to the foregoing
justified only when all other less drastic means have been tried findings, the Court sees no reason to deviate from the same.
and found insufficient or inadequate.51 Corollary thereto, the
employer must prove the requirements for a valid (2) Records also show that the respondents had already been
retrenchment by clear and convincing evidence; otherwise, said paid the requisite separation pay as evidenced by the
ground for termination would be susceptible to abuse by September 1999 quitclaims signed by them. Effectively, the said
scheming employers who might be merely feigning losses or quitclaims serve inter alia the purpose of acknowledging receipt
reverses in their business ventures in order to ease out of their respective separation pays.56 Appositely, respondents
employees.52 These requirements are: never questioned that separation pay arising from their
retrenchment was indeed paid by Pepsi to them. As such, the
(1) That retrenchment is reasonably necessary and likely to foregoing fact is now deemed conclusive.
prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real, or if (3) Contrary to the CA’s observation that Pepsi had singled out
only expected, are reasonably imminent as perceived members of the LEPCEU-ALU in implementing its retrenchment
objectively and in good faith by the employer; program,57 records reveal that the members of the company
union (i.e., LEPCEUUOEF#49) were likewise among those
(2) That the employer served written notice both to the retrenched.58
employees and to the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; Also, as aptly pointed out by the NLRC, Pepsi’s Corporate
Rightsizing Program was a company-wide program which had
already been implemented in its other plants in Bacolod, Iloilo,
173
Davao, General Santos and Zamboanga.59 Consequently, given albeit involving different parties, behooves the Court to accord
the general applicability of its retrenchment program, Pepsi a similar disposition and thus, finally uphold the legality of the
could not have intended to decimate LEPCEUALU’s said program altogether.
membership, much less impinge upon its right to self-
organization, when it employed the same. C. Union Busting and ULP
In fact, it is apropos to mention that Pepsi and its employees Under Article 276(c) of the Labor Code, there is union busting
entered into a collective bargaining agreement on October 17, when the existence of the union is threatened by the
1995 which contained a union shop clause requiring employer’s act of dismissing the former’s officers who have
membership in LEPCEU-UOEF#49, the incumbent bargaining been duly-elected in accordance with its constitution and by-
union, as a condition for continued employment. In this regard, laws.69
Pepsi had all the reasons to assume that all employees in the
bargaining unit were all members of LEPCEU-UOEF#49; On the other hand, the term unfair labor practice refers to that
otherwise, the latter would have already lost their gamut of offenses defined in the Labor Code70 which, at their
employment. In other words, Pepsi need not implement a core, violates the constitutional right of workers and employees
retrenchment program just to get rid of LEPCEU-ALU members to self-organization,71 with the sole exception of Article 257(f)
considering that the union shop clause already gave it ample (previously Article 248[f]).72 As explained in the case of
justification to terminate them. It is then hardly believable that Philcom Employees Union v. Philippine Global
union affiliations were even considered by Pepsi in the Communications:73
selection of the employees to be retrenched.60
Unfair labor practice refers to acts that violate the workers'
Moreover, it must be underscored that Pepsi’s management right to organize. The prohibited acts are related to the
exerted conscious efforts to incorporate employee participation workers' right to selforganization and to the observance of a
during the implementation of its retrenchment program. CBA. Without that element, the acts, no matter how unfair, are
Records indicate that Pepsi had initiated sit-downs with its not unfair labor practices. The only exception is Article 248(f)
employees to review the criteria on which the selection of who [now Article 257(f)]. (Emphasis and underscoring supplied)
to be retrenched would be based. This is evidenced by the
report of NCMB Region VIII Director Juanito Geonzon which Mindful of their nature, the Court finds it difficult to attribute
states that "[Pepsi’s] [m]anagement conceded on the proposal any act of union busting or ULP on the part of Pepsi considering
to review the criteria and to sit down for more positive steps to that it retrenched its employees in good faith. As earlier
resolve the issue."61 discussed, Pepsi tried to sit-down with its employees to arrive
at mutually beneficial criteria which would have been adopted
Lastly, the allegation that the retrenchment program was a for their intended retrenchment. In the same vein, Pepsi’s
mere subterfuge to dismiss the respondents considering Pepsi’s cooperation during the NCMB-supervised conciliation
subsequent hiring of replacement workers cannot be given conferences can also be gleaned from the records.
credence for lack of sufficient evidence to support the same. Furthermore, the fact that Pepsi’s rightsizing program was
implemented on a company-wide basis dilutes respondents’
Verily, the foregoing incidents clearly negate the claim that the claim that Pepsi’s retrenchment scheme was calculated to
retrenchment was undertaken by Pepsi in bad faith. stymie its union activities, much less diminish its constituency.
Therefore, absent any perceived threat to LEPCEU-ALU’s
(5) On the final requirement of fair and reasonable criteria for existence or a violation of respondents’ right to self-
determining who would or would not be dismissed, records organization – as demonstrated by the foregoing actuations –
indicate that Pepsi did proceed to implement its rightsizing Pepsi cannot be said to have committed union busting or ULP in
program based on fair and reasonable criteria recommended by this case.
the company supervisors.62
D. Execution of Quitclaims
Therefore, as all the requisites for a valid retrenchment are
extant, the Court finds Pepsi’s rightsizing program and the A waiver or quitclaim is a valid and binding agreement between
consequent dismissal of respondents in accord with law. the parties, provided that it constitutes a credible and
reasonable settlement and the one accomplishing it has done
At this juncture, it is noteworthy to mention that in the related so voluntarily and with a full understanding of its import.74 The
case of Beraya – which involved the same retrenchment applicable provision is Article 232 of the Labor Code which
incident affecting the respondents, although litigated by other reads in part:
LEPCEU-ALU employees – the NLRC in a Decision dated
November 24, 2003 had already pronounced that Pepsi’s ART. 232. Compromise Agreements. — Any compromise
retrenchment program was valid.63 Subsequently, the settlement, including those involving labor standard laws,
petitioners in Beraya elevated the case via petition for certiorari voluntarily agreed upon by the parties with the assistance of
to the CA64 which was, however, denied in a Decision dated the Bureau or the regional office of the Department of Labor,
November 28, 2006.65 They appealed the said ruling to the shall be final and binding upon the parties. x x x (Emphasis and
Court66 which was equally denied through the Resolutions underscoring supplied)
dated April 24, 200867 and August 4, 2008.68 The fact that the
validity of the same Pepsi retrenchment program had already In Olaybar v. National Labor Relations Commission,75 the
been passed upon and thereafter sustained in a related case, Court, recognizing the conclusiveness of compromise
174
settlements as a means to end labor disputes, held that Article
2037 of the Civil Code, which provides that "[a] compromise has Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National
upon the parties the effect and authority of res judicata," Labor Relations Commission,80 the Court pronounced that "the
applies suppletorily to labor cases even if the compromise is ends of social and compassionate justice would therefore be
not judicially approved.76 served if private respondent is reinstated but without
backwages in view of petitioner's good faith." The factual
In the present case, Pepsi claims that respondents have long similarity of these cases to Remandaban’s situation deems it
been precluded from filing cases before the NLRC to assail their appropriate to render the same disposition.
retrenchment due to their execution of the September 1999
quitclaims. In this regard, Pepsi advances the position that all As may be gathered from the September 11, 2002 NLRC
issues arising from the foregoing must now be considered as Decision, while Remandaban was remiss in properly informing
conclusively settled by the parties. Pepsi of his intended absence, the NLRC ruled that the penalty
of dismissal would have been too harsh for his infractions
The Court is unconvinced. considering that his failure to report to work was clearly
prompted by a medical emergency and not by any intention to
As correctly observed by the CA, the September 1999 defy the July 27, 1999 return-to-work order.81 On the other
quitclaims must be read in conjunction with the September 17, hand, Pepsi's good faith is supported by the NLRC's finding that
1999 Agreement, to wit: "the return-to-work-order of the Secretary was taken lightly by
.Remandaban."82 In this regard, considering Remandaban 's
2. Both parties agree that the release of these benefits is ostensible dereliction of the said order, Pepsi could not be
without prejudice to the filing of the case by the Union with the blamed for sending him a notice of termination and eventually
National Labor Relations Commission; proceeding to dismiss him. At any rate, it must be hoted that
while Pepsi impleaded Remandaban as party to the case, it
3. The Union undertakes to sign the Quitclaim but subject to failed to challenge the NLRC ruling ordering his reinstateme:ot
the 2nd paragraph of this Agreement. x x x (Emphasis and to his former position without backwages. As such, the
underscoring supplied)77 foregoing issue is now settled with finality.
The language of the September 17, 1999 Agreement is All told, the NLRC's directive to reinstate Remandaban without
straightforward. The use of the term "subject" in the 3rd clause backwages is upheld.
of the said agreement clearly means that the signing of the
quitclaim documents was without prejudice to the filing of a WHEREFORE, the petition is GRANTED. The assailed March 31,
case with the NLRC. Hence, when respondents signed the 2006 Decision and September 18, 2006 Resolution of the Court
September 1999 quitclaims, they did so with the reasonable of Appeals in CA-G.R. S.P. No. 82354 are hereby REVERSED and
impression that that they were not precluded from instituting a SET ASIDE. Accordingly, the September 11, 2002 Decision of the
subsequent action with the NLRC. Accordingly, it cannot be said National Labor Relations Commission is hereby REINSTATED
that the signing of the September 1999 quitclaims was insofar as (1) it dismissed subsumed cases NLRC-RAB VIII Case
tantamount to a full and final settlement between Pepsi and Nos. 9-0432-99 to 9-0458-99 and; (2) ordered the
respondents. reinstatement of respondent Saunder Santiago Remandaban III
without loss of seniority rights but without backwages in NLRC-
E. Dismissal of Remandaban RAB VIII Case No. 9-0459-99.
An illegally dismissed employee is entitled to either 74. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs.P/SUPT.
reinstatement, if viable, or separation pay if reinstatement is no ARTEMIO E. LAMSEN, PO2 ANTHONY D. ABULENCIA, and SPO1
longer viable, and backwages.78 In certain cases, however, the WILFREDO L. RAMOS, Accused-Appellants.
Court has ordered the reinstatement of the employee without
backwages considering the fact that (1) the dismissal of the The Court hereby resolves the Motions for Reconsideration1
employee would be too harsh a penalty; and (2) the employer filed by accused-appellants SPO 1 Wilfredo L. Ramos and PO2
was in good faith in terminating the employee. For instance, in Anthony D. Abulencia and the Motion for New Trial Due to.
the case of Cruz v. Minister of Labor and Employment79 the Newly Discovered Evidence and for Reconsideration of the
Court ruled as follows: February 20, 2013 Resolution2 filed by accused-appellant
P/Supt. Artemio E. Lamsen (Motions). The foregoing Motions
assail the Court's Resolution3 dated February 20, 2013, which
The Court is convinced that petitioner's guilt was substantially upheld the conviction of accused-appellants of the crime of
established.1âwphi1 Nevertheless, we agree with respondent robbery with homicide and sentenced them to suffer the
Minister's order of reinstating petitioner without backwages penalty of reclusion. perpetua and to jointly .and severally pay:
instead of dismissal which may be too drastic. Denial of [a] the heirs of victim Fernando Sy the amount of Pl 00,000.00
backwages would sufficiently penalize her for her infractions. as actual damages, ₱4,968,320.l 0 as loss of earning capacity,
The bank officials acted in good faith. They should be exempt ₱50,000.00 as civil indemnity, and 1 50,000.00 as moral
from the burden of paying backwages. The good faith of the damages; [b] the heirs of victim Arturo Mariado the amount of
employer, when clear under the circumstances, may preclude ₱150,000.00 as stipulated damages; [c] Equitable PCI Bank the
or diminish recovery of backwages. Only employees amount of ₱2,707,400.77 as the amount taken during the
discriminately dismissed are entitled to backpay. x x x robbery; and [d] costs of suit.4
(Emphasis and underscoring supplied)
175
In their respective Motions, accused-appellants state, inter alia is one of comparison coupled with the application of the
that they obtained affidavits from prosecution witnesses Amel general rules of evidence. A testimony solemnly given in court
F. Reyes5 (Reyes) and Domingo Marcelo6 (Marcelo) whose should not be set aside and disregarded lightly, and before this
testimonies implicated accused-appellants of the crime of can be done, both the previous testimony and the subsequent
robbery with homicide. In their affidavits, the aforesaid one should be carefully compared and juxtaposed, the
prosecution witnesses claim that they made their testimonies circumstances under which each was made, carefully and
under duress as they were forced by elements of the Philippine keenly scrutinized, and the reasons or motives for the change,
National Police, the National Bureau of Investigation, and the discriminatingly analyzed. The unreliable character of the
former mayor of San Carlos City, Pangasinan, Julian Resuello, to affidavit of recantation executed by a complaining witness is
point at accused-appellants as perpetrators of the aforesaid also shown by the incredulity of the fact that after going
crime. They equally claim that they did not actually see who through the burdensome process of reporting to and/or having
committed the crime and that they only testified against the accused arrested by the law enforcers, executing a criminal
accused-appellants out of fear of their own lives.7 complaint-affidavit against the accused, attending trial and
testifying against the accused, the said complaining witness
The Court is not convinced. would later on declare that all the foregoing is actually a farce
and the truth is now what he says it to be in his affidavit of
Reyes’ and Marcelo’s affidavits partake of a recantation which recantation. And in situations, like the instant case, where
is aimed to renounce their earlier testimonies and withdraw testimony is recanted by an affidavit subsequently executed by
them formally and publicly.8 Verily, recantations are viewed the recanting witness, we are properly guided by the well-
with suspicion and reservation. The Court looks with disfavor settled rules that an affidavit is hearsay unless the affiant is
upon retractions of testimonies previously given in court. It is presented on the witness stand and that affidavits taken ex-
settled that an affidavit of desistance made by a witness after parte are generally considered inferior to the testimony given in
conviction of the accused is not reliable, and deserves only open court.14 (Emphases and underscoring supplied)
scant attention. The rationale for the rule is obvious: affidavits
of retraction can easily be secured from witnesses, usually After a careful scrutiny of the records, the Court sees no
through intimidation or for a monetary consideration.9 sufficient reason to disturb its Resolution dated February 20,
Recanted testimony is exceedingly unreliable.10 There is always 2013. In the case at bar, the trial court gave great weight and
the probability that it will later be repudiated.11 Only when credence to the collective statements of the four (4)
there exist special circumstances in the case which when prosecution witnesses, including those of Reyes and Marcelo,
coupled with the retraction raise doubts as to the truth of the as their testimonies were candid, straightforward, and
testimony or statement given, can retractions be considered categorical. It is likewise worthy to mention that their
and upheld.12 As aptly pointed out by the Court in Firaza v. respective testimonies were deemed credible as they withstood
People,13 viz: extensive cross-examination, and possibly, even re-direct and
re-cross examinations. Absent any special circumstances
Indeed, it is a dangerous rule to set aside a testimony which has attendant to this case, Reyes’ and Marcelo’s recantations fail to
been solemnly taken before a court of justice in an open and cast doubt to the truth and veracity of their earlier testimonies,
free trial and under conditions precisely sought to discourage and to the collective statements of all of the prosecution
and forestall falsehood simply because one of the witnesses witnesses as a whole.
who had given the testimony later on changed his mind. Such a
rule will make solemn trials a mockery and place the Moreover, it should be noted that Reyes and Marcelo only
investigation of the truth at the mercy of unscrupulous executed their respective affidavits of recantation after the
witnesses. Court issued its Resolution dated February 20, 2013 upholding
accused-appellants’ conviction of the crime of robbery with
x x x. homicide, or more than a decade after they gave their
testimonies in open court. These affidavits should be seen as
This Court has always looked with disfavor upon retraction of nothing but a last-minute attempt to save accused-appellants
testimonies previously given in court. The asserted motives for from punishment.15
the repudiation are commonly held suspect, and the veracity of
the statements made in the affidavit of repudiation are Finally, the Court need not discuss the other issues raised in the
frequently and deservedly subject to serious doubt. accused-appellants Motions as they were already exhaustively
passed upon in its Resolution dated February 20, 2013.
x x x. Especially when the affidavit of retraction is executed by a
prosecution witness after the judgment of conviction has WHEREFORE, the Court hereby DENIES with FINALITY the
already been rendered, "it is too late in the day for his Motions for Reconsideration filed by accused-appellants SPO1
recantation without portraying himself as a liar." At most, the Wilfredo L. Ramos and PO2 Anthony D. Abulencia and the
retraction is an afterthought which should not be given Motion for New Trial Due to Newly Discovered Evidence and for
probative value. Reconsideration of the February 20, 2013 Resolution filed by
accused-appellant P/Supt. Artemio E. Lamsen. Accordingly, the
Mere retraction by a prosecution witness does not necessarily Court’s Resolution dated February 20, 2013 is AFFIRMED.
vitiate the original testimony if credible.1âwphi1 The rule is
settled that in cases where previous testimony is retracted and 75. GOTESCO PROPERTIES, INC., JOSE C. GO, EVELYN GO,
a subsequent different, if not contrary, testimony is made by LOURDES G. ORTIGA, GEORGE GO, and VICENTE GO,
the same witness, the test to decide which testimony to believe
176
Petitioners, vs.SPOUSES EUGENIO and ANGELINA FAJARDO, Caloocan), the same was reversed14 by the CA; this caused the
Respondents. delay in the subdivision of the property into individual lots with
individual titles. Given the foregoing incidents, petitioners thus
Assailed in this Petition for Review on Certiorari under Rule 45 argued that Article 1191 of the Civil Code (Code) – the provision
of the Rules of Court is the July 22, 2011 Decision1 and on which Sps. Fajardo anchor their right of rescission –
February 29, 2012 Resolution2 of the Court of Appeals (CA) in remained inapplicable since they were actually willing to
CA-G.R. SP No. 112981, which affirmed with modification the comply with their obligation but were only prevented from
August 27, 2009 Decision3 of the Office of the President (OP). doing so due to circumstances beyond their control. Separately,
petitioners pointed out that BSP's adverse claim/levy which was
The Facts annotated long after the execution of the contract had already
been settled.
On January 24, 1995, respondent-spouses Eugenio and Angelina
Fajardo (Sps. Fajardo) entered into a Contract to Sell4 (contract) The Ruling of the HLURB-ENCRFO
with petitioner-corporation Gotesco Properties, Inc. (GPI) for
the purchase of a 100-square meter lot identified as Lot No. 13, On February 9, 2007, the HLURB-ENCRFO issued a Decision15 in
Block No.6, Phase No. IV of Evergreen Executive Village, a favor of Sps. Fajardo, holding that GPI’s obligation to execute
subdivision project owned and developed by GPI located at the corresponding deed and to deliver the transfer certificate of
Deparo Road, Novaliches, Caloocan City. The subject lot is a title and possession of the subject lot arose and thus became
portion of a bigger lot covered by Transfer Certificate of Title due and demandable at the time Sps. Fajardo had fully paid the
(TCT) No. 2442205 (mother title). purchase price for the subject lot. Consequently, GPI’s failure to
meet the said obligation constituted a substantial breach of the
Under the contract, Sps. Fajardo undertook to pay the purchase contract which perforce warranted its rescission. In this regard,
price of ₱126,000.00 within a 10-year period, including interest Sps. Fajardo were given the option to recover the money they
at the rate of nine percent (9%) per annum. GPI, on the other paid to GPI in the amount of ₱168,728.83, plus legal interest
hand, agreed to execute a final deed of sale (deed) in favor of reckoned from date of extra-judicial demand in September
Sps. Fajardo upon full payment of the stipulated consideration. 2002 until fully paid. Petitioners were likewise held jointly and
However, despite its full payment of the purchase price on solidarily liable for the payment of moral and exemplary
January 17, 20006 and subsequent demands,7 GPI failed to damages, attorney's fees and the costs of suit.
execute the deed and to deliver the title and physical
possession of the subject lot. Thus, on May 3, 2006, Sps. The Ruling of the HLURB Board of Commissioners
Fajardo filed before the Housing and Land Use Regulatory
Board-Expanded National Capital Region Field Office On appeal, the HLURB Board of Commissioners affirmed the
(HLURBENCRFO) a complaint8 for specific performance or above ruling in its August 3, 2007 Decision,16 finding that the
rescission of contract with damages against GPI and the failure to execute the deed and to deliver the title to Sps.
members of its Board of Directors namely, Jose C. Go, Evelyn Fajardo amounted to a violation of Section 25 of PD 957 which
Go, Lourdes G. Ortiga, George Go, and Vicente Go (individual therefore, warranted the refund of payments in favor of Sps.
petitioners), docketed as HLURB Case No. REM-050306-13319. Fajardo.
Sps. Fajardo averred that GPI violated Section 209 of The Ruling of the OP
Presidential Decree No. 95710 (PD 957) due to its failure to
construct and provide water facilities, improvements, On further appeal, the OP affirmed the HLURB rulings in its
infrastructures and other forms of development including water August 27, 2009 Decision.17 In so doing, it emphasized the
supply and lighting facilities for the subdivision project. They mandatory tenor of Section 25 of PD 957 which requires the
also alleged that GPI failed to provide boundary marks for each delivery of title to the buyer upon full payment and found that
lot and that the mother title including the subject lot had no GPI unjustifiably failed to comply with the same.
technical description and was even levied upon by the Bangko
Sentral ng Pilipinas (BSP) without their knowledge. They thus The Ruling of the CA
prayed that GPI be ordered to execute the deed, to deliver the
corresponding certificate of title and the physical possession of On petition for review, the CA affirmed the above rulings with
the subject lot within a reasonable period, and to develop modification, fixing the amount to be refunded to Sps. Fajardo
Evergreen Executive Village; or in the alternative, to cancel at the prevailing market value of the property18 pursuant to
and/or rescind the contract and refund the total payments the ruling in Solid Homes v. Tan (Solid Homes).19
made plus legal interest starting January 2000.
The Petition
For their part, petitioners maintained that at the time of the
execution of the contract, Sps. Fajardo were actually aware that Petitioners insist that Sps. Fajardo have no right to rescind the
GPI's certificate of title had no technical description inscribed contract considering that GPI's inability to comply therewith
on it. Nonetheless, the title to the subject lot was free from any was due to reasons beyond its control and thus, should not be
liens or encumbrances.11 Petitioners claimed that the failure to held liable to refund the payments they had received. Further,
deliver the title to Sps. Fajardo was beyond their control12 since the individual petitioners never participated in the acts
because while GPI's petition for inscription of technical complained of nor found to have acted in bad faith, they should
description (LRC Case No. 4211) was favorably granted13 by the not be held liable to pay damages and attorney's fees.
Regional Trial Court of Caloocan City, Branch 131 (RTC-
177
The Court's Ruling February 10, 2006 and the filing of the complaint on May 3,
2006, alternatively seeking refund of payments. While the court
The petition is partly meritorious. a quo decided the latter petition for inscription in its favor,28
there is no showing that the same had attained finality or that
A. Sps. Fajardo’s right to rescind the approved technical description had in fact been annotated
on TCT No. 244220, or even that the subdivision plan had
It is settled that in a contract to sell, the seller's obligation to already been approved.
deliver the corresponding certificates of title is simultaneous
and reciprocal to the buyer's full payment of the purchase Moreover, despite petitioners’ allegation29 that the claim of
price.20 In this relation, Section 25 of PD 957, which regulates BSP had been settled, there appears to be no cancellation of
the subject transaction, imposes on the subdivision owner or the annotations30 in GPI’s favor. Clearly, the long delay in the
developer the obligation to cause the transfer of the performance of GPI's obligation from date of demand on
corresponding certificate of title to the buyer upon full September 16, 2002 was unreasonable and unjustified. It
payment, to wit: cannot therefore be denied that GPI substantially breached its
contract to sell with Sps. Fajardo which thereby accords the
Sec. 25. Issuance of Title. The owner or developer shall deliver latter the right to rescind the same pursuant to Article 1191 of
the title of the lot or unit to the buyer upon full payment of the the Code, viz:
lot or unit. No fee, except those required for the registration of
the deed of sale in the Registry of Deeds, shall be collected for ART. 1191. The power to rescind obligations is implied in
the issuance of such title. In the event a mortgage over the lot reciprocal ones, in case one of the obligors should not comply
or unit is outstanding at the time of the issuance of the title to with what is incumbent upon him.
the buyer, the owner or developer shall redeem the mortgage
or the corresponding portion thereof within six months from The injured party may choose between the fulfillment and the
such issuance in order that the title over any fully paid lot or rescission of the obligation, with the payment of damages in
unit may be secured and delivered to the buyer in accordance either case. He may also seek rescission, even after he has
herewith. (Emphasis supplied.) chosen fulfillment, if the latter should become impossible.
In the present case, Sps. Fajardo claim that GPI breached the The court shall decree the rescission claimed, unless there be
contract due to its failure to execute the deed of sale and to just cause authorizing the fixing of a period.
deliver the title and possession over the subject lot,
notwithstanding the full payment of the purchase price made This is understood to be without prejudice to the rights of third
by Sps. Fajardo on January 17, 200021 as well as the latter’s persons who have acquired the thing, in accordance with
demand for GPI to comply with the aforementioned obligations articles 1385 and 1388 and the Mortgage Law.
per the letter22 dated September 16, 2002. For its part,
petitioners proffer that GPI could not have committed any B. Effects of rescission
breach of contract considering that its purported non-
compliance was largely impelled by circumstances beyond its At this juncture, it is noteworthy to point out that rescission
control i.e., the legal proceedings concerning the subdivision of does not merely terminate the contract and release the parties
the property into individual lots. Hence, absent any substantial from further obligations to each other, but abrogates the
breach, Sps. Fajardo had no right to rescind the contract. contract from its inception and restores the parties to their
original positions as if no contract has been made.31
The Court does not find merit in petitioners’ contention. Consequently, mutual restitution, which entails the return of
the benefits that each party may have received as a result of
A perusal of the records shows that GPI acquired the subject the contract, is thus required.32 To be sure, it has been settled
property on March 10, 1992 through a Deed of Partition and that the effects of rescission as provided for in Article 1385 of
Exchange23 executed between it and Andres Pacheco (Andres), the Code are equally applicable to cases under Article 1191, to
the former registered owner of the property. GPI was issued wit:
TCT No. 244220 on March 16, 1992 but the same did not bear
any technical description.24 However, no plausible explanation xxxx
was advanced by the petitioners as to why the petition for
inscription (docketed as LRC Case No. 4211) dated January 6, Mutual restitution is required in cases involving rescission
2000,25 was filed only after almost eight (8) years from the under Article 1191.1âwphi1 This means bringing the parties
acquisition of the subject property. back to their original status prior to the inception of the
contract. Article 1385 of the Civil Code provides, thus:
Neither did petitioners sufficiently explain why GPI took no
positive action to cause the immediate filing of a new petition ART. 1385. Rescission creates the obligation to return the things
for inscription within a reasonable time from notice of the July which were the object of the contract, together with their
15, 2003 CA Decision which dismissed GPI’s earlier petition fruits, and the price with its interest; consequently, it can be
based on technical defects, this notwithstanding Sps. Fajardo's carried out only when he who demands rescission can return
full payment of the purchase price and prior demand for whatever he may be obligated to restore.
delivery of title. GPI filed the petition before the RTC-Caloocan,
Branch 122 (docketed as LRC Case No. C-5026) only on
November 23, 2006,26 following receipt of the letter27 dated
178
Neither shall rescission take place when the things which are same transgression. And finally, considering that Sps. Fajardo
the object of the contract are legally in the possession of third were constrained to engage the services of counsel to file this
persons who did not act in bad faith. suit, the award of attorney’s fees must be likewise sustained.
In this case, indemnity for damages may be demanded from the D. Liability of individual Petitioners
person causing the loss.
However, the Court finds no basis to hold individual petitioners
This Court has consistently ruled that this provision applies to solidarily liable with petitioner GPI for the payment of damages
rescission under Article 1191: in favor of Sps. Fajardo since it was not shown that they acted
maliciously or dealt with the latter in bad faith. Settled 1s the
Since Article 1385 of the Civil Code expressly and clearly states rule that in the absence of malice and bad faith, as in this case,
that "rescission creates the obligation to return the things officers of the corporation cannot be made personally liable for
which were the object of the contract, together with their liabilities of the corporation which, by legal fiction, has a
fruits, and the price with its interest," the Court finds no personality separate and distinct from its officers, stockholders,
justification to sustain petitioners’ position that said Article and members.36
1385 does not apply to rescission under Article 1191. x x x33
(Emphasis supplied; citations omitted.) WHEREFORE, the assailed July 22, 2011 Decision and February
29, 2012 Resolution of the Court of Appeals in CA-G.R. SP No.
In this light, it cannot be denied that only GPI benefited from 112981 are hereby AFFIRMED WITH MODIFICATION, absolving
the contract, having received full payment of the contract price individual petitioners Jose C. Go, Evelyn Go, Lourdes G. Ortiga,
plus interests as early as January 17, 2000, while Sps. Fajardo George Go, and Vicente Go from personal liability towards
remained prejudiced by the persisting non-delivery of the respondent-spouses Eugenio and Angelina Fajardo.
subject lot despite full payment. As a necessary consequence,
considering the propriety of the rescission as earlier discussed, 76. PHILIPPINE PLAZA HOLDINGS, INC., Petitioner, vs.MA.
Sps. Fajardo must be able to recover the price of the property FLORA M. EPISCOPE, Respondent.
pegged at its prevailing market value consistent with the
Court’s pronouncement in Solid Homes,34 viz: This is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the March 26, 2010 Decision1 and July
Indeed, there would be unjust enrichment if respondents Solid 5, 2010 Resolution2 rendered by the Court of Appeals (CA) in
Homes, Inc. & Purita Soliven are made to pay only the purchase CA-G.R. SP No. 102188. The CA reversed and set aside the
price plus interest. It is definite that the value of the subject Resolutions3 of the National Labor Relations Commission
property already escalated after almost two decades from the (NLRC) dared May 30, 2007 and November 14, 2007 in NLRC
time the petitioner paid for it. Equity and justice dictate that NCR CA No. 047187-06/NLRC NCR-12-13621-04 and thereby
the injured party should be paid the market value of the lot, declared respondent to have been illegally dismissed.
otherwise, respondents Solid Homes, Inc. & Purita Soliven
would enrich themselves at the expense of herein lot owners Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner
when they sell the same lot at the present market value. Surely, and operator of the Westin Philippine Plaza Hotel (Hotel).
such a situation should not be countenanced for to do so would Respondent Ma. Flora M. Episcope (Episcope) was employedby
be contrary to reason and therefore, unconscionable. Over PPHI since July 24, 1984 until she was terminated on November
time, courts have recognized with almost pedantic adherence 4, 2004 for dishonesty, willful disobedience and serious
that what is inconvenient or contrary to reason is not allowed misconduct amounting to loss of trust and confidence.
in law. (Emphasis supplied.)
In order to check the performance of the employees and the
On this score, it is apt to mention that it is the intent of PD 957 services in the different outlets of the Hotel, PPHI regularly
to protect the buyer against unscrupulous developers, employed the services of independent auditors and/or
operators and/or sellers who reneged on their obligations.35 professional shoppers.For this purpose,Sycip, Gorres and
Thus, in order to achieve this purpose, equity and justice Velayoauditors dined at the Hotel’s Café Plaza on August 28,
dictate that the injured party should be afforded full 2004. After dining, the auditors were billed the total amount of
recompense and as such, be allowed to recover the prevailing ₱2,306.65, representing the cost of the food and drinks they
market value of the undelivered lot which had been fully paid had ordered under Check No. 565938.4 Based on the audit
for.1âwphi1 report5 submitted to PPHI, Episcope was one of those who
attended to the auditors and was the one who handed the
C. Moral and exemplary damages, attorney’s fees and costs of check and received the payment of ₱2,400.00. She thereafter
suit returned Check No. 565938, which was stamp marked "paid,"
together with the change.
Furthermore, the Court finds that there is proper legal basis to
accord moral and exemplary damages and attorney's fees, Upon verification of the foregoing check receipt with the sales
including costs of suit. Verily, GPI’s unjustified failure to comply report of Café Plaza, it was discovered that the Hotel's copy of
with its obligations as above-discussed caused Sps. Fajardo the receipt bore a discount of ₱906.456on account of the use of
serious anxiety, mental anguish and sleepless nights, thereby a Starwood Privilege Discount Card registered in the name of
justifying the award of moral damages. In the same vein, the Peter A. Pamintuan, while the receipt issued by Episcope to the
payment of exemplary damages remains in order so as to auditors reflected the undiscounted amount of
prevent similarly minded subdivision developers to commit the ₱2,306.65considering that none of the auditors had such
179
discount card. In view of the foregoing, the amount actually
remitted to the Hotel was only ₱1,400.20thus, leaving a Ruling of the CA
shortage of ₱906.45.
On certiorari, the CA gave due course to the petition and
On September 30, 2004, the Hotel issued a Show-Cause Memo7 reversed the NLRC's Decision.19 It found the report submitted
directing Episcope to explain in writing why no disciplinary by the auditors grossly insufficient to support the conclusion
action should be taken against her for the questionable and that Episcope was guilty of the charges imputed against her. It
invaliddiscount application on the settlement check issued to described the report as a mere transaction account in tabular
the auditors on August 28, 2004. form,bereft of any evidentiary worth. It was unsigned and bore
no indication of her alleged culpability. The CA likewise did not
In her handwritten letter,8 Episcope admitted that she was on give credence to the minutes of the administrative hearing
duty on the date and time in question but alleged that she because it was based on the same unaudited report. Hence, the
could no longer recall if the concerned guests presented a CA(1) declared Episcope's dismissal illegal;(2) ordered her
Starwood Privilege Discount Card. reinstatement to her former position without loss of seniority
rights and benefits under the Labor Code; and (3) remanded the
On October 4, 2004, Episcope was placed on preventive case to the NLRC for further proceedings on her money claims
suspension without pay.9 During the administrative hearing on and other benefits. The dispositive portion of the CA'sDecision
October 6, 2004, Episcope, who was therein assisted by the reads:
Union President and four union representatives from National
Union of Workers in Hotel Restaurant and Allied Industries WHEREFORE, in view of the foregoing, the petition is GRANTED.
(NUWHRAIN)-Philippine Plaza Hotel Chapter, confirmed the fact The assailed Resolutions dated May 30, 2007 and November 14,
that she was the one who presented the subject check and 2007 of the public respondent NLRC are REVERSED and SET
received the corresponding payment from the guests. She, ASIDE. Petitioner is hereby ordered reinstated to her former
however, denied stampingthe said check as "paid" or that she position without loss of seniority rights and benefits under the
gaveany discount without a discount card, explaining that she Labor Code. The case is hereby remanded to the NLRC for
could not have committed such acts given that all receipts and further proceedings on her money claims and other benefits.
discount applications were handled by the cashier. But when
asked why the discounted receipt was not given to the guests, SO ORDERED.20
she merely replied that she could no longer remember. In a
separate inquiry, the cashier of Café Plaza, however, Dissatisfied, PPHI moved for reconsideration which was,
maintained that a Starwood Privilege Discount Card must have however, denied in the assailed July 5, 2010 Resolution.21
been presented during the said incident given that there was a
Discount Slip10 and a stamped receipt indicating such Hence, the instant petition anchored on the sole ground that:
discounted payment.11
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED AND
Finding Episcope to have failed to sufficiently explain the RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT
questionable discount application on the settlement bill of the ACTED AS A TRIER OF FACTS AND ORDERED THE
auditors, her employment was terminated for committing acts REINSTATEMENT OF THE RESPONDENT AND PAYMENT OF
ofdishonesty, which was classified as a Class D offense under BACKWAGES.22
the Hotel's Code of Discipline, as well as for willful
disobedience, serious misconduct and loss of trust and The Ruling of the Court
confidence.12
The petition is impressed with merit.
Aggrieved, Episcope filed a complaint13 for illegal dismissal
with prayer for payment of damages and attorney's fees against At the outset, it is settled that the jurisdiction of the Supreme
PPHI before the NLRC docketed as NLRC-NCR Case No. 00-12- Court in cases brought before it from the CA via Rule 45 of the
13621-04. Rules of Court is generally limited to reviewing errors of law.
The Court is not the proper venue to consider a factual issue as
Rulings of the LA and the NLRC it is not a trier of facts. The rule, however, is not ironclad and a
departure therefrom may be warranted where the findings of
On October 20, 2005, the Labor Arbiter (LA) rendered a fact of the CA are contrary to the findings and conclusions of
Decision in favor of PPHI and thus, dismissed Episcope's the trial court or quasi-judicial agency,23 as in this case. There
complaint for illegal dismissal.14 The LA found that there was is therefore a need to review the records to determine which of
substantial evidence to support the charge of improper them should be preferred as more conformable to evidentiary
discount application and observed that the said act resulted to facts.24
a loss on the part of the Hotel. Accordingly, the LA held that
Episcope's actions rendered her unworthy of the trust and After a judicious review of the records, as well as the respective
confidence demanded by her position which thus, warranted allegations and defenses of the parties, the Court is constrained
her dismissal. to reverse the findings and conclusion of the CA.
On appeal,15 the NLRC affirmed the LA's decision in theMay 30, Article 293 (formerly Article 279) of the Labor Code25 provides
2007 Resolution.16 Episcope's motion for reconsideration17 that the employer shall not terminate the services of an
was likewise denied in the November 14, 2007 Resolution.18 employee except only for a just or authorized cause. If an
180
employer terminates the employment without a just or that the employee has breached the trust and confidence of the
authorized cause, then the employee is considered to have employer is sufficient and does not require proof beyond
been illegally dismissed and is thus, entitled to reinstatement or reasonable doubt. Thus, when an employee has been guilty of
in certain instances, separation pay in lieu thereof, as well as breach of trust or his employer has ample reason to distrust
the payment of backwages. him, a labor tribunal cannot deny the employer the authority to
dismiss him.
Among the just causes for termination isthe employer’s loss of
trust and confidence in its employee. Article 296 (c) (formerly In addition, it must be observed that only substantial evidence
Article 282 [c]) of the Labor Code provides that an employer is required in order to support a finding that an employer’s
may terminate the services of an employee for fraud or willful trust and confidence accorded to its employee had been
breach of the trust reposed in him. But in order for the said breached. As explained in the case of Lopez v. Alturas Group of
cause to be properly invoked, certain requirements must be Companies:30
complied with namely,(1) the employee concerned must be
holding a position of trust and confidence and (2) there must be xxx, the language of Article 282(c) [now, Article 296 (c)]of the
an act that would justify the loss of trust and confidence.26 Labor Code states that the loss of trust and confidence must be
based on willful breach of the trust reposed in the employee by
It is noteworthy to mention that there are two classes of his employer. Such breach is willful if it is done intentionally,
positions of trust: on the one hand, there are managerial knowingly, and purposely, without justifiable excuse, as
employees whose primary duty consists of the management of distinguished from an act done carelessly, thoughtlessly,
the establishment in which they are employed or of a heedlessly or inadvertently. Moreover, it must be based on
department or a subdivision thereof, and to other officers or substantial evidence and not on the employer's whims or
members of the managerial staff; on the other hand, there are caprices or suspicions otherwise, the employee would eternally
fiduciary rank-and-file employees, such as cashiers, auditors, remain at the mercy of the employer. Loss of confidence must
property custodians, or those who, in the normal exercise of not be indiscriminately used as a shield by the employer against
their functions, regularly handle significant amounts of money a claim that the dismissal of an employee was arbitrary. And, in
or property. These employees, though rank-and-file, are order to constitute a just cause for dismissal, the act
routinely charged with the care and custody of the employer's complained of must be work-related and shows that the
money or property, and are thus classified as occupying employee concerned is unfit to continue working for the
positions of trust and confidence.27 Episcope belongs to this employer. In addition, loss of confidence as a just cause for
latter class and therefore, occupies a position of trust and termination of employment is premised on the fact that the
confidence. employee concerned holds a position of responsibility, trust
and confidence or that the employee concerned is entrusted
As may be readily gleaned from the records, Episcope was with confidence with respect to delicate matters, such as the
employed by PPHI as a service attendant in its Café Plaza. In this handling or care and protection of the property and assets of
regard, she was tasked to attend to dining guests, handle their the employer. The betrayal of this trust is the essence of the
bills and receive their payments for transmittal to the cashier. It offense for which an employee is penalized. (Emphasis
is also apparent that whenever discount cards are presented, supplied.)
she maintained the responsibility to take them to the cashier
for the application of discounts. Being therefore involved in the In the present case, records would show that Episcope
handling of company funds, Episcope is undeniably considered committed acts of dishonesty which resulted to monetary loss
an employee occupying a position of trust and confidence and on the part of PPHI and more significantly, led to the latter’s
as such, was expected to act with utmost honesty and fidelity. loss of trust and confidence in her. Notwithstanding the
impaired probative value of the unaudited and unsigned
Anent the second requisite, records likewise reveal that auditor’s report, the totality of circumstances supports the
Episcope committed an act which justified her employer’s foregoing findings:
(PPHI’s) loss of trust and confidence in her.
First, it remains unrefuted that Episcope attended to the
Primarily, it is apt to point out that proof beyond reasonable auditors when they dined at the Café Plaza on the date and
doubt is not required in dismissing an employee on the ground time in question. In fact, Episcope herself admitted that she
of loss of trust and confidence; it is sufficient that there lies tendered Check No. 565938 bearing the amount of ₱2,306.65
some basis to believe that the employee concerned is and received the amount of ₱2,400.00 as payment;
responsible for the misconduct and that the nature of the
employee's participation therein rendered him absolutely Second, it is likewiseundisputed that the check receipt on file
unworthy of trust and confidence demanded by his position. with the Hotel for the same transaction reflected only the
amount of ₱1,400.20 in view of the application of a certain
On this point, the Court, in the case of Bristol Myers Squibb Starwood Privilege Discount Card registered in the name of one
(Phils.), Inc. v. Baban,28 citing Atlas Fertilizer Corporation v. Peter Pamintuan, while the receipt given to the auditors bore
National Labor Relations Commission,29 ruled as follows: the undiscounted amount of ₱2,306.65 which thus, resulted to
a ₱906.45 discrepancy. During the proceedings, both receipts
As a general rule, employers are allowed a wider latitude of were actually presented in evidence yet, Episcope never
discretion in terminating the services of employees who interposed any objection on the authenticity of the same; and
perform functions by which their nature require the employer's
full trust and confidence. Mere existence of basis for believing
181
Third, when asked to explain the said discrepancy, Episcope
merelyimputed culpability onthe part of the cashier, whom she Eventually, Gloria sold the Sta. Barbara Property, which
claimed prepared all the receipts that were returned to the resulted in disagreements between her and Viola regarding
guests. their respective shares in the proceeds. Consequently, Viola
refused to return to Gloria TCT No. T-119598, prompting Gloria
From the foregoing incidents, it is clear that Episcope was to engage the services of Atty. Jizon April 29, 2003 to recover
remiss in her duty to carefully account for the money she the said title, for which she immediately paid an acceptance fee
received from the cafe's guests. It must be observed that of ₱17,000.00.3
though the receipts were prepared by the cashier, Episcope; as
a service attendant,. was the one who actually handled the In their subsequent meeting, Atty. Jiz assured the transfer of
money tendered to her by the hotel clients. In this regard, the title in Gloria's name.
prudence dictates that Episcope should have at least known
why there was a shortage in remittance. Yet when asked, On August 13, 2003, Gloria, upon Atty. Jiz's instructions,
Episcope could not offer any plausible explanation but merely remitted the amount of ₱45,000.004
shifted the blame to the cashier. Irrefragably, as an employee
who was routinely charged with the care and custody of her to answer for the expenses of the transfer. However, when she
employer's money, Episcope was expected to have been more later inquired about the status of her case, she was surprised to
circumspect in the performance of her duties as a service learn from Atty. Jiz that a certain Atty. Caras was handling the
attendant. This she failed to observe in the case at bar which same. Moreover, when she visited the Leganes Property, which
thus, justifies PPHI's loss of trust and confidence in her as well has been leased out to one Rose Morado (Rose), she discovered
as her consequent dismissal. that Atty. Jiz has been collecting the rentals for the period June
2003 up to October 2004, which amounted to ₱12,000.00.
Perforce, having substantially established the actual breach of When she demanded for the rentals, Atty. Jiz gave her only
duty committed by Episcope and the due observance of due ₱7,000.00, explaining that the balance of ₱5,000.00 would be
process, no grave abuse of discretion can be imputed against added to the expenses needed for the transfer of the title of
the NLRC in sustaining the finding of the LA that her dismissal the Leganes Property to her name.
was proper under the circumstances.
The foregoing incidents prompted Gloria to terminate the legal
Finally, with respect to Episcope's other monetary claims, services of Atty. Jiz and demand the return of the amounts of
namely, service incentive leave credits and 13th month pay, the ₱45,000.00 and ₱5,000.00 through a letter5dated September
Court finds no error on the part of the LA when it denied the 22, 2004, which has remained unheeded.
foregoing claims considering that Episcope failed to proffer any
legitimate basis to substantiate her entitlement to the same. To date, Atty. Jiz has not complied with his undertaking to
recover TCT No. T-119598 from Viola and effect its transfer in
WHEREFORE, premises considered, the petition is GRANTED. Gloria’s name, and has failed to return her money despite due
The assailed March 26, 2010 Decision and July 5, 2010 demands. Hence, the instant administrative complaint praying
Resolution of the Court of Appeals in CA-G.R. SP No. 102188 are that Atty. Jiz: (1) be ordered to reimburse the total amount of
REVERSED and SET ASIDE. The Decision of the Labor Arbiter, as ₱67,000.00 (₱17,000.00 acceptance fee, ₱45,000.00 for the
affirmed by the NLRC, dismissing respondent Ma. Flora M. transfer of title, and ₱5,000.00 as unremitted rentals for the
Episcope's complaint for illegal dismissal and other monetary Leganes Property); and (2) be meted disciplinary action that the
claims is REINSTATED. Court may deem fit under the circumstances.
77. GLORIA P. JINON, Complainant, vs.ATTY. LEONARDO E. JIZ, In his Answer6 andPosition Paper,7 Atty. Jiz admitted accepting
Respondent. Gloria’s case but claimed that it was only for the purpose of
protecting her rights against her sister-in-law, Viola. According
Before the Court is an administrative complaint1 for disciplinary to him, the extent of his legal services covered the negotiation
action filed by complainant Gloria P. Jinon (Gloria) before the and consummation of the sale of the Sta. Barbara Propertyfor a
Committee on Bar Discipline (CBD) of the Integrated Bar of the fee of ₱75,000.00;recovery of TCT No.T-119598from Viola; and
Philippines (IBP) against respondent Atty. Leonardo E. Jiz (Atty. the possible filing of an ejectment case against the tenant of
Jiz) for neglecting her case, misappropriating funds, and the Leganes Property. For his attorney’s fees, Gloria had
assigning her case to another lawyer without her consent, in partially paid the sum of ₱62,000.00 inclusive of the acceptance
violation of the provisions of the Code of Professional fee of ₱17,000.00, leavingan unpaid balance of ₱13,000.00.
Responsibility.
Atty. Jiz also alleged that Gloria approached him to secure
The Facts another owner’s copy of a title she purportedly lost, but which
would turn out to be in Viola’s possession. Despite her offer to
The complaint alleged that Gloria, after the death of her pay legal fees amounting to ₱100,000.00, heclaimed to have
brother Charlie in July 2001, entrusted two (2) land titles refused to file a "fraudulent cadastral case." He likewise denied
covering properties owned by their deceased parents to her having committed to file one or to refer the case to another
sister-in-law, Viola J. Jinon (Viola): one located in Mangasina, lawyer.8
Sta. Barbara, Iloilo (Sta. Barbara Property) and the other at No.
12 Valencia St., Poblacion, Leganes, Iloilo (Leganes Property) Thus, Atty. Jiz asseverated that he was not remiss in his legal
covered by Transfer Certificate of Title (TCT) No. T-119598.2 duties to Gloria.Denying liability to reimburse Gloria for any
182
amount, much less for ₱45,000.00,he claimed that he had
rendered the corresponding legal services to her with fidelity The Issue
and candor. In particular, he pointed to the demand letters he
sent to Viola for the return of the subject titleandto Rose,the The sole issue before the Court is whether Atty. Jiz should be
tenant of the held administratively liable for having been remiss in his duties
as a lawyer with respect to the legal services he had undertaken
Leganes Property, requiring the submission of the itemized to perform for his client, Gloria.
expenses for the repair of the leased property. He also claimed
to have caused the execution of a lease contract covering the The Court's Ruling
Leganes Property.Hence, he prayed that the complaint against
him be dismissed. After a careful perusal of the records, the Court concurs with
the findings of Commissioner Villanueva and the IBP Board of
The Action and Recommendation of the IBP Governors that Atty. Jiz was remiss in his duties as a lawyer in
neglecting his client’s case, misappropriating her funds and
After the parties’ submission of their respective position disobeying the CBD’s lawful orders requiring the submission of
papers,9 the CBD, through Commissioner Cecilio A.C. Villanueva his pleadings and his attendance at hearings. He should thus be
(Commissioner Villanueva), submitted its October 8, 2010 suspended from the practice of law in conformity with
Report and Recommendation.10 He found Atty. Jiz to have prevailing jurisprudence.
been remiss in his duty to update his client, Gloria, regarding
her case, and to respond to Gloria’s letter terminating his The practice of law is considered a privilege bestowed by the
services and demanding the refund of the sum of ₱45,000.00, State on those who show that they possess and continue to
in violation of Rule 18.04, Canon 18 of the Code of Professional possess the legal qualifications for the profession. As such,
Responsibility which states: lawyers are expected to maintain at all times a high standard of
legal proficiency, morality, honesty, integrity and fair dealing,
A lawyer shall keep the client informed of the status of his case and must perform their four-fold duty to society, the legal
and shall respond within a reasonable time to the client’s profession, the courts and their clients, in accordance with the
request for information. values and norms embodied in the Code.12 "Lawyers may, thus,
be disciplined for any conduct that is wanting of the above
Commissioner Villanueva also observed that the scope of the standards whether in their professional or in their private
legal services that Atty. Jiz undertook to perform for Gloria capacity."13
could have been clarified had he been more candid with the
exact fees that he intended to collect.Recognizing, however, The Code of Professional Responsibility provides:
the legal services rendered by Atty. Jizin the form of legal
advice, sending of demand letters to Viola and Rose and CANON 16 – A LAWYER SHALL HOLD IN TRUST ALL MONEYS
collecting rentals from the latter,he found the amount of AND PROPERTIES OF HIS CLIENT THAT COME INTO HIS
₱17,000.00 as sufficient and reasonable remuneration for his POSSESSION.
services.Moreover, Atty. Jiz’sdisregard of the CBD’s orders – to
submit his answer on time and attend hearings – showed RULE 16.01 – A lawyer shall account for all money or property
disrespect to the judiciary and his fellow lawyers. collected or received for or from the client.
With these findings, Commissioner Villanueva held Atty. Jiz to xxx xxx xxx
have committed improper conduct and recommended that he
be (1) ordered to refund to Gloria the amount of ₱45,000.00 RULE 16.03 – A lawyer shall deliver the funds and property of
with legal interest, and (2) reprimanded, with a stern warning his client when due or upon demand.
that a more drastic punishment will be imposed upon him for a
repetition of the same acts. xxx xxx xxx
On December 10, 2011, the IBP Board of Governors passed CANON 18. – A LAWYER SHALL SERVE HIS CLIENT WITH
Resolution No. XX-2011-303,11 adopting with modification the COMPETENCE AND DILIGENCE.
Commission’s Report and Recommendation, to wit:
xxx xxx xxx
RESOLVED to ADOPT and APPROVE, as it is hereby unanimously
ADOPTED and APPROVED, with modification, the Report and RULE 18.03 – A lawyer shall not neglect a legal matter
Recommendation of the Investigating Commissioner in the entrusted to him, and his negligence in connection therewith
above-entitled case, herein made part of this Resolution as shall render him liable.
Annex "A" and finding the recommendation fully supported by
the evidence on record and the applicable laws and rules, and xxx xxx xxx
finding Respondent remiss in his duty and for disregarding the
Orders of the Commission, Atty. Leonardo E. Jiz is hereby Undeniably, "when a lawyer takes a client’s cause, he
SUSPENDED from the practice of law for two (2) years and to covenants that he will exercise due diligence in protecting the
Ordered to Restitute complainant the amount of ₱45,000.00 latter’s rights. Failure to exercise that degree of vigilance and
and 12% interest from the time he received the amount until attention expected of a good father of a family makes the
fully paid within sixty (60) days from notice. lawyer unworthy of the trust reposed on him by his client and
183
makes him answerable not just to client but also to the legal as the titles over certain properties owned by the latter; and (3)
profession, the court and society."14 failing to update his client on the status of her case and to
respond to her requests for information, all in violation of the
Moreover, money entrusted to a lawyer for a specific purpose, Code of Professional Responsibility.
such as for the processing of transfer of land title, but not used
for the purpose, should be immediately returned.15 "A lawyer’s Considering the foregoing relevant jurisprudence, the Court
failure to return upon demand the funds held by him on behalf finds it appropriate to adopt the recommendation of the IBP
of his client gives rise to the presumption that he has Board of Governors to suspend Atty. Jiz from the practice of law
appropriated the same for his own use in violation of the trust for two (2) years. With respect to the amount that he should
reposed to him by his client. Such act is a gross violation of refund to Gloria, only the sum of ₱45,000.00 plus legal interest
general morality as well as of professional ethics. It impairs should be returned to her, considering the finding that the
public confidence in the legal profession and deserves initial payment of ₱17,000.00 was reasonable and sufficient
punishment."16 remuneration for the actual legal services he rendered.
In this case, Atty. Jiz committed acts in violation of his sworn The Court notes that in administrative proceedings, only
duty as a member of the bar.1âwphi1 Aside from the demand substantial evidence, i.e., that amount of relevant evidence that
letter17 dated April 29, 2003 which he sent to Viola, he failed to a reasonable mind might accept as adequate to support a
perform any other positive act in order to recover TCT No. T- conclusion, is required.24 Having carefully scrutinized the
119598 from Viola for more than a year. He also failed to records of this case, the Court therefore finds that the standard
return, despite due demand, the funds allocated for the of substantial evidence has been more than satisfied.
transfer of the title that he received from her.
WHEREFORE, respondent Atty. Leonardo E. Jiz, having clearly
The claim that the total amount of ₱62,000.00 that Gloria paid violated Rules 16.01 and 16.03, Canon 16 and Rule 18.03,
him was for the services he rendered in facilitating the sale of Canon 18 of the Code of Professional Responsibility and
the Sta. Barbara Property is belied by the receipt18 dated April disobeyed lawful orders of the Commission on Bar Discipline, is
29, 2003, which states that the amount of ₱17,000.00 paid by SUSPENDED from the practice of law for two (2) years, with a
Gloria was for "consultation and other legal services" he would stern warning that a repetition of the same or similar acts shall
render "up to and including April 30, 2003." His handwritten be dealt with more severely. He is ORDERED to return to
notation at the bottom portion made it clear that he received complainant Gloria P. Jinon the full amount of ₱45,000.00 with
the said amount "as full payment." He likewise failed to legal interest of 6% per annum from date of demand on
substantiate his averment that he actually facilitated the sale of September 22, 2004 up to the finality of this Decision and 12%
the Sta. Barbara Property. per annum from its finality until paid.
Furthermore, respondent’s infractions were aggravated by his Let a copy of this Decision be furnished the Office of the Bar
failure to comply with CBD’s directives for him to file his Confidant to be entered into respondent's records as attorney.
pleadings on time and to religiously attend hearings, Copies shall likewise be furnished the Integrated Bar of the
demonstrating not only his irresponsibility but also his Philippines and the Office of the Court Administrator for
disrespect for the judiciary and his fellow lawyers. Such conduct circulation to all courts concerned.
was unbecoming of a lawyer who is called upon to obey court
orders and processes and is expected to stand foremost in 78. IRENE VILLAMAR-SANDOVAL, Petitioner, vs.JOSE
complying with court directives as an officer of the court.19 As CAILIPAN, MARIA OFELIA M. GONZALES, LAURA J. CAYABYAB,
a member of the bar, he ought to have known that the orders ROGELIO COSTALES, and FERNANDO V. AUSTRIA,
of the CBD as the investigating arm of the Court in Respondents.
administrative cases against lawyers were not mere requests
but directives which should have been complied with promptly Assailed in this Petition for Review on Certiorari1 is the
and completely.20 September 30, 2011 Decision2 and February 1, 2012
Resolution3 of the Court of Appeals (CA) of Cagayan de Oro City
In Rollon v. Naraval,21 the Court suspended respondent Atty. -in CA-G.R. SP No. 03976-MIN which set aside the October 20,
Naraval from the practice of law for two (2) years for failing to 201 0 and November 10, 201 0 Orders of the Regional Trial
render any legal service even after receiving money from the Court (RTC) of Koronadal City, Branch 24 declaring respondents
complainant and for failing to return the money and documents in default.
he received.
The Facts
Similarly, in Small v. Banares,22 the respondent was suspended
from the practice of law for two (2) years for failing to file a Petitioner Irene Villamar-Sandoval (petitioner) instituted a
case for which the amount of ₱80,000.00 was given him by his complaint for damages before the RTC, claiming that she was
client; to update the latter of the status of the case;and to prejudiced by the false, baseless and malicious libel case filed
return the said amount upon demand. against her by respondent Jose Cailipan (Cailipan) which was
supported by affidavits executed by the other respondents
Likewise, in Villanueva v. Gonzales,23 the Court meted the herein.4 The said libel case circled around certain declarations
same punishment to the respondent lawyer for (1) having failed purportedly made by petitioner during a homeowner’s
to serve his client with fidelity, competence and diligence; (2) association meeting about Cailipan’s criminal records for
refusing to account for and to return his client’s money as well murder, slight physical injuries and estafa. These allegations
184
were supposedly made by petitioner in order to tarnish Ruling of the CA
Cailipan’s reputation and facilitate his ouster as President of the
said homeowner’s association.5 In its Decision dated September 30, 2011,16 the CA, through its
Twenty-First Division, denied respondents’ contention that the
During the course of the proceedings, respondents belatedly venue was improperly laid17 but nevertheless, granted their
filed their answer (albeit by one day), prompting petitioner to petition grounded on the impropriety of the order of default. It
move to declare respondents in default. Consequently, the RTC applied the principle of substantial justice and deemed that "it
issued an Order dated September 27, 2010 denying the said would be most unfair" to declare respondents in default for
motion and admitting the answer of respondents.6 their lawyer’s failure to attend the pre-trial conference.18 With
respect to the failure of respondents’ counsel to file a pre-trial
Subsequently, the case was set for pre-trial, during which brief on time, the CA held that the RTC’s Order "barring
respondents’ counsel, Atty. Sardido, failed to appear as well as respondents from presenting evidence had been too
file a pre-trial brief despite due notice, while petitioner and her precipitate and was not commensurate with the level of non-
counsel appeared and made such submission. In view of these compliance by [respondents’] counsel with the said order."19
lapses, petitioner prayed that respondents be declared in Thus, for these reasons, the CA set aside the RTC’s October 20,
default which was granted by the RTC in its October 20, 2010 2010 and
Order.7
November 10, 2010 Orders and directed the remand of the
Aggrieved, Atty. Sardido filed an Entry of Appearance with case to the RTC to allow the respondents to present their
Motion for Reconsideration on October 29, 2010, seeking the evidence.20
reversal of the October 20, 2010 Order. He proffered the
excuse that on the day of the pre-trial conference, he had to Dissatisfied, petitioner filed a Partial Motion for
attend an urgent hearing in Cotabato City involving an election Reconsideration,21 arguing that: (1) since the main case had
protest but that he immediately went back to Koronadal City to already been decided by the RTC through its January 11, 2011
attend the mediation proceeding for the main case scheduled Decision and respondents have availed of the remedy of
at 2:00 in the afternoon of the same day. Petitioner opposed appeal, the latter’s petition for certiorari filed with the CA on
the motion.8 January 11, 2011 was already moot and academic; and (2) the
RTC did not commit grave abuse of discretion when it declared
Ruling of the RTC respondents in default.
On November 10, 2010, the RTC issued an Order denying The foregoing motion was denied by the CA in its February 1,
respondents’ motion for reconsideration, sustaining the 2012 Resolution, holding that petitioner "failed to raise
declaration of default due to their counsel’s failure to: (1) substantial issues that would warrant reconsideration."22 In
attend the scheduled pre-trial conference on October 20, 2010 sustaining the invalidity of the RTC’s October 20, 2010 and
and; (2) file a pre-trial brief despite due notice.9 Notably, it November 10, 2010 Orders, it ratiocinated that "it is a far better
observed that respondents were already accorded and more prudent cause of action for the court to excuse a
consideration when their answer was admitted despite its technical lapse" and afford the respondents the right to be
belated filing. It also found that "their newly retained counsel heard.23
miserably failed to attach a pre-trial brief or submit/attach an
affidavit of merit" in the said motion for reconsideration.10 Separately, the CA noted that, per the January 27, 2012
Pursuant thereto, petitioner proceeded with the presentation Verification issued by its Judicial Records Division, the case
of her evidence ex parte. Upon submission of her formal offer records have yet to be forwarded to it, despite petitioner’s
of evidence, the case was submitted for resolution.11 allegations that the RTC had already promulgated a decision
and that the respondents filed a Notice of Appeal.24 In this
On January 11, 2011, respondents filed before the CA a petition regard, it modified its initial September 30, 2011 Decision and
for certiorari under Rule 65 of the Rules of Court, asserting that thus deleted the portion which directed that the records of the
the RTC gravely abused its discretion in issuing the October 20, case be remanded to the court a quo.25
2010 and November 10, 2010 Orders and in not dismissing the
case for improper venue.12 Issues Before The Court
On even date, the RTC rendered a Decision in favor of Essentially, the following issues are presented for the Court’s
petitioner, a copy of which was received by respondents on resolution: (1) whether respondents’ petition for certiorari was
January 24, 2011.13 an improper remedy and/or had been rendered moot and
academic by virtue of the RTC’s January 11, 2011 Decision; and
On January 22, 2011, respondents filed a Notice of Appeal with (2) whether the CA erred in setting aside the October 20, 2010
the CA, while its initially filed certiorari petition was still and November 10, 2010 RTC Orders.
pending resolution before the same appellate court.14 In this
relation, they subsequently filed on February 2, 2011 an The Court’s Ruling
Amended Notice of Appeal Ad Cautelam and a Joint Notice of
Appeal Ad Cautelam (Amended Notices of Appeal), clarifying The petition is meritorious
therein that they were not abandoning their petition for
certiorari.15 It is well-settled that the remedies of appeal and certiorari are
mutually exclusive and not alternative or successive.26 The
185
simultaneous filing of a petition for certiorari under Rule 65 and rendition of a decision on the main case, thus creating an
an ordinary appeal under Rule 41 of the Revised Rules of Civil evident procedural impasse.1âwphi1
Procedure cannot be allowed since one remedy would
necessarily cancel out the other. The existence and availability It should be noted that respondents’ petition for certiorari had
of the right of appeal proscribes resort to certiorari because long become moot by the RTC’s January 11, 2011 Decision. In
one of the requirements for availment of the latter is precisely particular, the grant of the petition for certiorari on mere
that there should be no appeal.27 incidental matters of the proceedings would not accord any
practical relief to respondents because a decision had already
Corollary thereto, an appeal renders a pending petition for been rendered on the main case and therefore, may be
certiorari superfluous and mandates its dismissal. As held in elevated on appeal. Lest it be misunderstood, a case becomes
Enriquez v. Rivera:28 moot when no useful purpose can be served in passing upon its
merits. As a rule, courts will not determine a moot question in a
The general rule is that certiorari will not lie as a substitute for case in which no practical relief can be granted.32
an appeal, for relief through a special action like certiorari may
only be established when no remedy by appeal lies. The In view of the above-discussed considerations and considering
exception to this rule is conceded only "where public welfare the fact that respondents’ petition for certiorari cannot
and the advancement of public policy so dictate, and the anymore be dismissed, the Court is constrained to set aside the
broader interests of justice so require, or where the orders September 30, 2011 Decision and February 1, 2012 Resolution
complained of were found to be completely null and void, or of the CA. Consequently, this course of action will allow the CA
that appeal was not considered the appropriate remedy, such Division where the appeal of the main case is pending to
as in appeals from orders of preliminary attachment or appropriately pass upon the merits of the RTC’s January 11,
appointments of receiver." (Fernando v. Vasquez, L- 26417, 30 2011 Decision including all assailed irregularities in the
January 1970; 31 SCRA 288). For example, certiorari maybe proceedings such as the validity of the default orders. To rule
available where appeal is inadequate and ineffectual (Romero otherwise would only serve to perpetuate the procedural errors
Sr. v. Court of Appeals, L-29659, 30 July 1971; 40 SCRA already committed in this case.
172).1âwphi1
Given the foregoing pronouncement, there exists no cogent
None of the exceptional circumstances have been shown to be reason to further dwell on the issue regarding the RTC’s grave
present in this case; hence the general rule applies in its abuse of discretion in issuing the October 20, 2010 and
entirety. Appeal renders superfluous a pending petition for November 10, 2010 default orders. As earlier mentioned, that
certiorari, and mandates its dismissal. In the light of the clear matter may be properly ventilated on appeal.
language of Rule 65 (1), this is the only reasonable
reconciliation that can be effected between the two concurrent WHEREFORE, the petition is GRANTED. The September 30, 2011
actions: the appeal has to be prosecuted, but at the cost of the Decision and February 1, 2012 Resolution of the Court of
petition for certiorari, for the petition has lost its raison d'etre. Appeals in CA-G.R. SP No. 03976-MIN are hereby SET ASIDE.
To persevere in the pursuit of the writ would be to engage in an
enterprise which is unnecessary, tautological and frowned upon 79. RURAL BANK OF STA. BARBARA (ILOILO), INC.,
by the law. (Emphasis and underscoring supplied.) Petitioner,vs.GERRY CENTENO, Respondent.
Applying the foregoing principles to the case at bar, it is clear Assailed in this Petition for Review on Certiorari1 is the January
that respondents’ January 11, 2011 petition for certiorari was 31, 2012 Decision2 of the Cebu City Court of Appeals (CA) in CA-
rendered superfluous by their January 22, 2011 appeal. G.R. CV No. 78398 which set aside the October 8, 2002 Decision
of the Regional Trial Court of Barotac Viejo, Iloilo City, Branch -
Although respondents did not err in filing the certiorari petition 66 (RTC} in Cadastral Case No. 98-0693 and denied the issuance
with the CA on January 11, 2011 – as they only received the of a writ of possession for Cadastral Lot Nos. 964, 958 and 959
RTC’s Decision three days after the said date and therefore of the Ajuy, ·Iloilo Cadastre (subject lots) in petitioner's favor.
could not have availed of the remedy of an appeal at that
time29 – the Court observes that respondents should have (a) The Facts
withdrawn their certiorari petition and instead raised the
jurisdictional errors stated therein in their appeal30 or (b) at Spouses Gregorio and Rosario Centeno (Sps. Centeno) were the
the very least, informed the CA’s Twenty-First Division31 of the previous owners of the subject lots. During that time, they
Decision rendered on the main case and the filing of their mortgaged the foregoing properties in favor of petitioner Rural
Notice of Appeal on January 22, 2011. Prudence should have Bank of Sta. Barbara (Iloilo), Inc. as security for a ₱1,753.65
guided them to pursue either course of action considering the loan. Sps. Centeno, however, defaulted on the loan, prompting
well-entrenched conflict between the remedies of an appeal petitioner to cause the extrajudicial foreclosure of the said
and a petition for certiorari, of which they should have been mortgage. Consequently, the subject lots were sold to
well aware of. petitioner being the highest bidder at the auction sale. On
October 10, 1969, it obtained a Certificate of Sale at Public
Unfortunately, their omission resulted in the CA’s issuance of Auction4 which was later registered with the Register of Deeds
the September 30, 2011 Decision and February 1, 2012 of Iloilo City on December 13, 1971.5
Resolution in the certiorari case which set aside the assailed
interlocutory orders, notwithstanding the supervening Sps. Centeno failed to redeem the subject lots within the one
(1) year redemption period pursuant to Section 66 of Act No.
186
3135.7 Nonetheless, they still continued with the possession
and cultivation of the aforesaid properties. Sometime in 1983, Sec. 33. Deed and possession to be given at expiration of
respondent Gerry Centeno, son of Sps. Centeno, took over the redemption period; by whom executed or given. —
cultivation of the same. On March 14, 1988, he purchased the
said lots from his parents. Accordingly, Rosario Centeno paid xxxx
the capital gains taxes on the sale transaction and tax
declarations were eventually issued in the name of Upon the expiration of the right of redemption, the purchaser
respondent.8 While the latter was in possession of the subject or redemptioner shall be substituted to and acquire all the
lots, petitioner secured on November 25, 1997 a Final Deed of rights, title, interest and claim of the judgment obligor to the
Sale thereof and in 1998, was able to obtain the corresponding property as of the time of the levy. The possession of the
tax declarations in its name.9 property shall be given to the purchaser or last redemptioner
by the same officer unless a third party is actually holding the
On March 19, 1998, petitioner filed a petition for the issuance property adversely to the judgment obligor. (Emphasis and
of a writ of possession before the RTC, claiming entitlement to underscoring supplied)
the said writ by virtue of the Final Deed of Sale covering the
subject lots.10 Respondent opposed the petition, asserting that In China Banking Corporation v. Lozada,19 the Court held that
he purchased and has, in fact, been in actual, open and the phrase "a third party who is actually holding the property
exclusive possession of the same properties for at least fifteen adversely to the judgment obligor" contemplates a situation in
(15) years.11 He further averred that the foreclosure sale was which a third party holds the property by adverse title or right,
null and void owing to the forged signatures in the real estate such as that of a co-owner, tenant or usufructuary. The co-
mortgage. Moreover, he claims that petitioner’s rights over the owner, agricultural tenant, and usufructuary possess the
subject lots had already prescribed.12 property in their own right, and they are not merely the
successor or transferee of the right of possession of another co-
Ruling of the RTC owner or the owner of the property.20 Notably, the property
should not only be possessed by a third party, but also held by
On October 8, 2002, the RTC rendered its Decision13 in the third party adversely to the judgment obligor.21
Cadastral Case No. 98-069, finding petitioner to be the lawful
owner of the subject lots whose rights became absolute due to In this case, respondent acquired the subject lots from his
respondent’s failure to redeem the same. Consequently, it parents, Sps. Centeno, on March 14, 1988 after they were
found the issuance of a writ of possession ministerial on its purchased by petitioner and its Certificate of Sale at Public
part.14 Dissatisfied, respondent appealed to the CA. Auction was registered with the Register of Deeds of Iloilo City
in 1971. It cannot therefore be disputed that respondent is a
Ruling of the CA mere successor-in-interest of Sps. Centeno. Consequently, he
cannot be deemed as a "third party who is actually holding the
The CA, through its January 31, 2012 Decision,15 reversed the property adversely to the judgment obligor" under legal
RTC and ruled against the issuance of a writ of possession. It contemplation. Hence, the RTC had the ministerial duty to issue
considered respondent as a third party who is actually holding – as it did issue – the said writ in petitioner’s favor.
the property adverse to the judgment obligor and as such, has
the right to ventilate his claims in a proper judicial proceeding On the issue regarding the identity of the lots as raised by
i.e., an ejectment suit or reinvindicatory action.16 respondent in his Comment,22 records show that the RTC had
already passed upon petitioner’s title over the subject lots
Aggrieved, petitioner filed the instant petition. during the course of the proceedings. Accordingly, the identity
of the said lots had already been established for the purpose of
Issue Before The Court issuing a writ of possession. It is hornbook principle that absent
any clear showing of abuse, arbitrariness or capriciousness
The sole issue in this case is whether or not petitioner is committed by the lower court, its findings of facts are binding
entitled to a writ of possession over the subject lots. and conclusive upon the Court,23 as in this case.1âwphi1
The Court’s Ruling Finally, anent the issue of laches, it must be maintained that the
instant case only revolves around the issuance of a writ of
The petition is meritorious. possession which is merely ministerial on the RTC's part as
above-explained. As such, all defenses which respondent may
It is well-established that after consolidation of title in the raise including that of laches should be ventilated through a
purchaser’s name for failure of the mortgagor to redeem the proper proceeding.
property, the purchaser’s right to possession ripens into the
absolute right of a confirmed owner. At that point, the issuance WHEREFORE, the petition is GRANTED. The January 31, 2012
of a writ of possession, upon proper application and proof of Decision of the Cebu City Court of Appeals in CA-G.R. CV No.
title, to a purchaser in an extrajudicial foreclosure sale becomes 78398 is REVERSED and SET ASIDE. Accordingly, the October 8,
merely a ministerial function, 17 unless it appears that the 2002 Decision of the Regional Trial Court of Barotac Viejo, Iloilo
property is in possession of a third party claiming a right City, Branch 66 in Cadastral Case No. 98-069 is hereby
adverse to that of the mortgagor.18 The foregoing rule is REINSTATED.
contained in Section 33, Rule 39 of the Rules of Court which
partly provides:
187
80. OFFICE OF THE COURT ADMINISTRATOR, Complainant, usurpation of authority for issuing Commitment Order dated
vs.JESUS L. GRAGEDA, Respondent. January 16, 2008 in Crim. Case No. 01-2008 entitled "People v.
A. Ammad";
In view of the compulsory retirement of Judge Jesus L. Grageda
on November 25, 2009, the Office of the Court Administrator (D) DIRECT Mr. Boyd James B. Bacaltos, Legal Researcher II and
(OCA) conducted a judicial audit at the Regional Trial Court, then Officer-in-Charge, RTC, Br. 4, Panabo City to EXPLAIN
Branch 4, Panabo City presided by Judge Grageda on November within fifteen (15) days from notice why he should not be cited
17 to 26, 2009. The audit team of the OCA then submitted its for usurpation of authority for issuing the Commitment Order
report1 on March 24, 2010. Acting thereon, the First Division in Criminal Case No. 99-53 entitled "People v. J. Boston";
issued a Resolution2 dated April 28, 2010 resolving, among
others, to: (E) DIRECT Ms. Arlene C. Sison, Clerk in-Charge of civil cases,
RTC, Br. 4, Panabo City to comply with her duty to regularly
(A) DIRECT Judge Grageda to EXPLAIN within sixty (60) days update and maintain the docket book for civil cases and
from notice why he should not be cited for: SUBMIT certification from the Acting Presiding Judge and/or
Clerk of Court of such compliance;
(1) gross inefficiency and undue delay in rendering a decision or
order for his: (F) DIRECT Ms. Marianne G. Baylon, Clerk in-Charge of criminal
cases, RTC, Br. 4, Panabo City to comply with her duty to
(1.1) failure to decide sixteen (16) civil cases and one (1) regularly update and maintain the docket book for criminal
criminal case within the prescribed period; cases and submit certification from the Acting Presiding Judge
and/or the Clerk of Court of such compliance; and
(1.2) failure to resolve pending motions/incidents in eighteen
(18) civil and ten (10) criminal cases, within the prescribed (G) ORDER the Fiscal Management Office, Office of the Court
period; Administrator to retain from the retirement benefits of Judge
Grageda the sum of ₱200,000.00, to answer for any
(1.3) delay in deciding seven (7) civil cases; administrative liability that may be imposed upon him in
connection with the instant administrative matter.
(1.4) delay in resolving motions/incidents in fourteen (14) civil
cases; and In compliance with the said Resolution, Ms. Belen V. Basa3 and
Mr. Boyd James B. Bacaltos4 separately explained that they
(1.5) failure to act on the nineteen (19) civil and thirty-four (34) signed the subject Commitment Orders based on their office
criminal cases despite the lapse of considerable length of time; practice, without any malice nor intent to usurp the functions
of the Branch Clerk of Court. On June 22, 2010, Ms. Arlene C.
(2) gross ignorance of procedural law and unreasonable delay in Sison submitted a Certification5 from Acting Presiding Judge
the issuance of an order for the execution of the judgment in Virginia Hofileña-Europa of the same court, showing
four (4) civil cases; compliance with her mandated duty of updating the docket
book for civil cases. A similar Certification6 was also submitted
(3) gross misconduct and unreasonable delay in resolving by Marianne G. Baylon to show her compliance with the above
motions for reconsideration of decisions/final orders in directive to update the docket book for criminal cases.
nineteen (19) civil and five
In his letter-explanation,7 Judge Grageda denied the charges of
(5) criminal cases within the prescribed period thereby gross inefficiency, ignorance of the law and misconduct,
effectively freezing the judgments for two alleging that he had efficiently discharged his duties during his
fourteen (14) years of service as Presiding Judge of RTC, Br. 4,
(2) to seven (7) years and depriving the parties of the final Panabo City. While he admitted that there were delays in the
disposition of their cases; and resolution of cases in his sala, he put the blame on his heavy
case load; lack of support personnel; inadequate facilities; and
(4) dishonesty for declaring in his Certificate of Service for lack of time to act expeditiously on the various case-related
January to November 2009 that he has decided all cases and incidents.8 Nonetheless, he pleaded for mercy and indulgence
resolved all incidents within three (3) months from the date of from the Court and manifested his willingness to take full
submission for decision/resolution even when there were responsibility for his infractions. Judge Grageda also
several cases/incidents which remained undecided/unresolved enumerated purported inaccuracies9 in eleven (11) of the cases
beyond the reglementary period; referred to in the OCA Audit Report, which he alleged to have
been either already decided/disposed of or not yet due for
(B) DIRECT Judge Grageda to EXPLAIN within sixty (60) days decision/resolution as of the date of his retirement on
from notice why he should not be held administratively liable November 25, 2009. Moreover, he denied10 committing any
for rendering decisions/orders beyond his last working day, act of dishonesty in the submission of his Certificate of Service
which was on November 24, 2009, the day prior to his 70th for the period January to November 2009, claiming to have
birthday; relied on the assurance of his staff that there were no
unresolved or pending matters in his court.
(C) DIRECT Ms. Belen V. Basa, Court Interpreter III and then
Officer-in-Charge, RTC, Br. 4, Panabo City to EXPL AIN within On the matter of his administrative liability for rendering
fifteen (15) days from notice why she should not be cited for decisions/resolutions beyond November 24, 2009 or his last day
188
in office prior to his 70th birthday, Judge Grageda averred that Applying the foregoing principles to the case at bar, the Court is
his last working day should be on his retirement day or on constrained to similarly dismiss the complaint against Judge
November 25, 2009, hence, his actions were justified.11 Finally, Grageda.
he begged for fairness, equity and mercy from the Court and
requested that his fourteen (14) years of service be considered Records show that Judge Grageda compulsorily retired on
as a mitigating circumstance in the resolution of this case.12 November 25, 2009 while the judicial audit was conducted at
RTC, Br. 4, Panabo City from November 17 to November 26,
On November 24, 2010, the instant case was referred to the 2009. The OCA then submitted its report only on March 24,
OCA for evaluation, report and recommendation.13 On October 2010, which was re-docketed as a regular administrative matter
8, 2012, the OCA submitted its report14 recommending the on April 28, 2010, 23 or months after Judge Grageda retired
following for the Court’s consideration: from the judiciary. Consequently, his retirement effectively
barred the Court from pursuing the instant administrative
1. the respective compliances of Mr. Boyd James B. Bacaltos, proceeding that was instituted after his tenure in office,24 and
OIC/Acting Clerk of Court; Ms. Belen Basa, Court Interpreter III; divested the Court, much less the OCA, of any jurisdiction to
Ms. Arlene Sison, Clerk III; and Ms. Marianne G. Baylon, Clerk still subject him to the rules and regulations of the judiciary
III, all of the Regional Trial Court, Branch 4, Panabo City, be and/or to penalize him for the infractions committed while he
ACCEPTED as full compliance with the directive of this Court in was still in the service.25 As held in the case of OCA v. Judge
its Resolution dated 28 April 2010 in the instant administrative Celso L. Mantua:26
matter but with a STERN WARNING that a repetition of the
same or similar infraction shall be dealt with more severely; and This Court concedes that there are no promulgated rules on the
conduct of judicial audit.1âwphi1 However, the absence of such
2.1âwphi1 respondent Judge Jesus L. Grageda (ret.) be found rules should not serve as license to recommend the imposition
GUILTY of Gross Ignorance of the Law for rendering of penalties to retired judges who, during their incumbency,
orders/resolution on his retirement day and Gross Inefficiency were never given a chance to explain the circumstances behind
for undue delay in rendering decisions or orders and be FINED the results of the judicial audit.27
in the amount of Two Hundred Thousand Pesos (₱200,000.00)
to be taken from the ₱200,000.00 withheld from his retirement With respect to the administrative liability of Mr. Boyd James B.
benefits.15 Bacaltos, OIC/Acting Clerk of Court; Ms. Belen Basa, Court
Interpreter Ill; Ms. Arlene Sison, Clerk III; and Ms. Marianne G.
The OCA recommendations are well-taken but not with respect Baylon, Clerk III, all of the Regional Trial Court, Branch 4,
to the administrative liability of Judge Grageda. Panabo City, however, the Court concurs with the
recommendation of. the OCA that their respective compliance
Jurisprudence is replete with rulings that in order for the Court with the directives contained in the Resolution dated April 28,
to acquire jurisdiction over an administrative proceeding, the 2010 be accepted with stem warning that a repetition of the
complaint must be filed during the incumbency of the same or similar offense shall be dealt with more severely.
respondent public official or employee.16 This is because the
filing of an administrative case is predicated on the holding of a WHEREFORE, premises considered, the complaint against
position or office in the government service.17 However, once retired Judge Jesus L. Grageda of the Regional Trial Court,
jurisdiction has attached, the same is not lost by the mere fact Branch 4, Panabo City, is DISMISSED. The Fiscal Management
that the public official or employee was no longer in office Office of the Office of the Court Administrator is directed to
during the pendency of the case. In fine, cessation from office immediately release the ₱200,000.00 withheld from his
by reason of resignation, death or retirement is not a ground to retirement benefits, unless its continued retention is warranted
dismiss the case filed against the said officer or employee at the under any other lawful ground.
time that he was still in the public service or render it moot and
academic.18 The respective explanations and/or compliance of Mr. Boyd
James B. Bacaltos, OIC/ Acting Clerk of Court; Ms. Belen Basa,
In the case of Office of the Ombudsman v. Andutan, Jr., the Court Interpreter III; Ms. Arlene Sison, Clerk III; and Ms.
Court ruled that while the Ombudsman is not precluded from Marianne G. Baylon, Clerk III, all of the Regional Trial Court,
conducting an investigation against the errant employee, it can Branch 4, Panabo City, are hereby ACCEPTED as full compliance
no longer institute an administrative case against Andutan who with the directives of the Court in the Resolution dated April 28,
had already resigned,19 more so since his resignation or 2010 but with a STERN WARNING that a repetition of the same
severance of employment from the service was not availed of or similar infraction shall be dealt with more severely.
to prevent the continuation of the pending administrative case
or to pre-empt the imminent filing of one. 20 The Court also 81. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
dismissed an administrative case filed against a retired court vs.NAZARENO VILLAREAL y LUALHATI, Accused-Appellant.
stenographer for having been initiated over a month after her
retirement from the service.21 Moreover, in Re: Missing This is an appeal from the May 25, 2011 Decision1 of the Court
Exhibits and Court Properties in Regional Trial Court, Branch 4, of Appeals (CA) in CA-G.R. CR No. 31320 which affirmed in toto
Panabo City, Davao del Norte,22 the Court absolved herein the December 11, 2007 Decision2
respondent, Judge Grageda, from any administrative liability
since the complaint against him was filed after his retirement of the Regional Trial Court of Caloocan City, Branch 123 (RTC),
from the judiciary. convicting appellant Nazareno Villareal y Lualhati (appellant) of
violation of Section 11, Article II of Republic Act No. 91653 (RA
189
9165) and sentencing him to suffer the penalty of In his defense, appellant denied PO3 de Leon’s allegations and
imprisonment for twelve (12) years and one (1) day to fourteen instead claimed that on the date and time of the incident, he
(14) years and eight (8) months and to pay a fine of was walking alone along Avenida, Rizal headed towards 5th
₱300,000.00.
Avenue when someone who was riding a motorcycle called him
The Factual Antecedents from behind. Appellant approached the person, who turned out
to be PO3 de Leon, who then told him not to run, frisked him,
On December 25, 2006 at around 11:30 in the morning, as PO3 and took his wallet which contained ₱1,000.00.12
Renato de Leon (PO3 de Leon) was driving his motorcycle on his
way home along 5th Avenue, he saw appellant from a distance Appellant was brought to the 9th Avenue police station where
of about 8 to 10 meters, holding and scrutinizing in his hand a he was detained and mauled by eight other detainees under
plastic sachet of shabu. Thus, PO3 de Leon, a member of the the orders of PO3 de Leon. Subsequently, he was brought to
Station Anti-Illegal Drugs-Special Operation Unit (SAID-SOU) in the Sangandaan Headquarters where two other police officers,
Caloocan City, alighted from his motorcycle and approached whose names he recalled were "Michelle" and "Hipolito," took
the appellant whom he recognized as someone he had him to the headquarters’ firing range. There, "Michelle" and
previously arrested for illegal drug possession.4 "Hipolito" forced him to answer questions about a stolen
cellphone, firing a gun right beside his ear each time he failed
Upon seeing PO3 de Leon, appellant tried to escape but was to answer and eventually mauling him when he continued to
quickly apprehended with the help of a tricycle driver. Despite deny knowledge about the cellphone.13 Thus, appellant
appellant’s attempts to resist arrest, PO3 de Leon was able to sustained head injuries for which he was brought to the
board appellant onto his motorcycle and confiscate the plastic Diosdado Macapagal Hospital for proper treatment.14
sachet of shabu in his possession. Thereafter, PO3 de Leon
brought appellant to the 9th Avenue Police Station to fix his The following day, he underwent inquest proceedings before
handcuffs, and then they proceeded to the SAID-SOU office one Fiscal Guiyab, who informed him that he was being charged
where PO3 de Leon marked the seized plastic sachet with with resisting arrest and "Section 11."15 The first charge was
"RZL/NV 12-25-06," representing his and appellant’s initials and eventually dismissed.
the date of the arrest.5
The RTC Ruling
Subsequently, PO3 de Leon turned over the marked evidence as
well as the person of appellant to the investigator, PO2 After trial on the merits, the RTC convicted appellant as charged
Randulfo Hipolito (PO2 Hipolito) who, in turn, executed an upon a finding that all the elements of the crime of illegal
acknowledgment receipt6 and prepared a letter request7 for possession of dangerous drugs have been established, to wit:
the laboratory examination of the seized substance. PO2 (1) the appellant is in possession of an item or object which is
Hipolito personally delivered the request and the confiscated identified to be a prohibited drug; (2) that such possession is
item to the Philippine National Police (PNP) Crime Laboratory, not authorized by law; and (3) that the accused freely and
which were received by Police Senior Inspector Albert Arturo consciously possesses said drug. Finding no ill motive on the
(PSI Arturo), the forensic chemist.8 part of PO3 de Leon to testify falsely against appellant, coupled
with the fact that the former had previously arrested the latter
Upon qualitative examination, the plastic sachet, which for illegal possession of drugs under Republic Act No. 642516
contained 0.03 gram of white crystalline substance, tested (RA 6425), the RTC gave full faith and credit to PO3 de Leon’s
positive for methylamphetamine hydrochloride, a dangerous testimony. Moreover, the RTC found the plain view doctrine to
drug.9 be applicable, as the confiscated item was in plain view of PO3
de Leon at the place and time of the arrest.
Consequently, appellant was charged with violation of Section
11, Article II of RA 9165 for illegal possession of dangerous On the other hand, the RTC gave scant consideration to the
drugs in an Information10 which reads: defenses of denial and frame-up proffered by the appellant,
being uncorroborated, and in the light of the positive assertions
That on or about the 25th day of December, 2006 in Caloocan of PO3 de Leon. It refused to give credence to appellant’s claim
City, Metro Manila and within the jurisdiction of this Honorable that PO3 de Leon robbed him of his money, since he failed to
Court, the above-named accused, without being authorized by bring the incident to the attention of PO3 de Leon’s superiors
law, did then and there willfully, unlawfully and feloniously or to institute any action against the latter.
have in his possession, custody and control,
METHYLAMPHETAMINE HYDROCHLORIDE (Shabu) weighing Consequently, the RTC sentenced appellant to suffer the
0.03 gram which, when subjected to chemistry examination penalty of imprisonment of twelve (12) years and one (1) day to
gave positive result of METHYLAMPHETAMIME fourteen (14) years and eight (8) months and to pay a fine of
HYDROCHLORIDE, a dangerous drug. ₱300,000.00.
When arraigned, appellant, assisted by counsel de oficio, In its assailed Decision, the CA sustained appellant’s conviction,
entered a plea of not guilty to the offense charged.11 finding "a clear case of in flagrante delicto warrantless
arrest"17 as provided under Section 5, Rule 113 of the Revised
Rules of Criminal Procedure. The CA held that appellant
190
"exhibited an overt act or strange conduct that would under paragraph (b), he knows for a fact that a crime has just
reasonably arouse suspicion,"18 aggravated by the existence of been committed.
his past criminal citations and his attempt to flee when PO3 de
Leon approached him. In sustaining appellant’s conviction in this case, the appellate
court ratiocinated that this was a clear case of an "in flagrante
Citing jurisprudence, the appellate court likewise ruled that the delicto warrantless arrest" under paragraphs (a) and (b) of
prosecution had adequately shown the continuous and Section 5, Rule 113 of the Revised Rules on Criminal Procedure,
unbroken chain of custody of the seized item, from the time it as above-quoted.
was confiscated from appellant by PO3 de Leon, marked at the
police station, turned over to PO2 Hipolito and delivered to the The Court disagrees.
crime laboratory, where it was received by PSI Arturo, the
forensic chemist, up to the time it was presented in court for A punctilious assessment of the factual backdrop of this case
proper identification. shows that there could have been no lawful warrantless arrest.
A portion of PO3 de Leon’s testimony on direct examination in
The Issue court is revelatory:
The sole issue advanced before the Court for resolution is FISCAL LARIEGO: While you were there at 5th
whether the CA erred in affirming in toto the RTC’s Decision
convicting appellant of the offense charged. Avenue, was there anything unusual that transpired?
Section 5, Rule 113 of the Revised Rules of Criminal Procedure A: While I was on board my motorcycle on my home, I saw a
lays down the basic rules on lawful warrantless arrests, either man looking at the shabu in his hand, Ma’am.
by a peace officer or a private person, as follows:
Q: And exactly what time was this?
Sec. 5. Arrest without warrant; when lawful. – A peace officer
or a private person may, without a warrant, arrest a person: A: Around 11:30 in the morning, Ma’am.
(a) When, in his presence, the person to be arrested has Q: How far were you from this person that you said was
committed, is actually committing, or is attempting to commit verifying something in his hand?
an offense;
A: Eight to ten meters, Ma’am.
(b) When an offense has just been committed and he has
probable cause to believe based on personal knowledge of facts Q: What exactly did you see he was verifying? A: The shabu that
or circumstances that the person to be arrested has committed he was holding, Ma’am.
it; and
Q: After seeing what the man was doing, what did you do next?
(c) When the person to be arrested is a prisoner who has
escaped from a penal establishment or place where he is A: I alighted from my motorcycle and approached him, Ma’am.
serving final judgment or is temporarily confined while his case
is pending, or has escaped while being transferred from one Q: In the first place why do you say that what he was examining
confinement to another. and holding in his hand was a shabu?
xxx A: Because of the numerous arrests that I have done, they were
all shabu, Ma’am.21 (Underscoring supplied)
For the warrantless arrest under paragraph (a) of Section 5 to
operate, two elements must concur: (1) the person to be On the basis of the foregoing testimony, the Court finds it
arrested must execute an overt act indicating that he has just inconceivable how PO3 de Leon, even with his presumably
committed, is actually committing, or is attempting to commit a perfect vision, would be able to identify with reasonable
crime; and (2) such overt act is done in the presence or within accuracy, from a distance of about 8 to 10 meters and while
the view of the arresting officer.19 On the other hand, simultaneously driving a motorcycle, a negligible and minuscule
paragraph (b) of Section 5 requires for its application that at the amount of powdery substance (0.03 gram) inside the plastic
time of the arrest, an offense had in fact just been committed sachet allegedly held by appellant. That he had previously
and the arresting officer had personal knowledge of facts effected numerous arrests, all involving shabu, is insufficient to
indicating that the appellant had committed it.20 create a conclusion that what he purportedly saw in appellant’s
hands was indeed shabu.
In both instances, the officer’s personal knowledge of the fact
of the commission of an offense is absolutely required. Under Absent any other circumstance upon which to anchor a lawful
paragraph (a), the officer himself witnesses the crime while arrest, no other overt act could be properly attributed to
appellant as to rouse suspicion in the mind of PO3 de Leon that
191
he (appellant) had just committed, was committing, or was facts regarding appellant’s person and past criminal record," as
about to commit a crime, for the acts per se of walking along this is unquestionably not what "personal knowledge" under
the street and examining something in one’s hands cannot in the law contemplates, which must be strictly construed.24
any way be considered criminal acts. In fact, even if appellant
had been exhibiting unusual or strange acts, or at the very least Furthermore, appellant’s act of darting away when PO3 de Leon
appeared suspicious, the same would not have been sufficient approached him should not be construed against him. Flight per
in order for PO3 de Leon to effect a lawful warrantless arrest se is not synonymous with guilt and must not always be
under paragraph (a) of Section 5, Rule 113. attributed to one’s consciousness of guilt.25 It is not a reliable
indicator of guilt without other circumstances,26 for even in
Neither has it been established that the rigorous conditions set high crime areas there are many innocent reasons for flight,
forth in paragraph (b) of Section 5, Rule 113 have been including fear of retribution for speaking to officers,
complied with, i.e., that an offense had in fact just been unwillingness to appear as witnesses, and fear of being
committed and the arresting officer had personal knowledge of wrongfully apprehended as a guilty party.27 Thus, appellant’s
facts indicating that the appellant had committed it. attempt to run away from PO3 de Leon is susceptible of various
explanations; it could easily have meant guilt just as it could
The factual circumstances of the case failed to show that PO3 likewise signify innocence.
de Leon had personal knowledge that a crime had been
indisputably committed by the appellant. It is not enough that In fine, appellant’s acts of walking along the street and holding
PO3 de Leon had reasonable ground to believe that appellant something in his hands, even if they appeared to be dubious,
had just committed a crime; a crime must in fact have been coupled with his previous criminal charge for the same offense,
committed first, which does not obtain in this case. are not by themselves sufficient to incite suspicion of criminal
activity or to create probable cause enough to justify a
Without the overt act that would pin liability against appellant, warrantless arrest under Section 5 above-quoted. "Probable
it is therefore clear that PO3 de Leon was merely impelled to cause" has been understood to mean a reasonable ground of
apprehend appellant on account of the latter’s previous suspicion supported by circumstances sufficiently strong in
charge22 for the same offense. The CA stressed this point when themselves to warrant a cautious man's belief that the person
it said: accused is guilty of the offense with which he is charged.28
Specifically with respect to arrests, it is such facts and
circumstances which would lead a reasonably discreet and
It is common for drugs, being illegal in nature, to be concealed prudent man to believe that an offense has been committed by
from view.1âwphi1 PO3 Renato de Leon saw appellant holding the person sought to be arrested,29 which clearly do not obtain
and scrutinizing a piece of plastic wrapper containing a white in appellant’s case.
powderly substance. PO3 Renato de Leon was quite familiar
with appellant, having arrested him twice before for the same Thus, while it is true that the legality of an arrest depends upon
illegal possession of drug. It was not just a hollow suspicion. The the reasonable discretion of the officer or functionary to whom
third time around, PO3 de Leon had reasonably assumed that the law at the moment leaves the decision to characterize the
the piece of plastic wrapper appellant was holding and nature of the act or deed of the person for the urgent purpose
scrutinizing also contained shabu as he had personal knowledge of suspending his liberty,30 it cannot be arbitrarily or
of facts regarding appellant’s person and past criminal record. capriciously exercised without unduly compromising a citizen’s
He would have been irresponsible to just ‘wait and see’ and constitutionally-guaranteed right to liberty. As the Court
give appellant a chance to scamper away. For his part, succinctly explained in the case of People v. Tudtud:31
appellant being, in fact, in possession of illegal drug, sensing
trouble from an equally familiar face of authority, ran away. The right of a person to be secure against any unreasonable
Luckily, however, PO3 de Leon caught up with him through the seizure of his body and any deprivation of his liberty is a most
aid of a tricycle driver. Appellant’s act of running away, indeed, basic and fundamental one. The statute or rule which allows
validated PO3 de Leon’s reasonable suspicion that appellant exceptions to the requirement of warrants of arrest is strictly
was actually in possession of illegal drug. x x x23 construed. Any exception must clearly fall within the situations
when securing a warrant would be absurd or is manifestly
However, a previous arrest or existing criminal record, even for unnecessary as provided by the Rule. We cannot liberally
the same offense, will not suffice to satisfy the exacting construe the rule on arrests without warrant or extend its
requirements provided under Section 5, Rule 113 in order to application beyond the cases specifically provided by law. To do
justify a lawful warrantless arrest. "Personal knowledge" of the so would infringe upon personal liberty and set back a basic
arresting officer that a crime had in fact just been committed is right so often violated and so deserving of full protection.
required. To interpret "personal knowledge" as referring to a
person’s reputation or past criminal citations would create a Consequently, there being no lawful warrantless arrest, the
dangerous precedent and unnecessarily stretch the authority shabu purportedly seized from appellant is rendered
and power of police officers to effect warrantless arrests based inadmissible in evidence for being the proverbial fruit of the
solely on knowledge of a person’s previous criminal infractions, poisonous tree. As the confiscated shabu is the very corpus
rendering nugatory the rigorous requisites laid out under delicti of the crime charged, appellant must be acquitted and
Section 5. exonerated from all criminal liability.
It was therefore error on the part of the CA to rule on the WHEREFORE, the assailed Decision of the Court of Appeals in
validity of appellant’s arrest based on "personal knowledge of CA-G.R. CR No. 31320 is REVERSED and SET ASIDE. Appellant
192
Nazareno Villareal y Lualhati is ACQUITTED on reasonable requests submitted to the COMELEC’s Law Department (Law
doubt of the offense charged and ordered immediately Department), the COMELEC En Banc, in the exercise of its
released from detention, unless his continued confinement is administrative functions, issued Resolution No. 889011 on May
warranted by some other cause or ground. 8, 2010, approving, among others, the recommendation of the
said department to allow the substitution of private
82. SILVERIO R. TAGOLINO, Petitioner, vs.HOUSE OF respondent. The recommendation reads:
REPRESENTATIVES ELECTORAL TRIBUNAL AND LUCY MARIE
TORRES-GOMEZ, Respondents. STUDY AND OBSERVATION
Assailed in this Petition for Certiorari and Prohibition under On the same date, this Department received an Opposition
Rule 65 of the Rules of Court is the March 22, 2012 Decision1 of from Mr. Buenaventura O. Juntilla, thru his counsel, opposing
the House of Representatives Electoral Tribunal (HRET) in HRET the candidacy of Ms. Lucy Marie Torres Gomez, as a substitute
Case No. 10-031 (QW) which declared the validity of private candidate for Mr. Richard I. Gomez.
respondent Lucy Marie Torres-Gomez’s substitution as the
Liberal Party’s replacement candidate for the position of Leyte The crux of the opposition stemmed from the issue that there
Representative (Fourth Legislative District) in lieu of Richard should be no substitution because there is no candidate to
Gomez. substitute for.
The Facts It must be stressed that the resolution of the First Division, this
Commission, in SPA No. 09-059 speaks for disqualification of
On November 30, 2009, Richard Gomez (Richard) filed his candidate Richard I. Gomez and not of cancellation of his
certificate of candidacy2 (CoC) with the Commission on Certificate of Candidacy:
Elections (COMELEC), seeking congressional office as
Representative for the Fourth Legislative District of Leyte under ‘Wherefore, premises considered, the Commission RESOLVED,
the ticket of the Liberal Party. Subsequently, on December 6, as it hereby RESOLVES, to GRANT the Petition to Disqualify
2009, one of the opposing candidates, Buenaventura Juntilla Candidate for Lack of Qualification filed x x x against RICHARD I.
(Juntilla), filed a Verified Petition,3 alleging that Richard, who GOMEZ. Accordingly, RICHARD I. GOMEZ is DISQUALIFIED as a
was actually a resident of College Street, East Greenhills, San candidate for the Office of Congressman, Fourth District of
Juan City, Metro Manila, misrepresented in his CoC that he Leyte, for lack of residency requirement.’
resided in 910 Carlota Hills, Can-adieng, Ormoc City. In this
regard, Juntilla asserted that Richard failed to meet the one (1) The said resolution was affirmed by the Commission En Banc on
year residency requirement under Section 6, Article VI4 of the May 04, 2010.
1987 Philippine Constitution (Constitution) and thus should be
declared disqualified/ineligible to run for the said office. In The disqualification of a candidate does not automatically
addition, Juntilla prayed that Richard’s CoC be denied due cancel one’s certificate of candidacy, especially when it is
course and/or cancelled.5 nominated by a political party. In effect, the political party is
still allowed to substitute the candidate whose candidacy was
On February 17, 2010, the COMELEC First Division rendered a declared disqualified. After all, the right to substitute is a
Resolution6 granting Juntilla’s petition without any privilege given to a political party to exercise and not
qualification. The dispositive portion of which reads: dependent totally to a candidate.
WHEREFORE, premises considered, the Commission RESOLVED, Nonetheless, in case of doubt, the same must always be
as it hereby RESOLVE, to GRANT the Petition to Disqualify resolved to the qualification of a candidate to run in the public
Candidate for Lack of Qualification filed by BUENAVENTURA O. office.
JUNTILLA against RICHARD I. GOMEZ. Accordingly, RICHARD I.
GOMEZ is DISQUALIFIED as a candidate for the Office of The substitution complied with the requirements provided
Congressman, Fourth District of Leyte, for lack of residency under Section 12 in relation to Section 13 of Comelec
requirement. Resolution No. 8678 dated October 6, 2009.
SO ORDERED. xxxx
Aggrieved, Richard moved for reconsideration but the same In view of the foregoing, the Law Department RECOMMENDS
was denied by the COMELEC En Banc through a Resolution the following:
dated May 4, 2010.7 Thereafter, in a Manifestation of even
date, Richard accepted the said resolution with finality "in order xxxx
to enable his substitute to facilitate the filing of the necessary
documents for substitution."8 2. TO ALLOW CANDIDATE LUCY MARIE TORRES GOMEZ AS A
SUBSTITUTE CANDIDATE FOR RICHARD GOMEZ: (Emphasis and
On May 5, 2010, Lucy Marie Torres-Gomez (private respondent) underscoring supplied)
filed her CoC9 together with a Certificate of Nomination and
Acceptance10 from the Liberal Party endorsing her as the xxxx
party’s official substitute candidate vice her husband, Richard,
for the same congressional post. In response to various letter-
193
The following day, or on May 9, 2010, Juntilla filed an Extremely for the position of Leyte Representative (Fourth Legislative
Urgent Motion for Reconsideration12 (May 9, 2010 Motion) of District). It observed that the resolution denying Richard’s
the above-mentioned COMELEC En Banc resolution candidacy i.e., the COMELEC First Division’s February 17, 2010
Resolution, spoke of disqualification and not of CoC
Pending resolution of Juntilla’s May 9, 2010 Motion, the cancellation. Hence, it held that the substitution of private
national and local elections were conducted as scheduled on respondent in lieu of Richard was legal and valid.21 Also, it
May 10, 2010. During the elections, Richards, whose name upheld the validity of private respondent’s CoC due to
remained on the ballots, garnered 101, 250 votes while his petitioner’s failure to controvert her claim that she was
opponents, namely, Eufrocino Codilla, Jr. and herein petitioner personally known to the notary public who notarized her
Silverio Tagolino, obtained 76,549 and 493 votes, CoC.22 Finally, the HRET ruled that while it had been admitted
respectively.13 In view of the aforementioned substitution, that private respondent resides in Colgate Street, San Juan City
Richard’s votes were credited in favor of private respondent and lived in San Rafael, Bulacan, the fact was she continued to
and as a result, she was proclaimed the duly-elected retain her domicile in Ormoc City given that her absence
Representative of the Fourth District of Leyte. therefrom was only temporary.
On May 11, 2010, Juntilla filed an Extremely Urgent Motion to Hence, the instant petition.
resolve the pending May 9, 2010 Motion relative to Resolution
No. 8890.14 The said motion, however, remained unacted. Issues Before the Court
On May 24, 2010, petitioner filed a Petition15 for quo warranto The crux of the present controversy is whatever or not the
before the HRET in order to oust private respondent from her HRET gravely abused its discretion in finding that Richard was
congressional seat, claiming that: (1) she failed to comply with validly substituted by private respondent as candidate for Leyte
the one (1) year residency requirement under Section 6, Article Representative (Fourth Legislative District) in view of the
VI of the Constitution considering that the transfer of her voter former’s failure to meet the one (1) year residency requirement
registration from San Rafael Bulacan16 to the Fourth District of provided under Section 6, Article VI of the Constitution.
Leyte was only applied for on July 23, 2009; (2) she did not
validly substitute Richard as his CoC was void ab initio; and (3) It is petitioner’s submission that the HRET gravely abused its
private respondent’s CoC was void due to her non-compliance discretion when it upheld the validity of private respondent’s
with the prescribed notarial requirements i.e., she failed to substitution despite contrary jurisprudence holding that
present valid and competent proof of her identity before the substitution is impermissible where the substituted candidate’s
notarizing officer.17 CoC was denied due course to and/or cancelled, as in the case
of Richard. On the other hand, respondents maintain that
In her Verified Answer,18 private respondent denied Richard’s CoC was not denied due course to and/or cancelled
petitioner’s allegations and claimed that she validly substituted by the COMELEC as he was only "disqualified" and therefore,
her husband in the electoral process. She also averred that she was properly substituted by private respondent.
personally known to the notary public who notarized her CoC,
one Atty. Edgardo Cordeno, and thus, she was not required to Ruling of the Court
have presented any competent proof of identity during the
notarization of the said document. Lastly, she asserted that The petition is meritorious.
despite her marriage to Richard and exercise of profession in
Metro Manila, she continued to maintain her residency in A. Distinction between a petition for disqualification and a
Ormoc City which was the place where she was born and petition to deny due course to/cancel a certificate of candidacy
raised.
The Omnibus Election Code23 (OEC) provides for certain
During the preliminary conference, and as shown in the remedies to assail a candidate’s bid for public office. Among
Preliminary Conference Order dated September 2, 2010, the these which obtain particular significance to this case are: (1) a
parties agreed on the following issues for resolution: petition for disqualification under Section 68; and (2) a petition
to deny due course to and/or cancel a certificate of candidacy
Whether or not the instant petition for quo warranto is under Section 78. The distinctions between the two are well-
meritorious; perceived.
Whether or not the substitution of respondent is valid;
Whether or not a petition for quo warranto can be used as a Primarily, a disqualification case under Section 68 of the OEC is
substitute for failure to file the necessary petition for hinged on either: (a) a candidate’s possession of a permanent
disqualification with the COMELEC; resident status in a foreign country;24 or (b) his or her
Whether or not respondent’s COC was duly subscribed; and commission of certain acts of disqualification. Anent the latter,
Whether or not respondent is ineligible for the position of the prohibited acts under Section 68 refer to election offenses
Representative of the Fourth District of Leyte for lack of under the OEC, and not to violations of other penal laws.25 In
residency requirement.19 particular, these are: (1) giving money or other material
Ruling of the HRET consideration to influence, induce or corrupt the voters or
public officials performing electoral functions; (2) committing
After due proceedings, the HRET issued the assailed March 22, acts of terrorism to enhance one’s candidacy; (3) spending in
2012 Decision20 which dismissed the quo warranto petition one’s election campaign an amount in excess of that allowed by
and declared that private respondent was a qualified candidate the OEC; (4) soliciting, receiving or making any contribution
194
prohibited under Sections 89, 95, 96, 97 and 104 of the OEC; ineligibility and that the same be granted without any
and (5) violating Sections 80,26 83,27 85,28 8629 and 261, qualification.40
paragraphs d,30 e,31 k,32 v,33 and cc, sub-paragraph 634 of
the OEC. Accordingly, the same provision (Section 68) states Pertinently, while a disqualified candidate under Section 68 is
that any candidate who, in an action or protest in which he or still considered to have been a candidate for all intents and
she is a party, is declared by final decision of a competent court purposes, on the other hand, a person whose CoC had been
guilty of, or found by the COMELEC to have committed any of denied due course to and/or cancelled under Section 78 is
the foregoing acts shall be disqualified from continuing as a deemed to have not been a candidate at all. The reason being is
candidate for public office, or disallowed from holding the that a cancelled CoC is considered void ab initio and thus,
same, if he or she had already been elected.35 cannot give rise to a valid candidacy and necessarily, to valid
votes.41 In Talaga v. COMELEC42 (Talaga), the Court ruled that:
It must be stressed that one who is disqualified under Section
68 is still technically considered to have been a candidate, x x x x While a person who is disqualified under Section 68 is
albeit proscribed to continue as such only because of merely prohibited to continue as a candidate, a person who
supervening infractions which do not, however, deny his or her certificate is cancelled or denied due course under Section 78 is
statutory eligibility. In other words, while the candidate’s not treated as a candidate at all, as if he/she never filed a CoC.
compliance with the eligibility requirements as prescribed by
law, such as age, residency, and citizenship, is not in question, The foregoing variance gains utmost importance to the present
he or she is, however, ordered to discontinue such candidacy as case considering its implications on candidate substitution.
a form of penal sanction brought by the commission of the
above-mentioned election offenses. B. Valid CoC as a condition sine qua non for candidate
substitution
On the other hand, a denial of due course to and/or
cancellation of a CoC proceeding under Section 78 of the OEC36 Section 77 of the OEC provides that if an official candidate of a
is premised on a person’s misrepresentation of any of the registered or accredited political party dies, withdraws or is
material qualifications required for the elective office aspired disqualified for any cause, a person belonging to and certified
for. It is not enough that a person lacks the relevant by the same political party may file a CoC to replace the
qualification; he or she must have also made a false candidate who died, withdrew or was disqualified. It states
representation of the same in the CoC.37 The nature of a that:
Section 78 petition was discussed in the case of Fermin v.
COMELEC,38 where the Court illumined: Sec. 77. Candidates in case of death, disqualification or
withdrawal of another. - If after the last day for the filing of
Let it be misunderstood, the denial of due course to or the certificates of candidacy, an official candidate of a registered or
cancellation of the CoC is not based on the lack of qualifications accredited political party dies, withdraws or is disqualified for
but on a finding that the candidate made a material any cause, only a person belonging to, and certified by, the
representation that is false, which may relate to the same political party may file a certificate of candidacy to
qualifications required of the public office he/she is running for. replace the candidate who died, withdrew or was disqualified.
It is noted that the candidates states in his/her CoC that he/she (Emphasis supplied)
is eligible for the office he/she seeks. Section 78 of the OEC,
therefore, is to be read in relation to the constitutional and Evidently, Section 77 requires that there be an "official
statutory provisions on qualifications or eligibility for public candidate" before candidate substitution proceeds. Thus,
office. If the candidate subsequently states a material whether the ground for substitution is death, withdrawal or
representation in the CoC that is false, the COMELEC, following disqualification of a candidate, the said section unequivocally
the law, is empowered to deny due course to or cancel such states that only an official candidate of a registered or
certificate. Indeed, the Court has already likened a proceeding accredited party may be substituted.43
under Section 78 to a quo warranto proceeding under Section
253 of the OEC since they both deal with the eligibility or As defined under Section 79(a) of the OEC, the term
qualification of a candidate, with the distinction mainly in the "candidate" refers to any person aspiring for or seeking an
fact that a "Section 78" petition is filed before proclamation, elective public office who has filed a certificate of candidacy by
while a petition for quo warranto is filed after proclamation of himself or through an accredited political party, aggroupment,
the winning candidate. (Emphasis supplied) or coalition of parties. Clearly, the law requires that one must
have validly filed a CoC in order to be considered a candidate.
Corollary thereto, it must be noted that the deliberateness of The requirement of having a CoC obtains even greater
the misrepresentation, much less one’s intent to defraud, is of importance if one considers its nature. In particular, a CoC
bare significance in a Section 78 petition as it is enough that the formalizes not only a person’s public declaration to run for
person’s declaration of a material qualification in the CoC be office but evidences as well his or her statutory eligibility to be
false. In this relation, jurisprudence holds that an express elected for the said post. In Sinaca v. Mula,44 the Court has
finding that the person committed any deliberate illumined:
misrepresentation is of little consequence in the determination
of whether one’s CoC should be deemed cancelled or not.39 A certificate of candidacy is in the nature of a formal
What remains material is that the petition essentially seeks to manifestation to the whole world of the candidate’s political
deny due course to and/or cancel the CoC on the basis of one’s creed or lack of political creed. It is a statement of a person
seeking to run for a public office certifying that he announces
195
his candidacy for the office mentioned and the be is eligible for the one year residency requirement.49 The confusion,
the office, the name of the political party to which he belongs, however, stemmed from the use of the word "disqualified" in
if he belongs to any, and his post-office address for all election the February 17, 2010 Resolution of the COMELEC First
purposes being as well stated. (Emphasis and underscoring Division, which was adopted by the COMELEC En Banc in
supplied). granting the substitution of private respondent, and even
further perpetuated by the HRET in denying the quo warranto
In this regard, the CoC is the document which formally accords petition. In short, a finding that Richard was merely disqualified
upon a person the status of a candidate. In other words, absent – and not that his CoC was denied due course to and/or
a valid CoC one is not considered a candidate under legal cancelled – would mean that he could have been validly
contemplation. As held in Talaga:45 substitute by private respondent, thereby legitimizing her
candidacy.
x x x a person’s declaration of his intention to run for public
office and his affirmation that he possesses the eligibility for Yet the fact that the COMELEC First Division’s February 17, 2010
the position he seeks to assume, followed by the timely filing of Resolution did not explicitly decree the denial of due course to
such declaration, constitute a valid CoC that render the person and/or cancellation of Richard’s CoC should not have obviated
making the declaration a valid or official candidate. (Emphasis the COMELEC En Banc from declaring the invalidity of private
supplied) respondent’s substitution. It should be stressed that the clear
and unequivocal basis for Richard’s "disqualification" is his
Considering that Section 77 requires that there be a candidate failure to comply with the residency requirement under Section
in order for substitution to take place, as well as the precept 6, Article VI of the Constitution which is a ground for the denial
that a person without a valid CoC is not considered as a of due course to and/or cancellation a CoC under Section 78 of
candidate at all, it necessarily follows that if a person’s CoC had the OEC, misrepresentation contemplated under a Section 78
been denied due course to and/or cancelled, he or she cannot petition refers to statements affecting one’s qualifications for
be validly substituted in the electoral process. The existence of elective office such as age, residence and citizenship or non-
a valid CoC is therefore a condition sine qua non for a possession of natural-born Filipino status.51 There is therefore
disqualified candidate to be validly substituted.46 no legal basis to support a finding of disqualification within the
ambit of election laws. Accordingly, given Richard’s non-
C. Divergent effects of disqualification and denial of due course compliance with the one year residency requirement, it cannot
to and/or cancellation of CoC cases vis-à-vis candidate be mistaken that the COMELEC First Division’s unqualified grant
substitution of Juntilla’s "Verified Petition to Disqualify Candidate for Lack of
Qualification"52 – which prayed that the COMELEC declare
Proceeding, from the foregoing discourse, it is evident that Richard "DISQUALIFIED and INELIGIBLE from seeking the office
there lies a clear-cut distinction between a disqualification case of Member of the House of Representatives" and "x x x that his
under Section 68 and denial of due course to and/or Certificate of Candidacy x x x be DENIED DUE COURSE and/or
cancellation of COC case under Section 78 vis-à-vis their CANCELLED"53 – carried with it the denial of due course to
respective effects on candidate substitution under Section and/or cancellation of Richard’s CoC pursuant to Section 78.
77.1âwphi1
Case law dictates that if a petition prays for the denial of due
As explained in the case of Miranda v. Abaya47 (Miranda), a course to and/or cancellation of CoC and the same is granted by
candidate who is disqualified under Section 68 can be validly the COMELEC without any qualification, the cancellation of the
substituted pursuant to Section 77 because he remains a candidate’s CoC in in order. This is precisely the crux of the
candidate until disqualified; but a person whose CoC has been Miranda ruling wherein the Court, in upholding the COMELEC
denied due course to and/or cancelled under Section 78 cannot En Banc’s nullification of the substitution in that case, decreed
be substituted because he is not considered a candidate.48 that the COMELEC Division’s unqualified grant of the petition
Stated differently, since there would be no candidate to speak necessarily included the denial of due course to and/or
of under a denial of due course to and/or cancellation of a CoC cancellation of the candidate’s CoC, notwithstanding the use of
case, then there would be no candidate to be substituted; the the term "disqualified" in the COMELEC Division’s resolution, as
same does not obtain, however, in a disqualification case since the foregoing was prayed for in the said petition:
there remains to be a candidate to be substituted, although his
or her candidacy is discontinued. The question to settle next is whether or not aside from Joiel
"Pempe" Miranda being disqualified by the COMELEC in its May
On this note, it is equally revelatory that Section 77 expressly 5, 1998 resolution, his certificate of candidacy had likewise
enumerates the instances where substitution is permissible, been denied due course and cancelled.
that is when an official candidate of a registered or accredited
political party "dies, withdraws or is disqualified for any cause." The Court rules that it was.
Noticeably, material misrepresentation cases are not included
in the said section and therefore, cannot be a valid basis to Private respondent’s petition in SPA No. 98-019 specifically
proceed with candidate substitution. prayed for the following:
D. Application to the case at bar WHEREFORE, it is respectfully prayed that the Certificate of
Candidacy filed by respondent for the position of Mayor for the
In this case, it is undisputed that Richard was disqualified to run City of Snatiago be not given due course and/or cancelled.
in the May 10, 2010 elections due to his failure to comply with
196
Other reliefs just and equitable in the premises are likewise In view of the foregoing rulings, the COMELEC En Banc direly
prayed for. misconstrued the COMELEC First Division’s February 17, 2010
Resolution when it adopted the Law Department’s finding that
In resolving the petition filed by private respondent specifying a Richard was only "disqualified" and that his CoC was not denied
very particular relief, the COMELEC ruled favorably in the due course to and/or cancelled, paving the way for the
following manner: approval of private respondent’s substitution. It overlooked the
fact that the COMELEC First Division’s ruling encompassed the
WHEREFORE, in view of the foregoing, the Commission (FIRST cancellation of Richard’s CoC and in consequence, disallowed
DIVISION) GRANTS the Petition. Respondent JOSE "Pempe" the substitution of private respondent. It was therefore grave
MIRANDA is hereby DISQUALIFIED from running for the position and serious error on the part of the COMELEC En Banc to have
of mayor of Santiago City, Isabela, in the May 11, 1998 national approved private respondent’s substitution.
and local elections.
Consequently, in perpetuating the COMELEC En Banc’s error as
SO ORDERED. above-discussed, the HRET committed a grave abuse of
discretion, warranting the grant of the instant petition.
From a plain reading of the dispositive portion of the COMELEC
resolution of May 5, 1998 in SPA No. 98-019, it is sufficiently Fundamental is the rule that grave abuse of discretion arises
clear that the prayer specifically and particularly sought in the when a lower court or tribunal patently violates the
petition was GRANTED, there being no qualification on the Constitution, the law or existing jurisprudence.54 While it is
matter whatsoever. The disqualification was simply ruled over well-recognized that the HRET has been empowered by the
and above the granting of the specific prayer for denial of due Constitution to be the "sole judge" of all contests relating to the
course and cancellation of the certificate of candidacy. election, returns, and qualifications of the members of the
House, the Court maintains jurisdiction over it to check
xxxx "whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction" on the part of the
There is no dispute that the complaint or petition filed by latter.55 In other words, when the HRET utterly disregards the
private respondent in SPA No. 98-019 is one to deny due course law and settled precedents on the matter before it, it commits
and to cancel the certificate of candidacy of Jose "Pempe" a grave abuse of discretion.
Miranda. There is likewise no question that the said petition
was GRANTED without any qualification whatsoever. It is rather Records clearly show that: (1) Richard was held ineligible as a
clear, therefore, that whether or not the COMELEC granted any congressional candidate for the Fourth District of Leyte due to
further relief in SPA No. 98-019 by disqualifying the candidate, his failure to comply with the one year residency requirement;
the fact remains that the said petition was granted and that the (2) Juntilla’s petition prayed for the denial of due course to
certificate of candidacy of Jose "Pempe" Miranda was denied and/or cancellation of his CoC; and (3) the COMELEC First
due course and cancelled. (Emphasis and underscoring Division granted the foregoing petition without any
supplied) qualification. By these undisputed and essential facts alone, the
HRET should not have adopted the COMELEC En Banc’s
The same rule was later discussed in the case of Talaga, viz: erroneous finding that the COMELEC First Division’s February
17, 2010 Resolution "speaks only of "disqualification and not of
3. Granting without any qualification or petition in SPA No. 09- cancellation of Richard’s CoC"36 and thereby, sanctioned the
029(DC) manifested COMELEC’s intention to declare Ramon substitution of private respondent.
disqualified and to cancel his CoC
Lest it be misunderstood, the HRET is not bound by previous
xxxx COMELEC pronouncements relative to the qualifications of the
Members of the House. Being the sole judge57 of all contests
In Miranda v. Abaya, the specific relief that the petition prayed relating to the election, returns, and qualifications of its
for was that the CoC "be not given due course and/or respective members, the HRET cannot be tied down by
cancelled". The COMELEC categorically granted "the petition" COMELEC resolutions, else its constitutional mandate58 be
and then pronounced – in apparent contradiction – that Joel circumvented and rendered nugatory. Instructive on this point
Pempe Miranda was "disqualified." The Court held that the is the Court’s disquisition in Fernandez v. HRET,59 to wit:
COMELEC, by granting the petition without any qualification,
disqualified Joel Pempe Miranda and at the same time Private respondent concludes from the above that petitioner
cancelled Jose Pempe Miranda’s CoC. had no legal basis to claim that the HRET, when reference to
the qualification/s of Members of the House of Representatives
xxxx is concerned, is "co-equal", to the COMELEC respecting the
matter of eligibility and qualification of a member of the House
The crucial point of Miranda v. Abaya was that the COMELEC of Representatives. The truth is the other way around, because
actually granted the particular relief of cancelling or denying the COMELEC is subservient to the HRET when the dispute or
due course to the CoC prayed for in the petition by not contest at issue refers to the eligibility and/or qualification of a
subjecting that relief to any qualification. (Emphasis and Member of the House of Representatives. A petition for quo
underscoring supplied) warranto is within the exclusive jurisdiction of the HRET as sole
judge, and cannot be considered forum shopping even if
another body may have passed upon in administrative or quasi-
197
judicial proceedings the issue of the Member’s qualification Philippines (Land Bank) and the Municipality of Agoo, La Union
while the Member was still a candidate. There is forum- (Municipality).
shopping only where two cases involve the same parties and
the same cause of action. The two cases here are distinct and The Facts
dissimilar in their nature and character. (Emphasis and
underscoring supplied) From 2005 to 2006, the Municipality’s Sangguniang Bayan (SB)
passed certain resolutions to implement a multi-phased plan
Notably, the phrase "election, returns, and qualifications" (Redevelopment Plan) to redevelop the Agoo Public Plaza (Agoo
should be interpreted in its totality as referring to all matters Plaza) where the Imelda Garden and Jose Rizal Monument were
affecting the validity of the contestee’s title. More particularly, situated.
the term "qualifications" refers to matters that could be raised
in a quo warranto proceeding against the pro-claimed winner, To finance phase 1 of the said plan, the SB initially passed
such as his disloyalty or ineligibility, or the inadequacy of his Resolution No. 68-20054 on April 19, 2005, authorizing then
certificate of candidacy.60 As used in Section 74 of the OEC, the Mayor Eufranio Eriguel (Mayor Eriguel) to obtain a loan from
word "eligible" means having the right to run for elective public Land Bank and incidental thereto, mortgage a 2,323.75 square
office, that is, having all the qualifications and none of the meter lot situated at the southeastern portion of the Agoo
ineligibilities to run for the public office.61 In this relation, Plaza (Plaza Lot) as collateral. To serve as additional security, it
private respondent’s own qualification to run for public office – further authorized the assignment of a portion of its internal
which was inextricably linked to her husband’s own revenue allotment (IRA) and the monthly income from the
qualifications due to her substitution – was the proper subject proposed project in favor of Land Bank.5 The foregoing terms
of quo warranto proceedings falling within the exclusive were confirmed, approved and ratified on October 4, 2005
jurisdiction of the HRET and independent from any previous through Resolution No. 139-2005.6 Consequently, on
proceedings before the COMELEC, lest the jurisdiction divide November 21, 2005, Land Bank extended a ₱4,000,000.00 loan
between the two be blurred. in favor of the Municipality (First Loan),7 the proceeds of which
were used to construct ten (10) kiosks at the northern and
Nonetheless, it must be pointed out that the HRET’s southern portions of the Imelda Garden. After completion,
independence is not without limitation. As earlier mentioned, these kiosks were rented out.8
the Court retains certiorari jurisdiction over the HRET if only to
check whether or not it has gravely abused its discretion. In this On March 7, 2006, the SB passed Resolution No. 58-2006,9
regard, the Court does not endeavor to denigrate nor approving the construction of a commercial center on the Plaza
undermine the HRET’s independence; rather, it merely fulfills Lot as part of phase II of the Redevelopment Plan. To finance
its duty to ensure that the Constitution and the laws are upheld the project, Mayor Eriguel was again authorized to obtain a
through the exercise of its power of judicial review. loan from Land Bank, posting as well the same securities as that
of the First Loan. All previous representations and warranties of
In fine, the Court observes that the HRET wantonly disregarded Mayor Eriguel related to the negotiation and obtention of the
the law by deliberately adopting the COMELEC En Banc’s flawed new loan10 were ratified on September 5, 2006 through
findings regarding private respondent’s eligibility to run for Resolution No. 128-2006.11 In consequence, Land Bank granted
public office which essentially stemmed from her substitution. a second loan in favor of the Municipality on October 20, 2006
In this light, it cannot be gainsaid that the HRET gravely abused in the principal amount of ₱28,000,000.00 (Second Loan).12
its discretion.
Unlike phase 1 of the Redevelopment Plan, the construction of
Owing to the lack of proper substitution in its case, private the commercial center at the Agoo Plaza was vehemently
respondent was therefore not a bona fide candidate for the objected to by some residents of the Municipality. Led by
position of Representative for the Fourth District of Leyte when respondent Eduardo Cacayuran (Cacayuran), these residents
she ran for office, which means that she could not have been claimed that the conversion of the Agoo Plaza into a
elected. Considering this pronouncement, there exists no commercial center, as funded by the proceeds from the First
cogent reason to further dwell on the other issues respecting and Second Loans (Subject Loans), were "highly irregular,
private respondent’s own qualification to office. violative of the law, and detrimental to public interests, and will
result to wanton desecration of the said historical and public
WHEREFORE, the petition is GRANTED. Accordingly, the March park."13 The foregoing was embodied in a Manifesto,14
22, 2012 Decision rendered by the House of Representatives launched through a signature campaign conducted by the
Electoral Tribunal in HRET Case No. 10-031 (QW) is hereby residents and Cacayuran.
REVERSED and SET ASIDE.
In addition, Cacayuran wrote a letter15 dated December 8,
83. LAND BANK OF THE PHILIPPINES, Petitioner, vs.EDUARDO 2006 addressed to Mayor Eriguel, Vice Mayor Antonio Eslao
M. CACAYURAN, Respondent. (Vice Mayor Eslao), and the members of the SB namely, Violeta
Laroya-Balbin, Jaime Boado, Jr., Rogelio De Vera, James Dy,
Assailed in this Petition for Review on Certiorari1 is the March Crisogono Colubong, Ricardo Fronda, Josephus Komiya, Erwina
26, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R. CV. Eriguel, Felizardo Villanueva, and Gerard Mamuyac (Implicated
No. 89732 which affirmed with modification the April 10, 2007 Officers), expressing the growing public clamor against the
Decision3 of the Regional Trial Court (RTC) of Agoo, La Union, conversion of the Agoo Plaza into a commercial center. He then
Branch 31, declaring inter alia the nullity of the loan requested the foregoing officers to furnish him certified copies
agreements entered into by petitioner Land Bank of the of various documents related to the aforementioned
198
conversion including, among others, the resolutions approving vires because they were transacted without proper authority
the Redevelopment Plan as well as the loan agreements for the and their collateralization constituted improper disbursement
sake of public information and transparency. of public funds.
Ruling of the CA First, although the construction of the APC would be primarily
sourced from the proceeds of the Subject Loans, which Land
In its Decision dated March 26, 2010,27 the CA affirmed with Bank insists are not taxpayer’s money, there is no denying that
modification the RTC’s ruling, excluding Vice Mayor Eslao from public funds derived from taxation are bound to be expended
any personal liability arising from the Subject Loans.28 as the Municipality assigned a portion of its IRA as a security for
the foregoing loans. Needless to state, the Municipality’s IRA,
It held, among others, that: (1) Cacayuran had locus standi to which serves as the local government unit’s just share in the
file his complaint, considering that (a) he was born, raised and a national taxes,32 is in the nature of public funds derived from
bona fide resident of the Municipality; and (b) the issue at hand taxation. The Court believes, however, that although these
involved public interest of transcendental importance;29 (2) funds may be posted as a security, its collateralization should
Resolution Nos. 68-2005, 139-2005, 58-2006, 128-2006 and all only be deemed effective during the incumbency of the public
other related resolutions (Subject Resolutions) were invalidly officers who approved the same, else those who succeed them
passed due to the SB’s non-compliance with certain sections of be effectively deprived of its use.
Republic Act No. 7160, otherwise known as the "Local
Government Code of 1991" (LGC); (3) the Plaza Lot, which In any event, it is observed that the proceeds from the Subject
served as collateral for the Subject Loans, is property of public Loans had already been converted into public funds by the
dominion and thus, cannot be appropriated either by the State Municipality’s receipt thereof. Funds coming from private
or by private persons;30 and (4) the Subject Loans are ultra
199
sources become impressed with the characteristics of public perceived. While ordinances are laws and possess a general and
funds when they are under official custody.33 permanent character, resolutions are merely declarations of
the sentiment or opinion of a lawmaking body on a specific
Accordingly, the first requisite has been clearly met. matter and are temporary in nature.39 As opposed to
ordinances, "no rights can be conferred by and be inferred from
Second, as a resident-taxpayer of the Municipality, Cacayuran is a resolution."40 In this accord, it cannot be denied that the SB
directly affected by the conversion of the Agoo Plaza which was violated Section 444(b)(1)(vi) of the LGC altogether.
funded by the proceeds of the Subject Loans. It is well-settled
that public plazas are properties for public use34 and therefore, Noticeably, the passage of the Subject Resolutions was also
belongs to the public dominion.35 As such, it can be used by tainted with other irregularities, such as (1) the SB’s failure to
anybody and no one can exercise over it the rights of a private submit the Subject Resolutions to the Sangguniang
owner.36 In this light, Cacayuran had a direct interest in Panlalawigan of La Union for its review contrary to Section 56
ensuring that the Agoo Plaza would not be exploited for of the LGC;41 and (2) the lack of publication and posting in
commercial purposes through the APC’s construction. contravention of Section 59 of the LGC.42
Moreover, Cacayuran need not be privy to the Subject Loans in
order to proffer his objections thereto. In Mamba v. Lara, it has In fine, Land Bank cannot rely on the Subject Resolutions as
been held that a taxpayer need not be a party to the contract to basis to validate the Subject Loans.
challenge its validity; as long as taxes are involved, people have
a right to question contracts entered into by the C. Ultra vires nature of the Subject
government.37
Loans
Therefore, as the above-stated requisites obtain in this case,
Cacayuran has standing to file the instant suit. Neither can Land Bank claim that the Subject Loans do not
constitute ultra vires acts of the officers who approved the
B. Validity of the Subject Resolutions same.
Land Bank avers that the Subject Resolutions provided ample Generally, an ultra vires act is one committed outside the
authority for Mayor Eriguel to contract the Subject Loans. It object for which a corporation is created as defined by the law
posits that Section 444(b)(1)(vi) of the LGC merely requires that of its organization and therefore beyond the powers conferred
the municipal mayor be authorized by the SB concerned and upon it by law.43 There are two (2) types of ultra vires acts. As
that such authorization need not be embodied in an held in Middletown Policemen's Benevolent Association v.
ordinance.38 Township of Middletown:44
A careful perusal of Section 444(b)(1)(vi) of the LGC shows that There is a distinction between an act utterly beyond the
while the authorization of the municipal mayor need not be in jurisdiction of a municipal corporation and the irregular
the form of an ordinance, the obligation which the said local exercise of a basic power under the legislative grant in matters
executive is authorized to enter into must be made pursuant to not in themselves jurisdictional. The former are ultra vires in
a law or ordinance, viz: the primary sense and void; the latter, ultra vires only in a
secondary sense which does not preclude ratification or the
Sec. 444. The Chief Executive: Powers, Duties, Functions and application of the doctrine of estoppel in the interest of equity
Compensation. - and essential justice. (Emphasis and underscoring supplied)
In the present case, while Mayor Eriguel’s authorization to Applying these principles to the case at bar, it is clear that the
contract the Subject Loans was not contained – as it need not Subject Loans belong to the first class of ultra vires acts deemed
be contained – in the form of an ordinance, the said loans and as void.
even the Redevelopment Plan itself were not approved
pursuant to any law or ordinance but through mere resolutions. Records disclose that the said loans were executed by the
The distinction between ordinances and resolutions is well- Municipality for the purpose of funding the conversion of the
200
Agoo Plaza into a commercial center pursuant to the approval of the terms and conditions of the parties' Universal
Redevelopment Plan. However, the conversion of the said plaza Compromise Agreement2 dated June 1, 2012 (UCA) in lieu of
is beyond the Municipality’s jurisdiction considering the the Court's Decision3 dated June 5, 2013 (subject Decision)
property’s nature as one for public use and thereby, forming which denied petitioners' claim for tax refund/credit of their
part of the public dominion. Accordingly, it cannot be the object local business taxes paid to respondent City of Manila.
of appropriation either by the State or by private persons.46
Nor can it be the subject of lease or any other contractual In their Manifestation and Motion, petitioners alleged that
undertaking.47 In Villanueva v. Castañeda, Jr.,48 citing Espiritu pursuant to the UCA, the parties agreed to amicably settle all
v. Municipal Council of Pozorrubio,49 the Court pronounced cases between them involving claims for tax refund/credit,
that: including the instant case.4 The pertinent portions of the UCA
provide:5
x x x Town plazas are properties of public dominion, to be
devoted to public use and to be made available to the public in 2.b. It is further agreed that there shall be no refunds/tax credit
general. They are outside the commerce of man and cannot be certificates to be given or issued by the City of Manilain the
disposed of or even leased by the municipality to private following cases:
parties.1âwphi1
2.b.1. SC GR 190818 (CTA EB No. 480)entitled "Supervalue, Inc.,
In this relation, Article 1409(1) of the Civil Code provides that a Ace Hardware Philippines, Inc., H and B Inc., Metro Manila
contract whose purpose is contrary to law, morals, good Shopping Mecca Corp., SM Land, Inc. (formerly Shoemart, Inc.),
customs, public order or public policy is considered void50 and SM Prime Holdings, Inc., Star Appliance Center, Inc., Surplus
as such, creates no rights or obligations or any juridical Marketing Corp. versus The City of Manila and the City
relations.51 Consequently, given the unlawful purpose behind Treasurer [of] Manila," which emanated from an Order in
the Subject Loans which is to fund the commercialization of the favour of the SM Group issued by Branch 47 of the Regional
Agoo Plaza pursuant to the Redevelopment Plan, they are Trial Court of Manila in Civil Case No. 03-108175 entitled "Ace
considered as ultra vires in the primary sense thus, rendering Hardware Phils., Inc., SM Prime Holdings, Inc., Star Appliance
them void and in effect, non-binding on the Municipality. Center, Inc., Supervalue, Inc., Watsons Personal Care Stores
(Phils.) Inc. versus The City of Manila and the City Treasurer of
At this juncture, it is equally observed that the land on which Manila," and is currently pending before the Supreme Court.
the Agoo Plaza is situated cannot be converted into patrimonial (Emphases and underscoring supplied)
property – as the SB tried to when it passed Municipal
Ordinance No. 02-200752 – absent any express grant by the In their Comment (with Manifestation of Earnest Apology to the
national government.53 As public land used for public use, the Supreme Court)6 dated June 4, 2014, respondent City of Manila
foregoing lot rightfully belongs to and is subject to the and Liberty Toledo, in her capacity as Treasurer of the City of
administration and control of the Republic of the Philippines.54 Manila (respondents), confirmed the authenticity and due
Hence, without the said grant, the Municipality has no right to execution of the UCA. They, however, submitted that the UCA
claim it as patrimonial property. had no effect on the subject Decision since the taxes paid
subject of the instant case was not included in the agreement.7
Nevertheless, while the Subject Loans cannot bind the
Municipality for being ultra vires, the officers who authorized The Court adopts the terms and conditions of the UCA
the passage of the Subject Resolutions are personally liable. pertinent to this case.
Case law states that public officials can be held personally
accountable for acts claimed to have been performed in A compromise agreement is a contract whereby the parties, by
connection with official duties where they have acted ultra making reciprocal concessions, avoid a litigation or put an end
vires,55 as in this case. to one already commenced.8 It contemplates mutual
concessions and mutual gains to avoid the expenses of
WHEREFORE, the petition is DENIED. Accordingly, the March 26, litigation; or when litigation has already begun, to end it
2010 Decision of the Court of Appeals in CA-G.R. CV. No. 89732 because of the uncertainty of the result.9 Its validity is
is hereby AFFIRMED. dependent upon the fulfillment of the requisites and principles
of contracts dictated by law; and its terms and conditions must
84. METRO MANILA SHOPPING MECCA CORP., SHOEMART, not be contrary to law, morals, good customs, public policy, and
INC., SM PRIME HOLDINGS, INC., STAR APPLIANCES CENTER, public order.10 When given judicial approval, a compromise
SUPER VALUE, INC., ACE HARDWARE PHILIPPINES, INC., HEAL agreement becomes more than a contract binding upon the
TH AND BEAUTY, INC., JOLLIMART PHILS. CORP., and SURPLUS parties. Having been sanctioned by the court, it is entered as a
MARKETING CORPORATION, Petitioners, vs.MS. LIBERTY M. determination of a controversy and has the force and effect of
TOLEDO, in her official capacity as the City Treasurer of a judgment. It is immediately executory and not appealable,
Manila, and THE CITY OF MANILA, Respondents. except for vices of consent or forgery. The nonfulfillment of its
terms and conditions justifies the issuance of a writ of
The Court hereby resolves the Manifestation and Motion1 execution; in such an instance, execution becomes a ministerial
dated August 2, 2013 filed by petitioners Metro Manila duty of the court.11
Shopping Mecca Corp., Shoemart, Inc., SM Prime Holdings, Inc.,
Star Appliances Center, Super Value, Inc., Ace Hardware A review of the whereas clauses12 of the UCA reveals the
Philippines, Inc., Health and Beauty, Inc., Jollimart Phils. Corp., various court cases filed by petitioners, including this case, for
and Surplus Marketing Corporation (petitioners), seeking the the refund and/or issuance of tax credit covering the local
201
business taxes payments they paid to respondent City of Manila On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc.
pursuant to Section 21 of the latter’s Revenue Code.13 Thus, (Ecole) filed an opposition to the subject application, averring
contrary to the submission of respondents, the local business that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE
taxes subject of the instant case is clearly covered by the UCA DE CUISINE MANILLE," which it has been using since 1948 in
since they were also paid in accordance with the same cooking and other culinary activities, including in its restaurant
provision of the Revenue Code of Manila.1âwphi1 business; and (b) it has earned immense and invaluable
goodwill such that Cointreau’s use of the subject mark will
In this relation, it is observed thatthe present case would have actually create confusion, mistake, and deception to the buying
been rendered moot and academic had the parties informed public as to the origin and sponsorship of the goods, and cause
the Court of the UCA’s supervening execution.14 Be that as it great and irreparable injury and damage to Ecole’s business
may, and considering that: (a) the UCA appears to have been reputation and goodwill as a senior user of the same.5
executed in accordance with the requirements of a valid
compromise agreement; (b) the UCA was executed more than a On October 7, 1993, Cointreau filed its answer claiming to be
year prior to the promulgation of the subject Decision; and (c) the true and lawful owner of the subject mark. It averred that:
the result of both the UCA and the subject Decision are (a) it has filed applications for the subject mark’s registration in
practically identical, i.e., that petitioners are not entitled to any various jurisdictions, including the Philippines; (b) Le Cordon
tax refund/credit, the Court herein resolves to approve and Bleu is a culinary school of worldwide acclaim which was
adopt the pertinent terms and conditions of the UCA insofar as established in Paris, France in 1895; (c) Le Cordon Bleu was the
they govern the settlementof the present dispute. first cooking school to have set the standard for the teaching of
classical French cuisine and pastry making; and (d) it has trained
WHEREFORE, the petitioners’ Manifestation and Motion dated students from more than eighty (80) nationalities, including
August 2, 2013 is GRANTED. The Decision dated June 5, 2013 of Ecole’s directress, Ms. Lourdes L. Dayrit. Thus, Cointreau
the Court is hereby SET ASIDE. In lieu thereof, the terms and concluded that Ecole’s claim of being the exclusive owner of the
conditions of the Universal Compromise Agreement between subject mark is a fraudulent misrepresentation.6
the parties pertinent to the instant case are APPROVED and
ADOPTED as the Decision of the Court. During the pendency of the proceedings, Cointreau was issued
Certificates of Registration Nos. 60631 and 54352 for the marks
The parties are ordered to faithfully comply with the terms and "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895
conditions of the said agreement. & DEVICE" for goods and services under classes 21 and 41 of
the Nice Classification, respectively.7
This case is considered closed and tenninated. No costs.
The Ruling of the Bureau of Legal Affairs
85. ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE
PHILIPPINES), INC., Petitioner, vs. In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L., B.V., (BLA) of the IPO sustained Ecole’s opposition to the subject
Respondents. mark, necessarily resulting in the rejection of Cointreau’s
application.9 While noting the certificates of registration
Assailed in this petition for review on certiorari1 is the obtained from other countries and other pertinent materials
December 23, 2008 Decision2 of the Court of Appeals (CA) in showing the use of the subject mark outside the Philippines,
CA-G.R. SP No. 104672 which affirmed in toto the Intellectual the BLA did not find such evidence sufficient to
Property Office (IPO) Director General’s April 21, 2008 establishCointreau’s claim of prior use of the same in the
Decision3 that declared respondent Renaud Cointreau & Cie Philippines. It emphasized that the adoption and use of
(Cointreau) as the true and lawful owner of the mark "LE trademark must be in commerce in the Philippines and not
CORDON BLEU & DEVICE" and thus, is entitled to register the abroad. It then concluded that Cointreau has not established
same under its name. any proprietary right entitled to protection in the Philippine
jurisdiction because the law on trademarks rests upon the
The Facts doctrine of nationality or territoriality.10
On June 21, 1990, Cointreau, a partnership registered under the On the other hand, the BLA found that the subject mark, which
laws of France, filed before the (now defunct) Bureau of was the predecessor of the mark "LE CORDON BLEU MANILLE"
Patents, Trademarks, and Technology Transfer (BPTTT) of the has been known and used in the Philippines since 1948 and
Department of Trade and Industry a trademark application for registered under the name "ECOLE DE CUISINE MANILLE (THE
the mark "LE CORDON BLEU & DEVICE" for goods falling under CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980.11
classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International
Classification of Goods and Services for the Purposes of Aggrieved, Cointreau filed an appeal with the IPO Director
Registrations of Marks ("Nice Classification") (subject mark). General.
The application was filed pursuant to Section 37 of Republic Act
No. 166, as amended (R.A. No. 166), on the basis of Home The Ruling of the IPO Director General
Registration No. 1,390,912, issued on November 25, 1986 in
France. Bearing Serial No. 72264, such application was In his Decision dated April 21, 2008, the IPO Director General
published for opposition in the March-April 1993 issue of the reversed and set aside the BLA’s decision, thus, granting
BPTTT Gazette and released for circulation on May 31, 1993.4 Cointreau’s appeal and allowing the registration of the subject
mark.12 He held that while Section 2 of R.A. No. 166 requires
202
actual use of the subject mark in commerce in the Philippines the same in the Philippines. Hence, it is the one entitled to its
for at least two (2) months before the filing date of the registration and not Cointreau.
application, only the owner thereof has the right to register the
same, explaining that the user of a mark in the Philippines is not Petitioner’s argument is untenable.
ipso facto its owner. Moreover, Section 2-A of the same law
does not require actual use in the Philippines to be able to Under Section 220 of R.A. No. 166, in order to register a
acquire ownership of a mark.13 trademark, one must be the owner thereof and must have
actually used the mark in commerce in the Philippines for two
In resolving the issue of ownership and right to register the (2) months prior to the application for registration. Section 2-
subject mark in favor of Cointreau, he considered Cointreau’s A21 of the same law sets out to define how one goes about
undisputed use of such mark since 1895 for its culinary school acquiring ownership thereof. Under Section 2-A, it is clear that
in Paris, France (in which petitioner’s own directress, Ms. actual use in commerce is also the test of ownership but the
Lourdes L. Dayrit, had trained in 1977). Contrarily, he found provision went further by saying that the mark must not have
that while Ecole may have prior use of the subject mark in the been so appropriated by another. Additionally, it is significant
Philippines since 1948, it failed to explain how it came up with to note that Section 2-A does not require that the actual use of
such name and mark. The IPO Director General therefore a trademark must be within the Philippines. Thus, as correctly
concluded that Ecole has unjustly appropriated the subject mentioned by the CA, under R.A. No. 166, one may be an
mark, rendering it beyond the mantle of protection of Section owner of a mark due to its actual use but may not yet have the
4(d)14 of R.A. No. 166.15 right to register such ownership here due to the owner’s failure
to use the same in the Philippines for two (2) months prior to
Finding the IPO Director General’s reversal of the BLA’s Decision registration.22
unacceptable, Ecole filed a Petition for Review16 dated June 7,
2008 with the CA. Nevertheless, foreign marks which are not registered are still
accorded protection against infringement and/or unfair
Ruling of the CA competition. At this point, it is worthy to emphasize that the
Philippines and France, Cointreau’s country of origin, are both
In its Decision dated December 23, 2008, the CA affirmed the signatories to the Paris Convention for the Protection of
IPO Director General’s Decision in toto.17 It declared Cointreau Industrial Property (Paris Convention).23 Articles 6bis and 8 of
as the true and actual owner of the subject mark with a right to the Paris Convention state:
register the same in the Philippines under Section 37 of R.A. No.
166, having registered such mark in its country of origin on ARTICLE 6bis
November 25, 1986.18
(1) The countries of the Union undertake, ex officio if their
The CA likewise held that Cointreau’s right to register the legislation so permits, or at the request of an interested party,
subject mark cannot be barred by Ecole’s prior use thereof as to refuse or to cancel the registration, and to prohibit the use,
early as 1948 for its culinary school "LE CORDON BLEU of a trademark which constitutes a reproduction, an imitation,
MANILLE" in the Philippines because its appropriation of the or a translation, liable to create confusion, of a mark considered
mark was done in bad faith. Further, Ecole had no certificate of by the competent authority of the country of registration or use
registration that would put Cointreau on notice that the former to be well known in that country as being already the mark of a
had appropriated or has been using the subject mark. In fact, its person entitled to the benefits of this Convention and used for
application for trademark registration for the same which was identical or similar goods.1âwphi1 These provisions shall also
just filed on February 24, 1992 is still pending with the IPO.19 apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation
Hence, this petition. liable to create confusion therewith.
The sole issue raised for the Court’s resolution is whether the A trade name shall be protected in all the countries of the
CA was correct in upholding the IPO Director General’s ruling Union without the obligation of filing or registration, whether
that Cointreau is the true and lawful owner of the subject mark or not it forms part of a trademark. (Emphasis and underscoring
and thus, entitled to have the same registered under its name. supplied)
At this point, it should be noted that the instant case shall be In this regard, Section 37 of R.A. No. 166 incorporated Article 8
resolved under the provisions of the old Trademark Law, R.A. of the Paris Convention, to wit:
No. 166, which was the law in force at the time of Cointreau’s
application for registration of the subject mark. Section 37. Rights of foreign registrants. - Persons who are
nationals of, domiciled in, or have a bona fide or effective
The Court’s Ruling business or commercial establishment in any foreign country,
which is a party to any international convention or treaty
The petition is without merit. relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be
In the petition, Ecole argues that it is the rightful owner of the entitled to the benefits and subject to the provisions of this Act
subject mark, considering that it was the first entity that used to the extent and under the conditions essential to give effect
203
to any such convention and treaties so long as the Philippines
shall continue to be a party thereto, except as provided in the As a final note, "the function of a trademark is to point out
following paragraphs of this section. distinctly the origin or ownership of the goods (or services) to
which it is affixed; to secure to him, who has been instrumental
xxxx in bringing into the market a superior article of merchandise,
the fruit of his industry and skill; to assure the public that they
Trade-names of persons described in the first paragraph of this are procuring the genuine article; to prevent fraud and
section shall be protected without the obligation of filing or imposition; and to protect the manufacturer against
registration whether or not they form parts of marks. substitution and sale of an inferior and different article as his
product."28 As such, courts will protect trade names or marks,
xxxx although not registered or properly selected as trademarks, on
the broad ground of enforcing justice and protecting one in the
In view of the foregoing obligations under the Paris Convention, fruits of his toil.29
the Philippines is obligated to assure nationals of the signatory-
countries that they are afforded an effective protection against WHEREFORE, the petition is DENIED. Accordingly, the
violation of their intellectual property rights in the Philippines in December 23, 2008 Decision of the Court of Appeals in CA-G.R.
the same way that their own countries are obligated to accord SP No. 104672 is hereby AFFIRMED in toto.
similar protection to Philippine nationals.24 "Thus, under
Philippine law, a trade name of a national of a State that is a 86. JOSELITO C. BORROMEO, Petitioner, vs.JUAN T. MINA,
party to the Paris Convention, whether or not the trade name Respondent.
forms part of a trademark, is protected "without the obligation Assailed in this petition for review on certiorari1 are the April
of filing or registration.’"25 30, 2010 Decision2 and September 13, 2010 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 101185, dismissing
In the instant case, it is undisputed that Cointreau has been petitioner Joselito C. Borromeo’s petitions which identically
using the subject mark in France since 1895, prior to Ecole’s prayed for the exemption of his landholding from the coverage
averred first use of the same in the Philippines in 1948, of of the government’s Operation Land Transfer (OLT) program as
which the latter was fully aware thereof. In fact, Ecole’s present well as the cancellation of respondent Juan T. Mina’s title over
directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat the property subject of the said landholding.
Limjuco Dayrit), had trained in Cointreau’s Le Cordon Bleu
culinary school in Paris, France. Cointreau was likewise the first The Facts
registrant of the said mark under various classes, both abroad
and in the Philippines, having secured Home Registration No. Subject of this case is a 1.1057 hectare parcel of agriculture
1,390,912 dated November 25, 1986 from its country of origin, land, situated in Barangay Magsaysay, Naguilian, Isabela,
as well as several trademark registrations in the Philippines.26 denominated as Lot No. 5378 and covered by Transfer
Certificate of Title (TCT) No. EP-43526,4 registered in the name
On the other hand, Ecole has no certificate of registration over of respondent (subject property). It appears from the foregoing
the subject mark but only a pending application covering TCT that respondent’s title over the said property is based on
services limited to Class 41 of the Nice Classification, referring Emancipation Patent No. 393178 issued by the Department of
to the operation of a culinary school. Its application was filed Agrarian Reform (DAR) on May 2, 1990.5
only on February 24, 1992, or after Cointreau filed its
trademark application for goods and services falling under Petitioner filed a Petition dated June 9, 20036 before the
different classes in 1990. Under the foregoing circumstances, Provincial Agrarian Reform Office (PARO) of Isabela, seeking
even if Ecole was the first to use the mark in the Philippines, it that: (a) his landholding over the subject property (subject
cannot be said to have validly appropriated the same. landholding) be exempted from the coverage of the
government’s OLT program under Presidential Decree No. 27
It is thus clear that at the time Ecole started using the subject dated October 21, 19727 (PD 27); and (b) respondent’s
mark, the same was already being used by Cointreau, albeit emancipation patent over the subject property be consequently
abroad, of which Ecole’s directress was fully aware, being an revoked and cancelled.8 To this end, petitioner alleged that he
alumna of the latter’s culinary school in Paris, France. Hence, purchased the aforesaid property from its previous owner, one
Ecole cannot claim any tinge of ownership whatsoever over the Serafin M. Garcia (Garcia), as evidenced by a deed of sale
subject mark as Cointreau is the true and lawful owner thereof. notarized on February 19, 1982 (1982 deed of sale). For various
As such, the IPO Director General and the CA were correct in reasons, however, he was not able to effect the transfer of title
declaring Cointreau as the true and lawful owner of the subject in his name. Subsequently, to his surprise, he learned that an
mark and as such, is entitled to have the same registered under emancipation patent was issued in respondent’s favor without
its name. any notice to him. He equally maintained that his total
agricultural landholdings was only 3.3635 hectares and thus,
In any case, the present law on trademarks, Republic Act No. within the landowner's retention limits under both PD 27 and
8293, otherwise known as the Intellectual Property Code of the Republic Act No. 6647, otherwise known as the
Philippines, as amended, has already dispensed with the "Comprehensive Agrarian Reform Law of 1988." In this regard,
requirement of prior actual use at the time of registration.27 he claimed that the subject landholding should have been
Thus, there is more reason to allow the registration of the excluded from the coverage of the government’s OLT
subject mark under the name of Cointreau as its true and lawful program.9
owner.
204
Petitioner filed a subsequent Petition dated September 1, petitioner should be deemed to have slept on his rights on
200310 also with the PARO which contained identical account of his inaction for 21 years.
allegations as those stated in his June 9, 2003 Petition (PARO
petitions) and similarly prayed for the cancellation of The aforesaid motion was, however, denied in the Resolution
respondent’s emancipation patent. dated February 10, 2006,17 prompting respondent to elevate
the matter to the DAR Secretary.
After due investigation, the Municipal Agrarian Reform Officer
(MARO) Joey Rolando M. Unblas issued a Report dated The Ruling of the DAR Secretary
September 29, 2003,11 finding that the subject property was
erroneously identified by the same office as the property of On September 12, 2007, then DAR Secretary Nasser C.
petitioner’s father, the late Cipriano Borromeo. In all actuality, Pagandaman issued DARCO Order No. EXC-0709-333, series of
however, the subject property was never owned by Cipriano 2007,18 affirming in toto the DAR Regional Director’s ruling. It
Borromeo as its true owner was Garcia – notably, a perennial upheld the latter’s findings that the subject landholding was
PD 27 landowner12– who later sold the same to petitioner. improperly placed under the coverage of the government’s OLT
program on account of the erroneous identification of the
Based on these findings, the MARO recommended that: (a) the landowner,19 considering as well the fact that petitioner’s total
subject landholding be exempted from the coverage of the OLT; agricultural landholdings, i.e., 3.3635 hectares, was way below
and (b) petitioner be allowed to withdraw any amortizations the retention limits under existing agrarian laws.20
deposited by respondent with the Land Bank of the Philippines
(LBP) to serve as rental payments for the latter’s use of the Undaunted, respondent filed a petition for review with the CA.
subject property.13
The Ruling of the CA
The Ruling of the PARO
In a Decision dated April 30, 2010,21 the CA reversed and set
In an undated Resolution, the PARO adopted the aside the DAR Secretary's ruling. It doubted petitioner’s claim of
recommendation of the MARO and accordingly (a) cancelled ownership based on the 1982 deed of sale due to the
respondent's emancipation patent; (b) directed petitioner to inconsistent allegations regarding the dates of its notarization
allow respondent to continue in the peaceful possession and divergently stated in the two (2) PARO Petitions, this alongside
cultivation of the subject property and to execute a leasehold the fact that a copy of the same was not even attached to the
contract over the same pursuant to the provisions of Republic records of the case for its examination. In any case, the CA
Act No. 3844 (RA 3844), otherwise known as the "Agricultural found the said sale to be null and void for being a prohibited
Land Reform Code"; and (c) authorized petitioner to withdraw transaction under PD 27 which forbids the transfers or
from the LBP all amortizations deposited by respondent as alienation of covered agricultural lands after October 21, 1972
rental payments for the latter's use of the said property.14 except to the tenant-beneficiaries thereof, of which petitioner
was not.22 It also held23 that petitioner cannot mount any
Aggrieved, respondent filed an administrative appeal to the collateral attack against respondent’s title to the subject
DAR Regional Director. property as the same is prohibited under Section 48 of the
Presidential Decree No. 1529 (PD 1529), otherwise known as
The Ruling of the DAR Regional Director the "Property Registration Decree."
On November 30, 2004, DAR Regional Director Renato R. Petitioner moved for reconsideration which was, however,
Navata issued an Order,15 finding that petitioner, being the denied in a Resolution dated September 13, 2010.24
true owner of the subject property, had the right to impugn its
coverage from the government’s OLT program. Further, Hence, this petition.
considering that the subject property was erroneously
identified as owned by Cipriano Borromeo, coupled with the The Petition
fact that petitioner's total agricultural landholdings was way
below the retention limits prescribed under existing agrarian Petitioner contends that the CA erred in declaring the sale
laws, he declared the subject landholding to be exempt from between him and Garcia as null and void. In this connection, he
OLT coverage. avers that there was actually an oral sale entered into by him
and Garcia (through his son Lorenzo Garcia) in 1976. The said
While affirming the PARO's Decision, the DAR Regional Director oral sale was consummated on the same year as petitioner had
did not, however, order the cancellation of respondent’s already occupied and tilled the subject property and started
emancipation patent. He merely directed petitioner to institute paying real estate taxes thereon. He further alleges that he
the proper proceedings for such purpose before the DAR allowed respondent to cultivate and possess the subject
Adjudication Board (DARAB). property in 1976 only out of mercy and compassion since the
latter begged him for work. The existing sale agreement had
Consequently, respondent moved for reconsideration,16 been merely formalized by virtue of the 1982 deed of sale
challenging petitioner's ownership of the subject property for which in fact, expressly provided that the subject property was
lack of sufficient basis to show that his averred predecessor-in- not tenanted and that the provisions of law on pre-emption had
interest, Garcia, was its actual owner. In addition, respondent been complied with.25 In this regard, petitioner claims that
pointed out that petitioner never filed a protest against the respondent cannot be considered as a tenant and as such, the
issuance of an emancipation patent in his favor. Hence, issuance of an emancipation patent in his favor was erroneous.
205
Likewise, petitioner claims that his right to due process was B. Validity of the sale of the
violated by the issuance of the aforesaid emancipation patent
without any notice on his part. subject property to petitioner
In his Comment,26 respondent counters that petitioner cannot PD 27 prohibits the transfer of ownership over tenanted rice
change his theory regarding the date of sale between him and and/or corn lands after October 21, 1972 except only in favor of
Garcia nor even raise the same factual issue on appeal before the actual tenanttillers thereon. As held in the case of Sta.
the Court.27 Moreover, he asserts that the 1982 deed of sale Monica Industrial and Development Corporation v. DAR
was not registered and therefore, does not bind him. In any Regional Director for Region III,36 citing Heirs of Batongbacal v.
event, he posits that the sale between petitioner and Garcia CA:37
was null and void.28 Finally, he argues that petitioner’s PARO
petitions constitute collateral attacks to his title to the subject x x x P.D. No. 27, as amended, forbids the transfer or alienation
property which are disallowed under PD 1529.29 of covered agricultural lands after October 21, 1972 except to
the tenant-beneficiary. x x x.
The Court's Ruling
In Heirs of Batongbacal v. Court of Appeals, involving the similar
The petition lacks merit. issue of sale of a covered agricultural land under P.D. No. 27,
this Court held:
A. Petitioner’s change of theory on appeal
Clearly, therefore, Philbanking committed breach of obligation
The Court first resolves the procedural matter. as an agricultural lessor.1âwphi1 As the records show, private
respondent was not informed about the sale between
Settled is the rule that a party who adopts a certain theory Philbanking and petitioner, and neither was he privy to the
upon which the case is tried and decided by the lower courts or transfer of ownership from Juana Luciano to Philbanking. As an
tribunals will not be permitted to change his theory on agricultural lessee, the law gives him the right to be informed
appeal,30 not because of the strict application of procedural about matters affecting the land he tills, without need for him
rules, but as a matter of fairness.31 Basic considerations of due to inquire about it.
process dictate that theories, issues and arguments not brought In other words, transfer of ownership over tenanted rice and/or
to the attention of the trial court would not ordinarily be corn lands after October 21, 1972 is allowed only in favor of the
considered by a reviewing court,32 except when their factual actual tenant-tillers thereon. Hence, the sale executed by
bases would not require presentation of any further evidence Philbanking on January 11, 1985 in favor of petitioner was in
by the adverse party in order to enable him to properly meet violation of the aforequoted provision of P.D. 27 and its
the issue raised,33 such as when the factual bases of such novel implementing guidelines, and must thus be declared null and
theory, issue or argument is (a) subject of judicial notice; or (b) void. (Emphasis and underscoring supplied)
had already been judicially admitted,34 which do not obtain in
this case. Records reveal that the subject landholding fell under the
coverage of PD 27 on October 21, 197238 and as such, could
Records show that petitioner changed his theory on appeal have been subsequently sold only to the tenant thereof, i.e.,
with respect to two (2) matters: the respondent. Notably, the status of respondent as tenant is
now beyond dispute considering petitioner’s admission of such
First, the actual basis of his ownership rights over the subject fact.39 Likewise, as earlier discussed, petitioner is tied down to
property, wherein he now claims that his ownership was his initial theory that his claim of ownership over the subject
actually based on a certain oral sale in 1976 which was merely property was based on the 1982 deed of sale. Therefore, as
formalized by the 1982 deed of sale;35 and Garcia sold the property in 1982 to the petitioner who is
evidently not the tenant-beneficiary of the same, the said
Second, the status of respondent as tenant of the subject transaction is null and void for being contrary to law.40
property, which he never questioned during the earlier stages
of the proceedings before the DAR but presently disputes In consequence, petitioner cannot assert any right over the
before the Court. subject landholding, such as his present claim for landholding
exemption, because his title springs from a null and void
Clearly, the factual bases of the foregoing theories require the source. A void contract is equivalent to nothing; it produces no
presentation of proof as neither of them had been judicially civil effect; and it does not create, modify or extinguish a
admitted by respondent nor subject of judicial notice. juridical relation.41 Hence, notwithstanding the erroneous
Therefore, the Court cannot entertain petitioner’s novel identification of the subject landholding by the MARO as owned
arguments raised in the instant petition. Accordingly, he must by Cipriano Borromeo, the fact remains that petitioner had no
rely on his previous positions that (a) his basis of ownership right to file a petition for landholding exemption since the sale
over the subject property rests on the 1982 deed of sale; and of the said property to him by Garcia in 1982 is null and void.
(b) that respondent’s status as the tenant of the subject Proceeding from this, the finding that petitioner’s total
property remains undisputed. agricultural landholdings is way below the retention limits set
forth by law thus, becomes irrelevant to his claim for
Having settled the foregoing procedural issue, the Court now landholding exemption precisely because he has no right over
proceeds to resolve the substantive issue in this case. the aforementioned landholding.
206
In view of the foregoing disquisition, the Court sees no reason
to delve on the issue regarding the cancellation of respondent’s In the Order dated August 22, 2008,12 the RTC, citing the
emancipation patent, without prejudice to petitioner’s right to principle that just compensation must be fair not only to the
raise his other claims and objections thereto through the owner but to the expropriator as well, adopted the findings of
appropriate action filed before the proper forum.42 Commissioners Ostaco and Alcantara and thus, held that the
just compensation for the subject property should be set at
WHEREFORE, the petition is DENIED. The assailed April 30, 2010 ₱5,500.00 per sq. m.13 Further, it found no basis for the award
Decision and September 13, 2010 Resolution of the Court of of damages and back rentals in favor of Sy.14 Finally, while legal
Appeals in CA-G.R. SP No. 101185 are hereby AFFIRMED. interest was not claimed, for equity considerations, it awarded
six percent (6%) legal interest, computed from November 7,
87. HENRY L. SY, Petitioner, vs.LOCAL GOVERNMENT OF 1996 until full payment of just compensation.15
QUEZON CITY, Respondent.
Dissatisfied, Sy filed an appeal with the CA.16
Assailed in this petition for review on certiorari1 are the
January 20, 2012 Decision2 and July 16, 2012 Resolution3 of the The CA Ruling
Court of Appeals (CA) in CA-G.R. CV No. 91964 which affirmed
with modification the August 22, 2008 Order4 of the Regional In the Decision dated January 20, 2012,17 the CA affirmed the
Trial Court of Quezon City, Branch 80 (RTC) in Civil Case No. Q- RTC’s ruling but modified the same, ordering the City to pay Sy
96-29352, ordering respondent Local Government of Quezon the amount of ₱200,000.00 as exemplary damages and
City (the City) to pay petitioner Henry L. Sy (Sy) just attorney’s fees equivalent to one percent (1%) of the total
compensation set as ₱5,500.00 per square meter (sq. m.), amount due.
including ₱200,000.00 as exemplary damages and attorney’s
fees equivalent to one percent (1%) of the total amount due. It found the appraisal of Commissioners Ostaco and Alcantara
for the subject property to be more believable than the
The Facts ₱13,000.00 per sq. m. valuation made by independent
appraisers Cuervo and Asian Appraisers in 1995 and 1996,
On November 7, 1996, the City, through then Mayor Ismael respectively, considering that it was arrived at after taking into
Mathay, Jr., filed a complaint for expropriation with the RTC in account: (a) the fair market value of the subject property in the
order to acquire a 1,000 sq. m. parcel of land, owned and amount of ₱4,000.00 per sq. m. based on the September 4,
registered under the name of Sy (subject property),5 which was 1996 recommendation of the City Appraisal Committee;18 (b)
intended to be used as a site for a multi-purpose barangay hall, the market value of the subject lot in the amount of ₱2,000.00
day-care center, playground and community activity center for per sq. m. based on several sworn statements made by Sy
the benefit of the residents of Barangay Balingasa, Balintawak, himself;19 and (c) Sy’s own tax declaration for 1996,20 stating
Quezon City.6 The requisite ordinance to undertake the that the subject property has a total market value of
aforesaid expropriation namely, Ordinance No. Sp-181, s-94, ₱2,272,050.00. Accordingly, it held that the fair market value of
was enacted on April 12, 1994.7 ₱5,500.00 per sq. m., or ₱5,500,000.00 in total, for the 1,000
sq. m. subject property arrived at by Commissioners Ostaco and
On March 18, 1997, pursuant to Section 198 of Republic Act No. Alcantara was more than fair and reasonable.21
7160 (RA 7160), otherwise known as the "Local Government
Code of 1991," the City deposited the amount of ₱241,090.00 The CA also denied Sy’s assertion that he should be entitled to
with the Office of the Clerk of Court, representing 15% of the damages on account of the purported shelving of his housing
fair market value of the subject property based on its tax project, finding no sufficient evidence to support the same.
declaration.9 Likewise, it observed that the expropriation would not leave
the rest of Sy’s properties useless as they would still be
During the preliminary conference on November 8, 2006, Sy did accessible through a certain Lot 8 based on the Property
not question the City’s right to expropriate the subject Identification Map.22
property. Thus, only the amount of just compensation
remained at issue.10 Nonetheless, citing the case of Manila International Airport
Authority v. Rodriguez (MIAA),23 it awarded exemplary
On July 6, 2006, the RTC appointed Edgardo Ostaco damages in the amount of ₱200,000.00 and attorney’s fees
(Commissioner Ostaco), Engr. Victor Salinas (Commissioner equivalent to one percent (1%) of the amount due because of
Salinas) and Atty. Carlo Alcantara (Commissioner Alcantara) as the City’s taking of the subject property without even initiating
commissioners to determine the proper amount of just expropriation proceedings.24 It, however, denied Sy’s claim of
compensation to be paid by the City for the subject property. back rentals considering that the RTC had already granted legal
Subsequently, Commissioners Ostaco and Alcantara, in a Report interest in his favor.25
dated February 11, 2008, recommended the payment of
₱5,500.00 per sq. m., to be computed from the date of the Aggrieved, Sy moved for reconsideration which was denied in
filing of the expropriation complaint, or on November 7, 1996. the Resolution dated July 16, 201226 for being filed out of
On the other hand, Commissioner Salinas filed a separate time.27 The City also filed a motion for reconsideration which
Report dated March 7, 2008, recommending the higher amount was equally denied for lack of merit.28
of ₱13,500.00 per sq. m. as just compensation.11
Hence, this petition.
The RTC Ruling
207
Issues Before The Court where observance of it would result in the outright deprivation
of the client’s liberty or property, or where the interest of
The present controversy revolves around the issue of whether justice so requires.38
the CA correctly: (a) dismissed Sy’s motion for reconsideration
for being filed out of time; (b) upheld the amount of just As applied in this case, the Court finds that the procedural
compensation as determined by the RTC as well as its grant of consequence of the above-discussed one-day delay in the filing
six percent (6%) legal interest; and (c) awarded exemplary of the subject motion – which, as a matter of course, should
damages and attorney’s fees. render the CA’s January 20, 2012 Decision already final and
executory and hence, bar the instant petition – is
The Court’s Ruling incommensurate to the injustice which Sy may suffer. This is in
line with the Court’s observation that the amount of just
The petition is partly meritorious. compensation, the rate of legal interest, as well as the time of
its accrual, were incorrectly adjudged by both the RTC and the
A. Failure to seasonably move for CA, contrary to existing jurisprudence. In this respect, the Court
reconsideration; excusable deems it proper to relax the rules of procedure and thus,
negligence; relaxation of procedural proceed to resolve these substantive issues.
rules
B. Rate of legal interest and time of accrual
At the outset, the Court observes that Sy’s motion for
reconsideration was filed out of time and thus, was properly Based on a judicious review of the records and application of
dismissed by the CA. Records show that, as per the jurisprudential rulings, the Court holds that the correct rate of
Postmaster’s Certification, the CA’s January 20, 2012 Decision legal interest to be applied is twelve percent (12%) and not six
was received by Sy on January 26, 2012 and as such, any percent (6%) per annum, owing to the nature of the City’s
motion for reconsideration therefrom should have been filed obligation as an effective forbearance.
not later than fifteen (15) days from receipt,29 or on February
10, 2012.30 However, Sy filed his motion for reconsideration In the case of Republic v. CA,39 the Court ruled that the debt
(subject motion) a day late, or on February 13, 2012,31 which incurred by the government on account of the taking of the
thus, renders the CA decision final and executory.32 property subject of an expropriation constitutes an effective
forbearance which therefore, warrants the application of the
In this regard, it is apt to mention that Sy’s counsel, Atty. 12% legal interest rate, viz:
Tranquilino F. Meris (Atty. Meris), claims that his secretary’s
inadvertent placing of the date January 27, 2012, instead of The constitutional limitation of "just compensation" is
January 26, 2012, on the Notice of Decision33 constitutes considered to be the sum equivalent to the market value of the
excusable negligence which should therefore, justify a property, broadly described to be the price fixed by the seller in
relaxation of the rules. open market in the usual and ordinary course of legal action
and competition or the fair value of the property as between
The assertion is untenable. one who receives, and one who desires to sell, it fixed at the
time of the actual taking by the government. Thus, if property is
A claim of excusable negligence does not loosely warrant a taken for public use before compensation is deposited with the
relaxation of the rules. Verily, the party invoking such should be court having jurisdiction over the case, the final compensation
able to show that the procedural oversight or lapse is attended must include interests on its just value to be computed from
by a genuine miscalculation or unforeseen fortuitousness which the time the property is taken to the time when compensation
ordinary prudence could not have guarded against so as to is actually paid or deposited with the court. In fine, between
justify the relief sought.34 The standard of carerequired is that the taking of the property and the actual payment, legal
which an ordinarily prudent man bestows upon his important interests accrue in order to place the owner in a position as
business.35 In this accord, the duty rests on every counsel to good as (but not better than) the position he was in before the
see to adopt and strictly maintain a system that will efficiently taking occurred.
take into account all court notices sent to him.36
The Bulacan trial court, in its 1979 decision, was correct in
Applying these principles, the Court cannot excuse Atty. Meris’ imposing interests on the zonal value of the property to be
misstep based on his proffered reasons. Evidently, the computed from the time petitioner instituted condemnation
erroneous stamping of the Notice of Decision could have been proceedings and "took" the property in September 1969. This
averted if only he had instituted a credible filing system in his allowance of interest on the amount found to be the value of
office to account for oversights such as that committed by his the property as of the time of the taking computed, being an
secretary. Indeed, ordinary prudence could have prevented effective forbearance, at 12% per annum should help eliminate
such mistake. the issue of the constant fluctuation and inflation of the value
of the currency over time. x x x (Emphasis and underscoring
Be that as it may, procedural rules may, nonetheless, be relaxed supplied)
for the most persuasive of reasons in order to relieve a litigant
of an injustice not commensurate with the degree of his In similar regard, the Court, in Land Bank of the Philippines v.
thoughtlessness in not complying with the procedure Rivera,40 pronounced that:
prescribed.37 Corollarily, the rule, which states that the
mistakes of counsel bind the client, may not be strictly followed
208
In many cases decided by this Court,41 it has been repeated benefit of expropriation proceedings undoubtedly entitled the
time and again that the award of 12% interest is imposed in the landowner to damages:
nature of damages for delay in payment which in effect makes
the obligation on the part of the government one of Such pecuniary loss entitles him to adequate compensation in
forbearance. This is to ensure prompt payment of the value of the form of actual or compensatory damages, which in this case
the land and limit the opportunity loss of the owner that can should be the legal interest (6%) on the value of the land at the
drag from days to decades. (Emphasis and underscoring time of taking, from said point up to full payment by the MIAA.
supplied) This is based on the principle that interest "runs as a matter of
law and follows from the right of the landowner to be placed in
As to the reckoning point on which the legal interest should as good position as money can accomplish, as of the date of the
accrue, the same should be computed from the time of the taking x x x.
taking of the subject property in 1986 and not from the filing of
the complaint for expropriation on November 7, 1996. xxxx
Records show that the City itself admitted in its Appellee’s Brief For more than twenty (20) years, the MIAA occupied the
filed before the CA that as early as 1986, "a burden was already subject lot without the benefit of expropriation proceedings
imposed upon the owner of the subject property x x x, and without the MIAA exerting efforts to ascertain ownership
considering that the expropriated property was already being of the lot and negotiating with any of the owners of the
used as Barangay day care and office."42 Thus, the property property. To our mind, these are wanton and irresponsible acts
was actually taken during that time and from thereon, legal which should be suppressed and corrected. Hence, the award
interest should have already accrued. In this light, the Court has of exemplary damages and attorneys fees is in order. x x x.
held that:43 (Emphasis and underscoring supplied; citations omitted)
x x x [T]he final compensation must include interests on its just All told, the Court finds the grant of exemplary damages in the
value to be computed from the time the property is taken to amount of ₱200,000.00 as well as attorney’s fees equivalent to
the time when compensation is actually paid or deposited with 1% of the total amount due amply justified, square as it is with
the court. x x x (Emphasis supplied) existing jurisprudence.
This is based on the principle that interest "runs as a matter of C. Amount of just compensation
law and follows from the right of the landowner to be placed in
as good position as money can accomplish, as of the date of the Finally, the Court cannot sustain the amount of ₱5,500.00/sq.
taking."44 m. as just compensation which was set by the RTC and upheld
by the CA. The said valuation was actually arrived at after
Notably, the lack of proper authorization, i.e., resolution to considering: (a) the September 4, 1996 recommendation of the
effect expropriation,45 did not affect the character of the City’s City Appraisal Committee; (b) several sworn statements made
taking of the subject property in 1986 as the CA, in its January by Sy himself; and (c) Sy’s own tax declaration for 1996.48
20, 2012 Decision, suggests. Case law dictates that there is
"taking" when the owner is actually deprived or dispossessed of It is well-settled that the amount of just compensation is to be
his property; when there is a practical destruction or a material ascertained as of the time of the taking.49 However, the above-
impairment of the value of his property or when he is deprived stated documents do not reflect the value of the subject
of the ordinary use thereof.46 Therefore, notwithstanding the property at the time of its taking in 1986 but rather, its
lack of proper authorization, the legal character of the City’s valuation in 1996. Consequently, the case must be remanded to
action as one of "taking" did not change. In this relation, the CA the RTC in order to properly determine the amount of just
noted that the City enacted Ordinance No. Sp-181, s-94, only on compensation during such time the subject property was
April 12, 1994 and filed its expropriation complaint on actually taken.
November 7, 1996. However, as it previously admitted, it
already commenced with the taking of the subject property as WHEREFORE, the petition is PARTLY GRANTED. The January 20,
early as 1986. Accordingly, interest must run from such time. 2012 Decision and July 16, 2012 Resolution of the Court of
Appeals in CA-G.R. CV No. 91964 are hereby SET ASIDE.
This irregularity does not, however, proceed without any Accordingly, the case is REMANDED to the trial court for the
consequence.1âwphi1 As correctly observed by the CA, citing as proper determination of the amount of just compensation in
basis the MIAA case, exemplary damages and attorney’s fees accordance with this Decision. To forestall any further delay in
should be awarded to the landowner if the government takes the resolution of this case, the trial court is hereby ordered to
possession of the property for a prolonged period of time fix the just compensation for petitioner Henry L. Sy's property
without properly initiating expropriation proceedings. The with dispatch and report to the Court its compliance. Finally,
MIAA ruling was applied in the more recent case of City of Iloilo respondent Local Government of Quezon City is ordered to PAY
v. Judge Lolita Contreras-Besana ,47 wherein the Court said: exemplary damages in the amount of ₱200,000.00 and
attorney's fees equivalent to one percent (1%) of the amount
We stress, however, that the City of Iloilo should be held liable due, after final determination of the amount of just
for damages for taking private respondent’s property without compensation.
payment of just compensation. In Manila International Airport
Authority v. Rodriguez, the Court held that a government 88. KAPISANANG PANG~AUNLARAN NG KABABAIHANG
agency’s prolonged occupation of private property without the POTRERO, INC. and MILAGROS H. REYES, Petitioners,
209
vs.REMEDIOS BARRENO, LILIBETH AMETIN, DRANREV F. money claims. Further, petitioners averred that respondents
NONAY, FREDERICK D. DIONISIO and MARITES CASIO, committed forum shopping when they filed the NLRC CASE
Respondents. during the pendency of the DOLE CASE.
Assailed in this Petition for Review on Certiorari1 under Rule 45 In respondents’ Reply10 dated December 19, 2001, they
of the Rules of Court is the July 31, 2006 Decision2 and insisted that they were employees under the control of KPKPI,
December 18, 2006 Resolution3 of the Court of Appeals (CA) in submitting in support thereof a copy of an office memorandum
CA-G.R. SP No. 81585, which affirmed with modification the issued by petitioner Reyes respecting the rules on absences of
June 30, 2003 Decision4 of the National Labor Relations all its employees. Respondents likewise denied having
Commission (NLRC), finding respondents herein to have committed forum shopping, explaining that the DOLE CASE
committed forum shopping but ordered the remand of NLRC referred only to money claims and that it had already been
NCR Case Nos. 00-10-05213-2001 and 00-10-05526-2001 to the withdrawn while the NLRC CASE involves the complaint for
NLRC for further proceedings on the matters of illegal dismissal, illegal dismissal with money claims.
separation pay, damages, and attorney’s fees.
Meanwhile, respondents filed a Motion to Withdraw
The Facts Complaint11 dated December 18, 2001 with regard to the DOLE
CASE after having instituted the NLRC CASE. Records, however,
Petitioner Kapisanang Pangkaunlaran ng Kababaihang Potrero, show that the said motion was left unresolved.
Inc. (KPKPI) is a non-stock, non-profit, social service oriented
corporation. Sometime in November 1997, the Technology and The Ruling of the Labor Arbiter
Livelihood Resource Center (TLRC) tapped KPKPI to participate
in its microlending program and was granted a loan for In its Decision12 dated June 28, 2002, the Labor Arbiter (LA)
microfinance or re-lending for the poor. As such, KPKPI hired found no forum shopping, holding that the subsequent
respondents for its KPKPI Mile Program as follows: dismissal of the respondents affected the jurisdiction of the
DOLE-NCR since illegal dismissal cases are beyond the latter’s
Name Date Hired Position jurisdiction. Necessarily therefore, the case for money claims
1. Remedios Barreno November, 1997 Training pending before the DOLE-NCR had to be consolidated with the
Officer illegal dismissal case before the NLRC.
2. Lilibeth Ametin January, 1999 Coordinator
3. Drandrev F. Nonay June, 1997 Encoder Further, the LA found that respondents were employees of
4. Frederick Dionisio February 15, 1997 Officer-In- KPKPI and not mere volunteer members. Consequently, for
Charge failure to justify their dismissal and to observe the twin notice
5. Marites Casio June 26, 2001 Collector Motivator5 requirement under the Labor Code, the LA held petitioners
On September 20, 2001, respondents filed a Complaint6 before jointly and severally liable to pay respondents their backwages
the Department of Labor and Employment-National Capital reckoned from the date of their dismissal on October 1, 2001
Region (DOLENCR) for underpayment of wages, non-payment for respondent Barreno and October 9, 2001 for the remaining
of labor standard benefits, namely, legal/special holiday pay, respondents which, as of June 1, 2002, had already
13th month pay and service incentive leave pay, and non- accumulated in the amount of ₱54,639.00 each as well as
coverage with the Social Security System and Home separation pay for one (1) month for every year of service.
Development Mutual Fund against KPKPI and its Program Respondents were also awarded their claim for underpayment
Manager, petitioner Milagros H. Reyes (Reyes), docketed as of their salaries limited to a period of three (3) years reckoned
LSED-0109-IS-029 (DOLE CASE). During its pendency, however, from the filing of their complaints, and attorney’s fees
respondent Barreno was served a memo signed by petitioner equivalent to ten percent (10%) of the total monetary award.
Reyes terminating her from employment effective October 1, The rest of the money claims were denied for lack of factual
2001. On even date, respondent Barreno filed another and legal bases.
Complaint7 against petitioners, this time for illegal dismissal
with prayer for reinstatement and payment of their money Aggrieved, petitioners filed a Memorandum of Appeal13 dated
claims before the NLRC, docketed as NLRC-NCR North Sector September 5, 2002 with the NLRC and posted a surety bond in
Case No. 00-10-05213-2001. the amount of ₱559,000.00.14 In turn, respondents filed their
Opposition with Motion to Dismiss15 dated November 20, 2002
Respondents Ametin, Nonay, Dionisio and Casio were also questioning the sufficiency of the bond posted which, as
verbally informed by petitioner Reyes of their termination required, was not equivalent to the total monetary award of
effective October 9, 2001, but they still reported for work until ₱832,195.00 as computed by the NLRC’s Computation Unit,
disallowed on October 15, 2001. This prompted the filing of exclusive of ten percent (10%) attorney’s fees. Accordingly,
their Complaint8 dated October 16, 2001 with the NLRC, respondents prayed for the dismissal of the appeal for failure to
docketed as NLRC-NCR North Sector Case No. 10-05526-2001, perfect the same.
which was subsequently consolidated with Barreno’s Case No.
00-10-053-5213-2001 (NLRC CASE). The Ruling of the NLRC
In petitioners’ Position Paper9 dated November 29, 2001, they In its Decision16 dated June 30, 2003, the NLRC set aside the
claimed that respondents were not employees but mere LA’s ruling and dismissed respondents’ complaints. Contrary to
volunteers who received allowances and reimbursements for the LA’s findings, it found respondents guilty of forum shopping
their expenses. Hence, they are not entitled to recover their
210
in filing the same complaint against petitioners in two (2) fora, Applying the foregoing principles to the case at bar,
namely the DOLE and the NLRC. respondents did not commit forum shopping. Clearly, there is
no identity of causes of action between the cases pending with
Respondents filed a Motion for Reconsideration17 dated the DOLE and the NLRC. The DOLE CASE involved violations of
August 19, 2003 questioning the aforementioned decision but labor standard provisions where an employer-employee
the same was denied in the NLRC’s Resolution18 dated October relationship exists. On the other hand, the NLRC CASE
30, 2003. questioned the propriety of respondents' dismissal. No less
than the Labor Code provides for these two (2) separate
Ruling of the CA remedies for distinct causes of action. More importantly, at the
time the DOLE CASE was initiated, respondents' only, cause of
In its Decision19 dated July 31, 2006, the CA found no grave action was petitioners' violation of labor standard laws which
abuse of discretion to have been committed by the NLRC in falls within the jurisdiction of the DOLE. It was only after the
giving due course to the appeal and in setting aside the LA’s same was filed that respondents were dismissed from
ruling. The CA agreed with the NLRC that respondents employment, prompting the filing of the NLRC CASE, which is
committed forum shopping in seeking their money claims within the mantle of the NLRC's jurisdiction. Under the
before the DOLE and the NLRC. Nonetheless, it declared that foregoing circumstances, respondents had no choice but to
the ends of justice would be better served if respondents would avail of different fora.
be given the opportunity to be heard on their complaint for
illegal dismissal. Nevertheless, records reveal that respondents withdrew the
DOLE CASE after they had instituted the NLRC CASE. Pertinent
Anent the issue on insufficiency of the appeal bond, the CA on this point is the Court's pronouncement in Consolidated
accorded a liberal interpretation to the Labor Code provisions Broadcasting System v. Oberio,23 to wit:
relating thereto and thus, deemed the same as not fatal.
Accordingly, the CA ordered the remand of the case to the Under Article 217 of the Labor Code, termination cases fall
NLRC for further proceedings on the matter of illegal dismissal, under the jurisdiction of Labor Arbiters.1âwphi1 Whereas,
separation pay, damages, and attorney’s fees. Article 128 of the same Code vests the Secretary of Labor or his
duly authorized representatives with the power to inspect the
Both parties moved for reconsideration which the CA denied in employer's records to determine and compel compliance with
its Resolution20 dated December 18, 2006. Hence, petitioners labor standard laws. The exercise of the said power by the
KPKPI and Reyes filed the instant petition. Secretary or his duly authorized representatives is exclusive to
cases where the employer-employee relationship still exits.
Issue Before the Court Thus, in cases where the complaint for violation of labor
standard laws preceded the termination of the employee and
The core issue raised for the Court’s resolution is whether the the filing of the illegal dismissal case, it would not be in
CA erred in ordering the reinstatement and remand of the NLRC consonance with justice to charge the complainants with
CASE to the NLRC despite its finding of forum shopping. engaging in forum shopping when the remedy available to
them at the time their causes of action arose was to file
The Court’s Ruling separate cases before different fora. x x x (Emphasis and
underscoring supplied)
The petition is bereft of merit.
WHEREFORE, premises considered, the July 31, 2006 Decision
At the outset, the Court finds that contrary to the findings of and December 18, 2006 Resolution of the Court of Appeals in
both the NLRC and the CA, respondents are not guilty of forum CA-G.R. SP No. 81585 are hereby AFFIRMED, with modification
shopping. Thus, considering that the NLRC did not resolve the finding respondents not guilty of committing forum shopping.
appeal on the merits but instead dismissed the case based on a The National Labor Relations Commission is DIRECTED to
finding of forum shopping, the Court concurs in the result resolve the appeal with reasonable dispatch.
arrived at by the CA in remanding the cases for illegal dismissal
to the NLRC for resolution of the appeal. 89. CHRISTIAN CABALLO, Petitioner, vs.PEOPLE OF THE
PHILIPPINES, Respondent.
Forum shopping exists "when one party repetitively avails of
several judicial remedies in different courts, simultaneously or Before the Court is a petition for review on certiorari1 assailing
successively, all substantially founded on the same transactions the January 28, 2011 Decision2 and September 26, 2011
and the same essential facts and circumstances, and all raising Resolution3 of the Court of Appeals (CA) in CA-G.R. CR No.
substantially the same issues either pending in, or already 27399-MIN which affirmed with modification the April 1, 2003
resolved adversely, by some other court."21 What is truly Decision of the Regional Trial Court of Surigao City, Branch 30
important to consider in determining whether it exists or not is (RTC), finding petitioner Christian Caballo (Caballo) guilty
the vexation caused the courts and parties-litigants by a party beyond reasonable doubt of violating Section 10(a), Article VI of
who asks different courts and/or administrative agencies to Republic Act No. 76104 (RA 7610), otherwise known as the
rule on the same or related causes and/or grant the same or "Special Protection of Children Against Child Abuse, Exploitation
substantially the same reliefs, in the process creating the and Discrimination Act," in relation to Section 2 of the Rules
possibility of conflicting decisions being rendered by different and Regulations on the Reporting and Investigation of Child
fora upon the same issues.22 Abuse Cases (Rules on Child Abuse Cases).
211
The Facts AAA’s mother confronted Caballo to find out what his plans
were for AAA, he assured her that he would marry her
On March 16, 1999, an Information5 was filed charging Caballo daughter.12
of violation of Section 10(a), Article VI of RA 7610 which was
later amended on May 28, 1999, to include statements Opposed to the foregoing, Caballo claimed that during their
pertaining to the delivery of private complainant AAA’s6 baby. first sexual intercourse, AAA was no longer a virgin as he found
The Amended Information7 reads: it easy to penetrate her and that there was no bleeding. He also
maintained that AAA had (3) three boyfriends prior to him.
That undersigned Second Assistant City Prosecutor hereby Further, he posited that he and AAA were sweethearts who
accuses Christian Caballo of the crime of Violation of Section 10 lived-in together, for one (1) week in a certain Litang Hotel and
(a) of Republic Act No. 7610, committed as follows: another week in the residence of AAA’s uncle. Eventually, they
broke up due to the intervention of AAA’s parents. At a certain
That in or about the last week of March 1998, and on different time, AAA’s mother even told Caballo that he was not deserving
dates subsequent thereto, until June 1998, in the City of of AAA because he was poor. Lastly, he alleged that he
Surigao, Philippines, and within the jurisdiction of this repeatedly proposed marriage to AAA but was always rejected
Honorable Court, the above-named accused, a 23 year old man, because she was still studying.13
in utter disregard of the prohibition of the provisions of
Republic Act No. 7610 and taking advantage of the innocence The RTC’s Ruling
and lack of worldly experience of AAA who was only 17 years
old at that time, having been born on November 3, 1980, did In a Decision dated April 1, 2003, the RTC found Caballo guilty
then and there willfully, unlawfully and feloniously commit beyond reasonable doubt of violation of Section 10(a), Article VI
sexual abuse upon said AAA, by persuading and inducing the of RA 7610, in relation to Section 2 of the Rules on Child Abuse
latter to have sexual intercourse with him, which ultimately Cases. Accordingly, it sentenced Caballo to suffer imprisonment
resulted to her untimely pregnancy and delivery of a baby on for an indeterminate period ranging from prision correccional,
March 8, 1999, a condition prejudicial to her development, to in its maximum period of four (4) years, two (2) months and
the damage and prejudice of AAA in such amount as may be one (1) day, as minimum, to prision mayor in its minimum
allowed by law. period of six (6) years, eight (8) months and one (1) day, as
maximum. It also ordered Caballo to pay AAA moral damages in
CONTRARY TO LAW. the amount of ₱50,000.00.14
Surigao City, Philippines, May 28, 1999. Aggrieved, Caballo elevated the case to the CA.
Upon arraignment, Caballo pleaded not guilty to the aforesaid The CA’s Ruling
charges.8
In a Decision dated January 28, 2011,15 the CA dismissed the
Based on the records, the undisputed facts are as follows: appeal and affirmed with modification the RTC’s ruling, finding
Caballo guilty of violating Section 5(b), Article III of RA 7610.
AAA, then 17 years old, met Caballo, then 23 years old, in her
uncle’s place in Surigao City. Her uncle was a choreographer It ruled that while the Amended Information denominated the
and Caballo was one of his dancers. During that time, AAA was crime charged as violation of Section 10(a), Article VI of RA
a sophomore college student at the University of San Carlos and 7610, the statements in its body actually support a charge of
resided at a boarding house in Cebu City. On January 17, 1998, violation of Section 5(b), Article III of RA 7610.16
Caballo went to Cebu City to attend the Sinulog Festival and
there, visited AAA. After spending time together, they On the merits of the case, it found that the evidence adduced
eventually became sweethearts.9 Sometime during the third by the prosecution clearly showed that Caballo persuaded,
week of March 1998, AAA went home to Surigao City and induced and enticed AAA, then a minor, to have carnal
stayed with her uncle. In the last week of March of the same knowledge with him. Towards this end, Caballo repeatedly
year, Caballo persuaded AAA to have sexual intercourse with assured AAA of his love and even went on to promise marriage
him. This was followed by several more of the same in April to her. He also assured AAA that she would not get pregnant
1998, in the first and second weeks of May 1998, on August 31, because he would be using the "withdrawal method." Thus, it
1998 and in November 1998, all of which happened in Surigao was upon these repeated coaxing and assuring words that AAA
City, except the one in August which occurred in Cebu.10 In succumbed to Caballo’s evil desires which deflowered and got
June 1998, AAA becamepregnant and later gave birth on March her pregnant. On this score, it observed that consent is
8, 1999.11 immaterial in child abuse cases involving sexual intercourse and
lascivious conduct and therefore, the sweetheart defense
During the trial, the prosecution asserted that Caballo was only remains unacceptable.17 It also found basis to sustain the
able to induce AAA to lose her virginity due to promises of award of moral damages.18
marriage and his assurance that he would not get her pregnant
due to the use of the "withdrawal method." Moreover, it Caballo filed a motion for reconsideration which was, however,
claimed that Caballo was shocked upon hearing the news of denied on September 26, 2011.19
AAA’s pregnancy and consequently, advised her to have an
abortion. She heeded Caballo’s advice; however, her efforts Hence, the instant petition.
were unsuccessful. Further, the prosecution averred that when
212
The Issue (b) The said act is performed with a child exploited in
prostitution or subjected to other sexual abuse; and
The core of the present controversy revolves around the
interpretation of the phrase "due to the coercion or influence (c) The child, whether male or female, is below 18 years of age.
of any adult" which would thereby classify the victim as a "child
exploited in prostitution and other sexual abuse" as found in In this case, the existence of the first and third elements
Section 5, Article III of RA 7610. Consequently, the remains undisputed. Records disclose that Caballo had
interpretation which the Court accords herein would determine succeeded in repeatedly having sexual intercourse with AAA
whether or not the CA erred in finding Caballo guilty of violating who, during all those instances, was still a minor. Thus, the only
paragraph (b) of the same proviso. bone of contention lies in the presence of the second element.
On this note, the defense submits that AAA could not be
In his petition, Caballo essentially argues that his promise to considered as a "child exploited in prostitution and other sexual
marry or his use of the "withdrawal method" should not be abuse" since the incidents to do not point to any form of
considered as "persuasion" or "inducement" sufficient to "coercion" or "influence" on Caballo’s part.
convict him for the aforementioned offense, asserting that
these should be coupled with some form of coercion or The argument is untenable.
intimidation to constitute child abuse. He further alleges that
he and AAA were sweethearts which thus, made the sexual To put things in proper perspective, it must be pointed out that
intercourse consensual. RA 7610 was meant to advance the state policy of affording
"special protection to children from all forms of abuse, neglect,
In its Comment,20 respondent advances the argument that cruelty, exploitation and discrimination and other conditions
there was "sexual abuse" within the purview of RA 7610 as well prejudicial to their development" and in such regard, "provide
as the Rules on Child Abuse Cases since it was only upon sanctions for their commission."23 It also furthers the "best
Caballo’s repeated assurances and persuasion that AAA gave in interests of children" and as such, its provisions are guided by
to his worldly desires. Likewise, it points out that the this standard.24
sweetheart theory, as relied on by Caballo, deserves scant
consideration in view of the Court’s ruling in Malto v. People Driven by the foregoing considerations, Congress crafted Article
(Malto).21 III of the same law in order to penalize child prostitution and
other forms of sexual abuse. Section 5 thereof provides a
The Court’s Ruling definition of who is considered a "child exploited in prostitution
and other sexual abuse." As illumined in Olivarez,25 citing
The petition has no merit. People v. Larin26 and Amployo v. People,27 the final version of
the aforesaid provision was a product of various deliberations
Section 5(b), Article III of RA 7610 pertinently reads: to expand its original coverage to cases where the minor may
have been coerced or intimidated into sexual intercourse or
SEC. 5. Child Prostitution and Other Sexual Abuse. - Children, lascivious conduct, not necessarily for money or profit, viz:
whether male or female, who for money, profit, or any other
consideration or due to the coercion or influence of any adult, The second element, i.e., that the act is performed with a child
syndicate or group, indulge in sexual intercourse or lascivious exploited in prostitution or subjected to other sexual abuse, is
conduct, are deemed to be children exploited in prostitution likewise present. As succinctly explained in People v. Larin:
and other sexual abuse.
A child is deemed exploited in prostitution or subjected to
The penalty of reclusion temporal in its medium period to other sexual abuse, when the child indulges in sexual
reclusion perpetua shall be imposed upon the following: x x x x intercourse or lascivious conduct (a) for money, profit, or any
other consideration; or (b) under the coercion or influence of
(b) Those who commit the act of sexual intercourse or any adult, syndicate or group...
lascivious conduct with a child exploited in prostitution or
subject to other sexual abuse; Provided, That when the victim is It must be noted that the law covers not only a situation in
under twelve (12) years of age, the perpetrators shall be which a child is abused for profit, but also one in which a child,
prosecuted under Article 335, paragraph 3 for rape and Article through coercion or intimidation, engages in lascivious conduct.
336 of Act No. 3815, as amended, the Revised Penal Code, for
rape or lascivious conduct, as the case may be; Provided, That We reiterated this ruling in Amployo v. People:
the penalty for lascivious conduct when the victim is under
twelve (12) years of age shall be reclusion temporal in its ... As we observed in People v. Larin, Section 5 of Rep. Act No.
medium period x x x x (Emphasis and underscoring supplied) 7610 does not merely cover a situation of a child being abused
for profit, but also one in which a child engages in any lascivious
As determined in the case of Olivarez v. CA (Olivarez),22 the conduct through coercion or intimidation...
elements of the foregoing offense are the following:
Thus, a child is deemed subjected to other sexual abuse when
(a) The accused commits the act of sexual intercourse or the child indulges in lascivious conduct under the coercion or
lascivious conduct; influence of any adult. In this case, Cristina was sexually abused
because she was coerced or intimidated by petitioner to
indulge in a lascivious conduct. Furthermore, it is
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inconsequential that the sexual abuse occurred only once. As Senator Angara. Yes, Mr. President, to cover the expanded
expressly provided in Section 3(b) of R.A. 7610, the abuse may scope.
be habitual or not. It must be observed that Article III of R.A.
7610 is captioned as "Child Prostitution and Other Sexual The President Pro Tempore. Is that not what we would call
Abuse" because Congress really intended to cover a situation probable ‘child abuse’?
where the minor may have been coerced or intimidated into
lascivious conduct, not necessarily for money or profit. The law Senator Angara. Yes, Mr. President.
covers not only child prostitution but also other forms of sexual
abuse. This is clear from the deliberations of the Senate: The President Pro Tempore. Subject to rewording. Is there any
objection? [Silence] Hearing none, the amendment is approved.
Senator Angara. I refer to line 9, ‘who for money or profit.’ I (Emphasis and underscoring supplied)
would like to amend this, Mr. President, to cover a situation
where the minor may have been coerced or intimidated into As it is presently worded, Section 5, Article III of RA 7610
this lascivious conduct, not necessarily for money or profit, so provides that when a child indulges in sexual intercourse or any
that we can cover those situations and not leave loophole in lascivious conduct due to the coercion or influence of any adult,
this section. the child is deemed to be a "child exploited in prostitution and
other sexual abuse." In this manner, the law is able to act as an
The proposal I have is something like this: WHO FOR MONEY, effective deterrent to quell all forms of abuse, neglect, cruelty,
PROFIT, OR ANY OTHER CONSIDERATION OR DUE TO THE exploitation and discrimination against children, prejudicial as
COERCION OR INFLUENCE OF ANY ADULT, SYNDICATE OR they are to their development.
GROUP INDULGE, et cetera.
In this relation, case law further clarifies that sexual intercourse
The President Pro Tempore. I see. That would mean also or lascivious conduct under the coercion or influence of any
changing the subtitle of Section 4. Will it no longer be child adult exists when there is some form of compulsion equivalent
prostitution? to intimidation which subdues the free exercise of the offended
party’s free will.28 Corollary thereto, Section 2(g) of the Rules
Senator Angara. No, no. Not necessarily, Mr. President, because on Child Abuse Cases conveys that sexual abuse involves the
we are still talking of the child who is being misused for sexual element of influence which manifests in a variety of forms. It is
purposes either for money or for consideration. What I am defined as:
trying to cover is the other consideration. Because, here, it is
limited only to the child being abused or misused for sexual The employment, use, persuasion, inducement, enticement or
purposes, only for money or profit. coercion of a child to engage in or assist another person to
engage in, sexual intercourse or lascivious conduct or the
I am contending, Mr. President, that there may be situations molestation, prostitution, or incest with children.
where the child may not have been used for profit or ...
To note, the term "influence" means the "improper use of
The President Pro Tempore. So, it is no longer prostitution. power or trust in any way that deprives a person of free will
Because the essence of prostitution is profit. and substitutes another’s objective."29 Meanwhile, "coercion"
is the "improper use of x x x power to compel another to
Senator Angara. Well, the Gentleman is right. Maybe the submit to the wishes of one who wields it."30
heading ought to be expanded. But, still, the President will
agree that that is a form or manner of child abuse. In view of the foregoing, the Court observes that Caballo’s
actuations may be classified as "coercion" and "influence"
The President Pro Tempore. What does the Sponsor say? Will within the purview of Section 5, Article III of RA 7610:
the Gentleman kindly restate the amendment?
First, the most crucial element is AAA’s minority. It is
ANGARA AMENDMENT undisputed that AAA was only 17 years old at the time of the
commission of the crime and is hence, considered a child under
Senator Angara. The new section will read something like this, the law.31 In this respect, AAA was not capable of fully
Mr. President: MINORS, WHETHER MALE OR FEMALE, WHO understanding or knowing the import of her actions and in
FOR MONEY, PROFIT, OR ANY OTHER CONSIDERATION OR consequence, remained vulnerable to the cajolery and
INFLUENCE OF ANY ADULT, SYNDICATE OR GROUP INDULGE IN deception of adults, as in this case.
SEXUAL INTERCOURSE, et cetera.
Based on this premise, jurisprudence settles that consent is
Senator Lina. It is accepted, Mr. President. immaterial in cases involving a violation of Section 5, Article III
of RA 7610; as such, the argument that AAA and Caballo were
The President Pro Tempore. Is there any objection? [Silence] sweethearts remains irrelevant. The Malto ruling is largely
Hearing none, the amendment is approved. instructive on this point:
How about the title, ‘Child Prostitution,’ shall we change that For purposes of sexual intercourse and lascivious conduct in
too? child abuse cases under RA 7610, the sweetheart defense is
unacceptable. A child exploited in prostitution or subjected to
214
other sexual abuse cannot validly give consent to sexual any other choice would, nonetheless, remain tarnished due to
intercourse with another person. AAA's minority as above-discussed.
The language of the law is clear: it seeks to punish "those who Hence, considering that Caballo's acts constitute "coercion" and
commit the act of sexual intercourse or lascivious conduct with "influence" within the context of the law, and that AAA
a child exploited in prostitution or subjected to other sexual indulged in sexual intercourse and/or lascivious conduct with
abuse." Caballo due to the same, she is deemed as a "child exploited in
prostitution and other sexual abuse"; as such, the second
Unlike rape, therefore, consent is immaterial in cases involving element of the subject offense exists.
violation of Section 5, Article III of RA 7610. The mere act of
having sexual intercourse or committing lascivious conduct with In fine, finding all elements to be present, the Court hereby
a child who is exploited in prostitution or subjected to sexual sustains Caballo's conviction for violation of Section 5(b), Article
abuse constitutes the offense. It is a malum prohibitum, an evil III of RA 7610.
that is proscribed.
WHEREFORE, the petition is DENIED. The January 28, 2011
A child cannot give consent to a contract under our civil laws. Decision and September 26, 2011 Resolution of the Court of
This is on the rationale that she can easily be the victim of fraud Appeals in CAG.R. CR No. 27399-MIN are hereby AFFIRMED.
as she is not capable of fully understanding or knowing the
nature or import of her actions. The State, as parens patriae, is 90. SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC., and/or
under the obligation to minimize the risk of harm to those who, DANNY Z. ESCALANTE, Petitioners, vs.TEOFILO GONZAGA,
because of their minority, are as yet unable to take care of Respondent.
themselves fully. Those of tender years deserve its protection.
Assailed in this petition for review on certiorari1 are the May
The harm which results from a child’s bad decision in a sexual 29, 2008 Decision2 and March 30, 2009 Resolution3 of the
encounter may be infinitely more damaging to her than a bad Cagayan de Oro City Court of Appeals (CA) in CA G.R. SP. No.
business deal. Thus, the law should protect her from the 00267 which nullified the August 31, 20044 and February 1,
harmful consequences of her attempts at adult sexual behavior. 20055 Resolutions of the National Labor Relations Commission
For this reason, a child should not be deemed to have validly (NLRC) in NLRC Case No. M-007354-2003 and instead,
consented to adult sexual activity and to surrender herself in reinstated with modification the November 28, 2002 Decision6
the act of ultimate physical intimacy under a law which seeks to of Executive Labor Arbiter Rogelio P. Legaspi (LA) in NLRC Case
afford her special protection against abuse, exploitation and No. RAB-13-01-00016-2002, finding respondent Teofilo
discrimination. (Otherwise, sexual predators like petitioner will Gonzaga (Gonzaga) to have been illegally dismissed.
be justified, or even unwittingly tempted by the law, to view
her as fair game and vulnerable prey.) In other words, a child is The Facts
presumed by law to be incapable of giving rational consent to
any lascivious act or sexual intercourse. x x x x32 (Emphasis and On October 13, 1993, petitioner Surigao Del Norte Electric
underscoring supplied; citations omitted) Cooperative, Inc. (SURNECO) hired Gonzaga as its lineman. On
February 15, 2000, he was assigned as Temporary Teller at
Second, coupled with AAA’s minority is Caballo’s seniority. SURNECO’s sub-office in Gigaquit, Surigao Del Norte.7
Records indicate that Caballo was 23 years old at the time of
the commission of the offense and therefore, 6 years older than On June 26, 2001, petitioner Danny Escalante (Escalante),
AAA, more or less. The age disparity between an adult and a General Manager of SURNECO, issued Memorandum Order No.
minor placed Caballo in a stronger position over AAA so as to 34, series of 2001 (Memorandum 34-01), with attached report
enable him to force his will upon the latter. of SURNECO’s Internal Auditor, Pedro Denolos (Collection
Report) and two (2) sets of summaries of collections and
Third, Caballo's actions effectively constitute overt acts of remittances (Summaries),8 seeking an explanation from
coercion and influence.1âwphi1 Records reveal that Caballo Gonzaga regarding his remittance shortages in the total amount
repeatedly assured AAA of his love for her, and even, promised of ₱314,252.23, covering the period from February 2000 to May
to marry her. In addition, he also guaranteed that she would 2001.9
not get pregnant since he would be using the "withdrawal
method" for safety. Irrefragably, these were meant to influence On July 16, 2001, Gonzaga asked for an extension of three (3)
AAA to set aside her reservations and eventually give into weeks within which to submit his explanation since he needed
having sex with him, with which he succeeded. to go over the voluminous receipts of collections and
remittances with the assistance of an accountant. On the same
Fourth, at least, with respect to the parties' first sexual day, he sent another letter, denying any unremitted amount on
encounter, it is observed that the brash and unexpected his part and thereby, requesting that the charges against him
manner in which Caballo pursued AAA to her room and pressed be lifted.10
on her to have sex with him, effectively placed her in, to a
certain extent, a position of duress .. An important factor is that Attached to the same letter is an Audit Opinion11 prepared by
AAA refused Caballo's incipient advances and in fact, asked him one Leonides Laluna (Laluna), a certified public accountant
to leave. However, AAA eventually yielded. Thus, it stands to (CPA), stating that the Internal Auditor’s Report cannot
reason that she was put in a situation deprived of the benefit of accurately establish any remittance shortage on Gonzaga’s part
clear thought and choice. In any case, the Court observes that
215
since the amount of collections stated in the Summaries was conduct of investigation, as outlined in Section 16.5 of the Code
not supported by any bills or official receipts. of Ethics was not followed; hence, he was denied due
process.22
In the meantime, SURNECO formed an Investigation Committee
(Committee) to investigate Gonzaga’s alleged remittance The LA’s Ruling
shortages. On July 30, 2001, the Committee sent Gonzaga an
invitation to attend the investigation proceedings, in which he On November 28, 2002, the LA rendered a Decision,23 finding
participated.12 Pending investigation, Gonzaga was placed that petitioners were unable to show that Gonzaga’s dismissal
under preventive suspension from July 31 to August 29, was just and valid and thus, ordered that the latter be
2001.13 reinstated to his former position without loss of seniority rights
and with payment of full backwages, moral and exemplary
On August 9, 2001, the Committee tendered its report, finding damages, and attorney’s fees.24
Gonzaga guilty of (a) gross and habitual neglect of duty under
Section 5.2.15 of the Code of Ethics and Discipline for Rural The LA found that the alleged shortages in Gonzaga’s
Electric Cooperative (REC) Employees (Code of Ethics); (b) remittances were not proved since the actual receipts were not
misappropriation of REC funds under Section 7.2.1 of the Code presented in evidence. The Summaries were not even signed by
of Ethics; and (c) failure to remit collections/monies under the preparer and neither did they reflect the receipt numbers
Section 7.2.2 of the Code of Ethics. Thereafter, a notice of of actual collection. Considering these deficiencies, there was
termination was served on Gonzaga on September 13, 2001. no way of verifying whether the total amount remitted, as
Gonzaga sought reconsideration before SURNECO’s Board of shown in the receipts, would tally with the amount actually
Directors but the latter denied the same after he presented his collected.25 Further, the LA held that Gonzaga was not
case.14 On October 25, 2001, another notice of termination afforded due process because the mandatory procedure for the
(Final Notice of Termination) was served on Gonzaga. conduct of investigation, pursuant to Section 16.5 of the Code
Consequently, he was dismissed from the service on November of Ethics, was not followed.26
26, 2001.15
Aggrieved, petitioners elevated the matter to the NLRC. On
In view of the foregoing incidents, Gonzaga filed a complaint September 22, 2003, pending appeal, they submitted a
with the NLRC Regional Arbitration Branch No. XIII - Butuan City Manifestation,27 with annexed Audit Report dated September
for illegal dismissal with payment of backwages including 15, 200328 (September 15, 2003 Audit Report) prepared by a
damages and attorney’s fees, claiming that he was denied due certain Daphne Fetalvero-Awit, an independent CPA, as
process and dismissed without just cause. He alleged that while additional evidence to corroborate the Collection Report of
he was asked in Memorandum 34-01 to explain the SURNECO’s internal auditor. The Cash Flow Summary attached
₱314,252.23 remittance shortage, he was nonetheless denied to the September 15, 2003 Audit Report reflected a shortage of
due process since the actual grounds for his dismissal, i.e., gross ₱328,974.02 in Gonzaga’s remittances as of May 31, 2001.29
and habitual neglect of duties and responsibilities,
misappropriation of REC funds and failure to remit The NLRC’s Ruling
collections/monies, were not indicated in the said
memorandum.16 He also claimed that petitioners’ evidence In a Resolution dated August 31, 2004,30 the NLRC vacated the
failed to show any missing collection since (a) the attached ruling of the LA, finding Gonzaga to have been dismissed for a
Summary of Collections and Remittances dated June 7, 200117 just and valid cause.
did not bear any receipt numbers, both with respect to
collections and remittances and (b) the other Summary of It observed that Gonzaga, by his admission, failed to subscribe
Collections and Remittances18 only contained receipt numbers to the company policy of remitting cash collections daily,
for the remittances and none for the collections.19 claiming that the distance and cost of doing so made it
impractical.31 With respect to the imputed cash shortages, it
In defense, petitioners maintained that Gonzaga’s dismissal was did not give credence to Gonzaga’s position in view of his
attended with due process and founded on a just and valid general denial. In this light, the NLRC faulted Gonzaga for not
cause. They maintained that Gonzaga’s remittance shortages demanding the production and examination of the collection
accumulated to the amount of ₱314,252.23,20 stressing that receipts during the investigation proceedings, noting that the
the so-called Collection Report was prepared by Gonzaga said omission meant that the collection receipts would confirm
himself. Petitioners further argued that Gonzaga was given the shortage.32 Moreover, it ruled that the procedure laid
enough opportunity to defend himself during the investigation. down in the Code of Ethics is not mandatory. It is sufficient that
Likewise, he was properly informed of the accusation against Gonzaga, with the assistance of an accountant and a legal
him since the charge of cash shortage has a direct and logical counsel, was given an ample opportunity to explain his side and
relation to the findings of gross and habitual neglect of duties also participate in the investigation proceedings.33
and responsibilities, misappropriation of REC funds and failure
to remit collections/monies. In this regard, there was no Gonzaga moved for reconsideration but the same was denied in
conflict between the charge stated in Memorandum 34-01 and a Resolution dated February 1, 2005.34
the grounds cited in the Final Notice of Termination.21
The CA’s Ruling
In reply, Gonzaga insisted that, contrary to petitioners’ claim,
the Summaries were prepared by SURNECO’s internal auditor. In a Decision dated May 29, 2008,35 the CA reversed and set
He also added that the cooperative’s proper procedure for the aside the NLRC’s ruling and, instead, reinstated the LA’s
216
decision with modification, deleting the award of moral and Accordingly, the Court proceeds to examine the cause and
exemplary damages.36 procedure attendant to the termination of Gonzaga’s
employment.
It held that it is petitioners’ duty to present substantial
evidence to show that the dismissal was due to a just and valid A. Cause of termination.
cause which they, however, failed to do. Petitioners’ evidence
did not prove the imputed shortage in Gonzaga’s collection In termination cases, the burden of proof rests on the employer
since the numbers of the collection receipts were not indicated to show that the dismissal is for a valid cause. Failing in which,
so as to compare them with the remittance receipts. Moreover, the law considers the matter a case of illegal dismissal.45 In this
the CA did not give weight to the September 15, 2003 Audit relation, the quantum of proof which the employer must
Report, which was submitted for the first time before the NLRC, discharge is substantial evidence which, as defined in case law,
because Gonzaga was not given an opportunity to submit any means that amount of relevant evidence as a reasonable mind
counter-evidence in order to rebut the same. For insufficiency might accept as adequate to support a conclusion, even if other
of evidence, it therefore ruled that the dismissal was illegal.37 minds, equally reasonable, might conceivably opine
otherwise.46
Nonetheless, it found improper the award of moral and
exemplary damages for lack of showing that petitioners acted Applying the foregoing principles to this case, the Court finds
in bad faith. Gonzaga was given ample opportunity to explain that petitioners were able to prove, by substantial evidence,
the alleged cash shortages, and an investigation, though that there lies a valid cause to terminate Gonzaga’s
informal, was actually conducted by SURNECO to determine his employment.
liability. As such, petitioners did not act in bad faith.38
The Court concurs with the NLRC’s finding that petitioners’
Petitioners filed a motion for reconsideration which was, evidence – which consists of the Collection Report, the
however, denied in a Resolution dated March 30, 2009.39 Summaries, and the September 15, 2003 Audit Report with
attached Cash Flow Summary – adequately supports the
In the said resolution, the CA held that the Summaries conclusion that Gonzaga misappropriated the funds of the
presented by petitioners remained insufficient as they failed to cooperative. The data indicated therein show gaping
establish the voluminous character of the official receipts discrepancies between Gonzaga’s collections and remittances,
evidencing the amount of Gonzaga’s collections and of which he was accountable for. In this accord, the burden of
remittances as to render them admissible under Section 3(c), evidence shifted to Gonzaga to prove that the reflected
Rule 13040 of the Rules of Court.41 It also observed that apart shortage was not attributable to him. However, despite being
from the fact that the September 15, 2003 Audit Report was allowed to peruse the bills and receipts on record together with
belatedly filed with the NLRC eight (8) months after Gonzaga the assistance of an accountant and a counsel during the
had filed his Comment to the Memorandum of Appeal, the said investigation proceedings, Gonzaga could not reconcile the
report was hearsay since the accountant who prepared the said amounts of his collections and remittances and, instead, merely
report was not presented to testify on its veracity.42 interposed bare and general denials.
Hence, the instant petition. To note, petitioners could not be faulted for not presenting
each and every bill or receipt due to their voluminous
The Issue character. Corollarily, the Court takes judicial notice of the fact
that documents of such nature could indeed consist of multiple
The crux of the present controversy revolves around the pages; likewise, it is clear that petitioners only sought to
propriety of Gonzaga’s dismissal. establish a general result from the whole, i.e., the total cash
shortage. In this regard, the requirement that the offeror first
The Court’s Ruling establish the voluminous nature of the evidence sought to be
presented, as discussed in the CA’s March 30, 2009 Resolution,
The petition is meritorious. is dispensed with. Besides, technical rules of evidence are not
strictly followed in labor cases47 and thus, their liberal
At the outset, it must be pointed out that the main issue in this application relaxes the same.
case involves a question of fact. In this light, it is an established
rule that the jurisdiction of the Court in cases brought before it Neither does the lack of collection receipt numbers, as Gonzaga
from the CA via a petition for review on certiorari under Rule 45 alleges, suffice to exculpate him from the dismissal charges.
of the Rules of Court is generally limited to reviewing errors of This is because the said numbers had already been supplied by
law as the former is not a trier of facts. In the Court’s exercise petitioners through their eventual submission of the Cash Flow
of its power of review, thus, the findings of fact of the CA are Summary which was attached to the September 15, 2003 Audit
conclusive and binding as it is not the former’s function to Report. On this score, the Court observes that the CA should
analyze or weigh evidence all over again.43 have considered the foregoing documents as they corroborate
the evidence presented by the petitioners before the LA. Verily,
However, one of the recognized exceptions to this rule is when labor tribunals, such as the NLRC, are not precluded from
there resides a conflict between the findings of facts of the receiving evidence submitted on appeal as technical rules are
NLRC and of the CA. In such instance, there is a need to review not binding in cases submitted before them.48 In fact, labor
the records to determine which of them should be preferred as officials should use every and reasonable means to ascertain
more conformable to the evidentiary facts,44 as in this case. the facts in each case speedily and objectively, without regard
217
to technicalities of law or procedure, all in the interest of due given opportunity to respond to the charge, present his
process.49 evidence, or rebut the evidence presented against him.
Also, it cannot be said that with the admission of the said (iii) A written notice of termination served on the employee,
evidence, Gonzaga would be denied due process. Records show indicating that upon due consideration of all the circumstances,
that he was furnished a copy of the Manifestation with the grounds have been established to justify his termination.
attached audit report on September 23, 2003 and the NLRC
only rendered a decision on August 31, 2004. This interim Succinctly put, the foregoing procedure consists of (a) a first
period gave him ample time to rebut the same; however, he written notice stating the intended grounds for termination; (b)
failed to do so. a hearing or conference where the employee is given the
opportunity to explain his side; and (c) a second written notice
Finally, the records are bereft of any showing that SURNECO’s informing the employee of his termination and the grounds
internal auditor was ill-motivated when he audited Gonzaga. therefor. Records disclose that petitioners were able to prove
Thus, there lies no reason for the Court not to afford full faith that they sufficiently complied with these procedural
and credit to his report. requirements:
All told, considering the totality of circumstances in this case, First, petitioners have furnished Gonzaga a written first notice
the Court finds the evidence presented by the petitioners, as specifying the grounds on which his termination was sought.
opposed to the bare denial of Gonzaga, sufficient to constitute
substantial evidence to prove that he committed serious In particular, Memorandum 34-01, which was issued on June
misconduct and gross and habitual neglect of duty to warrant 26, 2001, reads:52
his dismissal from employment. Such are just causes for
termination which are explicitly enumerated under Article 296 Attached is a report of Mr. Pedro A. Denolos, Internal
of the Labor Code, as amended:50 Auditor,alleging that you incurred shortages as Teller of Sub-
Office I which accumulated to THREE HUNDRED FOURTEEN
Article 296. Termination by Employer. – An employer may THOUSAND TWO HUNDRED FIFTY TWO PESOS AND TWENTY
terminate an employment for any of the following causes: THREE CENTAVOS (₱314,252.23).
(a) Serious Misconduct or wilful disobedience by the employee In this regard, please submit a written explanation within
of the lawful orders of his employer or representative in seventy two (72) hours from receipt of this memorandum why
connection with his work; no disciplinary action shall be taken against you on this matter.
(b) Gross and habitual neglect by the employee of his duties; xxxx
xxxx As may be gleaned from the foregoing, not only was Gonzaga
effectively notified of the charge of cash shortage against him,
At any rate, Gonzaga had admitted that he failed to remit his he was also given an ample opportunity to answer the same
collections daily in violation of SURNECO’s company policy, through written explanation. Notably, attached to
rendering such fact conclusive and binding upon him. Memorandum 34-01 are the Summaries which particularly
Therefore, for his equal violation of Section 7.2.2 of the Code of detail the discrepancies in Gonzaga’s collections vis-à-vis his
Ethics (failure to remit collections/monies), his dismissal is remittances. As it turned out, Gonzaga submitted a letter to
justified altogether. management on July 16, 2001, attaching therewith an Audit
Opinion prepared by Gonzaga’saccountant, Laluna, in order to
B. Termination procedure; statutory compliance. preliminarily answer the charges against him.
The statutory procedure for terminating an employee is found While the actual grounds of Gonzaga’s dismissal, i.e., gross and
in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules habitual neglect of duties and responsibilities, misappropriation
Implementing the Labor Code (Omnibus Rules) which states: of REC funds and failure to remit collections/monies, were not
explicitly stated in Memorandum 34-01, these infractions are,
SEC. 2. Standards of due process: requirements of notice. – In however, implicit in the charge of cash shortage. Due to the
all cases of termination of employment, the following standards direct and logical relation between these grounds, Gonzaga
of due process shall be substantially observed: could not have been misled to proffer any mistaken defense or
contrive any weakened position. Rather, precisely because of
For termination of employment based on just causes as defined the substantial identity of these grounds, any defense to the
in Article 282 of the Labor Code:51 charge of cash shortage equally constitutes an adequate
defense to the charges of gross and habitual neglect of duties
(i) A written notice served on the employee specifying the and responsibilities, misappropriation of REC funds and failure
ground or grounds for termination, and giving said employee to remit collections/monies. It stands to reason that the core of
reasonable opportunity within which to explain his side. all these infractions is similar – that is, the loss of money to
which Gonzaga was accountable – such that by reconciling the
(ii) A hearing or conference during which the employee amounts purportedly missing, Gonzaga would have been
concerned, with the assistance of counsel if he so desires is exculpated from all these charges. Therefore, based on these
218
considerations, the Court finds that the first notice requirement
had been properly met. (b) a formal hearing or conference becomes mandatory only
when requested by the employee in writing or substantial
Second, petitioners have conducted an informal inquiry in order evidentiary disputes exists or a company rule or practice
to allow Gonzaga to explain his side. To this end, SURNECO requires it, or when similar circumstances justify it.
formed an investigation committee to investigate Gonzaga’s
alleged remittance shortages. After its formation, an invitation (c) the "ample opportunity to be heard" standard in the Labor
was sent to Gonzaga to attend the investigation proceedings, in Code prevails over the "hearing and conference" requirement
which he participated.53 Apropos to state, Gonzaga never in the implementing rules and regulations. [emphases and
denied his participation during the said proceedings. Perforce, underscoring supplied]
the second requirement had been equally complied with.
The rationale behind this mandatory characterization is
Third, a second written notice was sent to Gonzaga informing premised on the fact that company rules and regulations which
him of the company’s decision to relieve him from regulate the procedure and requirements for termination, are
employment, as well as the grounds therefor. generally binding on the employer. Thus, as pronounced in
Suico v. NLRC, et al.:57
Records indicate that the Committee tendered its report on
August 9, 2001, finding Gonzaga guilty of gross and habitual Company policies or practices are binding on the parties. Some
neglect of duties and responsibilities, misappropriation of REC can ripen into an obligation on the part of the employer, such
funds and failure to remit collections/monies. Subsequently, a as those which confer benefits on employees or regulate the
notice of termination was served on Gonzaga on September 13, procedures and requirements for their termination. [emphases
2001, stating the aforesaid grounds. Thereafter, Gonzaga tried supplied; citations omitted]
to appeal his dismissal before SURNECO’s Board of Directors
which was, however, denied after again being given an Records reveal that while Gonzaga was given an ample
adequate opportunity to present his case.54 On October 25, opportunity to be heard within the purview of the foregoing
2001, a Final Notice of Termination was served on Gonzaga principles, SURNECO, however, failed to show that it followed
which read as follows: its own rules which mandate that the employee who is sought
to be terminated be afforded a formal hearing or conference.
For violation of the Code of Ethics and Discipline for REC As above-discussed, SURNECO remains bound by – and hence,
Employees, specifically Sections 5.2.15, 7.2.1 and 7.2.2 you are must faithfully observe – its company policy embodied in
hereby notified of the termination of your employment with Section 16.5 of its own Code of Ethics which reads:
this cooperative effective at the close of business hours on
November 26, 2001.55 16.5. Investigation Proper. The conduct of investigation shall be
open to the public.1âwphi1 If there is no answer from the
Based on the foregoing, it cannot be gainsaid that Gonzaga had respondent, as prescribed, he shall be declared in default.
been properly informed of the company’s decision to dismiss Direct examination of witnesses shall be dispensed with in the
him, as well as the grounds for the same. As such, the second IAC. In lieu thereof, the IAC shall require the complainant and
notice requirement had been finally observed. his witnesses to submit their testimonies in affidavit form duly
sworn to subject to the right of the respondent or his counsel/s
At this juncture, it must be pointed out that while petitioners to cross-examine the complainant or his witnesses. Cross
have complied with the procedure laid down in the Omnibus examination shall be confined only to material and relevant
Rules, they, however, failed to show that the established matter. Prolonged argumentation and other dilatory tactics
company policy in investigating employees was adhered to. In shall not be entertained.
this regard, SURNECO’s breach of its company procedure
necessitates the payment of nominal damages as will be Accordingly, since only an informal inquiry58 was conducted in
discussed below. investigating Gonzaga’s alleged cash shortages, SURNECO failed
to comply with its own company policy, violating the proper
C. Company procedure; termination procedure altogether.
consequences of breach.
In this relation, case law states that an employer who
Jurisprudence dictates that it is not enough that the employee terminates an employee for a valid cause but does so through
is given an "ample opportunity to be heard" if company rules or invalid procedure is liable to pay the latter nominal damages.
practices require a formal hearing or conference. In such
instance, the requirement of a formal hearing and conference In Agabon v. NLRC (Agabon),59 the Court pronounced that
becomes mandatory. In Perez v. Philippine Telegraph and where the dismissal is for a just cause, the lack of statutory due
Telephone Company,56 the Court laid down the following process should not nullify the dismissal, or render it illegal, or
principles in dismissing employees: ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights.60 Thus, in
(a) "ample opportunity to be heard" means any meaningful Agabon, the employer was ordered to pay the employee
opportunity (verbal or written) given to the employee to nominal damages in the amount of ₱30,000.00.61
answer the charges against him and submit evidence in support
of his defense, whether in a hearing, conference or some other By analogy, the Court finds that the same principle should apply
fair, just and reasonable way. to the case at bar for the reason that an employer’s breach of
219
its own company procedure is equally violative of the laborer’s value of the land. In compliance therewith, LBP filed a
rights, albeit not statutory in source. Hence, although the Manifestation8 dated November 4, 2002 stating the
dismissal stands, the Court deems it appropriate to award recomputed value of the land from ₱440,355.92 to
Gonzaga nominal damages in the amount of ₱30,000.00. ₱503,148.97. Despite the increase, respondents still rejected
the offer.
To clarify, Escalante, the general manager of SURNECO, does
not stand to be solidarily liable with the company for the same The RTC Ruling
since records are bereft of any indication that he either (a)
assented to a patently unlawful act of the corporation or (b) is On March 27, 2006, the RTC rendered the assailed Decision
guilty of bad faith or gross negligence in directing its affairs.62 fixing the just compensation of the land at ₱669,962.53, thus:
WHEREFORE, the petition is GRANTED. The May 29, 2008 WHEREFORE, based on the foregoing premises, judgment is
Decision and March 30, 2009 Resolution of the Court of Appeals hereby rendered fixing the just compensation of the total area
are hereby SET ASIDE. The August 31, 2004 and February 1, of the land actually taken in the amount of ₱669,962.53 and
2005 Resolutions of the National Labor Relations Commission in ordering the LBP to pay the plaintiffs Virginia Palmares, et al.
NLRC Case No. M-007354-2003 are hereby REINSTATED with the total sum of ₱669,962.53 as just compensation for the
the MODIFICATION that petitioner Surigao del Norte Electric 19.1071 hectares taken by the government pursuant to R.A.
Cooperative, Inc. be ORDERED to pay respondent Teofilo 6657 plus 12% interest per annum from June, 1995 until full
Gonzaga nominal damages in the amount of Thirty Thousand payment.
Pesos (₱30,000.00) on account of its breach of company
procedure . Under Section 19 of R.A. 6657, plaintiffs are also entitled to an
additional five percent (5%) cash payment by way of incentive
91. LAND BANK OF THE PHILIPPINES, Petitioner, vs.VIRGINIA for voluntarily offering the subject lot for sale.
PALMARES, LERMA P. AVELINO, MELILIA P. VILLA, NINIAN P.
CATEQUISTA, LUIS PALMARES, JR., SALVE P. VALENZUELA, SO ORDERED.9
GEORGE P. PALMARES, AND DENCEL P. PALMARES HEREIN
REPRESENTED BY THEIR ATTORNEY-IN-FACT, LERMA P. The trial court arrived at its own computation by getting the
AVELINO, Respondents. average of (1) the price per hectare as computed by LBP in
accordance with DAR guidelines;10 and (2) the market value of
This petition for review on certiorari1 assails the August 28, the land per hectare as shown in the 1997 tax declaration, viz:
2007 Decision2 and June 29, 2010 Resolution3 of the Court of
Appeals (CA) in CA-G.R. CEB SP No. 01846, which affirmed with Total Land Value P 669,962.53 11
modification the March 27, 2006 Decision4 of the Regional Trial LBP appealed to the CA arguing that the computation made by
Court (RTC) of Iloilo City, Branch 34, ordering petitioner Land the RTC failed to consider the factors in determining just
Bank of the Philippines (LBP) to pay respondents Virginia compensation enumerated under Section 17 of RA 6657, which
Palmares, Lerma P. Avelino, Melilia P. Villa, Ninian P. reads:
Catequista, Luis Palmares, Jr., Salve P. Valenzuela, George P.
Palmares, and Dencel P. Palmares (respondents) the total sum SEC. 17. Determination of Just Compensation. – In determining
of ₱669,962.53 as just compensation for their land plus twelve just compensation, the cost of acquisition of the land, the
percent (12%) interest per annum from June 1995 until full current value of like properties, its nature, actual use and
payment. income, the sworn valuation by the owner, the tax declarations,
and the assessment made by government assessors shall be
The Factual Antecedents considered. The social and economic benefits contributed by
the farmers and the farmworkers and by the Government to
Respondents inherited a 19.98-hectare agricultural land located the property as well as the non-payment of taxes or loans
in Barangay Tagubang, Passi City, Iloilo, registered under secured from any government financing institution on the said
Transfer Certificate of Title (TCT) No. T-11311. In 1995, they land shall be considered as additional factors to determine its
voluntarily offered the land for sale to the government valuation.
pursuant to Republic Act No. 6657 (RA 6657), the
Comprehensive Agrarian Law of 1988. Accordingly, the The CA Ruling
Department of Agrarian Reform (DAR) acquired 19.1071
hectares of the entire area,5 which was valued by LBP at On August 28, 2007, the appellate court affirmed the just
₱440,355.92. Respondents, however, rejected said amount. compensation fixed by the RTC as having been arrived at in
Consequently, the Department of Agrarian Reform Adjudication consonance with Section 17 of RA 6657 and pertinent DAR
Board (DARAB) conducted summary proceedings to determine Administrative Orders. It emphasized that the determination of
just compensation for the land, but it resolved to adopt LBP's just compensation in eminent domain proceedings is essentially
valuation. Hence, the same amount was deposited to a judicial function and, in the exercise thereof, courts should be
respondents' credit as provisional compensation for the land. given ample discretion and should not be delimited by
mathematical formulas.
On August 17, 2001, respondents filed a petition6 for judicial
determination of just compensation docketed as Civil Case No. The CA modified the award of twelve percent (12%) interest to
01-26876 before the RTC of Iloilo City. During the pendency of apply only to the remaining balance of the just compensation in
said petition, the trial court directed7 LBP to recompute the the amount of ₱229,606.61, considering that LBP had already
220
previously deposited in the name of respondents the amount of 2.THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
₱440,355.92 corresponding to its valuation. Thus: PETITIONER LBP LIABLE FOR INTEREST OF 12% PER ANNUM.
WHEREFORE, premises considered, the petition is PARTIALLY 3.THE COURT OF APPEALS EIGHTEENTH DIVISION ERRED IN NOT
GRANTED. The impugned Decision dated 27 March 2006 and CONSOLIDATING THE CASE WITH CAG.R. CEB SP NO. 01845
Order dated 12 May 2006 are AFFIRMED with the AND REMANDING THE CASE TO THE COURT A QUO
MODIFICATION that petitioner is ordered to pay respondents CONSIDERING THE SEPTEMBER 28, 2007 DECISION OF THE
the remaining balance of Php229,606.61 with legal interest SPECIAL TWENTIETH DIVISION OF THE COURT OF APPEALS IN
thereon at 12% per annum computed from the taking of the CA-G.R. CEB-SP NO. 01845 TO REMAND THE CASE ON THE
property in June, 1995 until the amount shall have been fully PETITION FILED BY THE DAR.19
paid.
The Court's Ruling
SO ORDERED.12
There is merit in the instant petition.
In its motion for reconsideration13 of the foregoing Decision,
LBP insisted on its valuation of the subject land, which already The principal basis of the computation for just compensation is
factored in the market value per tax declaration in 1995 when Section 17 of RA 6657,20 which enumerates the following
the land was offered, in accordance with the formula14 factors to guide the special agrarian courts in the determination
prescribed under DAR Administrative Order (AO) No. 6, Series thereof: (1) the acquisition cost of the land; (2) the current
of 1992, as amended by AO No. 11, Series of 1994. The RTC, value of the properties; (3) its nature, actual use, and income;
however, factored in the market value in the 1997 Tax (4) the sworn valuation by the owner; (5) the tax declarations;
Declaration of the subject land to arrive at its own valuation. (6) the assessment made by government assessors; (7) the
Thus, LBP protested what it called the "double take up" of the social and economic benefits contributed by the farmers and
market value per tax declaration.15 the farmworkers, and by the government to the property; and
(8) the nonpayment of taxes or loans secured from any
During the pendency of the said motion, LBP urgently moved16 government financing institution on the said land, if any.21
for the consolidation of the instant case with CA-G.R. CEB SP Pursuant to its rule-making power under Section 4922 of the
No. 01845 entitled Republic of the Philippines, represented by same law, the DAR translated these factors into a basic
the Department of Agrarian Reform v. Virginia Palmares, et formula.23
al.1âwphi1 It appeared that the DAR had filed a separate appeal
of the March 27, 2006 Decision of the RTC before a different In the instant case, the trial court found to be "unrealistically
division of the CA, which rendered a Decision on September 28, low" the total valuation by LBP and the DAR in the amount of
2007, exactly a month after the promulgation of the assailed ₱440,355.92, which was computed on the basis of DAR AO No.
Decision in the instant case, reversing the RTC and ordering the 6, Series of 1992, as amended by DAR AO No. 11, Series of
remand of the case for determination of just compensation 1994. It then merely proceeded to add said valuation to the
with the assistance of at least three (3) commissioners. LBP, market value of the subject land as appearing in the 1997 Tax
however, failed to append a copy of the September 28, 2007 Declaration, and used the average of such values to fix the just
Decision in CA-G.R. SP No. 01845 both in its Urgent compensation at ₱669,962.53.
Manifestation with Motion to Consolidate before the appellate
court, and in the instant petition before us. In Land Bank of the Philippines v. Barrido,24 where the RTC
adopted a different formula, as in this case, by considering the
LBP's motion for reconsideration of the August 28, 2007 average between the findings of the DAR using the formula laid
Decision17 of the CA and its Urgent Manifestation with Motion down in Executive Order No. 22825 and the market value of the
to Consolidate were both denied in the June 29, 2010 property as stated in the tax declaration, we declared it to be
Resolution,18 for lack of merit. an obvious departure from the mandate of the law and the DAR
administrative order.1âwphi1 We emphasized therein that,
Hence, LBP is now before us via the instant petition for review while the determination of just compensation is essentially a
on certiorari alleging that – judicial function vested in the RTC acting as a special agrarian
court, the judge cannot abuse his discretion by not taking into
1.THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF full consideration the factors specifically identified by law and
LAW IN AFFIRMING WITH MODIFICATION THE DECISION DATED implementing rules.
MARCH 27, 2006 AND ORDER DATED MAY 12, 2006 OF THE
SPECIAL AGRARIAN COURT (SAC), THE COMPENSATION FIXED We agree with LBP in the instant case that the "double take up"
BY THE SAC NOT BEING IN ACCORDANCE WITH THE LEGALLY of the market value per tax declaration as a valuation factor
PRESCRIBED VALUATION FACTORS UNDER SECTION 17 OF R.A. completely destroys the rationale of the formula laid down by
6657 AS TRANSLATED INTO A BASIC FORMULA IN DAR the DAR. Thus, argues LBP:
ADMINISTRATIVE ORDER NO. 05, SERIES OF 1998 AND AS
RULED BY THE SUPREME COURT IN THE CASES OF SPS. BANAL, x x x Market value accounts for only 10% under the basic
G.R. NO. 143276 (JULY 20, 2004); CELADA, G.R. NO. 164876 formula of LV = (CNI x 0.60) + (CS x .30) + (MV x .10). The 10%
(JANUARY 23, 2006); AND LUZ LIM, G.R. NO. 171941 (AUGUST remains constant even under the variation formulae of LV =
2, 2007). (CNI x .90) + (MV x .10) and LV = (CS x .90) + (MV x .10). It is only
when the data constituting CS (Comparable sales) and CNI
(capitalized net income) are absent that MV is given greater
221
weight in determining just compensation. This is not obtaining 1999,2 ordered PT&T to pay complainant ₱113,100.00 as
in this case. separation pay and ₱73,608.00 as backwages. Dissatisfied,
PT&T appealed the LA’s Decision to the NLRC. In a Decision
x x x Greater weight is accorded CNI, 60% in the basic formula dated September 12, 2001,3 the NLRC set aside LA Carreon’s
and 90% in the other variation thereof, and this is not without a ruling and instead ordered PT&T to reinstate complainant to his
valid reason. The valuation formula is heavily production based former position and pay him backwages, as well as 13th month
(net income) because that is the true value of what landowners pay and service incentive leave pay, including moral damages
lose when their lands are expropriated and what the farmers- and attorney’s fees. On reconsideration, it modified the
beneficiaries gain when the lands are distributed to them. A amounts of the aforesaid monetary awards but still maintained
more fundamental reason for the valuation formula of DAR is that complainant was illegally dismissed.4 Consequently, PT&T
the fidelity to the principle of affordability, i.e. what the filed a petition for certiorari before the Court of Appeals (CA).
farmers-beneficiaries can reasonably afford to pay based on
what the land can produce. It must be emphasized that In a Decision dated September 18, 2003 (CA Decision),5 the CA
agricultural lands are not residential lands, and farmers- affirmed the NLRC’s ruling with modification, ordering PT&T to
beneficiaries are not given those lands so they can live there pay complainant separation pay in lieu of reinstatement.
but so that they can till them. And since they generally live on Complainant moved for partial reconsideration, claiming that
hand to mouth existence, their source of repaying the just all his years of service were not taken into account in the
compensation is sourced from their income derived from the computation of his separation pay and backwages. The CA
cultivation of the land. Thus, the double take up of market granted the motion and thus, remanded the case to the LA for
value as a valuation factor goes against the grain of affordability the same purpose.6 On July 19, 2004, the CA Decision became
as the basic principle in the government-supervised valuation final and executory.7
formula for agrarian reform.26
Complainant alleged that he filed a Motion for Issuance of a
Considering, therefore, that the RTC based its valuation on a Writ of Execution before the Cebu City RAB on October 25,
different formula and without taking into full consideration the 2004. At this point, the case had already been assigned to the
factors set forth in Section 17 of RA 6657, we order the new LA, herein respondent. After the lapse of five (5) months,
consolidation of the instant case (CAG.R. CEB SP No. 01846) complainant’s motion remained unacted, prompting him to file
with CA-G.R. CEB SP No. 01845, where the appeal of the DAR a Second Motion for Execution on March 3, 2005. Eight (8)
from the March 27, 2006 Decision of the RTC was granted and months thereafter, still, there was no action on complainant’s
said case was remanded to the trial court for determination of motion. Thus, on November 4, 2005, complainant proceeded to
just compensation with the assistance of commissioners. We respondent’s office to personally follow-up the matter. In the
have held that consolidation of cases is proper when there is a process, complainant and respondent exchanged notes on how
real need to forestall, as in this case, the possibility of much the former’s monetary awards should be; however, their
conflicting decisions being rendered in the cases.27 computations differed. To complainant’s surprise, respondent
told him that the matter could be "easily fixed" and thereafter,
WHEREFORE, the petition is GRANTED. The August 28, 2007 asked "how much is mine?" Despite his shock, complainant
Decision and June 29, 2010 Resolution of the Court of Appeals offered the amount of ₱20,000.00, but respondent replied:
in CA-G.R. SP No. 01846 are hereby REVERSED and SET ASIDE. "make it ₱30,000.00." By force of circumstance, complainant
The case is CONSOLIDATED with CA-G.R. CEB SP No. 01845 and acceded on the condition that respondent would have to wait
REMANDED to the Regional Trial Court of Iloilo City, Branch 34, until he had already collected from PT&T. Before complainant
which is directed to determine with dispatch, and with the could leave, respondent asked him for some cash, compelling
assistance of at least three (3) commissioners, the just him to give the latter ₱1,500.00.8
compensation due the respondents in accordance with Section
17 of Republic Act No. 6657 and the applicable DAR On November 7, 2005, respondent issued a writ of execution,9
Administrative Orders. directing the sheriff to proceed to the premises of PT&T and
collect the amount of ₱1,470,082.60, inclusive of execution and
92. EDUARDO A. ABELLA, Complainant, vs.RICARDO G. deposit fees. PT&T moved to quash10 the said writ which was,
BARRIOS, JR., Respondent. however, denied through an Order dated November 22,
2005.11 Unfazed, PT&T filed a Supplemental Motion to Quash
Far the Court's resolution is an administrative complaint1 for dated December 2, 2005,12 the contents of which were
disbarment filed by Eduardo A. Abella (complainant) against virtually identical to the one respondent earlier denied. During
Ricardo G. Barrios, Jr. (respondent) based on the latter's the hearing of the said supplemental motion on December 9,
violation of Rules 1.01 and 1.03, Canon 1, and Rule 6.Q2, Canon 2005, respondent rendered an Order13 in open court, recalling
6 of the Code of Professional Responsibility (Code). the first writ of execution he issued on November 7, 2005. He
confirmed the December 9, 2005 Order through a Certification
The Facts dated December 14, 200514 and eventually, issued a new writ
of execution15 wherein complainant’s monetary awards were
On January 21, 1999, complainant filed an illegal dismissal case reduced from ₱1,470,082.60 to ₱114,585.00, inclusive of
against Philippine Telegraph and Telephone Corporation (PT&T) execution and deposit fees.
before the Cebu City Regional Arbitration Branch (RAB) of the
National Labor Relations Commission (NLRC), docketed as RAB- Aggrieved, complainant filed on December 16, 2005 a Petition
VII-01-0128-99. Finding merit in the complaint, Labor Arbiter for Injunction before the NLRC. In a Resolution dated March 14,
(LA) Ernesto F. Carreon, through a Decision dated May 13, 2006,16 the NLRC annulled respondent’s December 9, 2005
222
Order, stating that respondent had no authority to modify the The pertinent provisions of the Code provide:
CA Decision which was already final and executory.17
CANON 1 - A LAWYER SHALL UPHOLD THE CONSTITUTION,
Aside from instituting a criminal case before the Office of the OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR
Ombudsman,18 complainant filed the instant disbarment LAW AND LEGAL PROCESSES.
complaint19 before the Integrated Bar of the Philippines (IBP),
averring that respondent violated the Code of Professional Rule 1.01 - A lawyer shall not engage in unlawful, dishonest,
Responsibility for (a) soliciting money from complainant in immoral or deceitful conduct.
exchange for a favorable resolution; and (b) issuing a wrong
decision to give benefit and advantage to PT&T. xxxx
In his Comment,20 respondent denied the abovementioned Rule 1.03 - A lawyer shall not, for any corrupt motive or
accusations, maintaining that he merely implemented the CA interest, encourage any suit or proceeding or delay any man’s
Decision which did not provide for the payment of backwages. cause.
He also claimed that he never demanded a single centavo from
complainant as it was in fact the latter who offered him the CANON 6 - THESE CANONS SHALL APPLY TO LAWYERS IN
amount of ₱50,000.00. GOVERNMENT SERVICE IN THE DISCHARGE OF THEIR OFFICIAL
TASKS.
The Recommendation and Action of the IBP
xxxx
In the Report and Recommendation dated May 30, 2008,21
Investigating Commissioner Rico A. Limpingco (Commissioner Rule 6.02 - A lawyer in the government service shall not use his
Limpingco) found that respondent tried to twist the meaning of public position to promote or advance his private interests, nor
the CA Decision out of all logical, reasonable and grammatical allow the latter to interfere with his public duties.
context in order to favor PT&T.22 He further observed that the
confluence of events in this case shows that respondent The above-cited rules, which are contained under Chapter 1 of
deliberately left complainant’s efforts to execute the CA the Code, delineate the lawyer’s responsibility to society: Rule
Decision unacted upon until the latter agreed to give him a 1.01 engraves the overriding prohibition against lawyers from
portion of the monetary award thereof. Notwithstanding their engaging in any unlawful, dishonest, immoral and deceitful
agreement, immoral and illegal as it was, respondent later went conduct; Rule 1.03 proscribes lawyers from encouraging any
as far as turning the proceedings into some bidding war which suit or proceeding or delaying any man’s cause for any corrupt
eventually resulted into a resolution in favor of PT&T. In this motive or interest; meanwhile, Rule 6.02 is particularly directed
regard, respondent was found to be guilty of gross immorality to lawyers in government service, enjoining them from using
and therefore, Commissioner Limpingco recommended that he one’s public position to: (1) promote private interests; (2)
be disbarred.23 advance private interests; or (3) allow private interests to
interfere with public duties.26 It is well to note that a lawyer
On July 17, 2008, the IBP Board of Governors passed Resolution who holds a government office may be disciplined as a member
No. XVIII-2008-345 (IBP Resolution),24 adopting and approving of the Bar only when his misconduct also constitutes a violation
Commissioner Limpingco’s recommendation, to wit: of his oath as a lawyer.27
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED In this light, a lawyer’s compliance with and observance of the
and APPROVED the Report and Recommendation of the above-mentioned rules should be taken into consideration in
Investigating Commissioner of the above-entitled case, herein determining his moral fitness to continue in the practice of law.
made part of this Resolution as Annex "A"; and finding the
recommendation fully supported by the evidence on record and To note, "the possession of good moral character is both a
the applicable laws and rules, and for Respondent’s violation of condition precedent and a continuing requirement to warrant
the provisions of the Code of Professional Responsibility, the admission to the Bar and to retain membership in the legal
Anti-Graft and Corrupt Practices Act and the Code of Ethical profession."28 This proceeds from the lawyer’s duty to observe
Standards for Public Officials and Employees, Atty. Ricardo G. the highest degree of morality in order to safeguard the Bar’s
Barrios, Jr. is hereby DISBARRED.25 integrity.29 Consequently, any errant behavior on the part of a
lawyer, be it in the lawyer’s public or private activities, which
Issue tends to show deficiency in moral character, honesty, probity or
good demeanor, is sufficient to warrant suspension or
The sole issue in this case is whether respondent is guilty of disbarment.30
gross immorality for his violation of Rules 1.01 and 1.03, Canon
1, and Rule 6.02, Canon 6 of the Code. In this case, records show that respondent was merely tasked
to recompute the monetary awards due to the complainant
The Court’s Ruling who sought to execute the CA Decision which had already been
final and executory. When complainant moved for execution –
The Court concurs with the findings and recommendation of twice at that – respondent slept on the same for more than a
Commissioner Limpingco as adopted by the IBP Board of year. It was only when complainant paid respondent a personal
Governors. visit on November 4, 2005 that the latter speedily issued a writ
of execution three (3) days after, or on November 7, 2005.
223
Based on these incidents, the Court observes that the sudden already gone, and no equivalent position that the PT&T could
dispatch in respondent’s action soon after the aforesaid visit offer. x x x.
casts serious doubt on the legitimacy of his denial, i.e., that he
did not extort money from the complainant. Fundamental in the realm of labor law is the rule that
backwages are separate and distinct from separation pay in lieu
The incredulity of respondent’s claims is further bolstered by of reinstatement and are awarded conjunctively to an
his complete turnaround on the quashal of the November 7, employee who has been illegally dismissed.35 There is nothing
2005 writ of execution. in the records that could confound the finding that complainant
was illegally dismissed as LA Carreon, the NLRC, and the CA
To elucidate, records disclose that respondent denied PT&T’s were all unanimous in decreeing the same. Being a labor
initial motion to quash through an Order dated November 22, arbiter, it is hardly believable that respondent could overlook
2005 but later reversed such order in open court on the basis of the fact that complainant was entitled to backwages in view of
PT&T’s supplemental motion to quash which was a mere the standing pronouncement of illegal dismissal.1âwphi1 In this
rehash of the first motion that was earlier denied. As a result, regard, respondent’s defense deserves scant consideration.
respondent recalled his earlier orders and issued a new writ of
execution, reducing complainant’s monetary awards from Therefore, absent any cogent basis to rule otherwise, the Court
₱1,470,082.60 to ₱114,585.00, inclusive of execution and gives credence and upholds Commissioner Limpingco’s and the
deposit fees. IBP Board of Governor’s pronouncement of respondent’s gross
immorality. Likewise, the Court observes that his infractions
To justify the same, respondent contends that he was merely constitute gross misconduct.
implementing the CA Decision which did not provide for the
payment of backwages. A plain and cursory reading, however, Jurisprudence illumines that immoral conduct involves acts that
of the said decision belies the truthfulness of the foregoing are willful, flagrant, or shameless, and that show a moral
assertion. On point, the dispositive portion of the CA Decision indifference to the opinion of the upright and respectable
reads: members of the community.36 It treads the line of grossness
when it is so corrupt as to constitute a criminal act, or so
WHEREFORE, the petition is PARTIALLY GRANTED. The decision unprincipled as to be reprehensible to a high degree, or when
of public respondent National Labor Relations Commission committed under such scandalous or revolting circumstances as
dated September 12, 2001 and October 8, 2002 are AFFIRMED to shock the community’s sense of decency.37 On the other
with the MODIFICATION, ordering petitioner PT&T to pay hand, gross misconduct constitutes "improper or wrong
private respondent Eduardo A. Abella separation pay (as conduct, the transgression of some established and definite
computed by the Labor Arbiter) in lieu of reinstatement.31 rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies a wrongful intent and not mere error of
Noticeably, the CA affirmed with modification the NLRC’s judgment."38
rulings dated September 12, 2001 and October 8, 2002 which
both explicitly awarded backwages and other unpaid monetary In this relation, Section 27, Rule 138 of the Rules of Court states
benefits to complainant.32 The only modification was with that when a lawyer is found guilty of gross immoral conduct or
respect to the order of reinstatement as pronounced in both gross misconduct, he may be suspended or disbarred:
NLRC’s rulings which was changed by the CA to separation pay
in view of the strained relations between the parties as well as SEC. 27. Attorneys removed or suspended by Supreme Court on
the supervening removal of complainant’s previous position.33 what grounds. — A member of the bar may be removed or
In other words, the portion of the NLRC’s rulings which suspended from his office as attorney by the Supreme Court for
awarded backwages and other monetary benefits subsisted and any deceit, malpractice, or other gross misconduct in such
the modification pertained only to the CA’s award of separation office, grossly immoral conduct, or by reason of his conviction
pay in lieu of the NLRC’s previous order of reinstatement. This of a crime involving moral turpitude, or for any violation of the
conclusion, palpable as it is, can be easily deduced from the oath which he is required to take before the admission to
records. practice, or for a willful disobedience of any lawful order of a
superior court, or for corruptly or willful appearing as an
Lamentably, respondent tried to distort the findings of the CA attorney for a party to a case without authority so to do. The
by quoting portions of its decision, propounding that the CA’s practice of soliciting cases at law for the purpose of gain, either
award of separation pay denied complainant’s entitlement to personally or through paid agents or brokers, constitutes
any backwages and other consequential benefits altogether. In malpractice. (Emphasis and underscoring supplied)
his Verified Motion for Reconsideration of the IBP
Resolution,34 respondent stated: Thus, as respondent’s violations clearly constitute gross
immoral conduct and gross misconduct, his disbarment should
From the above quoted final conclusions, the Court is very clear come as a matter of course.1âwphi1 However, the Court takes
and categorical in directing PT&T to pay complainant his judicial notice of the fact that he had already been disbarred in
separation pay ONLY in lieu of reinstatement. Clearly, the Court a previous administrative case, entitled Sps. Rafols, Jr. v.
did not direct the PT&T to pay him his backwages, and other Ricardo G. Barrios, Jr.,39 which therefore precludes the Court
consequential benefits that were directed by the NLRC because fromduplicitously decreeing the same. In view of the foregoing,
he could no longer be reinstated to his previous position on the the Court deems it proper to, instead, impose a fine in the
ground of strained relationship and his previous position had amount of ₱40,000.0040 in order to penalize respondent’s
224
transgressions as discussed herein and to equally deter the scheduled on May 13, 2013 (May 2013 Elections). In his CoC,
commission of the same or similar acts in the future. petitioner stated, inter alia, that he is eligible for the said office
and that he is a registered voter of Barangay Tetuan,
As a final word, the Court staunchly reiterates the principle that Zamboanga City.
the practice of law is a privilege41 accorded only to those who
continue to meet its exacting qualifications. Verily, for all the On October 18, 2012,11 the MTCC denied his Petition for
prestige and opportunity which the profession brings lies the Inclusion on account of his perpetual absolute disqualification
greater responsibility to uphold its integrity and honor. Towards which in effect, deprived him of the right to vote in any
this purpose, it is quintessential that its members continuously election. Such denial was affirmed by the Regional Trial Court of
and unwaveringly exhibit, preserve and protect moral Zamboanga City, Branch 14 (RTC) in its October 31, 2012
uprightness in their activities, both in their legal practice as well Order12 which, pursuant to Section 13813 of Batas Pambansa
as in their personal lives. Truth be told, the Bar holds no place Bilang 881, as amended, otherwise known as the "Omnibus
for the deceitful, immoral and corrupt. Election Code" (OEC), was immediately final and executory.
WHEREFORE, respondent Ricardo G. Barrios, Jr. is hereby found Meanwhile, five (5) petitions were lodged before the
GUILTY of gross immoral conduct and gross misconduct in COMELEC’s First and Second Divisions (COMELEC Divisions),
violation of Rules 1.01 and 1.03, Canon 1, and Rule 6.02, Canon praying for the denial of due course to and/or cancellation of
6 of the Code of Professional Responsibility. Accordingly, he is petitioner’s CoC. Pending resolution, the COMELEC En Banc
ordered to pay a FINE of ₱40,000.00. issued motu proprio Resolution No. 961314 on January 15,
2013, resolving "to CANCEL and DENY due course the
Let a copy of this Decision be furnished the Office of the Bar Certificate of Candidacy filed by Romeo G. Jalosjos as Mayor of
Confidant, the Integrated Bar of the Philippines, and the Office Zamboanga City in the May 13, 2013 National and Local
of the Court Administrator for circulation to all the courts. Elections" due to his perpetual absolute disqualification as well
as his failure to comply with the voter registration requirement.
93. ROMEO G. JALOSJOS, Petitioner, vs.THE COMMISSION ON As basis, the COMELEC En Banc relied on the Court’s
ELECTIONS, MARIA ISABELLE G. CLIMACO-SALAZAR, ROEL B. pronouncement in the consolidated cases of Dominador
NATIVIDAD, ARTURO N. ONRUBIA, AHMAD NARZAD K. Jalosjos, Jr. v. COMELEC and Agapito Cardino v. COMELEC15
SAMPANG, JOSE L. LOBREGAT, ADELANTE ZAMBOANGA (Jalosjos, Jr. and Cardino).
PARTY, AND ELBERT C. ATILANO, Respondents.
Hence, the instant petition.
Assailed in this petition for certiorari1 file under Rule 64 in
relation to Rule 65 of the Rules of Court is the Commission on Issues Before the Court
Elections' (COMELEC) En Bane Resolution No. 96132 dated
January 15, 2013, ordering the denial of due course to and/or Submitted for the Court’s determination are the following
cancellation of petitioner Romeo G. Jalosjos' certificate of issues: (a) whether the COMELEC En Banc acted beyond its
candidacy (CoC) as a mayoralty candidate for Zamboanga City. jurisdiction when it issued motu proprio Resolution No. 9613
and in so doing, violated petitioner’s right to due process; and
The Facts (b) whether petitioner’s perpetual absolute disqualification to
run for elective office had already been removed by Section
On November 16, 2001, the Court promulgated its Decision in 40(a) of Republic Act No. 7160, otherwise known as the "Local
G.R. Nos. 132875-76, entitled "People of the Philippines v. Government Code of 1991" (LGC).
Romeo G. Jalosjos," convicting petitioner by final judgment of
two (2) counts of statutory rape and six (6) counts of acts of The Court’s Ruling
lasciviousness.4 Consequently, he was sentenced to suffer the
principal penalties of reclusion perpetua and reclusion The petition is bereft of merit.
temporal5 for each count, respectively, which carried the
accessory penalty of perpetual absolute disqualification At the outset, the Court observes that the controversy in this
pursuant to Article 41 of the Revised Penal Code (RPC).6 On case had already been mooted by the exclusion of petitioner in
April 30, 2007, then President Gloria Macapagal Arroyo issued the May 2013 Elections. Nevertheless, in view of the doctrinal
an order commuting his prison term to sixteen (16) years, three value of the issues raised herein, which may serve to guide both
(3) months and three (3) days (Order of Commutation). After the bench and the bar in the future, the Court takes this
serving the same, he was issued a Certificate of Discharge From opportunity to discuss on the same.
Prison on March 18, 2009.7
A. Nature and validity of motu
On April 26, 2012,8 petitioner applied to register as a voter in proprio issuance of Resolution No.
Zamboanga City. However, because of his previous conviction, 9613.
his application was denied by the Acting City Election Officer of
the Election Registration Board (ERB), prompting him to file a Petitioner claims that the COMELEC En Banc usurped the
Petition for Inclusion in the Permanent List of Voters (Petition COMELEC Divisions’ jurisdiction by cancelling motu proprio
for Inclusion) before the Municipal Trial Court in Cities of petitioner’s CoC through Resolution No. 9613, contrary to
Zamboanga City, Branch 1 (MTCC).9 Pending resolution of the Section 3, Article IX-C of the 1987 Philippine Constitution
same, he filed a CoC10 on October 5, 2012, seeking to run as (Constitution) which reads:
mayor for Zamboanga City in the upcoming local elections
225
SEC. 3. The Commission on Elections may sit en banc or in two Whether or not the COMELEC is expressly mentioned in the
divisions, and shall promulgate its rules of procedure in order to judgment to implement the disqualification, it is assumed that
expedite disposition of election cases, including pre- the portion of the final judgment on disqualification to run for
proclamation controversies. All such election cases shall be elective public office is addressed to the COMELEC because
heard and decided in division, provided that motions for under the Constitution the COMELEC is duty bound to "enforce
reconsideration of decisions shall be decided by the and administer all laws and regulations relative to the conduct
Commission en banc. (Emphasis and underscoring supplied) of an election." The disqualification of a convict to run for
public office under the Revised Penal Code, as affirmed by final
Concomitantly, he also claims that his right to procedural due judgment of a competent court, is part of the enforcement and
process had been violated by the aforementioned issuance. administration of "all laws" relating to the conduct of elections.
The Court is not persuaded. To allow the COMELEC to wait for a person to file a petition to
cancel the certificate of candidacy of one suffering from
The above-cited constitutional provision requiring a motion for perpetual special disqualification will result in the anomaly that
reconsideration before the COMELEC En Banc may take action these cases so grotesquely exemplify. Despite a prior perpetual
is confined only to cases where the COMELEC exercises its special disqualification, Jalosjos was elected and served twice as
quasi-judicial power. It finds no application, however, in mayor. The COMELEC will be grossly remiss in its constitutional
matters concerning the COMELEC’s exercise of administrative duty to "enforce and administer all laws" relating to the
functions. The distinction between the two is well-defined. As conduct of elections if it does not motu proprio bar from
illumined in Villarosa v. COMELEC:16 running for public office those suffering from perpetual special
disqualification by virtue of a final judgment. (Emphasis and
The term ‘administrative’ connotes, or pertains, to underscoring supplied)
‘administration, especially management, as by managing or
conducting, directing or superintending, the execution, In Aratea v. COMELEC (Aratea),18 the Court similarly
application, or conduct of persons or things. It does not entail pronounced that the disqualification of a convict to run for
an opportunity to be heard, the production and weighing of public office, as affirmed by final judgment of a competent
evidence, and a decision or resolution thereon. While a ‘quasi- court, is part of the enforcement and administration of all laws
judicial function’ is a term which applies to the action, relating to the conduct of elections.19
discretion, etc., of public administrative officers or bodies, who
are required to investigate facts, or ascertain the existence of Applying these principles to the case at bar, it is clear that the
facts, hold hearings, and draw conclusions from them, as a COMELEC En Banc did not exercise its quasi-judicial functions
basis for their official action and to exercise discretion of a when it issued Resolution No. 9613 as it did not assume
judicial nature. (Emphasis and underscoring supplied) jurisdiction over any pending petition or resolve any election
case before it or any of its divisions. Rather, it merely
Crucial therefore to the present disquisition is the performed its duty to enforce and administer election laws in
determination of the nature of the power exercised by the cancelling petitioner’s CoC on the basis of his perpetual
COMELEC En Banc when it promulgated Resolution No. 9613. absolute disqualification, the fact of which had already been
established by his final conviction. In this regard, the COMELEC
The foregoing matter is not without established precedent. In En Banc was exercising its administrative functions, dispensing
Jalosjos, Jr. and Cardino, the Court held that the COMELEC’s with the need for a motion for reconsideration of a division
denial of due course to and/or cancellation of a CoC in view of a ruling under Section 3, Article IX-C of the Constitution, the same
candidate’s disqualification to run for elective office based on a being required only in quasi-judicial proceedings.
final conviction is subsumed under its mandate to enforce and
administer all laws relating to the conduct of elections. Lest it be misunderstood, while the denial of due course to
Accordingly, in such a situation, it is the COMELEC’s duty to and/or cancellation of one’s CoC generally necessitates the
cancel motu proprio the candidate’s CoC, notwithstanding the exercise of the COMELEC’s quasi-judicial functions commenced
absence of any petition initiating a quasi-judicial proceeding for through a petition based on either Sections 1220 or 7821 of the
the resolution of the same. Thus, the Court stated:17 OEC, or Section 4022 of the LGC, when the grounds therefor are
rendered conclusive on account of final and executory
Even without a petition under either Section 12 or Section 78 of judgments – as when a candidate’s disqualification to run for
the Omnibus Election Code, or under Section 40 of the Local public office is based on a final conviction – such exercise falls
Government Code, the COMELEC is under a legal duty to cancel within the COMELEC’s administrative functions, as in this case.
the certificate of candidacy of anyone suffering from the
accessory penalty of perpetual special disqualification to run for In this light, there is also no violation of procedural due process
public office by virtue of a final judgment of conviction. The since the COMELEC En Banc would be acting in a purely
final judgment of conviction is notice to the COMELEC of the administrative manner. Administrative power is concerned with
disqualification of the convict from running for public office. the work of applying policies and enforcing orders as
The law itself bars the convict from running for public office, determined by proper governmental organs.23 As petitioner’s
and the disqualification is part of the final judgment of disqualification to run for public office had already been settled
conviction. The final judgment of the court is addressed not in a previous case and now stands beyond dispute, it is
only to the Executive branch, but also to other government incumbent upon the COMELEC En Banc to cancel his CoC as a
agencies tasked to implement the final judgment under the law. matter of course, else it be remiss in fulfilling its duty to enforce
226
and administer all laws and regulations relative to the conduct Keeping with the above-mentioned statutory construction
of an election. principle, the Court observes that the conflict between these
provisions of law may be properly reconciled. In particular,
Equally compelling is the fact that the denial of petitioner’s while Section 40(a) of the LGC allows a prior convict to run for
Petition for Inclusion as a registered voter in Zamboanga City local elective office after the lapse of two (2) years from the
had already attained finality by virtue of the RTC’s Order dated time he serves his sentence, the said provision should not be
October 31, 2012. In this accord, petitioner’s non-compliance deemed to cover cases wherein the law26 imposes a penalty,
with the voter registration requirement under Section 39(a) of either as principal or accessory,27 which has the effect of
the LGC24 is already beyond question and likewise provides a disqualifying the convict to run for elective office. An example
sufficient ground for the cancellation of his CoC altogether. of this would be Article 41 of the RPC, which imposes the
penalty of perpetual28 absolute29 disqualification as an
B. Petitioner’s right to run for accessory to the principal penalties of reclusion perpetua and
elective office. reclusion temporal:
It is petitioner’s submission that Article 30 of the RPC was ART. 41. Reclusion perpetua and reclusion temporal – Their
partially amended by Section 40(a) of the LGC and thus, claims accessory penalties. - The penalties of reclusion perpetua and
that his perpetual absolute disqualification had already been reclusion temporal shall carry with them that of civil
removed. interdiction for life or during the period of the sentence as the
case may be, and that of perpetual absolute disqualification
The argument is untenable. which the offender shall suffer even though pardoned as to the
principal penalty, unless the same shall have been expressly
Well-established is the rule that every new statute should be remitted in the pardon. (Emphasis and underscoring supplied)
construed in connection with those already existing in relation
to the same subject matter and all should be made to In this relation, Article 30 of the RPC, as earlier cited, provides
harmonize and stand together, if they can be done by any fair that the penalty of perpetual absolute disqualification has the
and reasonable interpretation.25 effect of depriving the convicted felon of the privilege to run for
elective office. To note, this penalty, as well as other penalties
On the one hand, Section 40(a) of the LGC, applicable as it is to of similar import, is based on the presumptive rule that one
local elective candidates, provides: who is rendered infamous by conviction of a felony, or other
base offense indicative of moral turpitude, is unfit to hold
SEC. 40. Disqualifications. – The following persons are public office,30 as the same partakes of a privilege which the
disqualified from running for any elective local position: State grants only to such classes of persons which are most
likely to exercise it for the common good.31
(a) Those sentenced by final judgment for an offense involving
moral turpitude or for an offense punishable by one (1) year or Pertinently, it is observed that the import of Article 41 in
more of imprisonment, within two (2) years after serving relation to Article 30 of the RPC is more direct and specific in
sentence; (Emphasis and underscoring supplied) nature – insofar as it deprives the candidate to run for elective
office due to his conviction – as compared to Section 40(a) of
And on the other hand, Article 30 of the RPC reads: the LGC which broadly speaks of offenses involving moral
turpitude and those punishable by one (1) year or more of
ART. 30. Effects of the penalties of perpetual or temporary imprisonment without any consideration of certain
absolute disqualification. - The penalties of perpetual or disqualifying effects to one’s right to suffrage. Accordingly,
temporary absolute disqualification for public office shall Section 40(a) of the LGC should be considered as a law of
produce the following effects: general application and therefore, must yield to the more
definitive RPC provisions in line with the principle of lex
1. The deprivation of the public offices and employments which specialis derogat generali – general legislation must give way to
the offender may have held, even if conferred by popular special legislation on the same subject, and generally is so
election. interpreted as to embrace only cases in which the special
provisions are not applicable. In other words, where two
2. The deprivation of the right to vote in any election for any statutes are of equal theoretical application to a particular case,
popular office or to be elected to such office. the one specially designed therefor should prevail.32
3. The disqualification for the offices or public employments In the present case, petitioner was sentenced to suffer the
and for the exercise of any of the rights mentioned. principal penalties of reclusion perpetua and reclusion
temporal which, pursuant to Article 41 of the RPC, carried with
In case of temporary disqualification, such disqualification as is it the accessory penalty of perpetual absolute disqualification
comprised in paragraphs 2 and 3 of this Article shall last during and in turn, pursuant to Article 30 of the RPC, disqualified him
the term of the sentence. to run for elective office. As discussed, Section 40(a) of the LGC
would not apply to cases wherein a penal provision – such as
4. The loss of all rights to retirement pay or other pension for Article 41 in this case – directly and specifically prohibits the
any office formerly held. (Emphasis and underscoring supplied) convict from running for elective office. Hence, despite the
lapse of two (2) years from petitioner’s service of his commuted
prison term, he remains bound to suffer the accessory penalty
227
of perpetual absolute disqualification which consequently, penalty of perpetual absolute disqualification which petitioner
disqualifies him to run as mayor for Zamboanga City. continues to suffer.1âwphi1 Thereby, he remains disqualified to
run for any elective office pursuant to Article 30 of the RPC.
Notably, Article 41 of the RPC expressly states that one who is
previously convicted of a crime punishable by reclusion WHEREFORE, the petition is DISMISSED.
perpetua or reclusion temporal continues to suffer the
accessory penalty of perpetual absolute disqualification even 94. BASES CONVERSION DEVELOPMENT
though pardoned as to the principal penalty, unless the said AUTHORITY,Petitioner, vs.ROSA REYES, CENANDO, REYES and
accessory penalty shall have been expressly remitted in the CARLOS REYES, Respondents.
pardon.33 In this case, the same accessory penalty had not
been expressly remitted in the Order of Commutation or by any Assailed in this petition for review on certiorari1 are the May 7,
subsequent pardon and as such, petitioner’s disqualification to 20102 and October 15, 20103 Resolutions of the Court of
run for elective office is deemed to subsist. Appeals (CA) in CA-G.R. CV No. 92181, dismissing petitioner
Bases Conversion Development Authority’s appeal from the
Further, it is well to note that the use of the word "perpetual" November 27, 2007 Order4 issued by the Regional Trial Court of
in the aforementioned accessory penalty connotes a lifetime Dinalupihan, Bataan, Branch 5 (RTC) in Civil Case Nos. DH-1136-
restriction and in this respect, does not depend on the length of 07, DH-1137-07 and DH-1138-07 for lack of jurisdiction, as only
the prison term which is imposed as its principal penalty. questions of law were raised on the aforesaid appeal.
Instructive on this point is the Court’s ruling in Lacuna v.
Abes,34 where the court explained the meaning of the term The Facts
"perpetual" as applied to the penalty of disqualification to run
for public office: On February 13, 2007, petitioner filed a complaint5 before the
RTC, docketed as Civil Case No. DH-1136-07, seeking to
The accessory penalty of temporary absolute disqualification expropriate 308 square meters of a parcel of land located in
disqualifies the convict for public office and for the right to Barangay San Ramon, Dinalupihan, Bataan, registered in the
vote, such disqualification to last only during the term of the name of respondent Rosa Reyes (Rosa) under Transfer
sentence (Article 27, paragraph 3, & Article 30, Revised Penal Certificate of Title (TCT) No. CLOA-10265, in view of the
Code) that, in the case of Abes, would have expired on 13 construction of the Subic-Clark-Tarlac Expressway (SCTEx). It
October 1961. claimed that the said property is an irrigated riceland with a
zonal value of ₱20.00 per square meter, based on the relevant
But this does not hold true with respect to the other accessory zonal valuation of the Bureau of Internal Revenue (BIR).
penalty of perpetual special disqualification for the exercise of Consequently, pursuant to Section 4(a)6 of Republic Act No.
the right of suffrage. This accessory penalty deprives the 89747 (RA 8974), petitioner deposited the amount of
convict of the right to vote or to be elected to or hold public ₱6,120.00,8 representing 100% of the zonal value of the same.
office perpetually, as distinguished from temporary special
disqualification, which lasts during the term of the sentence. Similar complaints for expropriation, docketed as Civil Case
(Emphasis and underscoring supplied) Nos. DH-1137-07 and DH-1138-07, were also filed over the 156
and 384 square meter portions of certain parcels of land owned
Likewise, adopting the Lacuna ruling, the Court, in the more by respondents Cenando Reyes9 (Cenando) and Carlos Reyes10
recent cases of Aratea,35 Jalosjos, Jr. and Cardino,36 held: (Carlos), respectively, for which petitioner deposited the sums
of ₱3,120.0011 and ₱7,680.0012 also in accordance with
Clearly, Lacuna instructs that the accessory penalty of perpetual Section 4(a) of RA 8974.
special disqualification "deprives the convict of the right to vote
or to be elected to or hold public office perpetually." In their separate Answers,13 respondents uniformly alleged
that while they had no objection to petitioner’s right to
The accessory penalty of perpetual special disqualification takes expropriate, they claimed that the amount of just
effect immediately once the judgment of conviction becomes compensation which petitioner offered was ridiculously low
final. The effectivity of this accessory penalty does not depend considering that the subject properties were already re-
on the duration of the principal penalty, or on whether the classified into residential lots as early as October 6, 2003 and as
convict serves his jail sentence or not. The last sentence of such, their zonal value ranged from ₱3,000.00 to ₱6,000.00 per
Article 32 states that "the offender shall not be permitted to square meter, as determined by the BIR. Nevertheless, to
hold any public office during the period of his [perpetual expedite the proceedings, respondents expressed that they
special] disqualification." Once the judgment of conviction were amenable to be paid the rate of ₱3,000.00 per square
becomes final, it is immediately executory. Any public office meter, at the lowest, translating to ₱924,000.00 for Rosa,14
that the convict may be holding at the time of his conviction ₱468,000.00 for Cenando15 and ₱1,152,000.00 for Carlos.16
becomes vacant upon finality of the judgment, and the convict
becomes ineligible to run for any elective public office The three (3) cases were subsequently consolidated as per the
perpetually. (Emphasis underscoring supplied) RTC’s Order dated May 23, 200717 and a writ of possession was
granted in petitioner’s favor on December 12, 2007.18
All told, applying the established principles of statutory
construction, and more significantly, considering the higher Meanwhile, on April 27, 2007, respondents filed a Motion for
interests of preserving the sanctity of our elections, the Court Summary Judgment19 (motion for summary judgment),
holds that Section 40(a) of the LGC has not removed the contending that there were no genuine issues left for
228
resolution, except for the amount of damages to be paid as just propriety should be a petition for review on certiorari under
compensation. Rule 45 of the Rules of Court and not an ordinary appeal under
Rule 41 as adopted by petitioner.
In opposition,20 petitioner argued that Rule 35 of the Rules of
Court on summary judgment applies only to ordinary civil In response, petitioner filed a Comment,30 asserting that its
actions for recovery of money claims and not to expropriation appeal raised both questions of fact and law and thus, was
cases. Moreover, it claimed that the mandatory constitution of properly lodged before the CA.
a panel of commissioners for the purpose of ascertaining the
amount of just compensation due under Section 5, Rule 67 of The CA Ruling
the Rules of Court precludes a summary judgment.
On May 7, 2010, the CA rendered a Resolution,31 dismissing
In turn, respondents filed a Reply,21 asserting that Rule 35 of petitioner’s appeal for being the wrong mode to assail the
the Rules of Court applies to both ordinary and special civil RTC’s summary judgment.
actions.
It found that the errors raised in petitioner’s appeal essentially
The RTC Ruling pertained to the propriety of the RTC’s grant of respondents’
motion for summary judgment and thus, involved only
On November 27, 2007, the RTC issued an Order,22 granting questions of law of which the CA had no jurisdiction. Hence,
the motion for summary judgment and thereby ordered considering its dismissal of petitioner’s appeal, it held that the
petitioner to pay respondents just compensation at the rate of assailed RTC Orders fixing the amount of just compensation had
₱3,000.00 per square meter, for a total of ₱924,000.00 for already become final and executory.
Rosa, ₱1,152,000.00 for Carlos and ₱468,000.00 for Cenando.
Petitioner moved for reconsideration which was, however,
In ruling for respondents, the RTC observed that the subject denied in a Resolution dated October 15, 2010,32 prompting it
properties were already re-classified from agricultural to to file the instant petition.
residential in 2004, or long before the corresponding
expropriation complaints were filed in February 2007. In this Issue Before The Court
regard, it held that the amount of just compensation should be
pegged anywhere between the range of ₱3,000.00 to ₱6,000.00 The sole issue in this case is whether or not the CA erred in
per square meter, pursuant to the relevant zonal valuation of dismissing petitioner’s appeal.
the BIR as published in the December 9, 2002 issue of the
Official Gazette.23 Thus, considering that respondents had The Court’s Ruling
already signified their willingness to accept the rate of
₱3,000.00 per square meter as just compensation, it ruled that The petition is meritorious.
there was nothing left for it to do but to terminate the
proceedings through summary judgment. In view of the A. Propriety of the CA’s dismissal
foregoing, the RTC brushed aside petitioner’s insistence for the of petitioner’s appeal.
constitution of a panel of commissioners under Section 5, Rule
67 of the Rules of Court, dismissing the same as a futile exercise Under Section 2, Rule 4133 of the Rules of Court, there are two
which would only delay the proceedings.24 (2) modes of appealing a judgment or final order of the RTC in
the exercise of its original jurisdiction:
Dissatisfied, petitioner filed a motion for reconsideration25
based on the following grounds: (a) respondents failed to prove (a) If the issues raised involve questions of fact or mixed
that the properties sought to be expropriated were properly re- questions of fact and law, the proper recourse is an ordinary
classified; (b) the RTC erred in fixing the value thereof at the appeal to the CA in accordance with Rule 41 in relation to Rule
rate of ₱3,000.00 per square meter given that they are not 44 of the Rules of Court; and
located along a national highway or road but are inner lots
which should be classified as "all other streets" and hence, (b) If the issues raised involve only questions of law, the appeal
accorded a lower zonal valuation; (c) the non-appointment of shall be to the Court by petition for review on certiorari in
the panel of commissioners was fatal; and (d) the issues accordance with Rule 45 of the Rules of Court.
surrounding the overlap of Rosa’s and Cenando’s properties
with that of the Philippine National Bank26 must first be Corollary thereto, should a party raise only questions of law
resolved so as not to prejudice the rights of the parties. In line through an ordinary appeal taken under Rule 41, Section 2, Rule
with these factual issues, petitioner maintained that a full- 50 of the Rules of Court provides that the said appeal shall be
blown trial should have been conducted by the RTC. dismissed.34
Petitioner’s motion for reconsideration was, however, denied in Jurisprudence dictates that there is a "question of law" when
an Order27 dated May 12, 2008, prompting it to file a notice of the doubt or difference arises as to what the law is on a certain
appeal.28 set of facts or circumstances; on the other hand, there is a
"question of fact" when the issue raised on appeal pertains to
For their part, respondents filed a Motion to Dismiss Appeal,29 the truth or falsity of the alleged facts. The test for determining
averring that an appeal from a summary judgment raises only whether the supposed error was one of "law" or "fact" is not
questions of law; hence, the proper recourse to assail its the appellation given by the parties raising the same; rather, it
229
is whether the reviewing court can resolve the issues raised on appeal only involve questions of law, no reversible error was
without evaluating the evidence, in which case, it is a question committed by the CA in dismissing petitioner’s appeal. The
of law; otherwise, it is one of fact.35 In other words, where proper recourse should have been to file a petition for review
there is no dispute as to the facts, the question of whether or on certiorari under Rule 45 of the Rules of Court.1âwphi1
not the conclusions drawn from these facts are correct is a
question of law.36 However, if the question posed requires a B. Relaxation of procedural rules.
re-evaluation of the credibility of witnesses, or the existence or
relevance of surrounding circumstances and their relationship While the RTC’s November 27, 2007 Order should – as a matter
to each other, the issue is factual.37 of course – already be regarded as final and executory due to
petitioner’s erroneous appeal, the Court, nonetheless, deems it
Applying these principles, the Court finds that the CA did not proper to relax the rules of procedure and remand the case to
err in dismissing petitioner’s appeal. the RTC in order to re-evaluate, on trial, the proper amount of
just compensation. Two (2) reasons impel this course of action:
Records show that petitioner raised four (4) issues38 in its
appeal before the CA: First, petitioner’s appeal – at least as to the first issue – would
have been granted due to its merit were it not for the foregoing
First, whether or not summary judgment was properly procedural lapse.
rendered by the RTC;
As earlier discussed, genuine issues remain to be threshed out
Second, whether or not there is any evidence on record to in this case which thereby negate the propriety of a summary
support the conclusion that the subject lots had already been judgment. In this respect, the RTC improperly issued the
re-classified from agricultural to residential; and if in the November 27, 2007 Order which granted respondents’ motion
affirmative, whether or not the same may be considered as for summary judgment.
"interior lots" which would necessarily affect its zonal
valuation; Second, expropriation cases involve the expenditure of public
funds and thus, are matters of public interest. In this light, trial
Third, whether or not the appointment of commissioners is courts are required to be more circumspect in their evaluation
indispensable in an expropriation case; and of the just compensation to be awarded to the owner of the
expropriated property,45 as in this case.
Fourth, whether or not the properties of Cenando and Rosa
Reyes overlap that of the Philippine National Bank. Records, however, show that the adjudged amount of just
compensation was not arrived at judiciously since the RTC
At the outset, it bears to note that the second and fourth issues based the same solely on respondents’ intimation that they
were not raised by petitioner in its opposition to respondents’ were willing to settle for the rate of ₱3,000.00 per square
motion for summary judgment39 but only in its motion for meter.46 It is settled that the final conclusions on the proper
reconsideration from the RTC’s Order dated November 27, amount of just compensation can only be made after due
2007.40 It has been consistently held that appellate courts are ascertainment of the requirements set forth under RA 8974 and
precluded from entertaining matters neither alleged nor raised not merely based on the declarations of the parties.47
during the proceedings below, but ventilated for the first time
only in a motion for reconsideration or on appeal.41 Thus, Further, it is observed that the RTC simply glossed over the
while these issues may be classified as questions of fact since issue regarding the proper classification of the subject
their resolution would require an evaluation of the evidence on properties as either residential or agricultural lands when the
record, the CA was precluded from considering the same. said matter should have been circumspectly resolved
Consequently, only the first and third issues were left for its considering that land classification accounts for a significant
determination. discrepancy in the valuation of the property. Based on the
evidence on record, the residential lots in Barangay San Ramon,
Unlike the second and fourth issues, the first and third issues Dinalupihan, Bataan have a zonal valuation ranging from
can be properly classified as questions of law since their ₱2,000.00 (for all other streets) to ₱6,000.00 per square meter
resolution would not involve an examination of the evidence (for those situated within the vicinity of the national highway
but only an application of the law on a particular set of facts. and San Juan to Payumo Streets).48 On the other hand,
petitioner claims . that agricultural lands command a zonal
To elucidate, the first issue regarding the propriety of the RTC’s valuation of only ₱20.00.49 Moreover, a property's zonal
summary judgment involves only a question of law since one valuation cannot, by and of itself, be considered as the sole
need not evaluate the evidence on record to assess if the basis for just compensation"; hence, the RTC was duty bound to
unresolved issues in this case, i.e., the classification of the look at other indices of fair market value.50 Unfortunately,
properties expropriated, its location and valuation, constitute records show that it did not.
genuine issues.42 This is in line with the rule that a summary
judgment is not warranted when there are genuine issues In fine, given the special and compelling reasons as above-
which call for a full blown trial.43 Similarly, the third issue discussed, the Court finds it appropriate to relax the rules of
concerning the propriety of the appointment of a panel of procedure in the interest of substantial justice. In Twin Towers
commissioners only requires an application of Section 5, Rule Condominium Corp. v. CA,51 the Court held that the merits of
67 of the Rules of Court,44 without the need of examining the the case may be regarded as a special or compelling reason to
evidence on record. Thus, given that the issues to be resolved relax procedural rules. Likewise, in Apo Fruits Corporation v.
230
Land Bank of the Philippines,52 special and compelling reasons government officials in responding to complaints of VAWC or
constitute recognized exceptions to the rule on immutability of requests for assistance.
judgment, viz:
A husband is now before the Court assailing the
As a rule, a final judgment may no longer be altered, amended constitutionality of R.A. 9262 as being violative of the equal
or modified, even if the alteration, amendment or modification protection and due process clauses, and an undue delegation of
is meant to correct what is perceived to l:1e an erroneous judicial power to barangay officials.
conclusion of fact or law and regardless of what court, be it the
highest Court of the land, rendered it. In the past, however, we The Factual Antecedents
have recognized exceptions to this rule by reversing judgments
and recalling their entries in the interest of substantial justice On March 23, 2006, Rosalie Jaype-Garcia (private respondent)
and where special and compelling reasons for such actions. filed, for herself and in behalf of her minor children, a verified
(Emphasis supplied) petition6 (Civil Case No. 06-797) before the Regional Trial Court
(RTC) of Bacolod City for the issuance of a Temporary
Accordingly, the case is hereby remanded to the RTC for further Protection Order (TPO) against her husband, Jesus C. Garcia
proceedings in order to determine the proper amount of just (petitioner), pursuant to R.A. 9262. She claimed to be a victim
compensation due to respondents. of physical abuse; emotional, psychological, and economic
violence as a result of marital infidelity on the part of
WHEREFORE, the petition is GRANTED. The May 7, 2010 and petitioner, with threats of deprivation of custody of her
October 15, 2010 Resolutions of the Court of Appeals in CA-G.R. children and of financial support.7
CV No. 92181 and the November 27, 2007 and May 12,2008
Orders of the Regional Trial Court of Dinalupihan, Bataan, Private respondent's claims
Branch 5 are hereby SET ASIDE. Let the records of this case be
REMANDED to the trial court for further proceedings to Private respondent married petitioner in 2002 when she was 34
determine the proper amount of just compensation. years old and the former was eleven years her senior. They
have three (3) children, namely: Jo-Ann J. Garcia, 17 years old,
95. JESUS C. GARCIA, Petitioner, vs.THE HONORABLE RAY who is the natural child of petitioner but whom private
ALAN T. DRILON, Presiding Judge, Regional Trial Court-Branch respondent adopted; Jessie Anthone J. Garcia, 6 years old; and
41, Bacolod City, and ROSALIE JAYPE-GARCIA, for herself and Joseph Eduard J. Garcia, 3 years old.8
in behalf of minor children, namely: JO-ANN, JOSEPH EDUARD,
JESSE ANTHONE, all surnamed GARCIA, Respondents. Private respondent described herself as a dutiful and faithful
wife, whose life revolved around her husband. On the other
Hailed as the bastion of Christianity in Asia, the Philippines hand, petitioner, who is of Filipino-Chinese descent, is
boasts of 86.8 million Filipinos- or 93 percent of a total dominant, controlling, and demands absolute obedience from
population of 93.3 million – adhering to the teachings of Jesus his wife and children. He forbade private respondent to pray,
Christ.1 Yet, the admonition for husbands to love their wives as and deliberately isolated her from her friends. When she took
their own bodies just as Christ loved the church and gave up law, and even when she was already working part time at a
himself up for her2 failed to prevent, or even to curb, the law office, petitioner trivialized her ambitions and prevailed
pervasiveness of violence against Filipino women. The National upon her to just stay at home. He was often jealous of the fact
Commission on the Role of Filipino Women (NCRFW) reported that his attractive wife still catches the eye of some men, at one
that, for the years 2000-2003, "female violence comprised point threatening that he would have any man eyeing her
more than 90o/o of all forms of abuse and violence and more killed.9
than 90% of these reported cases were committed by the
women's intimate partners such as their husbands and live-in Things turned for the worse when petitioner took up an affair
partners."3 with a bank manager of Robinson's Bank, Bacolod City, who is
the godmother of one of their sons. Petitioner admitted to the
Thus, on March 8, 2004, after nine (9) years of spirited affair when private respondent confronted him about it in
advocacy by women's groups, Congress enacted Republic Act 2004. He even boasted to the household help about his sexual
(R.A.) No. 9262, entitled "An Act Defining Violence Against relations with said bank manager. Petitioner told private
Women and Their Children, Providing for Protective Measures respondent, though, that he was just using the woman because
for Victims, Prescribing Penalties Therefor, and for Other of their accounts with the bank.10
Purposes." It took effect on March 27, 2004.4
Petitioner's infidelity spawned a series of fights that left private
R.A. 9262 is a landmark legislation that defines and criminalizes respondent physically and emotionally wounded. In one of their
acts of violence against women and their children (VAWC) quarrels, petitioner grabbed private respondent on both arms
perpetrated by women's intimate partners, i.e, husband; and shook her with such force that caused bruises and
former husband; or any person who has or had a sexual or hematoma. At another time, petitioner hit private respondent
dating relationship, or with whom the woman has a common forcefully on the lips that caused some bleeding. Petitioner
child.5 The law provides for protection orders from the sometimes turned his ire on their daughter, Jo-Ann, who had
barangay and the courts to prevent the commission of further seen the text messages he sent to his paramour and whom he
acts of VAWC; and outlines the duties and responsibilities of blamed for squealing on him. He beat Jo-Ann on the chest and
barangay officials, law enforcers, prosecutors and court slapped her many times. When private respondent decided to
personnel, social workers, health care providers, and other local leave petitioner, Jo-Ann begged her mother to stay for fear that
231
if the latter leaves, petitioner would beat her up. Even the small exists or is about to recur, the RTC issued a TPO18 on March 24,
boys are aware of private respondent's sufferings. Their 6-year- 2006 effective for thirty (30) days, which is quoted hereunder:
old son said that when he grows up, he would beat up his
father because of his cruelty to private respondent.11 Respondent (petitioner herein), Jesus Chua Garcia, is hereby:
All the emotional and psychological turmoil drove private a) Ordered to remove all his personal belongings from the
respondent to the brink of despair. On December 17, 2005, conjugal dwelling or family home within 24 hours from receipt
while at home, she attempted suicide by cutting her wrist. She of the Temporary Restraining Order and if he refuses, ordering
was found by her son bleeding on the floor. Petitioner simply that he be removed by police officers from the conjugal
fled the house instead of taking her to the hospital. Private dwelling; this order is enforceable notwithstanding that the
respondent was hospitalized for about seven (7) days in which house is under the name of 236 Realty Holdings Inc. (Republic
time petitioner never bothered to visit, nor apologized or Act No. 9262 states "regardless of ownership"), this is to allow
showed pity on her. Since then, private respondent has been the Petitioner (private respondent herein) to enter the conjugal
undergoing therapy almost every week and is taking anti- dwelling without any danger from the Respondent.
depressant medications.12
After the Respondent leaves or is removed from the conjugal
When private respondent informed the management of dwelling, or anytime the Petitioner decides to return to the
Robinson's Bank that she intends to file charges against the conjugal dwelling to remove things, the Petitioner shall be
bank manager, petitioner got angry with her for jeopardizing assisted by police officers when re-entering the family home.
the manager's job. He then packed his things and told private
respondent that he was leaving her for good. He even told The Chief of Police shall also give the Petitioner police
private respondent's mother, who lives with them in the family assistance on Sunday, 26 March 2006 because of the danger
home, that private respondent should just accept his that the Respondent will attempt to take her children from her
extramarital affair since he is not cohabiting with his paramour when he arrives from Manila and finds out about this suit.
and has not sired a child with her.13
b) To stay away from the petitioner and her children, mother
and all her household help and driver from a distance of 1,000
Private respondent is determined to separate from petitioner meters, and shall not enter the gate of the subdivision where
but she is afraid that he would take her children from her and the Petitioner may be temporarily residing.
deprive her of financial support. Petitioner had previously
warned her that if she goes on a legal battle with him, she c) Not to harass, annoy, telephone, contact or otherwise
would not get a single centavo.14 communicate with the Petitioner, directly or indirectly, or
through other persons, or contact directly or indirectly her
Petitioner controls the family businesses involving mostly the children, mother and household help, nor send gifts, cards,
construction of deep wells. He is the President of three flowers, letters and the like. Visitation rights to the children
corporations – 326 Realty Holdings, Inc., Negros Rotadrill may be subject of a modified TPO in the future.
Corporation, and J-Bros Trading Corporation – of which he and
private respondent are both stockholders. In contrast to the d) To surrender all his firearms including a .9MM caliber firearm
absolute control of petitioner over said corporations, private and a Walther PPK and ordering the Philippine National Police
respondent merely draws a monthly salary of ₱20,000.00 from Firearms and Explosives Unit and the Provincial Director of the
one corporation only, the Negros Rotadrill Corporation. PNP to cancel all the Respondent's firearm licenses. He should
Household expenses amounting to not less than ₱200,000.00 a also be ordered to surrender any unlicensed firearms in his
month are paid for by private respondent through the use of possession or control.
credit cards, which, in turn, are paid by the same corporation
together with the bills for utilities.15 e) To pay full financial support for the Petitioner and the
children, including rental of a house for them, and educational
On the other hand, petitioner receives a monthly salary of and medical expenses.
₱60,000.00 from Negros Rotadrill Corporation, and enjoys
unlimited cash advances and other benefits in hundreds of f) Not to dissipate the conjugal business.
thousands of pesos from the corporations.16 After private
respondent confronted him about the affair, petitioner forbade g) To render an accounting of all advances, benefits, bonuses
her to hold office at JBTC Building, Mandalagan, where all the and other cash he received from all the corporations from 1
businesses of the corporations are conducted, thereby January 2006 up to 31 March 2006, which himself and as
depriving her of access to full information about said President of the corporations and his Comptroller, must submit
businesses. Until the filing of the petition a quo, petitioner has to the Court not later than 2 April 2006. Thereafter, an
not given private respondent an accounting of the businesses accounting of all these funds shall be reported to the court by
the value of which she had helped raise to millions of pesos.17 the Comptroller, copy furnished to the Petitioner, every 15 days
of the month, under pain of Indirect Contempt of Court.
Action of the RTC of Bacolod City
h) To ensure compliance especially with the order granting
Finding reasonable ground to believe that an imminent danger support pendente lite, and considering the financial resources
of violence against the private respondent and her children of the Respondent and his threat that if the Petitioner sues she
will not get a single centavo, the Respondent is ordered to put
232
up a BOND TO KEEP THE PEACE in the amount of FIVE MILLION
PESOS, in two sufficient sureties. d) Deliver full financial support of Php200,000.00 and
Php50,000.00 for rental and Php25,000.00 for clothes of the
On April 24, 2006, upon motion19 of private respondent, the three petitioners (sic) children within 24 hours from receipt of
trial court issued an amended TPO,20 effective for thirty (30) the Temporary Protection Order by his counsel, otherwise be
days, which included the following additional provisions: declared in indirect contempt of Court;
i) The petitioners (private respondents herein) are given the e) That respondent surrender his two firearms and all
continued use of the Nissan Patrol and the Starex Van which unlicensed firearms to the Clerk of Court within 24 hours from
they are using in Negros Occidental. receipt of the Temporary Protection Order by his counsel;
j) The petitioners are given the continued use and occupation of f) That respondent shall pay petitioner educational expenses of
the house in Parañaque, the continued use of the Starex van in the children upon presentation of proof of payment of such
Metro Manila, whenever they go to Manila. expenses.23
k) Respondent is ordered to immediately post a bond to keep Claiming that petitioner continued to deprive them of financial
the peace, in two sufficient sureties. support; failed to faithfully comply with the TPO; and
committed new acts of harassment against her and their
l) To give monthly support to the petitioner provisionally fixed children, private respondent filed another application24 for the
in the sum of One Hundred Fifty Thousand Pesos (Php issuance of a TPO ex parte. She alleged inter
150,000.00) per month plus rental expenses of Fifty Thousand
Pesos (Php 50,000.00) per month until the matter of support alia that petitioner contrived a replevin suit against himself by J-
could be finally resolved. Bros Trading, Inc., of which the latter was purportedly no longer
president, with the end in view of recovering the Nissan Patrol
Two days later, or on April 26, 2006, petitioner filed an and Starex Van used by private respondent and the children. A
Opposition to the Urgent Ex-Parte Motion for Renewal of the writ of replevin was served upon private respondent by a group
TPO21 seeking the denial of the renewal of the TPO on the of six or seven policemen with long firearms that scared the
grounds that it did not (1) comply with the three-day notice two small boys, Jessie Anthone and Joseph Eduard.25
rule, and (2) contain a notice of hearing. He further asked that
the TPO be modified by (1) removing one vehicle used by While Joseph Eduard, then three years old, was driven to
private respondent and returning the same to its rightful school, two men allegedly attempted to kidnap him, which
owner, the J-Bros Trading Corporation, and (2) cancelling or incident traumatized the boy resulting in his refusal to go back
reducing the amount of the bond from ₱5,000,000.00 to a more to school. On another occasion, petitioner allegedly grabbed
manageable level at ₱100,000.00. their daughter, Jo-Ann, by the arm and threatened her.26 The
incident was reported to the police, and Jo-Ann subsequently
Subsequently, on May 23, 2006, petitioner moved22 for the filed a criminal complaint against her father for violation of R.A.
modification of the TPO to allow him visitation rights to his 7610, also known as the "Special Protection of Children Against
children. Child Abuse, Exploitation and Discrimination Act."
On May 24, 2006, the TPO was renewed and extended yet Aside from the replevin suit, petitioner's lawyers initiated the
again, but subject only to the following modifications prayed filing by the housemaids working at the conjugal home of a
for by private respondent: complaint for kidnapping and illegal detention against private
respondent. This came about after private respondent, armed
a) That respondent (petitioner herein) return the clothes and with a TPO, went to said home to get her and her children's
other personal belongings of Rosalie and her children to Judge belongings. Finding some of her things inside a housemaid's
Jesus Ramos, co-counsel for Petitioner, within 24 hours from (Sheryl Jamola) bag in the maids' room, private respondent filed
receipt of the Temporary Protection Order by his counsel, a case for qualified theft against Jamola.27
otherwise be declared in Indirect Contempt of Court;
On August 23, 2006, the RTC issued a TPO,28 effective for thirty
b) Respondent shall make an accounting or list of furniture and (30) days, which reads as follows:
equipment in the conjugal house in Pitimini St., Capitolville
Subdivision, Bacolod City within 24 hours from receipt of the Respondent (petitioner herein), Jesus Chua Garcia, is hereby:
Temporary Protection Order by his counsel;
1) Prohibited from threatening to commit or committing,
c) Ordering the Chief of the Women's Desk of the Bacolod City personally or through another, acts of violence against the
Police Headquarters to remove Respondent from the conjugal offended party;
dwelling within eight (8) hours from receipt of the Temporary
Protection Order by his counsel, and that he cannot return until 2) Prohibited from harassing, annoying, telephoning, contacting
48 hours after the petitioners have left, so that the petitioner or otherwise communicating in any form with the offended
Rosalie and her representatives can remove things from the party, either directly or indirectly;
conjugal home and make an inventory of the household
furniture, equipment and other things in the conjugal home, 3) Required to stay away, personally or through his friends,
which shall be submitted to the Court. relatives, employees or agents, from all the Petitioners Rosalie
233
J. Garcia and her children, Rosalie J. Garcia's three brothers, her October 5, had already been issued renewing the TPO dated
mother Primitiva Jaype, cook Novelita Caranzo, driver Romeo August 23, 2006. The pertinent portion is quoted hereunder:
Hontiveros, laundrywoman Mercedita Bornales, security guard
Darwin Gayona and the petitioner's other household helpers xxxx
from a distance of 1,000 meters, and shall not enter the gate of
the subdivision where the Petitioners are temporarily residing, x x x it appearing further that the hearing could not yet be
as well as from the schools of the three children; Furthermore, finally terminated, the Temporary Protection Order issued on
that respondent shall not contact the schools of the children August 23, 2006 is hereby renewed and extended for thirty (30)
directly or indirectly in any manner including, ostensibly to pay days and continuously extended and renewed for thirty (30)
for their tuition or other fees directly, otherwise he will have days, after each expiration, until further orders, and subject to
access to the children through the schools and the TPO will be such modifications as may be ordered by the court.
rendered nugatory;
After having received a copy of the foregoing Order, petitioner
4) Directed to surrender all his firearms including .9MM caliber no longer submitted the required comment to private
firearm and a Walther PPK to the Court; respondent's motion for renewal of the TPO arguing that it
would only be an "exercise in futility."33
5) Directed to deliver in full financial support of Php200,000.00
a month and Php50,000.00 for rental for the period from Proceedings before the CA
August 6 to September 6, 2006; and support in arrears from
March 2006 to August 2006 the total amount of During the pendency of Civil Case No. 06-797, petitioner filed
Php1,312,000.00; before the Court of Appeals (CA) a petition34 for prohibition
(CA-G.R. CEB-SP. No. 01698), with prayer for injunction and
6) Directed to deliver educational expenses for 2006-2007 the temporary restraining order, challenging (1) the
amount of Php75,000.00 and Php25,000.00; constitutionality of R.A. 9262 for being violative of the due
process and the equal protection clauses, and (2) the validity of
7) Directed to allow the continued use of a Nissan Patrol with the modified TPO issued in the civil case for being "an
Plate No. FEW 508 and a Starex van with Plate No. FFD 991 and unwanted product of an invalid law."
should the respondent fail to deliver said vehicles, respondent
is ordered to provide the petitioner another vehicle which is the On May 26, 2006, the appellate court issued a 60-day
one taken by J Bros Tading; Temporary Restraining Order36 (TRO) against the enforcement
of the TPO, the amended TPOs and other orders pursuant
8) Ordered not to dissipate, encumber, alienate, sell, lease or thereto.
otherwise dispose of the conjugal assets, or those real
properties in the name of Jesus Chua Garcia only and those in Subsequently, however, on January 24, 2007, the appellate
which the conjugal partnership of gains of the Petitioner Rosalie court dismissed36 the petition for failure of petitioner to raise
J. Garcia and respondent have an interest in, especially the the constitutional issue in his pleadings before the trial court in
conjugal home located in No. 14, Pitimini St., Capitolville the civil case, which is clothed with jurisdiction to resolve the
Subdivision, Bacolod City, and other properties which are same. Secondly, the challenge to the validity
conjugal assets or those in which the conjugal partnership of
gains of Petitioner Rosalie J. Garcia and the respondent have an of R.A. 9262 through a petition for prohibition seeking to annul
interest in and listed in Annexes "I," "I-1," and "I-2," including the protection orders issued by the trial court constituted a
properties covered by TCT Nos. T-186325 and T-168814; collateral attack on said law.
9) Ordered that the Register of Deeds of Bacolod City and E.B. His motion for reconsideration of the foregoing Decision having
Magalona shall be served a copy of this TEMPORARY been denied in the Resolution37 dated August 14, 2007,
PROTECTION ORDER and are ordered not to allow the transfer, petitioner is now before us alleging that –
sale, encumbrance or disposition of these above-cited
properties to any person, entity or corporation without the The Issues
personal presence of petitioner Rosalie J. Garcia, who shall affix
her signature in the presence of the Register of Deeds, due to I.
the fear of petitioner Rosalie that her signature will be forged in
order to effect the encumbrance or sale of these properties to THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION
defraud her or the conjugal partnership of gains. ON THE THEORY THAT THE ISSUE OF CONSTITUTIONALITY WAS
NOT RAISED AT THE EARLIEST OPPORTUNITY AND THAT, THE
In its Order29 dated September 26, 2006, the trial court PETITION CONSTITUTES A COLLATERAL ATTACK ON THE
extended the aforequoted TPO for another ten (10) days, and VALIDITY OF THE LAW.
gave petitioner a period of five (5) days within which to show
cause why the TPO should not be renewed, extended, or II.
modified. Upon petitioner's manifestation,30 however, that he
has not received a copy of private respondent's motion to THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
modify/renew the TPO, the trial court directed in its Order31 FAILING TO CONCLUDE THAT R.A. 9262 IS DISCRIMINATORY,
dated October 6, 2006 that petitioner be furnished a copy of UNJUST, AND VIOLATIVE OF THE EQUAL PROTECTION CLAUSE.
said motion. Nonetheless, an Order32 dated a day earlier,
234
III. where the crime or any of its elements was committed at the
option of the complainant. (Emphasis supplied)
THE COURT OF APPEALS COMMITTED GRAVE MISTAKE IN NOT
FINDING THAT R.A. 9262 RUNS COUNTER TO THE DUE PROCESS Inspite of its designation as a family court, the RTC of Bacolod
CLAUSE OF THE CONSTITUTION. City remains possessed of authority as a court of general
original jurisdiction to pass upon all kinds of cases whether civil,
IV. criminal, special proceedings, land registration, guardianship,
naturalization, admiralty or insolvency.44 It is settled that RTCs
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LAW have jurisdiction to resolve the constitutionality of a statute,45
DOES VIOLENCE TO THE POLICY OF THE STATE TO PROTECT THE "this authority being embraced in the general definition of the
FAMILY AS A BASIC SOCIAL INSTITUTION. judicial power to determine what are the valid and binding laws
by the criterion of their conformity to the fundamental law."46
V. The Constitution vests the power of judicial review or the
power to declare the constitutionality or validity of a law,
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT DECLARING treaty, international or executive agreement, presidential
R.A. No. 9262 AS INVALID AND UNCONSTITUTIONAL BECAUSE decree, order, instruction, ordinance, or regulation not only in
IT ALLOWS AN UNDUE DELEGATION OF JUDICIAL POWER TO this Court, but in all RTCs.47 We said in J.M. Tuason and Co.,
THE BARANGAY OFFICIALS.38 Inc. v. CA48 that, "plainly the Constitution contemplates that
the inferior courts should have jurisdiction in cases involving
The Ruling of the Court constitutionality of any treaty or law, for it speaks of appellate
review of final judgments of inferior courts in cases where such
Before delving into the arguments propounded by petitioner constitutionality happens to be in issue." Section 5, Article VIII
against the constitutionality of R.A. 9262, we shall first tackle of the 1987 Constitution reads in part as follows:
the propriety of the dismissal by the appellate court of the
petition for prohibition (CA-G.R. CEB-SP. No. 01698) filed by SEC. 5. The Supreme Court shall have the following powers:
petitioner.
xxx
As a general rule, the question of constitutionality must be
raised at the earliest opportunity so that if not raised in the 2. Review, revise, reverse, modify, or affirm on appeal or
pleadings, ordinarily it may not be raised in the trial, and if not certiorari, as the law or the Rules of Court may provide, final
raised in the trial court, it will not be considered on appeal.39 judgments and orders of lower courts in:
Courts will not anticipate a question of constitutional law in
advance of the necessity of deciding it.40 a. All cases in which the constitutionality or validity of any
treaty, international or executive agreement, law, presidential
In defending his failure to attack the constitutionality of R.A. decree, proclamation, order, instruction, ordinance, or
9262 before the RTC of Bacolod City, petitioner argues that the regulation is in question.
Family Court has limited authority and jurisdiction that is
"inadequate to tackle the complex issue of constitutionality."41 xxxx
Moreover, it cannot be denied that this issue affects the As the rules stand, a review of the case by appeal or certiorari
resolution of the case a quo because the right of private before judgment is prohibited. Moreover, if the appeal of a
respondent to a protection order is founded solely on the very judgment granting permanent protection shall not stay its
statute the validity of which is being attacked53 by petitioner enforcement,55 with more reason that a TPO, which is valid
who has sustained, or will sustain, direct injury as a result of its only for thirty (30) days at a time,56 should not be enjoined.
enforcement. The alleged unconstitutionality of R.A. 9262 is, for
all intents and purposes, a valid cause for the non-issuance of a The mere fact that a statute is alleged to be unconstitutional or
protection order. invalid, does not of itself entitle a litigant to have the same
enjoined.57 In Younger v. Harris, Jr.,58 the Supreme Court of
That the proceedings in Civil Case No. 06-797 are summary in the United States declared, thus:
nature should not have deterred petitioner from raising the
same in his Opposition. The question relative to the Federal injunctions against state criminal statutes, either in
constitutionality of a statute is one of law which does not need their entirety or with respect to their separate and distinct
to be supported by evidence.54 Be that as it may, Section 25 of prohibitions, are not to be granted as a matter of course, even
A.M. No. 04-10-11-SC nonetheless allows the conduct of a if such statutes are unconstitutional. No citizen or member of
hearing to determine legal issues, among others, viz: the community is immune from prosecution, in good faith, for
his alleged criminal acts. The imminence of such a prosecution
SEC. 25. Order for further hearing. - In case the court even though alleged to be unauthorized and, hence, unlawful is
determines the need for further hearing, it may issue an order not alone ground for relief in equity which exerts its
containing the following: extraordinary powers only to prevent irreparable injury to the
plaintiff who seeks its aid. (Citations omitted)
(a) Facts undisputed and admitted;
The sole objective of injunctions is to preserve the status quo
(b) Factual and legal issues to be resolved; until the trial court hears fully the merits of the case. It bears
stressing, however, that protection orders are granted ex parte
(c) Evidence, including objects and documents that have been so as to protect women and their children from acts of
marked and will be presented; violence. To issue an injunction against such orders will defeat
the very purpose of the law against VAWC.
(d) Names of witnesses who will be ordered to present their
direct testimonies in the form of affidavits; and Notwithstanding all these procedural flaws, we shall not shirk
from our obligation to determine novel issues, or issues of first
(e) Schedule of the presentation of evidence by both parties impression, with far-reaching implications. We have, time and
which shall be done in one day, to the extent possible, within again, discharged our solemn duty as final arbiter of
the 30-day period of the effectivity of the temporary protection constitutional issues, and with more reason now, in view of
order issued. (Emphasis supplied) private respondent's plea in her Comment59 to the instant
Petition that we should put the challenge to the
To obviate potential dangers that may arise concomitant to the constitutionality of R.A. 9262 to rest. And so we shall.
conduct of a hearing when necessary, Section 26 (b) of A.M. No.
04-10-11-SC provides that if a temporary protection order Intent of Congress in enacting R.A. 9262.
issued is due to expire, the trial court may extend or renew the
said order for a period of thirty (30) days each time until final Petitioner claims that since R.A. 9262 is intended to prevent
judgment is rendered. It may likewise modify the extended or and criminalize spousal and child abuse, which could very well
renewed temporary protection order as may be necessary to be committed by either the husband or the wife, gender alone
236
is not enough basis to deprive the husband/father of the there is a need to protect women's rights especially in the
remedies under the law.60 domestic environment.
A perusal of the deliberations of Congress on Senate Bill No. As I said earlier, there are nameless, countless, voiceless
2723,61 which became R.A. 9262, reveals that while the women who have not had the opportunity to file a case against
sponsor, Senator Luisa Pimentel-Ejercito (better known as their spouses, their live-in partners after years, if not decade, of
Senator Loi Estrada), had originally proposed what she called a battery and abuse. If we broaden the scope to include even the
"synthesized measure"62 – an amalgamation of two measures, men, assuming they can at all be abused by the women or their
namely, the "Anti-Domestic Violence Act" and the "Anti-Abuse spouses, then it would not equalize the already difficult
of Women in Intimate Relationships Act"63 – providing situation for women, Mr. President.
protection to "all family members, leaving no one in isolation"
but at the same time giving special attention to women as the I think that the sponsor, based on our earlier conversations,
"usual victims" of violence and abuse,64 nonetheless, it was concurs with this position. I am sure that the men in this
eventually agreed that men be denied protection under the Chamber who love their women in their lives so dearly will
same measure. We quote pertinent portions of the agree with this representation. Whether we like it or not, it is
deliberations: an unequal world. Whether we like it or not, no matter how
empowered the women are, we are not given equal
Wednesday, December 10, 2003 opportunities especially in the domestic environment where
the macho Filipino man would always feel that he is stronger,
Senator Pangilinan. I just wanted to place this on record, Mr. more superior to the Filipino woman.
President. Some women's groups have expressed concerns and
relayed these concerns to me that if we are to include domestic xxxx
violence apart from against women as well as other members
of the household, including children or the husband, they fear The President Pro Tempore. What does the sponsor say?
that this would weaken the efforts to address domestic
violence of which the main victims or the bulk of the victims Senator Estrada. Mr. President, before accepting this, the
really are the wives, the spouses or the female partners in a committee came up with this bill because the family members
relationship. We would like to place that on record. How does have been included in this proposed measure since the other
the good Senator respond to this kind of observation? members of the family other than women are also possible
victims of violence. While women are most likely the intended
Senator Estrada. Yes, Mr. President, there is this group of victims, one reason incidentally why the measure focuses on
women who call themselves "WIIR" Women in Intimate women, the fact remains that in some relatively few cases, men
Relationship. They do not want to include men in this domestic also stand to be victimized and that children are almost always
violence. But plenty of men are also being abused by women. I the helpless victims of violence. I am worried that there may
am playing safe so I placed here members of the family, not be enough protection extended to other family members
prescribing penalties therefor and providing protective particularly children who are excluded. Although Republic Act
measures for victims. This includes the men, children, live-in, No. 7610, for instance, more or less, addresses the special
common-law wives, and those related with the family.65 needs of abused children. The same law is inadequate.
Protection orders for one are not available in said law.
xxx
I am aware that some groups are apprehensive about granting
Wednesday, January 14, 2004 the same protection to men, fearing that they may use this law
to justify their abusive behavior against women. However, we
xxxx should also recognize that there are established procedures
and standards in our courts which give credence to evidentiary
The President Pro Tempore. x x x support and cannot just arbitrarily and whimsically entertain
baseless complaints.
Also, may the Chair remind the group that there was the
discussion whether to limit this to women and not to families Mr. President, this measure is intended to harmonize family
which was the issue of the AWIR group. The understanding that relations and to protect the family as the basic social
I have is that we would be having a broader scope rather than institution. Though I recognize the unequal power relations
just women, if I remember correctly, Madam sponsor. between men and women in our society, I believe we have an
obligation to uphold inherent rights and dignity of both
Senator Estrada. Yes, Mr. President. husband and wife and their immediate family members,
particularly children.
As a matter of fact, that was brought up by Senator Pangilinan
during the interpellation period. While I prefer to focus mainly on women, I was compelled to
include other family members as a critical input arrived at after
I think Senator Sotto has something to say to that. a series of consultations/meetings with various NGOs, experts,
sports groups and other affected sectors, Mr. President.
Senator Legarda. Mr. President, the reason I am in support of
the measure. Do not get me wrong. However, I believe that Senator Sotto. Mr. President.
237
The President Pro Tempore. Yes, with the permission of the SOTTO-LEGARDA AMENDMENTS
other senators.
Therefore, may I propose an amendment that, yes, we remove
Senator Sotto. Yes, with the permission of the two ladies on the the aspect of the men in the bill but not the children.
Floor.
Senator Legarda. I agree, Mr. President, with the Minority
The President Pro Tempore. Yes, Sen. Vicente C. Sotto III is Leader.
recognized.
The President Pro Tempore. Effectively then, it will be women
Senator Sotto. I presume that the effect of the proposed AND CHILDREN.
amendment of Senator Legarda would be removing the "men
and children" in this particular bill and focus specifically on Senator Sotto. Yes, Mr. President.
women alone. That will be the net effect of that proposed
amendment. Hearing the rationale mentioned by the Senator Estrada. It is accepted, Mr. President.
distinguished sponsor, Sen. Luisa "Loi" Ejercito Estrada, I am not
sure now whether she is inclined to accept the proposed The President Pro Tempore. Is there any objection? [Silence]
amendment of Senator Legarda. There being none, the amendment, as amended, is
approved.66
I am willing to wait whether she is accepting this or not because
if she is going to accept this, I will propose an amendment to It is settled that courts are not concerned with the wisdom,
the amendment rather than object to the amendment, Mr. justice, policy, or expediency of a statute.67 Hence, we dare not
President. venture into the real motivations and wisdom of the members
of Congress in limiting the protection against violence and
xxxx abuse under R.A. 9262 to women and children only. No proper
challenge on said grounds may be entertained in this
Senator Estrada. The amendment is accepted, Mr. President. proceeding. Congress has made its choice and it is not our
prerogative to supplant this judgment. The choice may be
The President Pro Tempore. Is there any objection? perceived as erroneous but even then, the remedy against it is
to seek its amendment or repeal by the legislative. By the
xxxx principle of separation of powers, it is the legislative that
determines the necessity, adequacy, wisdom and expediency of
Senator Sotto. x x x May I propose an amendment to the any law.68 We only step in when there is a violation of the
amendment. Constitution. However, none was sufficiently shown in this
case.
The President Pro Tempore. Before we act on the amendment?
R.A. 9262 does not violate the guaranty of equal protection of
Senator Sotto. Yes, Mr. President. the laws.
The President Pro Tempore. Yes, please proceed. Equal protection simply requires that all persons or things
similarly situated should be treated alike, both as to rights
Senator Sotto. Mr. President, I am inclined to believe the conferred and responsibilities imposed. The oft-repeated
rationale used by the distinguished proponent of the disquisition in the early case of Victoriano v. Elizalde Rope
amendment. As a matter of fact, I tend to agree. Kung may Workers' Union69 is instructive:
maaabuso, mas malamang iyong babae kaysa sa lalake. At saka
iyong mga lalake, puwede na talagang magulpi iyan. Okey lang The guaranty of equal protection of the laws is not a guaranty
iyan. But I cannot agree that we remove the children from this of equality in the application of the laws upon all citizens of the
particular measure. state. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man,
So, if I may propose an amendment – woman and child should be affected alike by a statute. Equality
of operation of statutes does not mean indiscriminate
The President Pro Tempore. To the amendment. operation on persons merely as such, but on persons according
to the circumstances surrounding them. It guarantees equality,
Senator Sotto. – more than the women, the children are very not identity of rights. The Constitution does not require that
much abused. As a matter of fact, it is not limited to minors. things which are different in fact be treated in law as though
The abuse is not limited to seven, six, 5-year-old children. I have they were the same. The equal protection clause does not
seen 14, 15-year-old children being abused by their fathers, forbid discrimination as to things that are different. It does not
even by their mothers. And it breaks my heart to find out about prohibit legislation which is limited either in the object to which
these things. it is directed or by the territory within which it is to operate.
Because of the inadequate existing law on abuse of children, The equal protection of the laws clause of the Constitution
this particular measure will update that. It will enhance and allows classification. Classification in law, as in the other
hopefully prevent the abuse of children and not only women. departments of knowledge or practice, is the grouping of things
in speculation or practice because they agree with one another
238
in certain particulars. A law is not invalid because of simple October 27, 2004, the pertinent portions of which are quoted
inequality. The very idea of classification is that of inequality, so hereunder:
that it goes without saying that the mere fact of inequality in no
manner determines the matter of constitutionality. All that is History reveals that most societies sanctioned the use of
required of a valid classification is that it be reasonable, which violence against women. The patriarch of a family was accorded
means that the classification should be based on substantial the right to use force on members of the family under his
distinctions which make for real differences; that it must be control. I quote the early studies:
germane to the purpose of the law; that it must not be limited
to existing conditions only; and that it must apply equally to Traditions subordinating women have a long history rooted in
each member of the class. This Court has held that the standard patriarchy – the institutional rule of men. Women were seen in
is satisfied if the classification or distinction is based on a virtually all societies to be naturally inferior both physically and
reasonable foundation or rational basis and is not palpably intellectually. In ancient Western societies, women whether
arbitrary. (Emphasis supplied) slave, concubine or wife, were under the authority of men. In
law, they were treated as property.
Measured against the foregoing jurisprudential yardstick, we
find that R.A. 9262 is based on a valid classification as shall The Roman concept of patria potestas allowed the husband to
hereinafter be discussed and, as such, did not violate the equal beat, or even kill, his wife if she endangered his property right
protection clause by favoring women over men as victims of over her. Judaism, Christianity and other religions oriented
violence and abuse to whom the State extends its protection. towards the patriarchal family strengthened the male
dominated structure of society.
I. R.A. 9262 rests on substantial distinctions.
English feudal law reinforced the tradition of male control over
The unequal power relationship between women and men; the women. Even the eminent Blackstone has been quoted in his
fact that women are more likely than men to be victims of commentaries as saying husband and wife were one and that
violence; and the widespread gender bias and prejudice against one was the husband. However, in the late 1500s and through
women all make for real differences justifying the classification the entire 1600s, English common law began to limit the right
under the law. As Justice McIntyre succinctly states, "the of husbands to chastise their wives. Thus, common law
accommodation of differences ... is the essence of true developed the rule of thumb, which allowed husbands to beat
equality."70 their wives with a rod or stick no thicker than their thumb.
A. Unequal power relationship between men and women In the later part of the 19th century, legal recognition of these
rights to chastise wives or inflict corporeal punishment ceased.
According to the Philippine Commission on Women (the Even then, the preservation of the family was given more
National Machinery for Gender Equality and Women's importance than preventing violence to women.
Empowerment), violence against women (VAW) is deemed to
be closely linked with the unequal power relationship between The metamorphosis of the law on violence in the United States
women and men otherwise known as "gender-based violence". followed that of the English common law. In 1871, the Supreme
Societal norms and traditions dictate people to think men are Court of Alabama became the first appellate court to strike
the leaders, pursuers, providers, and take on dominant roles in down the common law right of a husband to beat his wife:
society while women are nurturers, men's companions and
supporters, and take on subordinate roles in society. This The privilege, ancient though it may be, to beat one's wife with
perception leads to men gaining more power over women. a stick, to pull her hair, choke her, spit in her face or kick her
With power comes the need to control to retain that power. about the floor, or to inflict upon her like indignities, is not now
And VAW is a form of men's expression of controlling women to acknowledged by our law... In person, the wife is entitled to the
retain power.71 same protection of the law that the husband can invoke for
himself.
The United Nations, which has long recognized VAW as a
human rights issue, passed its Resolution 48/104 on the As time marched on, the women's advocacy movement became
Declaration on Elimination of Violence Against Women on more organized. The temperance leagues initiated it. These
December 20, 1993 stating that "violence against women is a leagues had a simple focus. They considered the evils of
manifestation of historically unequal power relations between alcoholism as the root cause of wife abuse. Hence, they
men and women, which have led to domination over and demonstrated and picketed saloons, bars and their husbands'
discrimination against women by men and to the prevention of other watering holes. Soon, however, their crusade was joined
the full advancement of women, and that violence against by suffragette movements, expanding the liberation
women is one of the crucial social mechanisms by which movement's agenda. They fought for women's right to vote, to
women are forced into subordinate positions, compared with own property, and more. Since then, the feminist movement
men."72 was on the roll.
Then Chief Justice Reynato S. Puno traced the historical and The feminist movement exposed the private invisibility of the
social context of gender-based violence and developments in domestic violence to the public gaze. They succeeded in
advocacies to eradicate VAW, in his remarks delivered during transforming the issue into an important public concern. No
the Joint Launching of R.A. 9262 and its Implementing Rules last less than the United States Supreme Court, in 1992 case
Planned Parenthood v. Casey, noted:
239
Children, Providing for Protective Measures for Victims,
In an average 12-month period in this country, approximately Prescribing Penalties therefor and for other Purposes."
two million women are the victims of severe assaults by their (Citations omitted)
male partners. In a 1985 survey, women reported that nearly
one of every eight husbands had assaulted their wives during B. Women are the "usual" and "most likely"
the past year. The [American Medical Association] views these
figures as "marked underestimates," because the nature of victims of violence.
these incidents discourages women from reporting them, and
because surveys typically exclude the very poor, those who do At the time of the presentation of Senate Bill No. 2723, official
not speak English well, and women who are homeless or in statistics on violence against women and children show that –
institutions or hospitals when the survey is conducted.
According to the AMA, "researchers on family violence agree x x x physical injuries had the highest number of cases at 5,058
that the true incidence of partner violence is probably double in 2002 representing 55.63% of total cases reported (9,903).
the above estimates; or four million severely assaulted women And for the first semester of 2003, there were 2,381 reported
per year." cases out of 4,354 cases which represent 54.31%. xxx (T)he
total number of women in especially difficult circumstances
Studies on prevalence suggest that from one-fifth to one-third served by the Department of Social Welfare and Development
of all women will be physically assaulted by a partner or ex- (DSWD) for the year 2002, there are 1,417 physically
partner during their lifetime... Thus on an average day in the abused/maltreated cases out of the total of 5,608 cases. xxx
United States, nearly 11,000 women are severely assaulted by (T)here are 1,091 DSWD cases out of a total number of 3,471
their male partners. Many of these incidents involve sexual cases for the first semester of 2003. Female violence comprised
assault... In families where wife beating takes place, moreover, more than 90% of all forms of abuse and violence and more
child abuse is often present as well. than 90% of these reported cases were committed by the
women's intimate partners such as their husbands and live-in
Other studies fill in the rest of this troubling picture. Physical partners.73
violence is only the most visible form of abuse. Psychological
abuse, particularly forced social and economic isolation of Recently, the Philippine Commission on Women presented
women, is also common. comparative statistics on violence against women across an
eight-year period from 2004 to August of 2011 with violations
Many victims of domestic violence remain with their abusers, under R.A. 9262 ranking first among the different VAW
perhaps because they perceive no superior alternative...Many categories since its implementation in 2004,74 thus:
abused women who find temporary refuge in shelters return to
their husbands, in large part because they have no other source Table 1. Annual Comparative Statistics on Violence Against
of income... Returning to one's abuser can be dangerous. Women, 2004 - 2011*
Recent Federal Bureau of Investigation statistics disclose that
8.8 percent of all homicide victims in the United States are Source: Philippine National Police – Women and Children
killed by their spouses...Thirty percent of female homicide Protection Center (WCPC)
victims are killed by their male partners.
On the other hand, no reliable estimates may be obtained on
Finally in 1994, the United States Congress enacted the domestic abuse and violence against men in the Philippines
Violence Against Women Act. because incidents thereof are relatively low and, perhaps,
because many men will not even attempt to report the
In the International front, the women's struggle for equality situation. In the United Kingdom, 32% of women who had ever
was no less successful. The United States Charter and the experienced domestic violence did so four or five (or more)
Universal Declaration of Human Rights affirmed the equality of times, compared with 11% of the smaller number of men who
all human beings. In 1979, the UN General Assembly adopted had ever experienced domestic violence; and women
the landmark Convention on the Elimination of all Forms of constituted 89% of all those who had experienced 4 or more
Discrimination Against Women (CEDAW). In 1993, the UN incidents of domestic violence.75 Statistics in Canada show that
General Assembly also adopted the Declaration on the spousal violence by a woman against a man is less likely to
Elimination of Violence Against Women. World conferences on cause injury than the other way around (18 percent versus 44
the role and rights of women have been regularly held in percent). Men, who experience violence from their spouses are
Mexico City, Copenhagen, Nairobi and Beijing. The UN itself much less likely to live in fear of violence at the hands of their
established a Commission on the Status of Women. spouses, and much less likely to experience sexual assault. In
fact, many cases of physical violence by a woman against a
The Philippines has been in cadence with the half – and full – spouse are in self-defense or the result of many years of
steps of all these women's movements. No less than Section 14, physical or emotional abuse.76
Article II of our 1987 Constitution mandates the State to
recognize the role of women in nation building and to ensure While there are, indeed, relatively few cases of violence and
the fundamental equality before the law of women and men. abuse perpetrated against men in the Philippines, the same
Our Senate has ratified the CEDAW as well as the Convention cannot render R.A. 9262 invalid.
on the Rights of the Child and its two protocols. To cap it all,
Congress, on March 8, 2004, enacted Rep. Act No. 9262, In a 1960 case involving the violation of a city ordinance
entitled "An Act Defining Violence Against Women and Their requiring drivers of animal-drawn vehicles to pick up, gather
240
and deposit in receptacles the manure emitted or discharged by does not discriminate against men.82 Petitioner's
their vehicle-drawing animals in any public highways, streets, contention,83 therefore, that R.A. 9262 is discriminatory and
plazas, parks or alleys, said ordinance was challenged as that it is an "anti-male," "husband-bashing," and "hate-men"
violative of the guaranty of equal protection of laws as its law deserves scant consideration. As a State Party to the
application is limited to owners and drivers of vehicle-drawing CEDAW, the Philippines bound itself to take all appropriate
animals and not to those animals, although not utilized, but measures "to modify the social and cultural patterns of conduct
similarly pass through the same streets. of men and women, with a view to achieving the elimination of
prejudices and customary and all other practices which are
The ordinance was upheld as a valid classification for the based on the idea of the inferiority or the superiority of either
reason that, while there may be non-vehicle-drawing animals of the sexes or on stereotyped roles for men and women."84
that also traverse the city roads, "but their number must be Justice Puno correctly pointed out that "(t)he paradigm shift
negligible and their appearance therein merely occasional, changing the character of domestic violence from a private
compared to the rig-drawing ones, as not to constitute a affair to a public offense will require the development of a
menace to the health of the community."77 The mere fact that distinct mindset on the part of the police, the prosecution and
the legislative classification may result in actual inequality is not the judges."85
violative of the right to equal protection, for every classification
of persons or things for regulation by law produces inequality in II. The classification is germane to the purpose of the law.
some degree, but the law is not thereby rendered invalid.78
The distinction between men and women is germane to the
C. Gender bias and prejudices purpose of R.A. 9262, which is to address violence committed
against women and children, spelled out in its Declaration of
From the initial report to the police through prosecution, trial, Policy, as follows:
and sentencing, crimes against women are often treated
differently and less seriously than other crimes. This was argued SEC. 2. Declaration of Policy. – It is hereby declared that the
by then United States Senator Joseph R. Biden, Jr., now Vice State values the dignity of women and children and guarantees
President, chief sponsor of the Violence Against Women Act full respect for human rights. The State also recognizes the
(VAWA), in defending the civil rights remedy as a valid exercise need to protect the family and its members particularly women
of the U.S. Congress' authority under the Commerce and Equal and children, from violence and threats to their personal safety
Protection Clauses. He stressed that the widespread gender and security.
bias in the U.S. has institutionalized historic prejudices against
victims of rape or domestic violence, subjecting them to Towards this end, the State shall exert efforts to address
"double victimization" – first at the hands of the offender and violence committed against women and children in keeping
then of the legal system.79 with the fundamental freedoms guaranteed under the
Constitution and the provisions of the Universal Declaration of
Our own Senator Loi Estrada lamented in her Sponsorship Human Rights, the Convention on the Elimination of All Forms
Speech for Senate Bill No. 2723 that "(w)henever violence of Discrimination Against Women, Convention on the Rights of
occurs in the family, the police treat it as a private matter and the Child and other international human rights instruments of
advise the parties to settle the conflict themselves. Once the which the Philippines is a party.
complainant brings the case to the prosecutor, the latter is
hesitant to file the complaint for fear that it might later be In 1979, the U.N. General Assembly adopted the CEDAW, which
withdrawn. This lack of response or reluctance to be involved the Philippines ratified on August 5, 1981. Subsequently, the
by the police and prosecution reinforces the escalating, Optional Protocol to the CEDAW was also ratified by the
recurring and often serious nature of domestic violence."80 Philippines on October 6, 2003.86 This Convention mandates
that State parties shall accord to women equality with men
Sadly, our own courts, as well, have exhibited prejudices and before the law87 and shall take all appropriate measures to
biases against our women. eliminate discrimination against women in all matters relating
to marriage and family relations on the basis of equality of men
In a recent case resolved on March 9, 2011, we fined RTC Judge and women.88 The Philippines likewise ratified the Convention
Venancio J. Amila for Conduct Unbecoming of a Judge. He used on the Rights of the Child and its two protocols.89 It is, thus,
derogatory and irreverent language in reference to the bound by said Conventions and their respective protocols.
complainant in a petition for TPO and PPO under R.A. 9262,
calling her as "only a live-in partner" and presenting her as an III. The classification is not limited to existing
"opportunist" and a "mistress" in an "illegitimate relationship."
Judge Amila even called her a "prostitute," and accused her of conditions only, and apply equally to all members
being motivated by "insatiable greed" and of absconding with
the contested property.81 Such remarks betrayed Judge Amila's Moreover, the application of R.A. 9262 is not limited to the
prejudices and lack of gender sensitivity. existing conditions when it was promulgated, but to future
conditions as well, for as long as the safety and security of
The enactment of R.A. 9262 aims to address the discrimination women and their children are threatened by violence and
brought about by biases and prejudices against women. As abuse.
emphasized by the CEDAW Committee on the Elimination of
Discrimination against Women, addressing or correcting R.A. 9262 applies equally to all women and children who suffer
discrimination through specific measures focused on women violence and abuse. Section 3 thereof defines VAWC as:
241
4. controlling the victims' own money or properties or solely
x x x any act or a series of acts committed by any person against controlling the conjugal money or properties.
a woman who is his wife, former wife, or against a woman with
whom the person has or had a sexual or dating relationship, or It should be stressed that the acts enumerated in the
with whom he has a common child, or against her child aforequoted provision are attributable to research that has
whether legitimate or illegitimate, within or without the family exposed the dimensions and dynamics of battery. The acts
abode, which result in or is likely to result in physical, sexual, described here are also found in the U.N. Declaration on the
psychological harm or suffering, or economic abuse including Elimination of Violence Against Women.90 Hence, the
threats of such acts, battery, assault, coercion, harassment or argument advanced by petitioner that the definition of what
arbitrary deprivation of liberty. It includes, but is not limited to, constitutes abuse removes the difference between violent
the following acts: action and simple marital tiffs is tenuous.
A. "Physical Violence" refers to acts that include bodily or There is nothing in the definition of VAWC that is vague and
physical harm; ambiguous that will confuse petitioner in his defense. The acts
enumerated above are easily understood and provide adequate
B. "Sexual violence" refers to an act which is sexual in nature, contrast between the innocent and the prohibited acts. They
committed against a woman or her child. It includes, but is not are worded with sufficient definiteness that persons of ordinary
limited to: intelligence can understand what conduct is prohibited, and
need not guess at its meaning nor differ in its application.91
a) rape, sexual harassment, acts of lasciviousness, treating a Yet, petitioner insists92 that phrases like "depriving or
woman or her child as a sex object, making demeaning and threatening to deprive the woman or her child of a legal right,"
sexually suggestive remarks, physically attacking the sexual "solely controlling the conjugal or common money or
parts of the victim's body, forcing her/him to watch obscene properties," "marital infidelity," and "causing mental or
publications and indecent shows or forcing the woman or her emotional anguish" are so vague that they make every quarrel a
child to do indecent acts and/or make films thereof, forcing the case of spousal abuse. However, we have stressed that the
wife and mistress/lover to live in the conjugal home or sleep "vagueness" doctrine merely requires a reasonable degree of
together in the same room with the abuser; certainty for the statute to be upheld – not absolute precision
or mathematical exactitude, as petitioner seems to suggest.
b) acts causing or attempting to cause the victim to engage in Flexibility, rather than meticulous specificity, is permissible as
any sexual activity by force, threat of force, physical or other long as the metes and bounds of the statute are clearly
harm or threat of physical or other harm or coercion; delineated. An act will not be held invalid merely because it
might have been more explicit in its wordings or detailed in its
c) Prostituting the woman or child. provisions.93
C. "Psychological violence" refers to acts or omissions causing There is likewise no merit to the contention that R.A. 9262
or likely to cause mental or emotional suffering of the victim singles out the husband or father as the culprit. As defined
such as but not limited to intimidation, harassment, stalking, above, VAWC may likewise be committed "against a woman
damage to property, public ridicule or humiliation, repeated with whom the person has or had a sexual or dating
verbal abuse and marital infidelity. It includes causing or relationship." Clearly, the use of the gender-neutral word
allowing the victim to witness the physical, sexual or "person" who has or had a sexual or dating relationship with
psychological abuse of a member of the family to which the the woman encompasses even lesbian relationships. Moreover,
victim belongs, or to witness pornography in any form or to while the law provides that the offender be related or
witness abusive injury to pets or to unlawful or unwanted connected to the victim by marriage, former marriage, or a
deprivation of the right to custody and/or visitation of common sexual or dating relationship, it does not preclude the
children. application of the principle of conspiracy under the Revised
Penal Code (RPC). Thus, in the case of Go-Tan v. Spouses Tan,94
D. "Economic abuse" refers to acts that make or attempt to the parents-in-law of Sharica Mari L. Go-Tan, the victim, were
make a woman financially dependent which includes, but is not held to be proper respondents in the case filed by the latter
limited to the following: upon the allegation that they and their son (Go-Tan's husband)
had community of design and purpose in tormenting her by
1. withdrawal of financial support or preventing the victim from giving her insufficient financial support; harassing and
engaging in any legitimate profession, occupation, business or pressuring her to be ejected from the family home; and in
activity, except in cases wherein the other spouse/partner repeatedly abusing her verbally, emotionally, mentally and
objects on valid, serious and moral grounds as defined in Article physically.
73 of the Family Code;
R.A. 9262 is not violative of the
2. deprivation or threat of deprivation of financial resources due process clause of the Constitution.
and the right to the use and enjoyment of the conjugal,
community or property owned in common; Petitioner bewails the disregard of R.A. 9262, specifically in the
issuance of POs, of all protections afforded by the due process
3. destroying household property; clause of the Constitution. Says he: "On the basis of
unsubstantiated allegations, and practically no opportunity to
respond, the husband is stripped of family, property, guns,
242
money, children, job, future employment and reputation, all in Where no TPO is issued ex parte, the court will nonetheless
a matter of seconds, without an inkling of what happened."95 order the immediate issuance and service of the notice upon
the respondent requiring him to file an opposition to the
A protection order is an order issued to prevent further acts of petition within five (5) days from service. The date of the
violence against women and their children, their family or preliminary conference and hearing on the merits shall likewise
household members, and to grant other necessary reliefs. Its be indicated on the notice.105
purpose is to safeguard the offended parties from further harm,
minimize any disruption in their daily life and facilitate the The opposition to the petition which the respondent himself
opportunity and ability to regain control of their life.96 shall verify, must be accompanied by the affidavits of witnesses
and shall show cause why a temporary or permanent
"The scope of reliefs in protection orders is broadened to protection order should not be issued.106
ensure that the victim or offended party is afforded all the
remedies necessary to curtail access by a perpetrator to the It is clear from the foregoing rules that the respondent of a
victim. This serves to safeguard the victim from greater risk of petition for protection order should be apprised of the charges
violence; to accord the victim and any designated family or imputed to him and afforded an opportunity to present his
household member safety in the family residence, and to side. Thus, the fear of petitioner of being "stripped of family,
prevent the perpetrator from committing acts that jeopardize property, guns, money, children, job, future employment and
the employment and support of the victim. It also enables the reputation, all in a matter of seconds, without an inkling of
court to award temporary custody of minor children to protect what happened" is a mere product of an overactive
the children from violence, to prevent their abduction by the imagination. The essence of due process is to be found in the
perpetrator and to ensure their financial support."97 reasonable opportunity to be heard and submit any evidence
one may have in support of one's defense. "To be heard" does
The rules require that petitions for protection order be in not only mean verbal arguments in court; one may be heard
writing, signed and verified by the petitioner98 thereby also through pleadings. Where opportunity to be heard, either
undertaking full responsibility, criminal or civil, for every through oral arguments or pleadings, is accorded, there is no
allegation therein. Since "time is of the essence in cases of denial of procedural due process.107
VAWC if further violence is to be prevented,"99 the court is
authorized to issue ex parte a TPO after raffle but before notice It should be recalled that petitioner filed on April 26, 2006 an
and hearing when the life, limb or property of the victim is in Opposition to the Urgent Ex-Parte Motion for Renewal of the
jeopardy and there is reasonable ground to believe that the TPO that was granted only two days earlier on April 24, 2006.
order is necessary to protect the victim from the immediate Likewise, on May 23, 2006, petitioner filed a motion for the
and imminent danger of VAWC or to prevent such violence, modification of the TPO to allow him visitation rights to his
which is about to recur.100 children. Still, the trial court in its Order dated September 26,
2006, gave him five days (5) within which to show cause why
There need not be any fear that the judge may have no rational the TPO should not be renewed or extended. Yet, he chose not
basis to issue an ex parte order. The victim is required not only to file the required comment arguing that it would just be an
to verify the allegations in the petition, but also to attach her "exercise in futility," conveniently forgetting that the renewal of
witnesses' affidavits to the petition.101 the questioned TPO was only for a limited period (30 days) each
time, and that he could prevent the continued renewal of said
The grant of a TPO ex parte cannot, therefore, be challenged as order if he can show sufficient cause therefor. Having failed to
violative of the right to due process. Just like a writ of do so, petitioner may not now be heard to complain that he
preliminary attachment which is issued without notice and was denied due process of law.
hearing because the time in which the hearing will take could
be enough to enable the defendant to abscond or dispose of his Petitioner next laments that the removal and exclusion of the
property,102 in the same way, the victim of VAWC may already respondent in the VAWC case from the residence of the victim,
have suffered harrowing experiences in the hands of her regardless of ownership of the residence, is virtually a "blank
tormentor, and possibly even death, if notice and hearing were check" issued to the wife to claim any property as her conjugal
required before such acts could be prevented. It is a home.108
constitutional commonplace that the ordinary requirements of
procedural due process must yield to the necessities of The wording of the pertinent rule, however, does not by any
protecting vital public interests,103 among which is protection stretch of the imagination suggest that this is so. It states:
of women and children from violence and threats to their
personal safety and security. SEC. 11. Reliefs available to the offended party. -- The
protection order shall include any, some or all of the following
It should be pointed out that when the TPO is issued ex parte, reliefs:
the court shall likewise order that notice be immediately given
to the respondent directing him to file an opposition within five xxxx
(5) days from service. Moreover, the court shall order that
notice, copies of the petition and TPO be served immediately (c) Removing and excluding the respondent from the residence
on the respondent by the court sheriffs. The TPOs are initially of the offended party, regardless of ownership of the residence,
effective for thirty (30) days from service on the either temporarily for the purpose of protecting the offended
respondent.104 party, or permanently where no property rights are violated. If
the respondent must remove personal effects from the
243
residence, the court shall direct a law enforcement agent to accompanied by an attestation by the Barangay Kagawad that
accompany the respondent to the residence, remain there until the Punong Barangay was unavailable at the time of the
the respondent has gathered his things and escort him from the issuance of the BPO. BPOs shall be effective for fifteen (15)
residence; days. Immediately after the issuance of an ex parte BPO, the
Punong Barangay or Barangay Kagawad shall personally serve a
xxxx copy of the same on the respondent, or direct any barangay
official to effect its personal service.
Indubitably, petitioner may be removed and excluded from
private respondent's residence, regardless of ownership, only The parties may be accompanied by a non-lawyer advocate in
temporarily for the purpose of protecting the latter. Such any proceeding before the Punong Barangay.
removal and exclusion may be permanent only where no
property rights are violated. How then can the private Judicial power includes the duty of the courts of justice to settle
respondent just claim any property and appropriate it for actual controversies involving rights which are legally
herself, as petitioner seems to suggest? demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack or
The non-referral of a VAWC case excess of jurisdiction on the part of any branch or
to a mediator is justified. instrumentality of the Government.112 On the other hand,
executive power "is generally defined as the power to enforce
Petitioner argues that "by criminalizing run-of-the-mill and administer the laws. It is the power of carrying the laws
arguments, instead of encouraging mediation and counseling, into practical operation and enforcing their due
the law has done violence to the avowed policy of the State to observance."113
"protect and strengthen the family as a basic autonomous
social institution."109 As clearly delimited by the aforequoted provision, the BPO
issued by the Punong Barangay or, in his unavailability, by any
Under Section 23(c) of A.M. No. 04-10-11-SC, the court shall not available Barangay Kagawad, merely orders the perpetrator to
refer the case or any issue thereof to a mediator. The reason desist from (a) causing physical harm to the woman or her
behind this provision is well-explained by the Commentary on child; and (2) threatening to cause the woman or her child
Section 311 of the Model Code on Domestic and Family physical harm. Such function of the Punong Barangay is, thus,
Violence as follows:110 purely executive in nature, in pursuance of his duty under the
Local Government Code to "enforce all laws and ordinances,"
This section prohibits a court from ordering or referring parties and to "maintain public order in the barangay."114
to mediation in a proceeding for an order for protection.
Mediation is a process by which parties in equivalent bargaining We have held that "(t)he mere fact that an officer is required by
positions voluntarily reach consensual agreement about the law to inquire into the existence of certain facts and to apply
issue at hand. Violence, however, is not a subject for the law thereto in order to determine what his official conduct
compromise. A process which involves parties mediating the shall be and the fact that these acts may affect private rights do
issue of violence implies that the victim is somehow at fault. In not constitute an exercise of judicial powers."115
addition, mediation of issues in a proceeding for an order of
protection is problematic because the petitioner is frequently In the same manner as the public prosecutor ascertains through
unable to participate equally with the person against whom the a preliminary inquiry or proceeding "whether there is
protection order has been sought. (Emphasis supplied) reasonable ground to believe that an offense has been
committed and the accused is probably guilty thereof," the
There is no undue delegation of Punong Barangay must determine reasonable ground to believe
judicial power to barangay officials. that an imminent danger of violence against the woman and
her children exists or is about to recur that would necessitate
Petitioner contends that protection orders involve the exercise the issuance of a BPO. The preliminary investigation conducted
of judicial power which, under the Constitution, is placed upon by the prosecutor is, concededly, an executive, not a judicial,
the "Supreme Court and such other lower courts as may be function. The same holds true with the issuance of a BPO.
established by law" and, thus, protests the delegation of power
to barangay officials to issue protection orders.111 The We need not even belabor the issue raised by petitioner that
pertinent provision reads, as follows: since barangay officials and other law enforcement agencies
are required to extend assistance to victims of violence and
SEC. 14. Barangay Protection Orders (BPOs); Who May Issue abuse, it would be very unlikely that they would remain
and How. – Barangay Protection Orders (BPOs) refer to the objective and impartial, and that the chances of acquittal are
protection order issued by the Punong Barangay ordering the nil. As already stated, assistance by barangay officials and other
perpetrator to desist from committing acts under Section 5 (a) law enforcement agencies is consistent with their duty to
and (b) of this Act.1âwphi1 A Punong Barangay who receives enforce the law and to maintain peace and order.
applications for a BPO shall issue the protection order to the
applicant on the date of filing after ex parte determination of Conclusion
the basis of the application. If the Punong Barangay is
unavailable to act on the application for a BPO, the application Before a statute or its provisions duly challenged are voided, an
shall be acted upon by any available Barangay Kagawad. If the unequivocal breach of, or a clear conflict with the Constitution,
BPO is issued by a Barangay Kagawad, the order must be not merely a doubtful or argumentative one, must be
244
demonstrated in such a manner as to leave no doubt in the investment.8 Desmond even presented a Business Plan,
mind of the Court. In other words, the grounds for nullity must indicating that: (a) Ocean Adventure’s "attendance will rise
be beyond reasonable doubt.116 In the instant case, however, from 271,192 in 2001 to just over 386,728 in 2006, with
no concrete evidence and convincing arguments were revenues rising from US$4,420,000.00 million to
presented by petitioner to warrant a declaration of the US$7,290,000.00 million in the same time frame"; (b) "early
unconstitutionality of R.A. 9262, which is an act of Congress and investors are expected to reap an annual return of 23% in 2001,
signed into law by the highest officer of the co-equal executive rising to 51% in 2006"; and (c) "fully priced shares would yield a
department. As we said in Estrada v. Sandiganbayan, 117 courts 19% return] in 2001, rising to 42% in 2006."9 Thus, on January
must assume that the legislature is ever conscious of the 18, 2002, a Subscription Agreement10 was executed by
borders and edges of its plenary powers, and passed laws with Desmond, as representative of SBMEI and JV China, and Dio, as
full knowledge of the facts and for the purpose of promoting representative of HS Equities.
what is right and advancing the welfare of the majority.
While no Certificate of Stock was issued either to HS Equities or
We reiterate here Justice Puno's observation that "the history to Dio, HS Equities was expressly granted minority protection
of the women's movement against domestic violence shows rights in a subsequent Subscription and Shareholders
that one of its most difficult struggles was the fight against the Agreement11 dated March 12, 2002, stating that there shall be
violence of law itself. If we keep that in mind, law will not again "a nominee of the Subscriber to be elected as Treasurer/Chief
be a hindrance to the struggle of women for equality but will be Financial Officer, who may not be removed by the Board of
its fulfillment."118 Accordingly, the constitutionality of R.A. Directors without the affirmative vote of the Subscriber."12
9262 is, as it should be, sustained. Accordingly, Dio was elected as a member of SBMEI’s Board of
Directors and further appointed as its Treasurer.13 The parties
WHEREFORE, the instant petition for review on certiorari is later executed two (2) Investor’s Convertible Promissory Notes
hereby DENIED for lack of merit. – one dated April 4, 200114 and another dated May 8, 200115
– covering HS Equities’ infusion of a total of US$1,000,000.00
96. VIRGINIA DE LOS SANTOS-DIO, as authorized for the purpose of purchasing machinery, equipment,
representative of H.S. EQUITIES, LTD., and WESTDALE ASSETS, accessories, and materials to be used for the construction of
LTD., Petitioner, vs.THE HONORABLE COURT OF APPEALS, Ocean Adventure.
JUDGE RAMON S. CAGUIOA, in his capacity as Presiding Judge
of Branch 74, Regional Trial Court, Olongapo City, and In June 2002, Dio, this time on behalf of Westdale, invested
TIMOTHY J. DESMOND, Respondents. another US$1,000,000.0016 in a separate business venture,
called the Miracle Beach Hotel Project (Miracle Beach), which
x-----------------------x involved the development of a resort owned by Desmond
adjoining Ocean Adventure. They agreed that the said
G.R. No. 179079 PEOPLE OF THE PHILIPPINES, Petitioner, investment would be used to settle SBMEI’s ₱40,000,000.00
vs.TIMOTHY J. DESMOND, Respondent. loan obligation to First Metro Investment Corporation and for
the construction of 48 lodging units/cabanas.17 However, when
Before the Court are consolidated petitions for review on the corresponding subscription agreement was presented to
certiorari1 assailing the November 8, 2006 Decision2 and July Dio by SBMEI for approval, it contained a clause stating that the
19, 2007 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP "funds in the Subscription Bank Account" were also to be used
No. 88285, upholding the validity of the trial court’s dismissal of for the "funding of Ocean Adventure’s Negative Cash Flow not
separate criminal informations for estafa against private exceeding US$200,000.00."18 This was in conflict with the
respondent Timothy J. Desmond (Desmond) due to lack of exclusive purpose and intent of Westdale’s investment in
probable cause. Miracle Beach and as such, Dio refused to sign the subscription
agreement.
The Facts
Dio further claimed that she found out that, contrary to
In 2001, petitioner Virginia De Los Santos-Dio (Dio), the Desmond’s representations, SBMEI actually had no capacity to
majority stockholder of H.S. Equities, Ltd. (HS Equities) and deliver on its guarantees, and that in fact, as of 2001, it was
authorized representative of Westdale Assets, Ltd. (Westdale),4 incurring losses amounting to ₱62,595,216.00.19 She likewise
was introduced to Desmond, the Chairman and Chief Executive claimed to have discovered false entries in the company’s
Officer (CEO) of the Subic Bay Marine Exploratorium, Inc. books and financial statements – specifically, its overvaluation
(SBMEI), and the authorized representative of Active of the marine animals and its non-disclosure of the true amount
Environments, Inc. and JV China, Inc. (JV China), the majority of JV China’s investment20 – which prompted her to call for an
shareholder of SBMEI.5 After some discussion on possible audit investigation. Consequently, Dio discovered that, without
business ventures, Dio, on behalf of HS Equities, decided to her knowledge and consent, Desmond made certain
invest a total of US$1,150,000.006 in SBMEI’s Ocean Adventure disbursements from Westdale’s special account, meant only for
Marine Park (Ocean Adventure), a theme park to be Miracle Beach expenditures (special account), and diverted a
constructed at the Subic Bay Freeport Zone which, when total of US$72,362.78 therein for the operating expenses of
operational, would showcase live performances of false-killer Ocean Adventure.21 When Desmond refused to execute an
whales and sea lions. In this relation, Dio claimed that Desmond undertaking to return the diverted funds, Dio, in her capacity as
led her to believe that SBMEI had a capital of US$5,500,000.00, Treasurer of SBMEI, suspended the release of the remaining
inclusive of the value of the marine mammals to be used in funds in the aforesaid special account.22
Ocean Adventure,7 and also guaranteed substantial returns on
245
Eventually, after Dio was ousted as Director and Treasurer of of Olongapo City, Branch 74 (RTC), docketed as Criminal Case
SBMEI,23 she filed, on April 19, 2004, two (2) criminal Nos. 516-2004 and 515-2004. The accusatory portions thereof
complaints24 (subject criminal complaints) for estafa (a) read as follows:
through false pretenses under Article 315(1)(b)25 of the
Revised Penal Code26 (RPC); and (b) with unfaithfulness or Criminal Case No. 516-200433
abuse of confidence through misappropriation or conversion
under Article 315(2)(a)27 of the RPC, both against Desmond That in or about and sometime in early 2001, in Olongapo City,
before the Olongapo City Prosecutor’s Office (City Prosecutor’s Philippines, and within the jurisdiction of this Honorable Court,
Office), docketed as IS Nos. 04-M-992 and 04-M-993. the abovenamed accused, being the officer of Subic Bay Marine
Exploration, Inc. (SBMEI), acting as a syndicate and by means of
In defense, Desmond maintained that his representation of deceit, did then and there, willfully, unlawfully and feloniously
himself as Chairman and CEO of SBMEI was not a sham and that defraud H.S. EQUITIES LIMITED, represented in this case by
Dio has not even proven that he did not have the expertise and Virginia S. Delos Santos-Dio in the following manner, to wit: the
qualifications to double her investment. Among others, he also said accused by means of false manifestations and fraudulent
denied having been fired from Beijing Landa Aquarium Co. Ltd. representations which he made to said Virginia S. Delos Santos-
for his supposed incompetence and mismanagement. He Dio to the effect that he had the expertise and qualifications, as
further asserted that it was not deceitful to value the marine well as the resources, influence, credit and business transaction
mammals at US$3,720,000.00 as equity contribution of JV China with the Subic Bay Metropolitan Authority (SBMA) and other
in SBMEI, notwithstanding the fact that two (2) false killer financing institutions to ensure the viability of the Subic Bay
whales had already perished before the company could start Marine Exploration Ocean Adventure Project (SBMEOA), which
operations. This is because the said valuation, in any case, he represented to be a qualified and legally existing investment
would be based on the collective income-earning capacity of enterprise with capacity to solicit investment from the general
the entire animal operating system derived from revenues public, by submitting documents for the purpose, which
generated by marine park attendance and admission fees.28 representations he knew to be false and fraudulent and the
supporting documents are similarly spurious and were only
In reply, Dio insisted that SBMEI, at the outset, never had made in order to induce said Virginia S. Delos Santos-Dio to
sufficient assets or resources of its own because, contrary to invest and deliver as in fact she invested and delivered a total
Desmond’s claims, the total amount of US$2,300,000.00 it amount of One Million One Hundred Fifty Thousand US Dollars
purportedly invested in buildings and equipment actually came ($1,150,000.00) to the said accused on the strength of said
from the investments Dio’s company made in SBMEI.29 manifestations and representations and supporting documents,
and said accused, once in possession of the said amount,
After the preliminary investigation, the City Prosecutor issued a misapplied, converted and misappropriated the same to his
Resolution30 dated August 26, 2004, finding probable cause own personal use and benefit, to the damage and prejudice of
against Desmond for the abovementioned crimes, to wit: H.S. Equities Limited in the amount of US $1,150,000.00 or
Php57,500,000.00 Pesos, the dollar computed at the rate of
The foregoing clearly applies in the instant two (2) cases as Php 50.00 to [US]$1.00 which was the prevailing rate of
borne out by the following facts, to with [sic]: (1) Desmond, as exchange of a dollar to peso at the time of the commission of
the Chairman and Chief Executive Office of SBMEI and in order the offense.
to persuade Dio to invest, represented that he possessed the
necessary influence, expertise and resources (in terms of credit CONTRARY TO LAW.
and property) for the project knowing the same to be false as
he never had the capital for the project as borne out by his Criminal Case No. 515-200434
correspondences with Dio; and (2) Dio fell for these
misrepresentations and the lure of profit offered by Desmond, That in or about and sometime during the period from June
thereby being induced to invest the amounts of $1,150,000.00 2002 to July 2002, in Olongapo City, Philippines, and within the
and $1,000,000.00 to the damage and prejudice of her jurisdiction of this Honorable Court, the above-named accused,
company. did then and there, willfully, unlawfully and feloniously defraud
Westdale Assets, Limited represented in this case by Virginia S.
The elements of the crimes charged were thus established in Delos Santos-Dio in the following manner to wit: the said
these cases, namely Dio parted with her money upon the accused received in trust and for administration from the said
prodding and enticement of respondent on the false pretense Virginia S. Delos Santos-Dio the amount of One Million US
that he had the capacity and resources for the proposed Dollars ($1,000,000.00) under the express obligation of using
project. In the end, Dio was not able to get her money back, the same to pay the loan facility of the Subic Bay Marine
thus causing her damage and prejudice. Moreover, such Exploration, Inc. (SBMEI) with First Metro Investment
defraudation or misappropriation having been committed by Corporation and to fund the construction and development of
Desmond through his company SBMEI involving funds solicited the Miracle Beach Project but the said accused, once in
from Dio as a member of the general public in contravention of possession of the said amount, with grave abuse of confidence
the public interest, the probable cause clearly exists to indict and with intent to defraud, misapplied, misappropriated and
Desmond for the crime of Estafa under Article 315 (1)(b) and converted the same for his own use and benefit by devoting it
(2)(a) of the Revised Penal Code in relation to PD No. 1689.31 to a purpose or use different from that agreed upon and
despite repeated demands made upon him to account for and
In view of the foregoing, corresponding criminal informations32 to return the said amount, he failed and refused and still fails
(subject informations) were filed with the Regional Trial Court and refuses to do so, to the damage and prejudice of the said
246
Westdale Assets, Limited in the amount of US $1,000,000.00 or Again, however, no adequate proof was adduced along this
its equivalent to FIFTY MILLION (Php 50,000,000.00) Pesos, line.
Philippine Currency, the dollar being computed at the rate of
Php50.00 to $ 1.00 which was the prevailing rate of exchange at Second, the element of personal misappropriation by the
the commission of the offense, to the damage and prejudice of accused under par. 1(b) Article 315 of the Revised Penal Code is
the latter in the aforementioned amount. likewise not present. While it may be conceded that there was
money utilized to pay salaries of expatriates and staff as well as
CONTRARY TO LAW. the cost of utilities amounting to US$72,272.00 complainant
failed to show that said money was taken from her companies’
Aggrieved, Desmond filed a Motion for Reconsideration,35 as investments in SBMEI. It must be pointed out that other than
well as a Motion to Withdraw Filed Informations.36 He also complainant’s bare allegation, there was no document
filed before the RTC a Motion to Defer Further Proceedings and presented categorically stating that the investment of
to Defer Issuance of Warrant of Arrest37 but subsequently complainant’s companies were earmark for a particular
withdrew the same and filed, instead, a Motion for Judicial payment or project. Hence, when the investment entered
Determination of Probable Cause.38 SBMEI’s financial coffers, the same presumably were co-
mingled with other monies of the corporation.
The RTC Ruling
Moreover and more revealing, is the fact that again there was
In an Order39 dated October 21, 2004, the RTC ruled in favor of no showing that it was accused who personally caused the
Desmond and declared that no probable cause exists for the payment of these expenses allegedly in violation of the
crimes charged against him since the elements of estafa were objective of the investment. It must be noted that SBMEI is a
not all present, to wit: corporation and not a single proprietorship. Being a
corporation, expenses paid of such a kind as utilities and
First, the element of misrepresentation or deceit found in par. 2 salaries are not authorized personally and solely by the
(a) Article 315 of the Revised Penal Code is absent. It must be President nor the Chief Executive Officer nor even by the
emphasized that the promises allegedly made to the Chairman of the Board for that matter. These are corporate
complainant by the accused that her company’s investment will acts that are passed through board resolutions. Hence, these
significantly increase, clearly appeared in the Subic Bay Marine corporate acts can in no way be considered personal acts of the
Exploration, Inc.’s ("SBMEI", for brevity) printed business plan accused. Yet, he was singled out among all 5 members of the
dated January 12, 2001 (Annex "A", Complaint-Affidavit dated Board of Directors who presumably, in the ordinary course of
19 April 2004). Verily, this is SBMEI’s representation or "come business, approved by resolution the payments of such utilities
on" to would-be investors and not a personal assurance of the and salaries. Consequently, there is again insufficiency of
accused. The fact that accused was the company’s Chief evidence that the accused alone caused the payment of these
Executive Officer and Chairman of the Board of Directors is of salaries and utilities for the sole purpose of pocketing the
no moment in the absence of any evidence to show that money thereby using the same for personal gain.40
accused personally prepared the business plan thereby making
the alleged "rosy picture" his own personal enticements to the Consequently, the RTC denied the issuance of a warrant of
complainant. Therefore, there being a dearth of evidence arrest and hold departure order against Desmond and ordered
pointing to the accused as author of the SBMEI’s business plan, the dismissal of the cases against him:
any misrepresentation or deceit committed cannot be
personally attributed to him. WHEREFORE, foregoing considered, the subject motion for
judicial determination of probable cause is favorably granted.
Furthermore, the court cannot find any sufficient evidence that There being no probable cause, the cases against the accused
the accused personally assured the complainant about his so- must be dismissed as they are hereby DISMISSED. The motions
called power, influence and credit with the SBMA and other to issue warrant of arrest and Hold
financial institutions that would supposedly insure the viability
and profitability of the project. Note that nowhere in the Departure Order as well as the prayer for provisional remedy
Complaint-Affidavit of the private complainant are there are necessarily DENIED.
specific factual allegations that would show that the accused
had personal business meetings with the SBMA and said SO ORDERED.41
financial institutions. As to how and in what manner and scope
accused exercised such alleged power, influence and credit Given the RTC’s dismissal of the foregoing criminal cases, the
over these juridical entities remain a bare and self-serving City Prosecutor’s Office filed motion for reconsideration which
averment in the absence of any factual detail or account. was, however, denied. As such, it filed a petition for certiorari
and mandamus42 before the CA on the ground of grave abuse
Finally, it cannot be gainsaid [sic] that accused was the one who of discretion. Relatedly, Dio also filed a petition-in-
personally valuated the marine mammals contributed by JV intervention43 before the CA, praying for the reinstatement of
China Incorporated to the Subic Bay Marine Exploration, Inc. as the subject criminal complaints.
capital amounting to US$3.724 Million. Evidence clearly point
to an independent valuation done by a third party namely The CA Ruling
Beijing Landa Aquarium that valued the marine mammals under
the Buy-Out Agreement dated September 9, 1998. Needless to In its November 8, 2006 Decision,44 the CA upheld the RTC’s
state, the onus is on complainant to controvert this valuation. authority to dismiss a criminal case if in the process of
247
determining probable cause for issuing a warrant of arrest, it It has also assets consisting of marine mammals which are
also finds the evidence on record insufficient to establish necessary for the operation of the marine park. In this respect,
probable cause. It explained that such dismissal is an exercise of we cannot subscribe to private complainants’ contention that
judicial discretion sanctioned under Section 6(a), Rule 112 of there was misrepresentation on the part of private respondent
the Revised Rules of Criminal Procedure. On this score, the CA that he had overvalued the worth of the marine mammals it
evaluated the evidence presented and agreed with the RTC’s had purchased from Beijing Landa Aquarium Co., Ltd. of the
conclusions that there was no sufficient basis showing that Republic of China. This claim of private complainants of the
Desmond committed estafa by means of false pretenses. deceitful acts employed by Desmond in overpricing the value of
Neither was it established that the money sourced from the marine animals for US$3.724 Million when in fact the sea
petitioner Dio was converted by respondent Desmond for some animals were only valued for one U.S. dollar was not
other purpose other than that for which it was intended. corroborated by the evidence on hand.
Pertinent portions of the CA Decision restated the RTC’s
observations in this wise: xxxx
In the instant case, the alleged false representations by In the same manner, the facts in the case at bar that would
Desmond which allegedly induced private complainants H.S. allegedly constitute a criminal charge of estafa under par. 1(b)
Equities, Ltd. ("H.S. Equities") and Dio, to part with their money are wanting. Be it noted that under the said paragraph, estafa
are not supported by the facts on record. First, the alleged false with unfaithfulness or abuse of confidence through
representation employed by Desmond with respect to his misappropriation or conversion of the money, goods or any
expertise and qualifications in the form of influence, credit and other personal property must be received in trust, on
business transactions with the Subic Bay Metropolitan commission, for administration, or under any other obligation
Authority (SBMA) and financial institutions and such resources which involves the duty to make delivery thereof or to return
to enable private complainants to double its investment with the same. It is not amiss to note that a perusal of private
SBMEI has not been shown to be false. complainants’ Complaint-Affidavit shows that subject money in
the amount of US$1,000,000.00 to be used for the Miracle
Indeed, nowhere in the documentary evidence presented by Beach Project was placed in a special account with Equitable-
private complainants that allegedly contained the above false PCI Bank. As the records show, the said funds were placed by
representations does it show that it was private respondent Dio under the control of Fatima Paglicawan, an employee of
himself who made such representation. Notably, the SBMEI’s Westdale, such that, no money can be withdrawn from the
Business Plan dated January 12, 2001 to which private special account without the signature of the said employee,
complainants anchor such allegation does not indicate that the Desmond and a certain John Corcoran. Therefore, at such time,
representations made therein came personally from Desmond. it cannot be said that the funds were received for
In addition, neither does it appear from such document that the administration or already under the juridical possession of
statements therein were used as a form of a personal assurance Desmond. Meanwhile, we would like to emphasize that to
coming from Desmond that private complainants would indeed constitute conversion, it presupposes that the thing has been
double the amount they had invested with SBMEI. If at all, we devoted to a purpose or use different from that agreed upon.
agree with the trial court that statements made in the said Verily, a facial examination of the Journal Voucher and Check
business plan were merely a form of enticement to encourage Voucher pertaining to the withdrawals made on such account
would-be investors from [sic] investing in such kind of business clearly shows that the disbursements were not only authorized
undertaking. by Paglicawan but likewise indicated that the purpose for such
withdrawals was to cover payments for BIR taxes and the
Moreover, we likewise agree with the trial court that no factual salaries of local employees and expatriates.
allegations were made by private complainants as to how such
false pretense of power and influence was made upon them by To repeat, these withdrawals as well as the purpose thereof
Desmond and which convinced private complainants to part were known to Paglicawan when [sic] she authorized the
with their money. It bears stressing that the allegations of false disbursements. Paglicawan, who was designated by private
pretense of power and influence in a case of estafa are mere complainant Dio to control the release of the said funds is
conclusions of law which must be substantiated at the very presumed to have acted under the latter’s authority. Such
least by circumstances which would show that the person miscommunication between Dio and Paglicawan with respect
accused of committing estafa did indeed commit acts of false to the purpose of the funds does not make out a case of estafa
representations. As the records show, there was no there being no abuse of confidence or conversion to speak of
misrepresentation on the part of Desmond that he is the taking into account that the said funds were released under the
Chairman and Chief Executive Officer of SBMEI which is a presumed authority of private complainants through
corporation engaged in the business of developing marine Paglicawan, and which were indeed used for the purpose for
parks. Significantly, the records likewise show that SBMEI did which it was withdrawn. That being the case, there can be no
indeed build and develop a marine park in Subic Bay (Ocean damage or prejudice to Westdale and Dio as there was no
Adventure) for the purposes stated in its business plan and had disturbance in the property rights of Westdale and Dio in the
entered into a long-term lease agreement with SBMA. said funds since the same were used for the purpose for which
Documentary evidence in the form of the Report of it was disbursed.
Independent Auditors to SBMEI shows the amount of
investment the corporation had invested in the said business Then again, we agree with the trial court that there is no
undertaking. For instance, the corporation had invested the sufficient evidence adduced to support the criminal charges of
amount of ₱106,788,219.00 in buildings and equipment alone. estafa against Desmond. As pointed out by the trial court, while
248
private respondent is the Chairman and Chief Executive Officer preliminary investigation which is more properly called
of SBMEI, there is no showing that he had personally and solely preliminary examination is judicial in nature and is lodged with
authorized the application of the above funds for the payment the judge.
of expenses not directly connected with the Miracle Beach
Project. Nor does it appear that as Chairman and Chief On this score, it bears to stress that a judge is not bound by the
Executive Officer, Desmond has been appointed to execute, on resolution of the public prosecutor who conducted the
his own, such corporate acts.45 (Citations omitted) preliminary investigation and must himself ascertain from the
latter’s findings and supporting documents whether probable
The City Prosecutor and Dio filed their respective motions for cause exists for the purpose of issuing a warrant of arrest. This
reconsideration which were both denied in a Resolution46 prerogative is granted by no less than the Constitution which
dated July 19, 2007. provides that "no warrant of arrest shall issue except upon
probable cause to be determined personally by the judge after
Hence, the instant petitions. examination under oath or affirmation of the complainant and
the witnesses he may produce."52
The Issue Before the Court
While a judge’s determination of probable cause is generally
The primordial issue in this case is whether or not the CA erred confined to the limited purpose of issuing arrest warrants,
in finding no grave abuse of discretion on the part of the RTC Section 5(a),53 Rule 112 of the Revised Rules of Criminal
when it dismissed the subject informations for lack of probable Procedure explicitly states that a judge may immediately
cause. dismiss a case if the evidence on record clearly fails to establish
probable cause,54 viz:
The Court’s Ruling
SEC. 5. When warrant of arrest may issue. – (a) By the Regional
The petitions are meritorious. Trial Court. – Within ten (10) days from the filing of the
complaint or information, the judge shall personally evaluate
Determination of probable cause may be either executive or the resolution of the prosecutor and its supporting evidence.
judicial. He may immediately dismiss the case if the evidence on record
clearly fails to establish probable cause. If he finds probable
The first is made by the public prosecutor, during a preliminary cause, he shall issue a warrant of arrest, or a commitment order
investigation, where he is given broad discretion to determine if the accused had already been arrested, pursuant to a warrant
whether probable cause exists for the purpose of filing a issued by the judge who conducted preliminary investigation or
criminal information in court. Whether or not that function has when the complaint or information was filed pursuant to
been correctly discharged by the public prosecutor, i.e., Section 7 of this Rule. In case of doubt on the existence of
whether or not he has made a correct ascertainment of the probable cause, the judge may order the prosecutor to present
existence of probable cause in a case, is a matter that the trial additional evidence within five (5) days from notice and the
court itself does not and may not be compelled to pass upon.47 issue must be resolved by the court within thirty (30) days from
the filing of the complaint or information. (Emphasis and
The second is one made by the judge to ascertain whether a underscoring supplied)
warrant of arrest should be issued against the accused. In this
respect, the judge must satisfy himself that, on the basis of the In this regard, so as not to transgress the public prosecutor’s
evidence submitted, there is a necessity for placing the accused authority, it must be stressed that the judge’s dismissal of a
under custody in order not to frustrate the ends of justice. If case must be done only in clear-cut cases when the evidence on
the judge, therefore, finds no probable cause, the judge cannot record plainly fails to establish probable cause – that is when
be forced to issue the arrest warrant.48 Notably, since the the records readily show uncontroverted, and thus, established
judge is already duty-bound to determine the existence or non- facts which unmistakably negate the existence of the elements
existence of probable cause for the arrest of the accused of the crime charged. On the contrary, if the evidence on record
immediately upon the filing of the information, the filing of a shows that, more likely than not, the crime charged has been
motion for judicial determination of probable cause becomes a committed and that respondent is probably guilty of the same,
mere superfluity,49 if not a deliberate attempt to cut short the the judge should not dismiss the case and thereon, order the
process by asking the judge to weigh in on the evidence parties to proceed to trial. In doubtful cases, however, the
without a full-blown trial. appropriate course of action would be to order the
presentation of additional evidence.55
In the case of Co v. Republic,50 the Court emphasized the
settled distinction between an executive and a judicial In other words, once the information is filed with the court and
determination of probable cause, viz:51 the judge proceeds with his primordial task of evaluating the
evidence on record, he may either: (a) issue a warrant of arrest,
We reiterate that preliminary investigation should be if he finds probable cause; (b) immediately dismiss the case, if
distinguished as to whether it is an investigation for the the evidence on record clearly fails to establish probable cause;
determination of a sufficient ground for the filing of the and (c) order the prosecutor to submit additional evidence, in
information or it is an investigation for the determination of a case he doubts the existence of probable cause.56
probable cause for the issuance of a warrant of arrest. The first
kind of preliminary investigation is executive in nature. It is part Applying these principles, the Court finds that the RTC’s
of the prosecution's job.1âwphi1 The second kind of immediate dismissal, as affirmed by the CA, was improper as
249
the standard of clear lack of probable cause was not observed. In January 2002, petitioner Inter-Orient Maritime Incorporated
In this case, records show that certain essential facts – namely, (Inter-Orient) hired Joselito C. Candava (Joselito) as an able-
(a) whether or not Desmond committed false representations bodied seaman for its foreign principal, Tankoil Carriers Limited
that induced Dio to invest in Ocean Adventure; and (b) whether (Tankoil). Joselito was then deployed to M/T Demetra for a
or not Desmond utilized the funds invested by Dio solely for the contract period of nine (9) months.7 Despite expiration of his
Miracle Beach Project for purposes different from what was contract period on October 28, 2002, Joselito continued to
agreed upon – remain controverted. As such, it cannot be said work aboard the vessel due to the unavailability of a
that the absence of the elements of the crime of estafa under replacement and such work extension lasted until February
Article 315(2)(a)57 and 315(1) (b)58 of the RPC had already 2003.
been established, thereby rendering the RTC’s immediate
dismissal of the case highly improper. On February 13, 2003, he complained of significant pain in the
abdominal region and was rushed to a hospital. Joselito was
Lest it be misconceived, trial judges will do well to remember diagnosed to be suffering from "direct inguinal hernia
that when a perceived gap in the evidence leads to a "neither strangulated right" and "acute appendicitis." As such, he
this nor that" conclusion, a purposeful resolution of the underwent two (2) medical procedures, namely right inguinal
ambiguity is preferable over a doubtful dismissal of the case. plasty and appendectomy, where the doctors further
Verily, a judge's discretion to dismiss a case immediately after discovered that the tumor in Joselito’s right inguinal canal
the filing of the information in court is appropriate only when "corresponded to a tumor formation dependent on the right
the failure to establish probable cause can be clearly inferred testicle"8 which appeared oncogenic. As a result thereof,
from the evidence presented and not when its existence is Joselito was repatriated to Manila. Upon his arrival, the
simply doubtful. After all, it cannot be expected that upon the company designated physician examined Joselito and declared
filing of the information in court the prosecutor would have him fit to work. Nonetheless, his supplications for work were
already presented all the evidence necessary to secure a rejected.
conviction of the accused, the objective of a previously-
conducted preliminary investigation being merely to determine On March 28, 2003, Joselito, accompanied by representatives
whether there is sufficient ground, to engender a well-founded of petitioner Inter-Orient, filed a complaint9 for recovery of sick
belief that a crime has been committed and that the wages and reimbursement of medical expenses before the
respondent is probably guilty thereof and should be held for NLRC – National Capital Region (NLRC-NCR). However, on even
trial.59 In this light, given that the lack of probable cause had date, Joselito sought for its Dismissal10 in consideration of the
not been clearly established in this case, the CA erred, and the sum of ₱29,813.04 and in relation thereto, executed a Release
RTC gravely abused its discretion, by ruling to dismiss Criminal of All Rights11 and Pagpapaubaya ng Lahat ng Karapatan,12
Case Nos. 515-2004 and 516-2004. Indeed, these cases must releasing Tankoil and Inter-Orient from any claim arising from
stand the muster of a full-blown trial where the parties could the appendicitis and inguinal hernia he suffered.
be given, as they should be given, the opportunity to ventilate
their respective claims and defenses, on the basis of which the A month later, Joselito was diagnosed to have suspected
court a quo can properly resolve the factual disputes therein. "malignant cells that may also be reactive mesothelial cells,"13
and thereafter found to have testicular tumor14 (cancer of the
WHEREFORE, the petitions are GRANTED. The November 8, testes15), abdominal germ cell tumor,16 metastatic carcinoma
2006 Decision and July 19, 2007 Resolution of the Court of to the lungs and pleural effusion.17 Thus, on August 11, 2003,
Appeals in CA G.R. SP No. 88285 which affirmed the October Joselito, again accompanied by representatives from petitioner
21, 2004 Order of Dismissal issued by the Regional Trial Court of Inter-Orient, filed another complaint18 for medical benefits
Olongapo City, Branch 74 are SET ASIDE. The two (2) criminal before the NLRC – San Pablo City. Similarly, on even date,
informations for estafa against respondent Timothy J. Desmond Joselito sought for the dismissal19 of his complaint in
in Criminal Case Nos. 515-2004 and 516-2004 are hereby consideration of the amount of ₱77,000.00 and executed a
REINSTATED. Accordingly, the trial court is directed to proceed Receipt and Release,20 releasing Tankoil and Inter-Orient from
with the arraignment of the accused and the trial of the case any claim arising from his employment. In both complaints,
with dispatch. orders of dismissal were issued.
97. INTER-ORIENT MARITIME, INCORPORATED and/or On October 9, 2003, Joselito passed away. His death
TANKOIL CARRIERS, LIMITED, Petitioners, vs.CRISTINA certificate21 listed the following causes:
CANDAVA, Respondent.
Immediate Cause: RESPIRATORY FAILURE
Assailed in this Petition for Review on Certiorari1 is the October
21, 2011 Decision2 and March 27, 2012 Resolution3 of the Antecedent Cause: PULMONARY METASTASIS
Court of Appeals (CA) in CA-G.R. SP No. 113342, which reversed
and set aside the August 28, 2009 Decision4 and December 21, Underlying Cause: GERM CELL TUMOR
2009 Resolution5 of the National Labor Relations Commission
(NLRC), reinstating the April 28, 2006 Decision6 of the Labor Other Significant Conditions
Arbiter (LA),.granting respondent Cristina Candava's (Cristina)
claim for death benefits. Contributing to Death: PNEUMONIA
The Facts Respondent Cristina sent a Letter22 dated December 17, 2003
to petitioner Inter-Orient, demanding payment of death
250
benefits but her pleas fell on deaf ears. As such, Cristina filed a 2003, or for four (4) additional months. Thus, the CA deemed
complaint for death and other monetary benefits against that there was an implied renewal of Joselito’s employment
petitioners before the NLRC-NCR. contract for another nine (9) months starting from the
expiration of the allowable three (3) month extension on
In her complaint, respondent Cristina alleged that Joselito did January 28, 2003, or for the period of January 29, 2003 up to
not receive any sickness benefit or medical assistance from October 28, 2003. In view of this, Joselito’s death on October 9,
petitioners other than those subject of the release documents 2003 was within the term of his contract and thus,
which were paid only after Joselito complied with the compensable.1âwphi1
requirement of filing his complaints. While admitting that
Joselito was not coerced into signing the release documents, Moreover, the CA noted that even though Joselito’s illness was
Cristina averred that he was constrained by his physical and not listed in Section 32 of the Standard Employment Contract,
financial condition to accept the measly amount offered by petitioners nevertheless failed to rebut the disputable
petitioners. Further, Cristina claimed that Joselito’s death was presumption that Joselito’s illness is work-related.33
due to an illness contracted during the latter’s employment and
thus, she is entitled to death compensation, burial assistance, Petitioners sought for reconsideration but was denied in the
moral and exemplary damages, and attorney’s fees. CA’s Resolution34 dated March 27, 2012. Hence, this petition.
For their part, petitioners claimed that Cristina’s complaint is The Issue Before the Court
barred by res judicata or the filing of the two previous
complaints by Joselito, which were dismissed upon his motion, The pivotal issue raised for the Court’s resolution is whether
and the accompanying release documents the latter executed. Joselito’s death is compensable as to entitle Cristina to claim
death benefits.
The Ruling of the Labor Arbiter
At this point, it should be noted that the compensability of
In its Decision23 dated April 28, 2006, the LA ruled in favor of Joselito’s death should be resolved under the provisions of the
Cristina, ordering petitioners to pay her US$50,000.00 as death 1996 POEA-SEC, which is the POEA-SEC in effect when
benefits, US$7,000.00 as benefits to their minor son, Jerome petitioners employed him in January 2002. This is because the
Lester, US$1,000.00 as burial assistance, and ten percent (10%) 2000 POEA-SEC which introduced amendments to the 1996
of the total monetary award as attorney’s fees.24 The LA found POEA-SEC initially took effect on June 25, 2000 but its
that the release papers executed by Joselito during his lifetime implementation was suspended35 and lifted only on June 5,
cannot bar his heirs’ right to receive death benefits and burial 2002.36
expenses which only arose and accrued upon his death.25
Further, the LA opined that the payment of sickness wages and The Court’s Ruling
other benefits made by petitioners is an acknowledgement that
his death was compensable.26 The petition is bereft of merit.
The Ruling of the NLRC At the outset, it bears stressing that the employment of
seafarers, including claims for death benefits, is governed by
In its Decision27 dated August 28, 2009, the NLRC reversed and the contracts they sign at the time of their engagement. As long
set aside the LA’s ruling, holding that Joselito did not die during as the stipulations therein are not contrary to law, morals,
the term of his contract with petitioners and that his illness was public order, or public policy, they have the force of law
not proven to be work-related.28 Nonetheless, the NLRC held between the parties. Nonetheless, while the seafarer and his
that contrary to petitioners’ claims, Cristina’s complaint is not employer are governed by their mutual agreement, the POEA
barred by res judicata considering the lack of identity of causes Rules and Regulations require that the POEA-SEC be integrated
of action between Joselito’s and Cristina’s respective in every seafarer’s contract.37
complaints.29
The prevailing rule under the 1996 POEA-SEC was that the
Cristina filed a Motion for Reconsideration dated October 9, illness leading to the eventual death of seafarer need not be
2009 but was denied in the NLRC’s Resolution30 dated shown to be work-related in order to be compensable, but
December 21, 2009. Aggrieved, Cristina filed a Petition for must be proven to have been contracted during the term of the
Certiorari31 dated March 4, 2010 with the CA. contract. Neither is it required that there be proof that the
working conditions increased the risk of contracting the disease
The Ruling of the CA or illness.38 An injury or accident is said to arise "in the course
of employment" when it takes place within the period of
In its Decision32 dated October 21, 2011, the CA annulled and employment, at a place where the employee reasonably may
set aside the NLRC’s ruling and reinstated that of the LA. It held be, and while he is fulfilling his duties or is engaged in doing
that while the Philippine Overseas Employment Administration something incidental thereto.39 A meticulous perusal of the
Standard Employment Contract (POEA-SEC) allows an employer records reveals that Joselito contracted his illness in the course
to extend a seafarer’s employment beyond the period of employment. It cannot also be denied that the same was
stipulated if there was no replacement crew available, such aggravated during the same period. Thus, there was a clear
extension should not exceed three (3) months. In Joselito’s causal connection between such illness and his eventual death,
case, his original contract period expired sometime in October making his death compensable.
2002 but petitioners extended his employment until February
251
Verily, Joselito complained of significant pain in the abdominal gradually regressed despite the company designated
region while aboard M/T Demetra and during the extended physician’s declaration that he was fit to work.
period of his employment. Upon undergoing different medical
procedures, the doctors discovered that the tumor in Joselito’s Anent the release documents that Joselito executed in favor of
right inguinal canal "corresponded to a tumor formation petitioners, records show that Joselito’s two (2) previous
dependent on the right testicle."40 Despite the company complaints were actually "walk-in settlements,"53 thus
designated physician’s declaration that Joselito was fit to work, explaining his actions of filing such complaints and eventual
his condition continued to deteriorate as succeeding medical motions to dismiss, as well as the execution of release
reports showed the presence of testicular as well as abdominal documents, all on the same day. Moreover, petitioners never
germ tumors.41 His abdominal germ tumor, being in the traversed Cristina’s assertion54 that the motion to dismiss and
midline portion of the body, the most common metastasis release document in connection with Joselito’s second
(spread) will be in the lungs.42 This is supported by medical complaint were already signed and executed even before such
reports showing the presence of multiple pulmonary nodules, complaint was filed and that respondent Inter-Orient’s
as well as reactive mesothelial cells,43 which is consistent with representatives actually accompanied Joselito in filing the
the presence of metastatic tumor.44 Thereafter, Joselito same.
underwent thoracentesis45 which further revealed malignant
cells in his body.46 The foregoing facts, coupled with Joselito’s failing health,
negate his voluntariness in executing his complaints, motions to
Moreover, Joselito’s Death Certificate47 stated respiratory dismiss, and release documents and give life to the truism that
failure as the immediate cause of his death, with pulmonary "necessitous men are not, truly speaking, free men; but to
metastasis as antecedent cause. The underlying cause for his answer a present emergency, will submit to any terms that the
death was germ cell tumor which may be found, among others, crafty may impose upon them."55 Besides, as a rule, quitclaims,
in the testes and the center back wall of the abdominal waivers, or releases are looked upon with disfavor and are
cavity.48 The World Health Organization defines an underlying largely ineffective to bar recovery of the full measure of a
cause as the disease or injury that initiated the train of events worker’s rights, and the acceptance of benefits therefrom does
leading directly to death, or circumstances of the accident or not amount to estoppel.56 This is especially true in this case
violence that produced the fatal injury.49 Perforce, there where instead of promoting the orderly settlement of disputes;
existed a clear causal connection between Joselito’s illness petitioners’ acts encouraged the circumvention of the proper
which he contracted during employment and his eventual legal procedures and the evasion of the payment of legitimate
death. claims to a seafarer succumbing to a life-threatening disease.
Therefore the settlements that Joselito entered into must be
The Court cannot give credence to petitioners’ claim50 that struck down for being contrary to public policy.
Joselito’s death occurred beyond the term of his employment
because his extended/renewed contract was void for lack of Lastly, despite the declaration of fitness that would have
POEA approval and thus, barred recognition of any rights and entitled him to reinstatement to his former position,57 Joselito
obligations arising therefrom. Such interpretation runs counter was not provided work, apparently due to his worsening health.
to the avowed policy of the State to give maximum aid and He was thus constrained to seek medical attention at his own
protection to labor, especially in the instant case where the lack expense and was continuously unable to work until his death.
of POEA approval was not Joselito’s fault who was made to This only shows that his medical condition effectively barred his
continuously serve aboard M/T Demetra beyond the maximum chances of being hired by other maritime employers and
allowable period of service of twelve months51 without the deployed abroad on an ocean-going vessel. In a number of
benefit of a formal contract or being subjected to another pre- cases, the Court disregarded the medical report issued by the
employment medical examination (PEME). Petitioners made company designated physician that the seafarer was fit to work
such a scenario occur and should not benefit from their in view of the evidence on record that the latter had in fact
wrongful acts. Thus, the CA is correct in holding that there was been unable to engage in his regular work within the allowable
an implied renewal of Joselito’s contract of employment for period,58 as in this case.
another nine (9) months starting from the expiration of the
allowable three (3) month extension on January 28, 2003, or for In view of the foregoing, Joselito’s death is compensable for
the period of January 29, 2003 up to October 28, 2003, with having been caused by an illness duly established to have been
petitioners being deemed to have relied on Joselito’s fitness contracted in the course of his employment.
based on his previous PEME and assumed the risk of liability for
illness contracted during such extended term. In this regard, WHEREFORE, the petition is DENIED. The October 21, 2011
the Court has repeatedly held that a worker brings with him Decision and March 27, 2012 Resolution of the Court of Appeals
possible infirmities in the course of his employment and while in CA-G.R. SP No. 113342 are hereby AFFIRMED. Therefore,
the employer is not the insurer of the health of the employees, petitioners Inter-Orient Maritime, . Incorporated and/or Tankoil
he takes them as he finds them and assumes the risk of Carriers, Limited are ordered to pay respondent Cristina
liability.52 Candava the following amounts: (1) US$50,000.00 as death
benefits; (2) US$7,000.00 as benefits to Joselito's minor child,
Neither may the execution of release documents in petitioners’ Jerome Lester; (3) US$1,000.00 as burial assistance; and ( 4) ten
favor detract from the compensability of Joselito’s death. While percent (10%) of the total monetary award as attorney's fees.
the documents appear to have been executed voluntarily, they
were the result of a predesignated scheme to evade payment 98. RIA PAMELA B. ABULENCIA and BLESSIE M. BURGONIO,
of disability benefits due to Joselito, whose medical condition Complainants, vs.REGINO R. HERMOSISIMA, SECURITY GUARD
252
II, SHERIFF AND SECURITY DIVISION, SANDIGANBAYAN,
Respondent. The Court agrees with the findings and recommendations of the
OCA.
The instant administrative case arose from the Joint Complaint-
Affidavit1 filed by complainants Ria Pamela B. Abulencia and Misconduct has been defined as an intentional wrongdoing or a
Blessie M. Burgonio, Clerk III and HRM Assistant, respectively, deliberate violation of a rule of law or standard of behavior,
of the Administrative Division of the Sandiganbayan, charging especially by a government official. A misconduct is grave
respondent Regino R. Hermosisima, Security Guard II of the where the elements of corruption, a clear intent to violate the
Sheriff and Security Division of the same court, with grave law, or a flagrant disregard of established rules are present.
misconduct. Otherwise, a misconduct is only simple.9 Accordingly, simple
misconduct has been defined as an unacceptable behavior
The Facts which transgresses the established rules of conduct for public
officers,10 work-related or not.11
On April 25, 2012, respondent inquired from the complainants
about the status of the computation of the loyalty differential In the case at bar, respondent's act of hurling invectives on the
of Sandiganbayan employees. The complainants replied that complainants during office hours and within the court premises
they were still finalizing the computation based on the new was correctly held to be a case of simple misconduct. Verily,
directives of the Finance Division. Respondent then said, "Bakit respondent’s foul and vulgar utterances, albeit not work
nyo pinapatagal?"2 to which complainant Burgonio replied, related, constitute clear deviations from the established norms
"Matalino ka naman, ikaw na gumawa nyan!"3 Taken aback by of conduct which ought to be followed by public officers. For
the latter's response, respondent in a loud angry voice uttered, such infractions, it cannot be gainsaid that respondent should
"Mga putang-ina nyo, ang bobobo nyo! Ang ta-tanga nyo, be held administratively liable for the same.
ayusin nyo yang trabaho nyo!"4
In this relation, it must be pointed out that respondent's
In this regard, complainants filed an administrative complaint justification, i.e., that his outbursts were only made out of his
against respondent for grave misconduct. In his Counter frustration due to the delayed release of his loyalty benefit can
Affidavit,5 respondent admitted his rude behavior which he be hardly regarded as a justifiable excuse. The Court has
explained was but an outburst of emotion, brought about by consistently reminded that court employees are supposed to be
the delayed release of his loyalty benefits which he needed to well-mannered, civil and considerate in their actuations, both in
sustain his five (5) children. He apologized to complainants for their relations with co-workers and the transacting public.
his conduct and pleaded for mercy and consideration. Boorishness, foul language, and any misbehavior in the court
premises diminish its sanctity and dignity.12 As held in Wee v.
A preliminary investigation was conducted by Atty. Mary Ruth Bunao, Jr.:13
M. Ferrer, Director III of the Legal Research and Technical Staff
Division, who found a prima facie case against respondent for x x x The conduct and behavior of every official and employee
grave misconduct under Section 46(A) (3), Rule 10 of the of an agency involved in the administration of justice, from the
Revised Rules on Administrative Cases in the Civil Service or, at presiding judge to the most junior clerk, should be
the very least, for simple misconduct under Section 46(D) (2), circumscribed with the heavy burden of responsibility. Their
Rule 10 of the same rules.6 The case was then assigned to conduct must at all times be characterized by strict propriety
Associate Justice Oscar C. Herrera, Jr. (Associate Justice and decorum so as to earn and keep the public's respect for the
Herrera, Jr.) for the conduct of a formal investigation where judiciary. Any fighting or misunderstanding among court
both parties were given the opportunity to present their employees becomes a disgraceful sight reflecting adversely on
respective evidence. the good image of the judiciary. Professionalism, respect for the
rights of others, good manners, and right conduct are expected
In a Resolution7 dated October 22, 2012, Associate Justice of all judicial officers and employees. This standard is applied
Herrera, Jr. found the respondent guilty of simple misconduct with respect to a court employee's dealings not only with the
only and recommended the penalty of one (1) month and one public but also with his or her co-workers in the service.
(1) day suspension from office with a warning that a repetition Conduct violative of this standard quickly and surely corrodes
of the same or similar acts would warrant the imposition of a respect for the courts.
more severe penalty. The foregoing resolution was brought to
the Office of the Court Administrator (OCA) for evaluation and In fine, having failed to live up to the high standards of
recommendation. propriety and decorum expected of employees of the judiciary,
the Court finds that respondent was correctly held
The Action and Recommendation of the OCA administratively liable for simple misconduct. Under Rule 10,
Section 46(D)(2) of the Uniform Rules on Administrative Cases
On April 10, 2013, the OCA submitted its Report8 in the Civil Service, the penalty for simple misconduct is
recommending that: (a) the administrative complaint against suspension for one (1) month and one (1) day to six ( 6) months
respondent be re-docketed as a regular administrative case; for the first offense. Accordingly, the penalty recommended by
and (b) respondent be suspended for one (1) month and one (1) the OCA, being within the range prescribed under the aforesaid
day without pay, and be sternly warned that a repetition of the rules, is therefore deemed to be proper.
same or similar acts shall be dealt with more severely.
WHEREFORE, respondent REGINO R. HERMOSISIMA, Security
The Court's Ruling Guard II of the Sheriff and Security Division of the
253
Sandiganbayan, is found GUILTY of SIMPLE MISCONDUCT and is refund of the excise taxes it paid.12 It added that even if the tax
SUSPENDED for a period of one ( 1) month and one ( 1) day burden was shifted to PAL, the latter cannot be deemed a
without pay, effective immediately upon receipt of this statutory taxpayer.
Resolution. He is STERNLY WARNED that a repetition of the
same or similar act in the future shall be dealt with more It further ruled that PAL’s claim for refund should be denied
severely. altogether on account of Letter of Instruction No. 1483 (LOI
1483) which already withdrew the tax exemption privileges
99. PHILIPPINE AIRLINES, INC., PETITIONER, previously granted to PAL on its purchase of domestic
vs.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. petroleum products, of which the transaction between PAL and
Caltex was characterized. 13
Before the Court is a petition for review on certiorari[1]
assailing the May 9, 2011 Decision2 and September 16, 2011 PAL moved for reconsideration, but the same was denied in a
Resolution3 of the Court of Tax Appeals (CTA) En Banc in CTA Resolution14 dated January 14, 2010, prompting it to elevate
EB Case No. 588 which denied petitioner Philippine Airlines, the matter to the CTA En Banc.
Inc.’s (PAL) claim for refund of the excise taxes imposed on its
purchase of petroleum products from Caltex Philippines, Inc. The CTA En Banc Ruling
(Caltex).
In a Decision dated May 9, 2011,15 the CTA En Banc affirmed
The Facts the ruling of the CTA Second Division, reiterating that it was
Caltex, the statutory taxpayer, which had the personality to file
For the period July 24 to 28, 2004, Caltex sold 804,370 liters of the subject refund claim. It explained that the payment of the
imported Jet A-1 fuel to PAL for the latter’s domestic subject excise taxes, being in the nature of indirect taxes,
operations.4 Consequently, on July 26, 27, 28 and 29, 2004, remained to be the direct liability of Caltex. While the tax
Caltex electronically filed with the Bureau of Internal Revenue burden may have been shifted to PAL, the liability passed on to
(BIR) its Excise Tax Returns for Petroleum Products, declaring it should not be treated as a tax but a part of the purchase price
the amounts of ₱1,232,798.80, ₱686,767.10, ₱623,422.90 and which PAL had to pay to obtain the goods.16 Further, it held
₱433,904.10, respectively, or a total amount of ₱2,975,892.90, that PAL’s exemption privileges on the said excise taxes, which
as excise taxes due thereon. 5 it claimed through its franchise, had already been withdrawn by
LOI 1483.17
On August 3, 2004, PAL received from Caltex an Aviation Billing
Invoice for the purchased aviation fuel in the amount of Aggrieved, PAL filed a motion for reconsideration which was,
US$313,949.54, reflecting the amount of US$52,669.33 as the however, denied in a Resolution dated September 16, 2011.18
related excise taxes on the transaction. This was confirmed by
Caltex in a Certification dated August 20, 2004 where it Hence, the instant petition.
indicated that: (a) the excise taxes it paid on the imported
petroleum products amounted to ₱2,952,037.90, i.e., the peso The Issues Before the Court
equivalent of the abovementioned dollar amount; (b) the
foregoing excise tax payment was passed on by it to PAL; and The following issues have been presented for the Court’s
(c) it did not file any claim for the refund of the said excise tax resolution: (a) whether PAL has the legal personality to file a
with the BIR.6 claim for refund of the passed on excise taxes; (b) whether the
sale of imported aviation fuel by Caltex to PAL is covered by LOI
On October 29, 2004, PAL, through a letter-request dated 1483 which withdrew the tax exemption privileges of PAL on its
October 15, 2004 addressed to respondent Commissioner of purchases of domestic petroleum products for use in its
Internal Revenue (CIR), sought a refund of the excise taxes domestic operations; and (c) whether PAL has sufficiently
passed on to it by Caltex. It hinged its tax refund claim on its proved its entitlement to refund.
operating franchise, i.e., Presidential Decree No. 15907 issued
on June 11, 1978 (PAL’s franchise), which conferred upon it The Ruling of the Court
certain tax exemption privileges on its purchase and/or
importation of aviation gas, fuel and oil, including those which The petition is meritorious.
are passed on to it by the seller and/or importer thereof.
Further, PAL asserted that it had the legal personality to file the A. PAL’s legal personality to file a claim for refund of excise
aforesaid tax refund claim.8 taxes.
Due to the CIR’s inaction, PAL filed a Petition for Review with The CIR argues that PAL has no personality to file the subject
the CTA on July 25, 2006.9 In its Answer, the CIR averred that tax refund claim because it is not the statutory taxpayer. As
since the excise taxes were paid by Caltex, PAL had no cause of basis, it relies on the Silkair ruling which enunciates that the
action.10 proper party to question, or to seek a refund of an indirect tax,
is the statutory taxpayer, or the person on whom the tax is
The CTA Division Ruling imposed by law and who paid the same, even if the burden to
pay such was shifted to another.19
Relying on Silkair (Singapore) Pte. Ltd. v. CIR11 (Silkair), the CTA
Second Division denied PAL’s petition on the ground that only a PAL counters that the doctrine laid down in Silkair is
statutory taxpayer (referring to Caltex in this case) may seek a inapplicable, asserting that it has the legal personality to file the
254
subject tax refund claim on account of its tax exemption Philippines and the Government of the Republic of Singapore.
privileges under its legislative franchise which covers both The Court denied Silkair Singapore’s refund claim since the tax
direct and indirect taxes. In support thereof, it cites the case of exemptions under both provisions were conferred on the
Maceda v. Macaraig, Jr.20 (Maceda). statutory taxpayer, and not the party who merely bears its
economic burden. As such, it was the Petron Corporation (the
The Court agrees with PAL. statutory taxpayer in that case) which was entitled to invoke
the applicable tax exemptions and not Silkair Singapore which
Under Section 129 of the National Internal Revenue Code merely shouldered the economic burden of the tax. As
(NIRC),21 as amended, excise taxes are imposed on two (2) explained in Silkair:
kinds of goods, namely: (a) goods manufactured or produced in
the Philippines for domestic sales or consumption or for any The proper party to question, or seek a refund of, an indirect
other disposition; and (b) things imported.22 tax is the statutory taxpayer, the person on whom the tax is
imposed by law and who paid the same even if he shifts the
With respect to the first kind of goods, Section 130 of the NIRC burden thereof to another. Section 130(A)(2) of the NIRC
states that, unless otherwise specifically allowed, the taxpayer provides that "[u]nless otherwise specifically allowed, the
obligated to file the return and pay the excise taxes due return shall be filed and the excise tax paid by the manufacturer
thereon is the manufacturer/producer.23 or producer before removal of domestic products from place of
production." Thus, Petron Corporation, not Silkair, is the
On the other hand, with respect to the second kind of goods, statutory taxpayer which is entitled to claim a refund based on
Section 131 of the NIRC states that the taxpayer obligated to Section 135 of the NIRC of 1997 and Article 4(2) of the Air
file the return and pay the excise taxes due thereon is the Transport Agreement between RP and Singapore.
owner or importer, unless the imported articles are exempt
from excise taxes and the person found to be in possession of Even if Petron Corporation passed on to Silkair the burden of
the same is other than those legally entitled to such tax the tax, the additional amount billed to Silkair for jet fuel is not
exemption.24 a tax but part of the price which Silkair had to pay as a
purchaser.32 (Emphasis supplied)
While the NIRC mandates the foregoing persons to pay the
applicable excise taxes directly to the government, they may, However, the abovementioned rule should not apply to
however, shift the economic burden of such payments to instances where the law clearly grants the party to which the
someone else – usually the purchaser of the goods – since economic burden of the tax is shifted an exemption from both
excise taxes are considered as a kind of indirect tax. direct and indirect taxes.1âwphi1 In which case, the latter must
be allowed to claim a tax refund even if it is not considered as
Jurisprudence states that indirect taxes are those which are the statutory taxpayer under the law. Precisely, this is the
demanded in the first instance from one person with the peculiar circumstance which differentiates the Maceda case
expectation and intention that he can shift the economic from Silkair.
burden to someone else.25 In this regard, the statutory
taxpayer can transfer to its customers the value of the excise To elucidate, in Maceda, the Court upheld the National Power
taxes it paid or would be liable to pay to the government by Corporation’s (NPC) claim for a tax refund since its own charter
treating it as part of the cost of the goods and tacking it on to specifically granted it an exemption from both direct and
the selling price.26 Notably, this shifting process, otherwise indirect taxes, viz:
known as "passing on," is largely a contractual affair between
the parties. Meaning, even if the purchaser effectively pays the x x x [T]he Court rules and declares that the oil companies
value of the tax, the manufacturer/producer (in case of goods which supply bunker fuel oil to NPC have to pay the taxes
manufactured or produced in the Philippines for domestic sales imposed upon said bunker fuel oil sold to NPC. By the very
or consumption or for any other disposition) or the owner or nature of indirect taxation, the economic burden of such
importer (in case of imported goods) are still regarded as the taxation is expected to be passed on through the channels of
statutory taxpayers under the law. To this end, the purchaser commerce to the user or consumer of the goods sold. Because,
does not really pay the tax; rather, he only pays the seller more however, the NPC has been exempted from both direct and
for the goods because of the latter’s obligation to the indirect taxation, the NPC must be held exempted from
government as the statutory taxpayer.27 absorbing the economic burden of indirect taxation. This
means, on the one hand, that the oil companies which wish to
In this relation, Section 204(c)28 of the NIRC states that it is the sell to NPC absorb all or part of the economic burden of the
statutory taxpayer which has the legal personality to file a claim taxes previously paid to BIR, which they could shift to NPC if
for refund. Accordingly, in cases involving excise tax exemptions NPC did not enjoy exemption from indirect taxes. This means
on petroleum products under Section 13529 of the NIRC, the also, on the other hand, that the NPC may refuse to pay the
Court has consistently held that it is the statutory taxpayer who part of the "normal" purchase price of bunker fuel oil which
is entitled to claim a tax refund based thereon and not the represents all or part of the taxes previously paid by the oil
party who merely bears its economic burden.30 companies to BIR. If NPC nonetheless purchases such oil from
the oil companies — because to do so may be more convenient
For instance, in the Silkair case, Silkair (Singapore) Pte. Ltd. and ultimately less costly for NPC than NPC itself importing and
(Silkair Singapore) filed a claim for tax refund based on Section hauling and storing the oil from overseas — NPC is entitled to
135(b) of the NIRC as well as Article 4(2)31 of the Air Transport be reimbursed by the BIR for that part of the buying price of
Agreement between the Government of the Republic of the NPC which verifiably represents the tax already paid by the oil
255
company-vendor to the BIR.33 (Emphasis and underscoring Based on these rulings, it may be observed that the propriety of
supplied) a tax refund claim is hinged on the kind of exemption which
forms its basis. If the law confers an exemption from both
Notably, the Court even discussed the Maceda ruling in Silkair, direct or indirect taxes, a claimant is entitled to a tax refund
highlighting the relevance of the exemptions in NPC’s charter to even if it only bears the economic burden of the applicable tax.
its claim for tax refund: On the other hand, if the exemption conferred only applies to
direct taxes, then the statutory taxpayer is regarded as the
Silkair nevertheless argues that it is exempt from indirect taxes proper party to file the refund claim.
because the Air Transport Agreement between RP and
Singapore grants exemption "from the same customs duties, In this case, PAL’s franchise grants it an exemption from both
inspection fees and other duties or taxes imposed in the direct and indirect taxes on its purchase of petroleum products.
territory of the first Contracting Party." It invokes Maceda v. Section 13 thereof reads:
Macaraig, Jr. which upheld the claim for tax credit or refund by
the National Power Corporation (NPC) on the ground that the SEC. 13. In consideration of the franchise and rights hereby
NPC is exempt even from the payment of indirect taxes. granted, the grantee [PAL] shall pay to the Philippine
Government during the life of this franchise whichever of
Silkair’s argument does not persuade. In Commissioner of subsections (a) and (b) hereunder will result in a lower tax:
Internal Revenue v. Philippine Long Distance Telephone
Company, this Court clarified the ruling in Maceda v. Macaraig, (a) The basic corporate income tax based on the grantee's
Jr., viz: annual net taxable income computed in accordance with the
provisions of the National Internal Revenue Code; or
It may be so that in Maceda vs. Macaraig, Jr., the Court held
that an exemption from "all taxes" granted to the National (b) A franchise tax of two per cent (2%) of the gross revenues
Power Corporation (NPC) under its charter includes both direct derived by the grantee from all sources, without distinction as
and indirect taxes. But far from providing PLDT comfort, to transport or nontransport operations; provided, that with
Maceda in fact supports the case of herein petitioner, the respect to international air-transport service, only the gross
correct lesson of Maceda being that an exemption from "all passenger, mail, and freight revenues from its outgoing flights
taxes" excludes indirect taxes, unless the exempting statute, shall be subject to this tax.
like NPC’s charter, is so couched as to include indirect tax from
the exemption. Wrote the Court: The tax paid by the grantee under either of the above
alternatives shall be in lieu of all other taxes, duties, royalties,
x x x However, the amendment under Republic Act No. 6395 registration, license, and other fees and charges of any kind,
enumerated the details covered by the exemption. nature, or description, imposed, levied, established, assessed,
Subsequently, P.D. 380, made even more specific the details of or collected by any municipal, city, provincial, or national
the exemption of NPC to cover, among others, both direct and authority or government agency, now or in the future, including
indirect taxes on all petroleum products used in its operation. but not limited to the following:
Presidential Decree No. 938 [NPC’s amended charter] amended
the tax exemption by simplifying the same law in general terms. 1. All taxes, duties, charges, royalties, or fees due on local
It succinctly exempts NPC from "all forms of taxes, duties[,] purchases by the grantee of aviation gas, fuel, and oil, whether
fees…" refined or in crude form, and whether such taxes, duties,
charges, royalties, or fees are directly due from or imposable
The use of the phrase "all forms" of taxes demonstrates the upon the purchaser or the seller, producer, manufacturer, or
intention of the law to give NPC all the tax exemptions it has importer of said petroleum products but are billed or passed on
been enjoying before. . . the grantee either as part of the price or cost thereof or by
mutual agreement or other arrangement; provided, that all
xxxx such purchases by, sales or deliveries of aviation gas, fuel, and
oil to the grantee shall be for exclusive use in its transport and
It is evident from the provisions of P.D. No. 938 that its purpose nontransport operations and other activities incidental thereto;
is to maintain the tax exemption of NPC from all forms of taxes
including indirect taxes as provided under R.A. No. 6395 and 2. All taxes, including compensating taxes, duties, charges,
P.D. 380 if it is to attain its goals. royalties, or fees due on all importations by the grantee of
aircraft, engines, equipment, machinery, spare parts,
The exemption granted under Section 135(b) of the NIRC of accessories, commissary and catering supplies, aviation gas,
1997 and Article 4(2) of the Air Transport Agreement between fuel, and oil, whether refined or in crude form and other
RP and Singapore cannot, without a clear showing of legislative articles, supplies, or materials; provided, that such articles or
intent, be construed as including indirect taxes. Statutes supplies or materials are imported for the use of the grantee in
granting tax exemptions must be construed in strictissimi juris its transport and transport operations and other activities
against the taxpayer and liberally in favor of the taxing incidental thereto and are not locally available in reasonable
authority, and if an exemption is found to exist, it must not be quantity, quality, or price; (Emphasis and underscoring
enlarged by construction. 34 (Emphasis and underscoring supplied)
supplied)
xxxx
256
Based on the above-cited provision, PAL’s payment of either PAL’s exemptions on (a) passed on excise tax costs due from
the basic corporate income tax or franchise tax, whichever is the seller, manufacturer/producer in case of locally
lower, shall be in lieu of all other taxes, duties, royalties, manufactured/ produced goods for domestic sale (first tax
registration, license, and other fees and charges, except only exemption under the second kind of tax privilege); and (b)
real property tax.35 The phrase "in lieu of all other taxes" passed on excise tax costs due from the importer in case of
includes but is not limited to taxes that are "directly due from imported aviation gas, fuel and oil (second tax exemption under
or imposable upon the purchaser or the seller, producer, the second kind of tax privilege). The second kind of tax
manufacturer, or importer of said petroleum products but are privilege should, in turn, be distinguished from the third kind of
billed or passed on the grantee either as part of the price or tax privilege which applies when PAL itself acts as the importer
cost thereof or by mutual agreement or other arrangement."36 of the foregoing petroleum products. In the latter instance, PAL
In other words, in view of PAL’s payment of either the basic is not merely regarded as the party to whom the economic
corporate income tax or franchise tax, whichever is lower, PAL burden of the excise taxes is shifted to but rather, it stands as
is exempt from paying: (a) taxes directly due from or imposable the statutory taxpayer directly liable to the government for the
upon it as the purchaser of the subject petroleum products; and same.40
(b) the cost of the taxes billed or passed on to it by the seller,
producer, manufacturer, or importer of the said products either In view of the foregoing, the Court observes that the phrase
as part of the purchase price or by mutual agreement or other "purchase of domestic petroleum products for use in its
arrangement. Therefore, given the foregoing direct and indirect domestic operations" – which characterizes the tax privilege LOI
tax exemptions under its franchise, and applying the principles 1483 withdrew – refers only to PAL’s tax exemptions on passed
as above-discussed, PAL is endowed with the legal standing to on excise tax costs due from the seller, manufacturer/producer
file the subject tax refund claim, notwithstanding the fact that it of locally manufactured/ produced goods for domestic sale41
is not the statutory taxpayer as contemplated by law. and does not, in any way, pertain to any of PAL’s tax privileges
concerning imported goods,42 may it be (a) PAL’s tax
B. Coverage of LOI 1483. exemption on excise tax costs which are merely passed on to it
by the importer when it buys imported goods from the latter
LOI 1483 amended PAL’s franchise by withdrawing the tax (the second tax exemption under the second kind of tax
exemption privilege granted to PAL on its purchase of domestic privilege); or (b) PAL’s tax exemption on its direct excise tax
petroleum products for use in its domestic operations. It liability when it imports the goods itself (the third kind of tax
pertinently provides: privilege). Both textual and contextual analyses lead to this
conclusion:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the First, examining its phraseology, the word "domestic," which
Constitution, do hereby order and direct that the tax- means "of or relating to one’s own country"43 or "an article of
exemption privilege granted to PAL on its purchase of domestic domestic manufacture,"44 clearly pertains to goods
petroleum products for use in its domestic operations is hereby manufactured or produced in the Philippines for domestic sales
withdrawn. (Emphasis and underscoring supplied) or consumption or for any other disposition45 as opposed to
things imported.46 In other words, by sheer divergence of
On this score, the CIR contends that the purchase of the meaning, the term "domestic petroleum products" could not
aviation fuel imported by Caltex is a "purchase of domestic refer to goods which are imported.
petroleum products" because the same was not purchased
abroad by PAL. Second, examining its context, certain "whereas clauses"47 in
LOI 1483 disclose that the said law was intended to lift the tax
The Court disagrees. privilege discussed in Department of Finance (DOF) Ruling
dated November 17, 1969 (Subject DOF Ruling) which, based on
Based on Section 13 of PAL’s franchise, PAL’s tax exemption a reading of the same, clarified that PAL’s franchise included tax
privileges on all taxes on aviation gas, fuel and oil may be exemptions on aviation gas, fuel and oil which are
classified into three (3) kinds, namely: (a) all taxes due on PAL’s manufactured or produced in the Philippines for domestic sales
local purchase of aviation gas, fuel and oil;37 (b) all taxes (and not only to those imported).48 In other words, LOI 1483
directly due from or imposable upon the purchaser or the was meant to divest PAL from the tax privilege which was
seller, producer, manufacturer, or importer of aviation gas, fuel tackled in the Subject DOF Ruling, namely, its tax exemption on
and oil but are billed or passed on to PAL;38 and (c), all taxes aviation gas, fuel and oil which are manufactured or produced
due on all importations by PAL of aviation gas, fuel, and oil.39 in the Philippines for domestic sales. Consequently, if LOI 1483
was intended to withdraw the foregoing tax exemption, then
Viewed within the context of excise taxes, it may be observed the term "purchase of domestic petroleum products for use in
that the first kind of tax privilege would be irrelevant to PAL its domestic operations" as used in LOI 1483 could only refer to
since it is not liable for excise taxes on locally "goods manufactured or produced in the Philippines for
manufactured/produced goods for domestic sale or other domestic sales or consumption or for any other disposition,"
disposition; based on Section 130 of the NIRC, it is the and not to "things imported." In this respect, it cannot be
manufacturer or producer, i.e., the local refinery, which is gainsaid that PAL’s tax exemption privileges concerning
regarded as the statutory taxpayer of the excise taxes due on imported goods remain beyond the scope of LOI 1483 and thus,
the same. On the contrary, when the economic burden of the continue to subsist.
applicable excise taxes is passed on to PAL, it may assert two (2)
tax exemptions under the second kind of tax privilege namely,
257
In this case, records disclose that Caltex imported aviation fuel In the Certification56 of Caltex on the volume of aviation fuel
from abroad and merely re-sold the same to PAL, tacking the sold to PAL and its Summary of Local Sales57 (see table below),
amount of excise taxes it paid or would be liable to pay to the Caltex sold 810,870 liters during the subject period out of which
government on to the purchase price. Evidently, the said 804,370 liters were sold to PAL, while the difference of 6,500
petroleum products are in the nature of "things imported" and liters58 were sold to its other client, LBOrendain.
thus, beyond the coverage of LOI 1483 as previously discussed.
As such, considering the subsistence of PAL’s tax exemption Per Summary of Removals and Excise Tax Due on Mineral
privileges over the imported goods subject of this case, PAL is Products Chargeable Against Payments attached to the Excise
allowed to claim a tax refund on the excise taxes imposed and Tax Returns,59 the excise tax rate is ₱3.67 per liter, which, if
due thereon. multiplied with 6,500 liters sold by Caltex to LBOrendain, would
equal the discrepancy amount of ₱23,855.00.
C. PAL’s entitlement to refund.
Further examination of the records also reveals that the
It is hornbook principle that the Court is not a trier of facts and amount reflected in Caltex’s Certification is consistent with the
often, remands cases to the lower courts for the determination amount indicated in Caltex’s Aviation Receipts and Invoices60
of questions of such character. However, when the trial court and Aviation Billing Invoice.61
had already received all the evidence of the parties, the Court
may resolve the case on the merits instead of remanding them Thus, finding that PAL has sufficiently proved its entitlement to
in the interest of expediency and to better serve the ends of a tax refund of the excise taxes subject of this case, the Court
justice.49 hereby grants its petition and consequently, annuls the assailed
CTA resolutions.
Applying these principles, the Court finds that the evidence on
record shows that PAL was able to sufficiently prove its WHEREFORE, the petition is hereby GRANTED.1âwphi1 The
entitlement to the subject tax refund. The following incidents May 9, 2011 Decision and September 16, 2011 Resolution of
attest to the same: the Court of Tax Appeals En Banc in CTA EB Case No. 588 are
ANNULLED and SET ASIDE. Respondent Commissioner of
First, PAL timely filed its claim for refund. Internal Revenue is hereby ORDERED to refund or issue a tax
credit certificate in favor of the petitioner Philippine Airlines,
Section 22950 of the NIRC provides that the claim for refund Inc. in the amount of ₱2,952,037.90.
should be filed within two (2) years from the date of payment
of the tax. 100. ALFREDO C. LIM, JR., PETITIONER, vs.SPOUSES TITO S.
LAZARO AND CARMEN T. LAZARO, RESPONDENTS.
Shortly after imported aviation fuel was delivered to PAL, Caltex
electronically filed the requisite excise tax returns and paid the Assailed in this petition for review on certiorari1 are the July 10,
corresponding amount of excise taxes, as follows: 2008 Decision2 and December 18, 2008 Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 100270, affirming the
PAL filed its administrative claim for refund on October 29, March 29, 2007 Order4 of the Regional Trial Court of Quezon
200451 and its judicial claim with the CTA on July 25, 2006.52 In City, Branch 223 (RTC), which lifted the writ of preliminary
this regard, PAL’s claims for refund were filed on time in attachment issued in favor of petitioner Alfredo C. Lim, Jr. (Lim,
accordance with the 2-year prescriptive period. Jr.).
Second, PAL paid the lower of the basic corporate income tax or The Facts
the franchise tax as provided for in the afore-quoted Section 13
of its franchise. On August 22, 2005, Lim, Jr. filed a complaint5 for sum of
money with prayer for the issuance of a writ of preliminary
In its income tax return for FY 2004-2005,53 PAL reported no attachment before the RTC, seeking to recover from
net taxable income for the period resulting in zero basic respondents-spouses Tito S. Lazaro and Carmen T. Lazaro (Sps.
corporate income tax, which would necessarily be lower than Lazaro) the sum of ₱2,160,000.00, which represented the
any franchise tax due from PAL for the same period. amounts stated in several dishonored checks issued by the
latter to the former, as well as interests, attorney’s fees, and
Third, the subject excise taxes were duly declared and remitted costs. The RTC granted the writ of preliminary attachment
to the BIR. application6 and upon the posting of the required
₱2,160,000.00 bond,7 issued the corresponding writ on
Contrary to the findings of the CTA that the excise taxes sought October 14, 2005.8 In this accord, three (3) parcels of land
to be refunded were not the very same taxes that were situated in Bulacan, covered by Transfer Certificates of Title
declared in the Excise Tax Returns filed by Caltex54 (TCT) Nos. T-64940, T-64939, and T-86369 (subject TCTs),
(underscoring the discrepancy of ₱23,855.00 between the registered in the names of Sps. Lazaro, were levied upon.9
amount of ₱2,975,892.90 declared in the said returns and the
amount of ₱2,952.037.9055 sought to be refunded), an In their Answer with Counterclaim,10 Sps. Lazaro averred,
examination of the records shows a sufficient explanation for among others, that Lim, Jr. had no cause of action against them
the difference. since: (a) Colim Merchandise (Colim), and not Lim, Jr., was the
payee of the fifteen (15) Metrobank checks; and (b) the PNB
and Real Bank checks were not drawn by them, but by Virgilio
258
Arcinas and Elizabeth Ramos, respectively. While they admit
their indebtedness to Colim, Sps. Lazaro alleged that the same The Issue Before the Court
had already been substantially reduced on account of previous
payments which were apparently misapplied. In this regard, The sole issue in this case is whether or not the writ of
they sought for an accounting and reconciliation of records to preliminary attachment was properly lifted.
determine the actual amount due. They likewise argued that no
fraud should be imputed against them as the aforesaid checks The Court’s Ruling
issued to Colim were merely intended as a form of collateral.11
Hinged on the same grounds, Sps. Lazaro equally opposed the The petition is meritorious.
issuance of a writ of preliminary attachment.12
By its nature, preliminary attachment, under Rule 57 of the
Nonetheless, on September 22, 2006, the parties entered into a Rules of Court (Rule 57), is an ancillary remedy applied for not
Compromise Agreement13 whereby Sps. Lazaro agreed to pay for its own sake but to enable the attaching party to realize
Lim, Jr. the amount of ₱2,351,064.80 on an installment basis, upon the relief sought and expected to be granted in the main
following a schedule of payments covering the period from or principal action; it is a measure auxiliary or incidental to the
September 2006 until October 2013, under the following terms, main action. As such, it is available during its pendency which
among others: (a) that should the financial condition of Sps. may be resorted to by a litigant to preserve and protect certain
Lazaro improve, the monthly installments shall be increased in rights and interests during the interim, awaiting the ultimate
order to hasten the full payment of the entire obligation;14 and effects of a final judgment in the case.26 In addition,
(b) that Sps. Lazaro’s failure to pay any installment due or the attachment is also availed of in order to acquire jurisdiction
dishonor of any of the postdated checks delivered in payment over the action by actual or constructive seizure of the property
thereof shall make the whole obligation immediately due and in those instances where personal or substituted service of
demandable. summons on the defendant cannot be effected.27
The aforesaid compromise agreement was approved by the RTC In this relation, while the provisions of Rule 57 are silent on the
in its October 31, 2006 Decision15 and January 5, 2007 length of time within which an attachment lien shall continue
Amended Decision.16 to subsist after the rendition of a final judgment, jurisprudence
dictates that the said lien continues until the debt is paid, or the
Subsequently, Sps. Lazaro filed an Omnibus Motion,17 seeking sale is had under execution issued on the judgment or until the
to lift the writ of preliminary attachment annotated on the judgment is satisfied, or the attachment discharged or vacated
subject TCTs, which the RTC granted on March 29, 2007.18 It in the same manner provided by law.28
ruled that a writ of preliminary attachment is a mere
provisional or ancillary remedy, resorted to by a litigant to Applying these principles, the Court finds that the discharge of
protect and preserve certain rights and interests pending final the writ of preliminary attachment against the properties of
judgment. Considering that the case had already been Sps. Lazaro was improper.
considered closed and terminated by the rendition of the
January 5, 2007 Amended Decision on the basis of the Records indicate that while the parties have entered into a
September 22, 2006 compromise agreement, the writ of compromise agreement which had already been approved by
preliminary attachment should be lifted and quashed. the RTC in its January 5, 2007 Amended Decision, the
Consequently, it ordered the Registry of Deeds of Bulacan to obligations thereunder have yet to be fully complied with –
cancel the writ’s annotation on the subject TCTs. particularly, the payment of the total compromise amount of
₱2,351,064.80. Hence, given that the foregoing debt remains
Lim, Jr. filed a motion for reconsideration19 which was, unpaid, the attachment of Sps. Lazaro’s properties should have
however, denied on July 26, 2007,20 prompting him to file a continued to subsist.
petition for certiorari21 before the CA.
In Chemphil Export & Import Corporation v. CA,29 the Court
The CA Ruling pronounced that a writ of attachment is not extinguished by
the execution of a compromise agreement between the parties,
On July 10, 2008, the CA rendered the assailed decision,22 viz:
finding no grave abuse of discretion on the RTC’s part. It
observed that a writ of preliminary attachment may only be Did the compromise agreement between Antonio Garcia and
issued at the commencement of the action or at any time the consortium discharge the latter’s attachment lien over the
before entry of judgment. Thus, since the principal cause of disputed shares?
action had already been declared closed and terminated by the
RTC, the provisional or ancillary remedy of preliminary CEIC argues that a writ of attachment is a mere auxiliary
attachment would have no leg to stand on, necessitating its remedy which, upon the dismissal of the case, dies a natural
discharge.23 death. Thus, when the consortium entered into a compromise
agreement, which resulted in the termination of their case, the
Aggrieved, Lim, Jr. moved for reconsideration24 which was disputed shares were released from garnishment.
likewise denied by the CA in its December 18, 2008
Resolution.25 We disagree. To subscribe to CEIC’s contentions would be to
totally disregard the concept and purpose of a preliminary
Hence, the instant petition. attachment.
259
exploration and utilization of renewable energy resources. As
xxxx Senior Logistics Assistant, Estrella’s duties included initiating
and handling the terms and conditions for the bidding of heavy
The case at bench admits of peculiar character in the sense that and support equipment rentals for PNOC-EDC’s project
it involves a compromise agreement. Nonetheless, x x x. The locations, and evaluating and recommending bid contracts for
parties to the compromise agreement should not be deprived management approval.8
of the protection provided by an attachment lien especially in
an instance where one reneges on his obligations under the Records show that PNOC-EDC opened the technical and
agreement, as in the case at bench, where Antonio Garcia failed financial bids for its 2004 Annual Contract on Heavy/Support
to hold up his own end of the deal, so to speak. Equipment Rental for SNGPF (EDC 03-191) (2004 Contract) on
December 4, 2003 and February 14, 2004, respectively. The
xxxx evaluation and post-qualification of bids were conducted from
February to May 2004.9
If we were to rule otherwise, we would in effect create a back
door by which a debtor can easily escape his creditors. As part of the bidding process, Estrella carried out an inspection
Consequently, we would be faced with an anomalous situation on May 13, 200410 wherein JR Car Services, owned by
where a debtor, in order to buy time to dispose of his Dumaguete-based contractor Remigio11 S. P. Jacobe (Jacobe),
properties, would enter into a compromise agreement he has qualified as the first priority contractor for the Asian Utility
no intention of honoring in the first place. The purpose of the Vehicle (AUV) Category, having offered three (3) units for lease
provisional remedy of attachment would thus be lost. It would at the rental rate of ₱1,250.00 per day.12 Accordingly, the
become, in analogy, a declawed and toothless tiger. (Emphasis vehicles of JR Car Services were included in the bid summary for
and underscoring supplied; citations omitted) the 2004 Contract (Bid Summary).
In fine, the Court holds that the writ of preliminary attachment On January 20, 2005, Jacobe, who also claimed to be a
subject of this case should be restored and its annotation distributor of Dream Satellite Cable units (cable unit), executed
revived in the subject TCTs, re-vesting unto Lim, Jr. his an Affidavit13 charging Estrella with irregularities in dealing
preferential lien over the properties covered by the same as it with JR Car Services’ bid. He narrated how Estrella manipulated
were before the cancellation of the said writ. Lest it be the bid tabulation by altering the field copy of the Bid Summary
misunderstood, the lien or security obtained by an attachment to reflect one (1) unit instead of the qualified bid for three (3)
even before judgment, is in the nature of a vested interest units, and, in a series of text messages,14 asked for a free cable
which affords specific security for the satisfaction of the debt unit, among other favors, in exchange for a positive treatment
put in suit.30 Verily, the lifting of the attachment lien would be of JR Car Services’ future bids.15 Realizing Estrella’s power and
tantamount to an abdication of Lim, Jr.’s rights over Sps. influence, Jacobe eventually acceded and gave him a free cable
Lazaro’s properties which the Court, absent any justifiable unit.
ground therefor, cannot allow.
Prompted by Jacobe’s Affidavit, PNOC-EDC’s Senior Manager,
WHEREFORE, the petition is GRANTED. The July 10, 2008 petitioner Francis A. Palafox, formed an audit committee to
Decision and the December 18, 2008 Resolution of the Court of investigate the charges. In its Detailed Audit Report16 dated
Appeals in CA-G.R. SP No. 100270 are REVERSED and SET ASIDE, April 11, 2005, the audit committee discovered that the bid of
and the March 29, 2007 Order of the Regional Trial Court of JR Car Services in the AUV Category was altered from three (3)
Quezon City, Branch 223 is NULLIFIED. Accordingly, the trial units to one (1) unit in the field copy of the Bid Summary, to
court is directed to RESTORE the attachment lien over Transfer which Estrella affixed his initials. However, in the final copy of
Certificates of Title Nos. T-64940, T-64939, and T-86369, in the Bid Summary, no alterations were reflected.17 Estrella was
favor of petitioner Alfredo C. Lim, Jr. also found to have accepted bids from a certain EGS Enterprises
despite non-compliance with the required bid specifications
101. PNOC-ENERGY DEVELOPMENT CORPORATION AND/OR and non-submission of competent proofs of ownership.18
PAUL A. AQUINO, FRANCIS A. PALAFOX, PETITIONERS,
vs.JOSELITO L. ESTRELLA, RESPONDENT. Thus, Estrella was charged to have committed willful acts of
dishonesty, consisting of his alteration and/or tampering of
Assailed in this petition for review on certiorari1 are the March lessors’ bids, acceptance of disqualified bids, manipulation of
21, 2011 Decision2 and July 20, 2011 Resolution3 of the Court bid summary, and extortion.19 On April 28, 2005, he was
of Appeals (CA) in CA-G.R. SP No. 98841, finding no grave abuse required20 to show cause why no disciplinary action should be
of discretion on the part of the National Labor Relations taken against him.
Commission (NLRC) which, in its November 30, 20064 and
March 30, 20075 Resolutions, held that respondent Joselito L. In his written explanation dated April 29, 2005,21 Estrella
Estrella (Estrella) was illegally dismissed from his employment. admitted the alteration but explained that he did so in order to
reflect the results of a second inspection he conducted on June
The Facts 30, 2004, which he found necessary considering that JR Car
Services had no actual service vehicles available during the first
At the time of his dismissal, Estrella was the Senior Logistics inspection. During the second inspection, Jacobe presented
Assistant6 at the Materials Control Department of petitioner only one (1) vehicle and informed Estrella that the two (2) other
PNOC-Energy Development Corporation (PNOC-EDC), then a vehicles included in the original bid had already been disposed.
government-owned and controlled corporation7 engaged in the Thus, Estrella altered the number of JR Car Services’ vehicles
260
from three (3) units to one (1) unit in the Bid Summary,22
which he claimed to be only his "working paper."23 He also On appeal, the NLRC affirmed34 in toto the LA’s decision,
denied having demanded a free cable unit from Jacobe, upholding its finding that the inconsistencies in Jacobe’s
averring instead that he purchased one.24 With respect to the statements rendered doubtful the charges against Estrella. It
text messages which he purportedly sent to Jacobe, he echoed the LA’s opinion that Estrella’s infractions were minor
contended that they were merely fabricated and intended to ones which did not merit the penalty of dismissal. Petitioners’
harass him. As for the disqualified bids of EGS Enterprises, he motion for reconsideration was denied on March 30, 2007.35
explained that EGS Enterprises’ bid rate was lower than that of
JR Car Services and that the engagement of its vehicles did not The CA Ruling
cause undue injury or damage to PNOC-EDC, but rather, was
more advantageous to it.25 In its assailed Decision,36 the CA found no grave abuse of
discretion on the part of the NLRC in sustaining the LA’s
Subsequently, an Investigation/Disciplinary Action Committee decision. Nonetheless, the CA conceded that Estrella did indeed
(Committee) was formed to further probe into the matter, commit infractions but ruled that dismissal was an
before whom Estrella personally testified.26 After the inappropriate penalty, considering his 21 long years of
investigation, the Committee recommended27 Estrella’s unblemished service with PNOC-EDC. Petitioners’ motion for
dismissal for willful dishonesty, extortion, grave misconduct and reconsideration therefrom was denied.37
misbehavior, and abuse of authority, on account of his
alteration, tampering or manipulation of the Bid Summary as The Issue Before The Court
well as his attempt to extort from Jacobe.28 However, one of
the Committee members, a certain D. D. Guevara (Guevara), The sole issue in this case is whether the CA erred in affirming
opined that dismissal may be too harsh a penalty and instead the labor tribunals’ pronouncement that Estrella had been
recommended that Estrella be suspended, considering that illegally dismissed.
PNOC-EDC eventually engaged two (2) more of JR Car Services’
vehicles.29 The Court’s Ruling
On July 5, 2005, Estrella was dismissed,30 prompting him to file The petition lacks merit.
a complaint for illegal dismissal, with prayer for reinstatement
and payment of full backwages and exemplary damages, Fundamental is the rule that an employee can be dismissed
against petitioners. from employment only for a valid cause.1âwphi1 Serious
misconduct is one of the just causes for termination under
The LA Ruling Article 282 of the Labor Code, which reads in part:
After due proceedings, the Labor Arbiter found31 Estrella to ART. 282. Termination By Employer. – An employer may
have been illegally dismissed, observing that he did not act with terminate an employment for any of the following causes:
bad faith and malice in the performance of his duties. Citing the
opinion of Guevara, the LA held that Jacobe could not validly (a) Serious misconduct or willful disobedience by the employee
claim that the engagement of his vehicles was hinged upon of the lawful orders of his employer or representative in
Estrella’s demand for a free cable unit since he was fully aware connection with his work;
that he was not limited to only one (1) vehicle in the 2004
Contract.32 Jacobe even failed to state in his affidavit that xxxx
Estrella was the source of the altered Bid Summary and that the
latter used the same to extort a free cable unit. Thus, not every form of misconduct can be considered as a just
cause for termination. The law explicitly qualifies that the
Finally, the LA noted Jacobe’s inconsistent statements when misconduct must be both serious and made in connection with
inquired as to his motive for executing the affidavit against the employee’s work. As clarified in Cosmos Bottling Corp. v.
Estrella. Initially, Jacobe claimed that he was infuriated Fermin:38
("Bumagsak talaga pisi ko") when he learned that his vehicles
would not be engaged, but later, he stated that he gave the
cable unit to Estrella as a token of gratitude ("pasasalamat").33 Misconduct involves "the transgression of some established
Thus, the LA ruled that there were doubts as to the truth of the and definite rule of action, forbidden act, a dereliction of duty,
charges of extortion, willful dishonesty and misbehavior against willful in character, and implies wrongful intent and not mere
Estrella. error in judgment." For misconduct to be serious and therefore
a valid ground for dismissal, it must be (1) of grave and
In sum, the LA held that Estrella’s infractions were not major aggravated character and not merely trivial or unimportant and
violations but only minor ones which did not merit the penalty (2) connected with the work of the employee.39 (Emphasis and
of dismissal. Hence, the LA ordered PNOC-EDC to reinstate underscoring supplied)
Estrella to his former or equivalent position without loss of
seniority rights and privileges and to pay him his full backwages In this relation, it is well to stress that the employer bears the
and other benefits from the date of his dismissal up to his burden of proving, through substantial evidence, that the
reinstatement. aforesaid just cause – or any other valid cause for that matter –
forms the basis of the employee’s dismissal from work.40
The NLRC Ruling Substantial evidence is the amount of relevant evidence as a
261
reasonable mind might accept as adequate to support a WHEREFORE, the petition is DENIED. The March 21, 2011
conclusion, even if other minds, equally reasonable, might Decision and July 20, 2011 Resolution of the Court of Appeals in
conceivably opine otherwise.41 As long as this evidentiary CA-G.R. SP No. 99841 are hereby AFFIRMED.
threshold is met, the dismissal of the employee should, as a
general rule, be upheld. 102. JOSEFINA CARANZA VDA. DE SALDIVAR,
COMPLAINANT,vs.ATTY. RAMON SG CABANES, JR.,
Applying these principles to the case at bar, the Court finds that RESPONDENT.
the CA committed no reversible error when it found no grave
abuse of discretion on the part of both the LA and NLRC in For the Court’s resolution is an administrative complaint1 filed
ruling that Estrella was illegally dismissed from his employment. by Josefina Caranza vda. de Saldivar (complainant) against Atty.
Ramon SG Cabanes, Jr. (respondent), charging him for gross
Records disclose that PNOC-EDC dismissed Estrella on the negligence in violation of Canon 17, and Rules 18.03 and 18.04
ground of serious misconduct42 which was mainly hinged on of Canon 18 of the Code of Professional Responsibility (Code).
Estrella’s alteration and/or tampering of lessors’ bids and
extortion. The Facts
Petitioners impute that Estrella used his position and authority Complainant was the defendant in an unlawful detainer case,
to exert undue pressure on Jacobe to give in to his personal docketed as Civil Case No. 1972,2 filed by the heirs of one
demands, and in the process, tainted the integrity of PNOC- Benjamin Don (heirs) before the Municipal Trial Court of Pili,
EDC’s bidding process. This conclusion was largely based on the Camarines Sur (MTC), wherein she was represented by
Committee’s finding that Estrella altered JR Car Services’ bid respondent. While respondent duly filed an answer to the
from three (3) units to one (1) unit for the AUV Category, unlawful detainer complaint, he, however, failed to submit a
coupled with the fact that Estrella sent several text messages to pre-trial brief as well as to attend the scheduled preliminary
Jacobe asking for personal favors, such as a free cable unit. conference. Consequently, the opposing counsel moved that
Ruling on the matter, the LA, the NLRC, and the CA all observed the case be submitted for decision which motion was granted in
that such infraction was only minor in nature which did not an Order3 dated November 27, 2003. When complainant
warrant his dismissal. confronted respondent about the foregoing, the latter just
apologized and told her not to worry, assuring her that she will
The Court agrees. not lose the case since she had the title to the subject property.
While Estrella himself admitted that he did alter JR Car Services’ On December 30, 2003, the MTC issued a Decision4 (MTC
bid from three (3) vehicles to one (1) in the Bid Summary which Decision) against complainant, ordering her to vacate and turn-
he himself initialed, he provided a reasonable excuse therefor – over the possession of the subject property to the heirs as well
that is, he only did so to reflect the results of his second as to pay them damages. On appeal, the Regional Trial Court of
inspection where he found that only one vehicle was available Pili, Camarines Sur, Branch 32 (RTC), reversed the MTC Decision
for lease. It is well to stress that the alteration was only made in and dismissed the unlawful detainer complaint.5 Later
a field copy which, as Estrella explains, was acquired by his however, the Court of Appeals (CA) reversed the RTC’s ruling
supervisor and sent to the accounting department without his and reinstated the MTC Decision.6 Respondent received a copy
knowledge. Although PNOC-EDC remarked that the fact that of the CA’s ruling on January 27, 2006. Yet, he failed to inform
Estrella initialed the said field copy proved his intent to make complainant about the said ruling, notwithstanding the fact
the alteration official, this supposition, bereft of any substantial that the latter frequented his work place. Neither did
evidence to corroborate such a conclusion, remains highly- respondent pursue any further action.7 As such, complainant
speculative and thus, cannot be given credence. Besides, as it decided to engage the services of another counsel for the
turned out, the alleged alterations did not appear in the final purpose of seeking other available remedies. Due to
copy of the Bid Summary, negating any complications on the respondent’s failure to timely turn-over to her the papers and
company’s bidding process. In fact, PNOC-EDC eventually documents in the case, such other remedies were, however,
engaged two (2) more of JR Car Services’ vehicles in August barred. Thus, based on these incidents, complainant filed the
2004. Thus, for these reasons, it cannot be gainsaid that instant administrative complaint, alleging that respondent’s
Estrella’s mistake, if any, hardly qualifies as serious misconduct acts amounted to gross negligence which resulted in her loss.8
as contemplated by law, denying his employer’s right to dismiss
him based on the same. In a Resolution9 dated March 10, 2008, the Court directed
respondent to comment on the administrative complaint within
To note, neither do the text messages sent to Jacobe predicate ten (10) days from notice.
any corrupt motive on Estrella’s part since the causal
connection between these messages and the conduct of Accordingly, respondent filed a Manifestation with
Estrella’s bid inspection and/or approval was not adequately Compliance10 dated May 19, 2008, admitting to have agreed to
shown. Moreover, the credibility of Estrella’s version of the represent complainant who claimed to be the tenant and
incident grows even stronger when taken in light of Jacobe’s rightful occupant of the subject property owned by the late
inconsistent statements before the Committee. Therefore, Pelagia Lascano (Pelagia). He alleged that upon careful
absent substantial evidence to prove that the subject text examination of the heirs' unlawful detainer complaint, he
messages were actually tied up to any form of extortion, noticed a discrepancy between the descriptions of the subject
Estrella’s termination for such actuations cannot be sustained. property as indicated in the said pleading as opposed to that
which complainant supplied to him. On the belief that the
262
parties may be contesting two (2) sets of properties which are In a Resolution18 dated July 7, 2008, the Court resolved to refer
distinct and separate from one another, respondent, at the the instant administrative case to the Integrated Bar of the
preliminary conference conducted on October 28, 2003, moved Philippines (IBP) for its evaluation, report and recommendation.
for the suspension of further proceedings and proposed that a
commissioner be appointed to conduct a re-survey in order to The IBP Commission on Bar Discipline set the case for
determine the true identity of the property in dispute. The MTC mandatory conference on April 15, 200919 and required the
allowed the counsels for both parties to decide on the manner parties to submit their respective position papers.20
of the proposed re-survey, leading to the assignment of a
Department of Agrarian Reform Survey Engineer (DAR The IBP’s Report and Recommendation
Engineer) for this purpose. In relation, the heirs’ counsel agreed
to turn-over to respondent in his office11 certain documents On June 18, 2009, the Investigating IBP Commissioner, Rebecca
which indicated the subject property’s description. Thus, Villanueva-Maala (Investigating Commissioner), issued a Report
pending the conduct and results of the re-survey, the and Recommendation (Commissioner’s Report),21 finding
preliminary conference was tentatively reset to November 27, respondent to have been negligent in failing to attend the
2003.12 preliminary conference in Civil Case No. 1972 set on November
27, 2003 which resulted in the immediate submission of the
As it turned out, the heirs’ counsel was unable to furnish said case for decision and eventual loss of complainant’s cause.
respondent copies of the above-stated documents,
notwithstanding their agreement. This led the latter to believe The Investigating Commissioner observed that respondent
that the preliminary conference scheduled on November 27, could have exercised ordinary diligence by inquiring from the
2003 would not push through. Respondent averred that the court as to whether the said preliminary conference would
aforesaid setting also happened to coincide with an important push through, considering that the November 27, 2003 setting
provincial conference which he was required to attend. As such, was only tentative and the heirs’ counsel was not able to confer
he inadvertently missed the hearing.13 Nonetheless, he with him. Further, the fact that respondent had to attend an
proffered that he duly appealed the adverse MTC Decision to important provincial conference which coincided with the said
the RTC,14 resulting to the dismissal of the unlawful detainer setting hardly serves as an excuse since he should have sent a
complaint, albeit later reversed by the CA. substitute counsel on his behalf. Also, respondent never
mentioned any legal remedy that he undertook when the heirs
Thereafter, pending the heirs' appeal to the CA, respondent elevated the decision of the RTC to the CA. In fact, he did not
came upon the information that the disputed property was file any comment or opposition to the heirs’ appeal. Finally,
subject of a petition for exemption from the coverage of respondent’s enumerations of his legal options to allegedly
Presidential Decree No. (PD) 2715 filed by Pelagia against protect the complainant’s interests were found to be thought
complainant’s mother, Placida Caranza (Placida). Based on only after the fact.22
several documents furnished to him by certain DAR personnel,
respondent was satisfied that Placida indeed held the subject Thus, based on the foregoing, the Investigating Commissioner
property for a long time and actually tilled the same in the ruled that respondent failed to exercise ordinary diligence in
name of Pelagia, thereby placing it under PD 27 coverage. Due handling his client's cause, warranting his suspension from the
to such information, respondent was convinced that Placida – practice of law for a period of six (6) months.23
and consequently, complainant (who took over the tilling) –
was indeed entitled to the subject property. Hence, he advised The IBP Board of Governors adopted and approved the
complainant that it would be best to pursue remedies at the Commissioner’s Report in Resolution No. XIX-2011-26624 dated
administrative level, instead of contesting the appeal filed by May 14, 2011, finding the same to be fully supported by the
the heirs before the CA. It was respondent’s calculated legal evidence on record and in accord with applicable laws and
strategy that in the event the CA reverses the decision of the rules.
RTC, an opposition to the issuance of a writ of execution or a
motion to quash such writ may be filed based on the afore- Respondent filed a motion for reconsideration25 which was,
stated reasons, especially if an approved plan and later, an however, denied, in Resolution No. XX-2012-51726 dated
emancipation patent covering the subject property is issued.16 December 14, 2012.
Meanwhile, the survey conducted by the DAR Engineer The Court's Ruling
revealed that complainant's tillage extended to about 5,000
square meters of the subject property which was determined to The Court resolves to adopt the IBP's findings and
belong to the heirs, the rest being covered by the title of recommendation.
Pelagia. Dissatisfied, complainant manifested her intention to
secure the services of a private surveyor of her own choice, and The relationship between an attorney and his client is one
promised to furnish respondent a copy of the survey results, imbued with utmost trust and confidence. In this light, clients
which she, however, failed to do. Later, complainant accused are led to expect that lawyers would be ever-mindful of their
respondent of manipulating the DAR Survey Results which cause and accordingly exercise the required degree of diligence
caused their lawyer-client relationship to turn sour and in handling their affairs. Verily, a lawyer is expected to maintain
eventually be severed. She has since retrieved the entire case at all times a high standard of legal proficiency, and to devote
folders and retained the services of another lawyer.17 his full attention, skill, and competence to the case, regardless
of its importance and whether he accepts it for a fee or for
free.27 Canon 17, and Rules 18.03 and 18.04 of Canon 18 of the
263
Code embody these quintessential directives and thus, he even failed to rebut complainant's allegation that he
respectively state: neglected to inform her about the CA ruling which he had duly
received, thereby precluding her from availing of any further
CANON 17 - A lawyer owes fidelity to the cause of his client and remedies. As regards respondent’s suggested legal strategy to
he shall be mindful of the trust and confidence reposed in him. pursue the case at the administrative level, suffice it to state
that the same does not excuse him from failing to file a
CANON 18 – A lawyer shall serve his client with competence comment or an opposition to an appeal, or even, inform his
and diligence. client of any adverse resolution, as in this case. Irrefragably,
these are basic courses of action which every diligent lawyer is
xxxx expected to make.
Rule 18.03 – A lawyer shall not neglect a legal matter entrusted All told, it cannot be gainsaid that respondent was guilty of
to him, and his negligence in connection therewith shall render gross negligence, in violation of the above-cited provisions of
him liable. the Code.
Rule 18.04 – A lawyer shall keep the client informed of the As regards the appropriate penalty, several cases show that
status of his case and shall respond within a reasonable time to lawyers who have been held liable for gross negligence for
the client's request for information. infractions similar to those of the respondent were suspended
for a period of six (6) months. In Aranda v. Elayda,32 a lawyer
Case law further illumines that a lawyer’s duty of competence who failed to appear at the scheduled hearing despite due
and diligence includes not merely reviewing the cases entrusted notice which resulted in the submission of the case for decision
to the counsel's care or giving sound legal advice, but also was found guilty of gross negligence and hence, suspended for
consists of properly representing the client before any court or six (6) months. In Heirs of Tiburcio F. Ballesteros, Sr. v. Apiag,33
tribunal, attending scheduled hearings or conferences, a lawyer who did not file a pre-trial brief and was absent during
preparing and filing the required pleadings, prosecuting the the pre-trial conference was likewise suspended for six (6)
handled cases with reasonable dispatch, and urging their months. In Abiero v. Juanino,34 a lawyer who neglected a legal
termination without waiting for the client or the court to prod matter entrusted to him by his client in breach of Canons 17
him or her to do so.28 and 18 of the Code was also suspended for six (6) months. Thus,
consistent with existing jurisprudence, the Court finds it proper
to impose the same penalty against respondent and accordingly
Conversely, a lawyer's negligence in fulfilling his duties subjects suspends him for a period of six (6) months.
him to disciplinary action.29 While such negligence or
carelessness is incapable of exact formulation, the Court has WHEREFORE, respondent Atty. Ramon SG Cabanes, Jr. is found
consistently held that the lawyer’s mere failure to perform the guilty of gross negligence in violation of Canon 17, and Rules
obligations due his client is per se a violation.30 18.03 and 18.04 of Canon 18 of the Code of Professional
Responsibility. He is hereby SUSPENDED from the practice of
Applying these principles to the present case, the Court finds law for a period of six (6) months, effective upon his receipt of
that respondent failed to exercise the required diligence in this Resolution, and is STERNLY WARNED that a repetition of
handling complainant’s cause. the same or similar acts will be dealt with more severely.
Records show that he failed to justify his absence during the Let a copy of this Resolution be furnished the Office of the Bar
scheduled preliminary conference hearing in Civil Case No. Confidant, the Integrated Bar of the Philippines, and the Office
1972 which led the same to be immediately submitted for of the Court Administrator for circulation to all the courts.
decision. As correctly observed by the Investigating
Commissioner, respondent could have exercised ordinary 103. RAFAEL L. COSCOLLUELA, Petitioner, vs.SANBIGANBAYAN
diligence by inquiring from the court as to whether the said (FIRST DIVISION) and PEOPLE OF THE PHILIPPINES,
hearing would push through, especially so since it was only Respondents.
tentatively set and considering further that he was yet to confer
with the opposing counsel. The fact that respondent had an x-----------------------x
important commitment during that day hardly exculpates him
from his omission since the prudent course of action would G.R. No. 191871 EDWIN N. NACIONALES, ERNESTO P.
have been for him to send a substitute counsel to appear on his MALVAS, and JOSE MA. G. AMUGOD, Petitioners,
behalf. In fact, he should have been more circumspect to vs.SANDIGANBAYAN (FIRST DIVISION) and PEOPLE OF THE
ensure that the aforesaid hearing would not have been left PHILIPPINES, represented by the OFFICE OF THE SPECIAL
unattended in view of its adverse consequences, i.e., that the PROSECUTOR, OFFICE OF THE OMBUDSMAN, Respondents.
defendant’s failure to appear at the preliminary conference
already entitles the plaintiff to a judgment.31 Indeed, second- Assailed in these consolidated Petitions for Certiorari1 are the
guessing the conduct of the proceedings, much less without any October 6, 20092 and February 10, 20103 Resolutions of public
contingent measure, exhibits respondent’s inexcusable lack of respondent First Division of Sandiganbayan (SB), denying the
care and diligence in managing his client’s cause.1âwphi1 Motion to Quash4 dated July 8, 2009 filed by petitioner Rafael
L. Coscolluela (Coscolluela). The said motion was adopted by
Equally compelling is the fact that respondent purposely failed petitioners Edwin N. Nacionales (Nacionales), Dr. Ernesto P.
to assail the heirs’ appeal before the CA. Records disclose that Malvas (Malvas), and Jose Ma. G. Amugod (Amugod), praying
264
for the dismissal of Crim. Case No. SB-09-CRM-0154 for In a Resolution15 dated October 6, 2009, the SB denied
violation of their right to speedy disposition of cases. petitioners’ Motion to Quash for lack of merit. It held that the
preliminary investigation against petitioners was actually
The Facts resolved by Cañares on March 27, 2003, one (1) year and four
(4) months from the date the complaint was filed, or in
Coscolluela served as governor of the Province of Negros November 9, 2001. Complying with internal procedure, Cañares
Occidental (Province) for three (3) full terms which ended on then prepared the March 27, 2003 Resolution and Information
June 30, 2001. During his tenure, Nacionales served as his for the recommendation of the Miro and eventually, the final
Special Projects Division Head, Amugod as Nacionales’ approval of the Casimiro. As these issuances had to undergo
subordinate, and Malvas as Provincial Health Officer.5 careful review and revision through the various levels of the
said office, the period of delay – i.e., from March 27, 2003 to
On November 9, 2001, the Office of the Ombudsman for the May 21, 2009, or roughly over six (6) years – cannot be deemed
Visayas (Office of the Ombudsman) received a letter- as inordinate16 and as such, petitioners’ constitutional right to
complaint6 dated November 7, 2001 from People’s Graftwatch, speedy disposition of cases was not violated.17
requesting for assistance to investigate the anomalous
purchase of medical and agricultural equipment for the Aggrieved, petitioners filed their respective Motions for
Province in the amount of ₱20,000,000.00 which allegedly Reconsideration18 dated November 9, 2009 and November 6,
happened around a month before Coscolluela stepped down 2009, similarly arguing that the SB erred in making a distinction
from office. between two time periods, namely: (a) from the filing of the
complaint up to the time Cañares prepared the resolution
Acting on the letter-complaint, the Case Building Team of the finding probable cause against petitioners; and (b) from the
Office of the Ombudsman conducted its investigation, resulting submission of the said resolution to the Acting Ombudsman for
in the issuance of a Final Evaluation Report7 dated April 16, review and approval up to the filing of the Information with the
2002 which upgraded the complaint into a criminal case against SB. In this regard, petitioners averred that the aforementioned
petitioners.8 Consequently, petitioners filed their respective periods should not be compartmentalized and thus, treated as
counter-affidavits.9 a single period. Accordingly, the delay of eight (8) years of the
instant case should be deemed prejudicial to their right to
On March 27, 2003, the assigned Graft Investigation Officer speedy disposition of cases.19
Butch E. Cañares (Cañares) prepared a Resolution (March 27,
2003 Resolution), finding probable cause against petitioners for The SB, however, denied the foregoing motions in its
violation of Section 3(e) of Republic Act No. (RA) 3019, Resolution20 dated February 10, 2010 for lack of merit.
otherwise known as the "Anti-Graft and Corrupt Practices Act,"
and recommended the filing of the corresponding information. Hence, the instant petitions.
On even date, the Information10 was prepared and signed by
Cañares and submitted to Deputy Ombudsman for the Visayas The Issue Before the Court
Primo C. Miro (Miro) for recommendation. Miro recommended
the approval of the Information on June 5, 2003. However, the The sole issue raised for the Court’s resolution is whether the
final approval of Acting Ombudsman Orlando C. Casimiro SB gravely abused its discretion in finding that petitioners’ right
(Casimiro), came only on May 21, 2009, and on June 19, 2009, to speedy disposition of cases was not violated.
the Information was filed before the SB.
The Court’s Ruling
Petitioners alleged that they learned about the March 27, 2003
Resolution and Information only when they received a copy of The petitions are meritorious.
the latter shortly after its filing with the SB.11
A person’s right to the speedy disposition of his case is
On July 9, 2009, Coscolluela filed a Motion to Quash,12 arguing, guaranteed under Section 16, Article III of the 1987 Philippine
among others, that his constitutional right to speedy disposition Constitution (Constitution) which provides:
of cases was violated as the criminal charges against him were
resolved only after almost eight (8) years since the complaint SEC. 16. All persons shall have the right to a speedy disposition
was instituted. Nacionales, Malvas, and Amugod later adopted of their cases before all judicial, quasi-judicial, or administrative
Coscolluela’s motion. bodies.
In reply, the respondents filed their Opposition to Motion to This constitutional right is not limited to the accused in criminal
Quash13 dated August 7, 2009, explaining that although the proceedings but extends to all parties in all cases, be it civil or
Information was originally dated March 27, 2003, it still had to administrative in nature, as well as all proceedings, either
go through careful review and revision before its final approval. judicial or quasi-judicial. In this accord, any party to a case may
It also pointed out that petitioners never raised any objections demand expeditious action to all officials who are tasked with
regarding the purported delay in the proceedings during the the administration of justice.21
interim.14
It must be noted, however, that the right to speedy disposition
The Ruling of the Sandiganbayan of cases should be understood to be a relative or flexible
concept such that a mere mathematical reckoning of the time
involved would not be sufficient.22 Jurisprudence dictates that
265
the right is deemed violated only when the proceedings are case had to undergo careful review and revision through the
attended by vexatious, capricious, and oppressive delays; or different levels in the Office of the Ombudsman before it is
when unjustified postponements of the trial are asked for and finally approved, in addition to the steady stream of cases
secured; or even without cause or justifiable motive, a long which it had to resolve.
period of time is allowed to elapse without the party having his
case tried.23 Verily, the Office of the Ombudsman was created under the
mantle of the Constitution, mandated to be the "protector of
Hence, in the determination of whether the defendant has the people" and as such, required to "act promptly on
been denied his right to a speedy disposition of a case, the complaints filed in any form or manner against officers and
following factors may be considered and balanced: (1) the employees of the Government, or of any subdivision, agency or
length of delay; (2) the reasons for the delay; (3) the assertion instrumentality thereof, in order to promote efficient
or failure to assert such right by the accused; and (4) the service."25 This great responsibility cannot be simply brushed
prejudice caused by the delay.24 aside by ineptitude. Precisely, the Office of the Ombudsman
has the inherent duty not only to carefully go through the
Examining the incidents in the present case, the Court holds particulars of case but also to resolve the same within the
that petitioners’ right to a speedy disposition of their criminal proper length of time. Its dutiful performance should not only
case had been violated. be gauged by the quality of the assessment but also by the
reasonable promptness of its dispensation. Thus, barring any
First, it is observed that the preliminary investigation extraordinary complication, such as the degree of difficulty of
proceedings took a protracted amount of time to complete. the questions involved in the case or any event external thereto
that effectively stymied its normal work activity – any of which
In this relation, the Court does not lend credence to the SB’s have not been adequately proven by the prosecution in the
position that the conduct of preliminary investigation was case at bar – there appears to be no justifiable basis as to why
terminated as early as March 27, 2003, or the time when the Office of the Ombudsman could not have earlier resolved
Cañares prepared the Resolution recommending the filing of the preliminary investigation proceedings against the
the Information. This is belied by Section 4, petitioners.
Rule II of the Administrative Order No. 07 dated April 10, 1990, Third, the Court deems that petitioners cannot be faulted for
otherwise known as the "Rules of Procedure of the Office of the their alleged failure to assert their right to speedy disposition of
Ombudsman," which provides: cases.
SEC. 4. Procedure – The preliminary investigation of cases Records show that they could not have urged the speedy
falling under the jurisdiction of the Sandiganbayan and Regional resolution of their case because they were unaware that the
Trial Courts shall be conducted in the manner prescribed in investigation against them was still on-going. They were only
Section 3, Rule 112 of the Rules of Court, subject to the informed of the March 27, 2003 Resolution and Information
following provisions: against them only after the lapse of six (6) long years, or when
they received a copy of the latter after its filing with the SB on
xxxx June 19, 2009.26 In this regard, they could have reasonably
assumed that the proceedings against them have already been
No information may be filed and no complaint may be terminated. This serves as a plausible reason as to why
dismissed without the written authority or approval of the petitioners never followed-up on the case altogether.
Ombudsman in cases falling within the jurisdiction of the Instructive on this point is the Court’s observation in Duterte v.
Sandiganbayan, or of the proper Deputy Ombudsman in all Sandiganbayan,27 to wit:
other cases. (Emphasis and underscoring supplied)
Petitioners in this case, however, could not have urged the
The above-cited provision readily reveals that there is no speedy resolution of their case because they were completely
complete resolution of a case under preliminary investigation unaware that the investigation against them was still on-going.
until the Ombudsman approves the investigating officer’s Peculiar to this case, we reiterate, is the fact that petitioners
recommendation to either file an Information with the SB or to were merely asked to comment, and not file counter-affidavits
dismiss the complaint. Therefore, in the case at bar, the which is the proper procedure to follow in a preliminary
preliminary investigation proceedings against the petitioners investigation. After giving their explanation and after four long
were not terminated upon Cañares’ preparation of the March years of being in the dark, petitioners, naturally, had reason to
27, 2003 Resolution and Information but rather, only at the assume that the charges against them had already been
time Casimiro finally approved the same for filing with the SB. dismissed.
In this regard, the proceedings were terminated only on May
21, 2009, or almost eight (8) years after the filing of the On the other hand, the Office of the Ombudsman failed to
complaint. present any plausible, special or even novel reason which could
justify the four-year delay in terminating its investigation. Its
Second, the above-discussed delay in the Ombudsman’s excuse for the delay — the many layers of review that the case
resolution of the case largely remains unjustified. had to undergo and the meticulous scrutiny it had to entail —
has lost its novelty and is no longer appealing, as was the
To this end, the Court equally denies the SB’s ratiocination that invocation in the Tatad case. The incident before us does not
the delay in proceedings could be excused by the fact that the involve complicated factual and legal issues, specially (sic) in
266
view of the fact that the subject computerization contract had fairly prosecuting criminals. As held in Williams v. United States,
been mutually cancelled by the parties thereto even before the for the government to sustain its right to try the accused
Anti-Graft League filed its complaint. (Emphasis and despite a delay, it must show two things: (a) that the accused
underscoring supplied) suffered no serious prejudice beyond that which ensued from
the ordinary and inevitable delay; and (b) that there was no
Being the respondents in the preliminary investigation more delay than is reasonably attributable to the ordinary
proceedings, it was not the petitioners’ duty to follow up on the processes of justice.
prosecution of their case. Conversely, it was the Office of the
Ombudsman’s responsibility to expedite the same within the Closely related to the length of delay is the reason or
bounds of reasonable timeliness in view of its mandate to justification of the State for such delay. Different weights
promptly act on all complaints lodged before it. As pronounced should be assigned to different reasons or justifications invoked
in the case of Barker v. Wingo:28 by the State. For instance, a deliberate attempt to delay the
trial in order to hamper or prejudice the defense should be
A defendant has no duty to bring himself to trial; the State has weighted heavily against the State. Also, it is improper for the
that duty as well as the duty of insuring that the trial is prosecutor to intentionally delay to gain some tactical
consistent with due process. advantage over the defendant or to harass or prejudice him. On
the other hand, the heavy case load of the prosecution or a
Fourth, the Court finally recognizes the prejudice caused to the missing witness should be weighted less heavily against the
petitioners by the lengthy delay in the proceedings against State. x x x (Emphasis and underscoring supplied; citations
them. omitted)
Lest it be misunderstood, the right to speedy disposition of As the right to a speedy disposition of cases encompasses the
cases is not merely hinged towards the objective of spurring broader purview of the entire proceedings of which trial proper
dispatch in the administration of justice but also to prevent the is but a stage, the above-discussed effects in Corpuz should
oppression of the citizen by holding a criminal prosecution equally apply to the case at bar. As held in Dansal v. Fernandez,
suspended over him for an indefinite time. Akin to the right to Sr.:32
speedy trial, its "salutary objective" is to assure that an
innocent person may be free from the anxiety and expense of Sec. 16, Article III of the 1987 Constitution, reads:
litigation or, if otherwise, of having his guilt determined within
the shortest possible time compatible with the presentation "Sec. 16. All persons shall have the right to a speedy disposition
and consideration of whatsoever legitimate defense he may of their cases before all judicial, quasi-judicial, or administrative
interpose.30 This looming unrest as well as the tactical bodies."
disadvantages carried by the passage of time should be
weighed against the State and in favor of the individual. In the Initially embodied in Section 16, Article IV of the 1973
context of the right to a speedy trial, the Court in Corpuz v. Constitution, the aforesaid constitutional provision is one of
Sandiganbayan31 (Corpuz) illumined: three provisions mandating speedier dispensation of justice. It
guarantees the right of all persons to "a speedy disposition of
A balancing test of applying societal interests and the rights of their case"; includes within its contemplation the periods
the accused necessarily compels the court to approach speedy before, during and after trial, and affords broader protection
trial cases on an ad hoc basis. than Section 14(2), which guarantees just the right to a speedy
trial. It is more embracing than the protection under Article VII,
x x x Prejudice should be assessed in the light of the interest of Section 15, which covers only the period after the submission of
the defendant that the speedy trial was designed to protect, the case. The present constitutional provision applies to civil,
namely: to prevent oppressive pre-trial incarceration; to criminal and administrative cases. (Emphasis and underscoring
minimize anxiety and concerns of the accused to trial; and to supplied; citations omitted)
limit the possibility that his defense will be impaired. Of these,
the most serious is the last, because the inability of a defendant Thus, in view of the unjustified length of time miring the Office
adequately to prepare his case skews the fairness of the entire of the Ombudsman’s resolution of the case as well as the
system. There is also prejudice if the defense witnesses are concomitant prejudice that the delay in this case has caused, it
unable to recall accurately the events of the distant past. Even is undeniable that petitioners’ constitutional right to due
if the accused is not imprisoned prior to trial, he is still process and speedy disposition of cases had been violated. As
disadvantaged by restraints on his liberty and by living under a the institutional vanguard against corruption and bureaucracy,
cloud of anxiety, suspicion and often, hostility. His financial the Office of the Ombudsman should create a system of
resources may be drained, his association is curtailed, and he is accountability in order to ensure that cases before it are
subjected to public obloquy. resolved with reasonable dispatch and to equally expose those
who are responsible for its delays, as it ought to determine in
Delay is a two-edge sword. It is the government that bears the this case.
burden of proving its case beyond reasonable doubt. The
passage of time may make it difficult or impossible for the Corollarily, for the SB’s patent and utter disregard of the
government to carry its burden. The Constitution and the Rules existing laws and jurisprudence surrounding the matter, the
do not require impossibilities or extraordinary efforts, diligence Court finds that it gravely abused its discretion when it denied
or exertion from courts or the prosecutor, nor contemplate that the quashal of the Information. Perforce, the assailed
such right shall deprive the State of a reasonable opportunity of
267
resolutions must be set aside and the criminal case against
petitioners be dismissed. 104. JESSIE G. MARTINEZ, Petitioner, vs.CENTRAL
PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO),
While the foregoing pronouncement should, as matter of Respondent.
course, result in the acquittal of the petitioners, it does not
necessarily follow that petitioners are entirely exculpated from Assailed in this Petition for Review on Certiorari1 is the
any civil liability, assuming that the same is proven in a December 23, 2009 Decision2 and April 27, 2010 Resolution3 of
subsequent case which the Province may opt to pursue. the Court of Appeals (CA) in CA-G.R. SP No. 106466, which
affirmed the February 29, 2008 Decision4 and September 15,
Section 2, Rule 111 of the Rules of Court provides that an 2008 Resolution5 of the National Labor Relations Commission
acquittal in a criminal case does not bar the private offended (NLRC), declaring inter alia that respondent Central Pangasinan
party from pursuing a subsequent civil case based on the delict, Electric Cooperative, Inc.'s (CENPELCO) dismissal of petitioner
unless the judgment of acquittal explicitly declares that the act Jessie G. Martinez (Martinez) based on the ground of loss of
or omission from which the civil liability may arise did not trust and confidence was valid.
exist.33 As explained in the case of Abejuela v. People,34 citing
Banal v. Tadeo, Jr.:35 The Facts
The Rules provide: "The extinction of the penal action does not In 1991, CENPELCO employed Martinez on a contractual basis
carry with it extinction of the civil, unless the extinction and in 1993, was subsequently regularized as a billing clerk at
proceeds from a declaration in a final judgment that the fact the former's main office in San Carlos City, Pangasinan. On
from which the civil might arise did not exist. In other cases, the January 7, 2002, CENPELCO gave Martinez the position of teller
person entitled to the civil action may institute it in the at Area VI in Malasiqui, Pangasinan.6
jurisdiction and in the manner provided by law against the
person who may be liable for restitution of the thing and On April 26, 2002, CENPELCO’s Internal Audit Department (IAD)
reparation or indemnity for the damage suffered." conducted a cash count audit at its Area VI.7 Josefina Mandapat
(Mandapat), the IAD Officer-in-Charge, analyzed the audit
xxxx results and concluded that there was an error in the count of
Benjamin Madriaga (Madriaga), cashier for Area VI, regarding
In Banal vs. Tadeo, Jr., we declared: the breakdown of collection turned over by Martinez for April
23, 2002.8 Specifically, Madriaga erroneously recorded that
"While an act or omission is felonious because it is punishable Martinez remitted 390 pieces of ₱500-bills, instead of the
by law, it gives rise to civil liability not so much because it is a correct number which was just 290, and issued a handwritten
crime but because it caused damage to another. Viewing things temporary receipt for ₱406,130.31 instead of ₱360,447.13.
pragmatically, we can readily see that what gives rise to the civil Upon noting that Madriaga issued Official Receipts Nos. 77365-
liability is really the obligation and moral duty of everyone to 77367 for the amount of ₱360,447.139 with corresponding
repair or make whole the damage caused to another by reason remittance stubs for Martinez’s April 23, 2002 collections,
of his own act or omission, done intentionally or negligently, Mandapat concluded that Martinez’s overage for the same day
whether or not the same be punishable by law."(Emphasis and in the amount of ₱45,682.58 is questionable.10 Further,
underscoring supplied) Mandapat noted that on April 25, 2002, Martinez committed a
shortage in the amount of ₱44,846.77,11 considering that the
Based on the violation of petitioners’ right to speedy latter’s total accountability for the said date is in the amount of
disposition of cases as herein discussed, the present case ₱212,258.56 but his actual cash count12 only amounted to
stands to be dismissed even before either the prosecution or ₱167,411.79.
the defense has been given the chance to present any
evidence. Thus, the Court is unable to make a definite In view of such audit, Mandapat recommended that Madriaga
pronouncement as to whether petitioners indeed committed and Martinez be made to explain why no disciplinary action
the acts or omissions from which any civil liability on their part should be taken against them. Thus, on May 15, 2002, Martinez
might arise as prescribed under Section 2, Rule 120 of the Rules filed his letter-explanation, explaining that he submitted his
of Court.36 Consequently, absent this pronouncement, the collections and remittance stubs to Madriaga who was the one
Province is not precluded from instituting a subsequent civil tasked to make the report thereon and who may have
case based on the delict if only to recover the amount of mishandled the proper listing and tallying of the money
₱20,000,000.00 in public funds attributable to petitioners’ collected vis-à-vis the collection stubs.13 He further admitted
alleged malfeasance. the existence of such shortage and tried to offset the same with
his alleged overage on April 23, 2002.14
WHEREFORE, the petitions are hereby GRANTED. The assailed
Resolutions dated October 6, 2009 and February 10, 2010 of On June 30 2002, the Company’s Grievance Committee, which
the First Division of the Sandiganbayan are ANNULLED and SET was commissioned to investigate the charges imputed to
ASIDE. The Sandiganbayan is likewise ordered to DISMISS Crim. Martinez, submitted its report recommending Martinez’s
Case No. SB-09-CRM-0154 for violation of the Constitutional termination from employment as well as the filing of the
right to speedy disposition of cases of petitioners Rafael L. appropriate case in court. On November 26, 2002, Martinez
Coscolluela, Edwin N. Nacionales, Dr. Ernesto P. Malvas, and was dismissed from service, prompting him to file a
Jose Ma. G. Amugod, without prejudice to any civil action which complaint15 for illegal dismissal with money claims for 13th
the Province of Negros Occidental may file against petitioners.
268
month pay, service incentive leave pay and allowances, as well To validly dismiss an employee on the ground of loss of trust
as moral and exemplary damages.16 and confidence under Article 296(c) (formerly Article 282[c]) of
the Labor Code,26 the following guidelines must be observed:
In a Decision17 dated December 1, 2004, the Labor Arbiter (LA) (1) the employee concerned must be holding a position of trust
ruled Martinez’s dismissal illegal, ordering his reinstatement and confidence; and (2) there must be an act that would justify
without loss of seniority rights and for CENPELCO to pay him the loss of trust and confidence.27
backwages and other benefits due to a regular employee, 13th
month pay, the cash equivalent of his leave credits, and ten Anent the first requisite, it is noteworthy to mention that there
percent (10%) of the total monetary award as attorney’s fees. are two classes of positions of trust, namely: (1) managerial
He found that CENPELCO failed to discharge the onus to prove employees whose primary duty consists of the management of
that Martinez’s dismissal was for a just cause. Thus, the LA the establishment in which they are employed or of a
opined that there is no ascribable offense against Martinez department or a subdivision thereof, and to other officers or
which may constitute the charges of misappropriation and loss members of the managerial staff; and (2) fiduciary rank-and-file
of confidence against him.18 employees such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly
Aggrieved, CENPELCO appealed to the NLRC.19 handle significant amounts of money or property. These
employees, though rank-and-file, are routinely charged with
The NLRC Ruling the care and custody of the employer’s money or property, and
are thus classified as occupying positions of trust and
In its Decision20 dated February 29, 2008, the NLRC reversed confidence.28 Being an employee tasked to collect payments
the LA’s ruling, declaring Martinez’s dismissal valid but and remit the same to CENPELCO, Martinez belongs to the
nevertheless, upheld the award for 13th month pay and cash latter class and thus, occupies a position of trust and
equivalent of leave credits. It found that a closer scrutiny of the confidence.
audit report reveals that on April 25, 2002, Martinez indeed had
a shortage in the amount of ₱44,846.77, which he himself Anent the second requisite, the audit report conducted on
admitted in his letter-explanation dated May 15, 2002. Further, Martinez's cash count revealed that he had a shortage in the
Martinez was not able to account for such shortage and amount of ₱44,846. 77 in his remittance for April 25, 2002.
instead, tried to offset the same with his April 23, 2002 overage When asked to explain such shortage, Martinez not only
in the amount of ₱45,682.58. admitted the same but even tried to exculpate himself from
liability by attempting to offset said shortage with his alleged
Martinez moved for reconsideration but was denied in the overage on April 23, 2002 in the amount of ₱45,682.58. The
NLRC’s Resolution21 dated September 15, 2008. Court agrees with the CA that this practice should never be
countenanced because it would allow the employees to patch
Dissatisfied, Martinez filed a Petition for Certiorari22 dated up inaccuracies or even their own wrongdoings and thus, the
December 2, 2008 with the CA. true revenues or losses of the company will never be correctly
identified.29 Verily, this irregular practice would be detrimental
The CA Ruling to the interests of the employer whose bread and butter
depends solely on realized profits.30 Perforce, Martinez's
In its Decision23 dated December 23, 2009, the CA affirmed the failure to properly account for his shortage of such a significant
NLRC’s ruling. The CA held that the anomalies charged against amount is enough reason for CENPELCO to lose trust and
Martinez are duly substantiated as such finding is supported by confidence in him.
an audit report issued after Mandapat conducted a cash count
audit on the collections and remittances made by the On the contrary, the Court disagrees with Martinez's contention
former.1âwphi1 It echoed the NLRC’s finding that Martinez that CENPELCO had failed to prove the validity of his dismissal.
cannot offset his April 25, 2002 shortage with his April 23, 2002 As correctly found by the CA and the NLRC, CENPELCO had
overage because the latter is dubious and that the practice of properly adduced evidence which substantially supports the
offsetting shortages with overages is highly improper.24 conclusion that on April 25, 2002, Martinez had a shortage in
the amount of ₱44,846.77. As Martinez was accountable for the
Aggrieved, Martinez moved for reconsideration but was denied discrepancies in his collections vis-a-vis his remittances, the
in the CA’s Resolution25 dated April 27, 2010. burden of evidence shifted to him to prove that the reflected
shortage was not attributable to any form of negligence or
Hence, this Petition. infraction on his part.1âwphi1 However, records disclose that
instead of properly explaining the reason for such shortage,
The Issue Before the Court Martinez merely admitted its existence. Worse, he even tried to
offset such shortage with his purported April 23, 2002 overage.
The sole issue raised for the Court’s resolution is whether In fine, CENPELCO had every right to dismiss Martinez on the
Martinez’s dismissal on the ground of loss of trust and ground of loss of trust and confidence for the latter's inability to
confidence is valid. account for the shortages imputed to him.
On February 26, 2001, Labrador’s counsel de oficio, Atty. Incidents Before the COA
Vicente Espina, manifested in open court that Labrador desires
270
Almost a year later, or on February 7, 2005, COA State Auditor salaries and benefits of Labrador should not have been paid to
IV, Crescencia L. Escurel, issued Audit Observation him from August 1999 to March 31, 2004 pending final
Memorandum No. 2005-01125 dated February 7, 2005 (COA resolution of the criminal case against him. The COA pointed
Audit Memo) which contained her audit observations on the out that Labrador should not have reported for work while he
various expenditures of the POEA pertaining to the payment of was under probation since his probation did not obliterate the
salaries and benefits to Labrador for the period covering August crime for which he was convicted, more so his penalty of
31, 1999 to March 15, 2004. The pertinent portions of the COA dismissal from the service.31
Audit Memo read as follows:26
On January 26, 2010, the POEA moved for the
The accounts Government Equity and Salaries and Wages- reconsideration32 (POEA’s Motion for Reconsideration) of the
Regular, Additional Compensation, Representation and COA Decision. On even date, POEA Administrator Jennifer
Transportation Allowances and Other Personnel Benefits are Jardin-Manalili (Jardin-Manalili), who took over the post of
overstated by ₱1,626,956.05, ₱57,143.03, ₱3,000.00, Dimapilis-Baldoz, wrote a letter to Audit Team Leader Evelyn V.
₱16,050.00 and ₱11,800.00, respectively due to payment of Menciano, requesting that the execution of the COA Decision
salaries and wages, additional compensation, allowances and be held in abeyance pending resolution of the POEA’s Motion
other benefits to an official from August 31, 1999 to March 15, for Reconsideration.33 In a letter34 dated May 31, 2000, the
2004, contrary to the Sandiganbayan Decision dated August 31, COA, however, no longer entertained the said motion in view of
1999. the issuance by the COA Secretary of a Notice of Finality of
Decision35 dated January 7, 2010, stating that the COA Decision
xxxx had already become final and executory since no motion for
reconsideration or appeal was filed within the reglementary
In view thereof, justification is desired why Mr. Leonel period.36
Labrador, formerly Chief General Services Division and
Employment Services Regulation Division was allowed to Undaunted, Jardin-Manalili, through a letter37 dated June 21,
continue in the service and receive his salaries, additional 2010, again implored the COA to resolve POEA’s Motion for
compensation, RATA and other personnel benefits from August Reconsideration on its merits and not to deny it outright on a
31, 1999 to the time he was terminated from office effective technicality. Yet, the COA no longer responded to the said plea,
March 9, 2004 (Note: The last salary received was even up to prompting Dimapilis-Baldoz to file this petition for certiorari.
March 15, 2004) in the total amount of ₱1,714,949.08,
including other emoluments such as allowances, 13th month The Issue Before the Court
pay and other personnel benefits granted him such as medical
and rice allowances, incentive allowances, etc. in the amount of The primordial issue for the Court’s resolution is whether or not
₱565,795.05. Pursuant to the August 31, 1999 judgment of grave abuse of discretion attended the COA’s disallowance in
conviction, which had long become final and executory, Mr. this case.
Labrador is considered terminated from the service and is no
longer entitled to continue to draw his salaries thereafter up to The Court’s Ruling
March 15, 2004. x x x
The petition is partly meritorious
Corollary to this, Book V Title I Subtitle B Chapter 9, Sec. 52, EO
292 and Sec. 103 PD 1445 provides that expenditures of A. Grave abuse of discretion; reckoning
government funds or uses of government property in violation point of period of disallowance.
of law or regulations shall be a personal liability of the official or
employee found to be directly responsible therefore. It is fundamental that the COA has the authority to rule on the
(Underscoring and italics in the original) legality of the disbursement of government funds. This finds
force in Section 2, Article IX-D of the 1987 Philippine
Based on these observations, the COA issued a Notice of Constitution (Constitution) which explicitly provides that:
Disallowance27 (Notice of Disallowance) on January 18, 2006,
finding Dimapilis-Baldoz, among other POEA employees,28 D. THE COMMISSION ON AUDIT
personally liable for the salaries and other benefits unduly
received by Labrador in the amount of ₱1,740,124.08, paid xxxx
through various checks issued from August 1999 to March 15,
2004. Section 2.
Through a letter29 dated March 3, 2006, Dimapilis-Baldoz The Commission on Audit shall have the power, authority, and
sought the reconsideration of the Notice of Disallowance, duty to examine, audit, and settle all accounts pertaining to the
asserting that the POEA should not be held liable for the refund revenue and receipts of, and expenditures or uses of funds and
of the foregoing amount since Labrador's employment was fully property, owned or held in trust by, or pertaining to, the
and promptly terminated upon receipt of the SB’s March 2, Government, or any of its subdivisions, agencies, or
2004 Resolution. instrumentalities, including government-owned or controlled
corporations with original charters, and on a post- audit basis:
However, on October 29, 2009, the COA issued Decision No.
2009-12130 (COA Decision) which affirmed the Notice of a. constitutional bodies, commissions and offices that have
Disallowance and reiterated that the amount covering the been granted fiscal autonomy under this Constitution;
271
Pursuant to its mandate, the COA disallowed the disbursements
b. autonomous state colleges and universities; pertaining to the personnel benefits paid to Labrador,
reasoning that the latter should have stopped reporting for
c. other government-owned or controlled corporations and work as early as June 28, 2000 when the denial of his appeal
their subsidiaries; and from the SB’s August 31, 1999 Decision rendered his conviction
for the crime of direct bribery final and executory,
d. such non-governmental entities receiving subsidy or equity, notwithstanding the grant of his application for probation. In
directly or indirectly, from or through the Government, which this regard, it opines that the period of disallowance should be
are required by law or the granting institution to submit to such reckoned from May 3, 2000 which is the date the SB’s August
audit as a condition of subsidy or equity. x x x 31, 1999 Decision had become final and executory.39
Jurisprudence instructs that not every error in the proceedings, It is a standing rule that every public official is entitled to the
or every erroneous conclusion of law or fact, constitutes grave presumption of good faith in the discharge of official duties,54
abuse of discretion.47 The abuse of discretion to be qualified as such that, in the absence of any proof that a public officer has
"grave" must be so patent or gross as to constitute an evasion acted with malice or bad faith, he should not be charged with
273
personal liability for damages that may result from the In view of the foregoing pronouncements, the Court finds it
performance of an official duty.55 Good faith is always unnecessary to delve on the other ancillary issues raised in this
presumed and he who alleges the contrary bears the burden56 case.
to convincingly show that malice or bad faith attended the
public officer’s performance of his duties.57 WHEREFORE, the petition is PARTLY GRANTED. Accordingly,
Notice of Disallowance No. 2006-002 dated January 18, 2006
Keeping with these principles, the Court observes that and Decision No. 2009-121 dated October 29, 2009 issued by
Dimapilis-Baldoz’s actuations were only impressed with good respondent Commission on Audit is AFFIRMED with
faith which perforce, negates her personal liability in this case. MODIFICATION, (a) deleting the portions pertaining to
petitioner Rosalinda Dimapilis-Baldoz’s personal liability; and
To elucidate, while the COA correctly affirmed the disallowance (b) adjusting the proper period of disallowance from the date of
of the salaries and benefits which Labrador unduly received Leonel P. Labrador’s dismissal on May 2, 1997. The foregoing is
when he continued to hold office despite his conviction, the without prejudice to any subsequent action or proceeding to
liability for refund cannot be imposed upon Dimapilis-Baldoz recover any undue amount/s received by Labrador.
because she had no knowledge or any reasonable indication
that the payment of salaries to Labrador was actually improper. 106. PHILIPPINE TOURISM AUTHORITY (Now known as
Two important incidents impel this conclusion: first, Labrador’s TOURISM INFRASTRUCTURE AND ENTERPRISE ZONE
201 File with the POEA was without any record of the SB case; AUTHORITY), Petitioner, vs.MARCOSA A. SABANDAL-
and second, Dimapilis-Baldoz was only apprised of his HERZENSTIEL, PEDRO TAPALES, LUIS TAPALES, and ROMEO
conviction when her office was furnished a copy of the SB’s TAPALES, Respondents.
March 2, 2004 Resolution which ordered the revocation of
Labrador’s probation. In addition, Dimapilis-Baldoz’s good faith Before the Court is a petition for review on certiorari1 assailing
is further strengthened by the fact that she lost no time in the January 11, 2011 Decision2 and April 14, 2011 Resolution3
issuing the Separation Order as soon as she was apprised of of the Court of Appeals, Cebu City (CA) in CA-G.R. SP No. 03888
Labrador’s situation. Thus, absent any proof to the contrary, it which declared respondent Marcosa A. Sabandal-Herzenstiel
cannot be gainsaid that Dimapilis-Baldoz’s approval was (Sabandal-Herzenstiel) as the lawful possessor of Lot No. 2574,
spurred only by the honest belief that the payment of salaries situated in Brgy. Basdiot, Moalboal, Cebu (subject property).
disbursed to Labrador was due and owing to him.1âwphi1
The Facts
It is well to stress that neither will it do justice to hold Dimapilis-
Baldoz personally liable simply because she possessed the final Petitioner Philippine Tourism Authority (now Tourism
authority for the disbursements and had direct supervision over Infrastructure and Enterprise Zone Authority) (petitioner) is the
her subordinates. Case law exhorts that although a public owner of the subject property and other parcels of land located
officer is the final approving authority and the employees who in Brgy. Basdiot, Moalboal, Cebu since February 12, 1981 when
processed the transaction were directly under his supervision, it bought the same from Tri-Island Corporate Holdings, Inc. (Tri-
personal liability does not automatically attach to him but only Island).4 It had then been in actual, physical, continuous, and
upon those directly responsible for the unlawful uninterrupted possession of the subject property and had
expenditures.58 As Dimapilis-Baldoz’s direct responsibility declared the same for taxation purposes. Sometime in 1997,
therefor had not been demonstrated, in addition to her good however, respondents Pedro Tapales, Luis Tapales, Romeo
faith as above-discussed, there is no cogent factual or legal Tapales (Tapaleses), and SabandalHerzenstiel (respondents) by
basis to hold her personally liable. In this respect, the Court force, strategy and stealth entered into the 2,940 square meter
finds that the COA gravely abused its discretion. portion of the subject property, on which they proceeded to cut
down some coconut trees, introduced improvements and
As to how the matter of Labrador’s administrative penalty of fenced the area. Petitioner made demands to vacate, the last of
dismissal from the service escaped notice – not to mention, which was through a letter5 dated January 5, 1998, which
implementation – is not revealed in the records before the respondents ignored, prompting the filing of a forcible entry
Court; but it can be easily surmised that the POEA’s incapability complaint6 against them before the 12th Municipal Circuit Trial
to deal with a twice-dismissed employee was largely Court of Moalboal-Alcantara-Badian-Alegria, Cebu (MCTC),
attributable to bureaucratic incompetence. It bears docketed as Civil Case No. 118, on March 18, 1998.
emphasizing that it is the policy of the State to maintain
honesty and integrity in the public service and take positive and In their Answer with Counterclaim, the Tapaleses
effective measures against graft and corruption.59 It should, acknowledged that the subject property had already been sold
therefore, be the responsibility of each government agency, by its administrator, Josefina Abrenica, to Tri-Island.7 They,
such as the POEA, to know matters pertaining to the conduct of however, claimed that the sale was tainted with force and
its own employees in the performance of their duties and to intimidation and hence void, including the subsequent
readily take action against those undeserving of the public’s transactions covering the same property.8 Notwithstanding the
trust. To be an effective agent at exacting accountability from sale, they remained in actual and physical possession of the
those under its direct authority, government agencies would do subject property and even introduced improvements thereon.
well to devise a coordinative system to ensure that records of Consequently, absent any proof of prior possession on the part
personnel actions concerning its individual employees are of petitioner, they claimed that the forcible entry complaint
properly updated and secured on file, especially all must necessarily be dismissed.9
administrative and criminal cases decided against them.
The MCTC Ruling
274
On April 13, 2007, the MCTC rendered a Decision10 (MCTC The Court’s Ruling
Decision) ordering respondents to: (a) vacate the subject
property and remove all the improvements introduced therein; The petition is meritorious.
(b) pay petitioner, jointly and severally, the amount of
₱2,000.00 as monthly rental from the date of judicial demand, In an action for forcible entry, the plaintiff must prove that he
i.e., March 18, 1998, until they have effectively vacated the was in prior possession of the disputed property and that the
premises; and (c) pay the costs of suit. defendant deprived him of his possession by any of the means
provided for in Section 1, Rule 70 of the Rules, namely: force,
The MCTC declared that petitioner is the lawful owner of the intimidation, threats, strategy, and stealth.23
subject property and had been in prior possession thereof as
shown by the following: (a) the deed of sale dated February 12, In this case, respondents failed to establish their prior and
1981; (b) the tax declarations issued in its name; and (c) its act continued possession of the subject property after its sale in
of leasing portions of the subject property to others in the favor of petitioner in 1981. On the contrary, they even admitted
exercise of its right of ownership and possession.11 In contrast, in their answer to the complaint that petitioner exercised
respondents failed to substantiate their claim of ownership and dominion over the same by instituting caretakers and leasing
possession. Neither have they established any relationship with portions thereof to third persons.24 Suffice it to state that
Abrenica, the previous owner of the subject property.12 On the possession in the eyes of the law does not mean that a man has
other hand, Sabandal-Herzenstiel never claimed to be the to have his feet on every square meter of the ground before he
owner of the same and even acknowledged petitioner’s is deemed in possession.25 Thus, finding petitioner’s assertion
ownership when she offered to buy back the land.13 to be well-founded, the MCTC properly adjudged petitioner to
have prior possession over the subject property as against
The RTC Ruling Sabandal-Herzenstiel, who never claimed ownership or
possession thereof.26
On January 30, 2008, respondents' appeal to the RTC was
dismissed for their failure to file a memorandum on appeal as Petitioner’s supposed failure to describe in detail the manner of
required under Section 7(b), Rule 40 of the Rules of Court respondents’ entry into the subject property is inconsequential.
(Rules).14 Their motion for reconsideration was similarly Jurisprudence states that proving the fact of unlawful entry and
denied in an Order dated April 23, 2008.15 the exclusion of the lawful possessor – as petitioner had
sufficiently demonstrated – would necessarily imply the use of
Only Sabandal-Herzenstiel elevated the matter before the CA force. As held in Estel v. Heirs of Recaredo P. Diego, Sr.:28
via a petition for review under Rule 42 of the Rules.
x x x Unlawfully entering the subject property and excluding
The CA Ruling therefrom the prior possessor would necessarily imply the use
of force and this is all that is necessary. In order to constitute
On January 11, 2011, the CA rendered the assailed Decision,16 force, the trespasser does not have to institute a state of war.
nullifying and setting aside the rulings of both the MCTC and No other proof is necessary. In the instant case, it is, thus,
RTC, and declaring Sabandal-Herzenstiel as the lawful possessor irrefutable that respondents sufficiently alleged that the
of the subject property.17 possession of the subject property was wrested from them
through violence and force.29
It held that while the RTC correctly dismissed respondents’
appeal for failure to submit their memorandum on appeal And in David v. Cordova:30
within the prescribed period, it should have relaxed the rules
on procedure in the interest of substantial justice and for a full x x x The foundation of a possessory action is really the forcible
determination of the rights of the parties taking into account exclusion of the original possessor by a person who has entered
the subsequent compliance of the respondents.18 without right. The words "by force, intimidation, threat,
strategy or stealth" include every situation or condition under
On the merits, the CA found petitioner to have failed to which one person can wrongfully enter upon real property and
establish prior possession of the subject property19 and rebut exclude another, who has had prior possession therefrom. If a
respondents’ claim of continued physical possession in spite of trespasser enters upon land in open daylight, under the very
the sale of the subject property to Tri-Island during which, eyes of the person already clothed with lawful possession, but
Sabandal-Herzenstiel leased and converted the property into a without the consent of the latter, and there plants himself and
resort.20 excludes such prior possessor from the property, the action of
forcibly entry and detainer can unquestionably be maintained,
Petitioner moved for reconsideration21 which was, however, even though no force is used by the trespasser other than such
denied in a Resolution22 dated April 14, 2011. as is necessarily implied from the mere acts of planting himself
on the ground and excluding the other party.31
Hence, the instant petition.
Similarly, in Arbizo v. Santillan,32 it has been held that the acts
The Issue Before the Court of unlawfully entering the disputed premises, erecting a
structure thereon, and excluding therefrom the prior possessor
The sole issue for the Court’s resolution is whether or not the would necessarily imply the use of force, as in this
respondents may be lawfully ejected from the subject property. case.1âwphi1
275
Later, on February 7, 2003, the Office of the Solicitor General
In fine, the Court upholds the findings and conclusions of the (OSG), as counsel for herein petitioner Republic of the
MCTC, adjudging petitioner to be the lawful possessor of the Philippines (Republic), filed a notice of appearance13 and
subject property, square as they are with existing law and deputized14 the City Prosecutor of Quezon City to assist the
jurisprudence. Accordingly, the CA’s ruling on the merits must OSG and appear in the case on its behalf, which the RTC
perforce be reversed and set aside. noted.15
WHEREFORE, the petition is GRANTED. The January 11, 2011 On February 20, 2003, upon request of the LRA16 and in
Decision and April 14, 2011 Resolution of the Court of Appeals, accordance with paragraph 4(a)17 of LRC Circular No. 35, De
Cebu City, in CA-G.R. SP No. 03888 are hereby REVERSED and Asis was required to submit a certified true copy of the owner’s
SET ASIDE. The April 13, 2007 Decision of the 12th Municipal duplicate certificate of title of the subject property,18 with
Circuit Trial Court of Moalboal-Alcantara-Badian-Alegria, Cebu which he complied.19 Subsequently, the LRA submitted its April
in Civil Case No. 118 is 29, 2003 Report20 (LRA’s report) before the RTC stating that
"the technical description of Lot [No.] 804-C of the subdivision
REINSTATED. plan Psd-2341, appearing on the reproduction of [TCT] No. T-
8240, was found correct after examination and due
107. REPUBLIC OF THE PHILIPPINES, Petitioner, vs.RICORDITO computation. Said technical description, however, when
N. DE ASIS, JR., Respondent. plotted in the Municipal Index Sheet No. 5708-B, it overlaps
with (LRC) Psd-372628 and (LRC) Psd-314053."21
Assailed in this petition for review on certiorari1 are the
January 26, 2010 Decision2 and October 1, 2010 Resolution3 of The RTC Ruling
the Court of Appeals (CA) in CA-G.R. CV No. 79569 which
affirmed in toto the May 27, 2003 Decision4 of the Regional In its May 27, 2003 Decision,22 the RTC granted the amended
Trial Court of Quezon City, Branch 77 (RTC) in LRC Case No. Q- petition based on the evidence presented ex parte by De Asis.
15289(02), granting the verified amended petition for
reconstitution of title filed by respondent Ricordito N. De Asis, The Republic appealed the RTC Decision to the CA, arguing23
Jr. (De Asis). that De Asis failed to strictly comply with the mandatory
jurisdictional requirement on publication. It pointed out that
The Facts while the notice of the amended petition was indeed published
in the December 23 and 30, 2002 issues of the Official Gazette,
On August 7, 2002, De Asis filed a verified amended petition for the last issue was, however, officially released only on January
Reconstitution5 (amended petition) of Transfer Certificate of 3, 2003, or less than thirty (30) days prior to the date of hearing
Title (TCT) No. 8240 of the Register of Deeds of Quezon City set on January 30, 2003, per Certificate of Publication24 of the
(Register of Deeds) in the name of his uncle, Lauriano De Asis National Printing Office (NPO).
(Lauriano), covering Lot No. 804-C located at Pasong Tamo,
Caloocan, Rizal (now No. 4, Panama St., Veterans Village, Brgy. Likewise, the Republic argued 25 that the RTC erred in granting
Holy Spirit, Quezon City),6 with an area of 30,052 square the amended petition despite the LRA’s report that the
meters, more or less (subject property). technical description of the subject property overlaps with
other properties, rendering doubtful the authenticity of the
De Asis alleged that he purchased the subject property from title sought to be reconstituted.
Lauriano through a Deed of Absolute Sale7 dated January 5,
1978 and that the same is free from any encumbrances. The CA Ruling
Likewise, no deed affecting it has been presented or is pending
before the Register of Deeds. Unfortunately, the original copy In its assailed Decision, the CA affirmed the RTC Decision in
of TCT No. 8240 was destroyed by the fire that gutted the toto, ratiocinating that the thirty-day notice should be reckoned
Quezon City Hall on June 11, 1988,8 hence, the amended from the date of issue of the Official Gazette, not from the date
petition based on the owner’s duplicate copy of TCT No. 8240,9 of its actual release, citing Section 1326 of Republic Act No. 26
which was in his possession. (RA 26).27 While the CA conceded the stringent and mandatory
nature of the requirement of publication, it however
Finding the amended petition to be sufficient in form and considered the fact that the source of the reconstitution in this
substance, the RTC, in its September 4, 2002 Order,10 case was the owner’s duplicate copy of title in De Asis’
scheduled the initial hearing on January 30, 2003 and directed possession, the authenticity of which was never disputed by the
that the Land Registration Authority (LRA), inter alia, be Republic.
furnished a copy thereof. The RTC likewise ordered that notice
of the amended petition be published in the Official Gazette Further, the appellate court cited the case of Imperial v. CA
once a week for two (2) consecutive weeks. The notice was (Imperial),28 where the Court upheld the validity of the
published in the December 23, 2002 (Vol. 98, No. 51) and publication of the notice of the petition in the March 27, 1995
December 30, 2002 (Vol. 98, No. 52) issues of the Official and April 3, 1995 issues of the Official Gazette despite the NPO
Gazette.11 certification that the last issue (pertaining to the April 3, 1995
issue) was officially released on March 28, 1995. The Court
On January 30, 2003, after compliance with the jurisdictional observed in the Imperial case that it is not uncommon among
requirements and without any opposition having been raised, publishing companies to release issues before the actual date
the RTC allowed12 De Asis to present his evidence ex-parte. of issue reflected on the cover of the publication. What matters
276
is that the petitioner in a reconstitution case caused the shall not be subject to the encumbrance referred to in section
publication of the notice of the petition in two (2) consecutive seven of this Act. (Italics and emphasis supplied)
issues of the Official Gazette thirty (30) days prior to the date of
hearing. Corollarily, Section 9 reads in part:
Following the Court’s pronouncement in Imperial, the CA ruled SEC. 9. x x x Thereupon, the court shall cause a notice of the
in the present case that since the notice of the amended petition to be published, at the expense of the petitioner, twice
petition was duly published in the December 23 and 30, 2002 in successive issues of the Official Gazette, and to be posted on
issues of the Official Gazette, De Asis had sufficiently complied the main entrance of the provincial building and of the
with the requirement of publication, despite the NPO’s municipal building of the municipality or city in which the land
certification that the second issue was officially released on lies, at least thirty days prior to the date of hearing, and after
January 3, 2003, or three (3) days short of the thirty-day period hearing, shall determine the petition and render such judgment
before the scheduled January 30, 2003 hearing. Consequently, as justice and equity may require. x x x. (Emphasis supplied)
the RTC acquired jurisdiction over the case.
The foregoing provisions, therefore, clearly require that (a)
With respect to the Republic’s second assigned error, the CA notice of the petition should be published in two (2) successive
found that the RTC did not err in giving little credence to the issues of the Official Gazette; and (b) publication should be
LRA’s report declaring that the technical description of the made at least thirty (30) days prior to the date of hearing.
subject property overlaps with (LRC) Psd-372628 and (LRC) Psd- Substantial compliance with this jurisdictional requirement is
314053, which failed to mention sufficient details in support of not enough; it bears stressing that the acquisition of jurisdiction
its finding or to identify the specific titles with which TCT No. over a reconstitution case is hinged on a strict compliance with
8240 supposedly overlaps. Moreover, the CA held that the the requirements of the law.31
LRA’s report was not even a condition sine qua non before a
petition for reconstitution could be given due course. The factual antecedents of this case are undisputed: De Asis
caused the publication of the notice of the amended petition in
The Republic’s motion for reconsideration was denied in the the December 23 and 30, 2002 issues of the Official Gazette.
CA’s October 1, 2010 Resolution, hence, the present recourse. However, the NPO certified that the December 30, 2002 issue
was officially released only on January 3, 2003, evidently short
The Issues Before The Court of the thirty-day period preceding the January 30, 2003
scheduled hearing. Indubitably, therefore, there was a defect in
The Republic insists that the CA committed reversible error in the mandatory publication of the notice required under Section
affirming the RTC Decision which granted the amended petition 10 in relation to Section 9 of RA 26.
on the basis of (a) non-compliance with Sections 9 and 10 of RA
26 requiring publication of the notice of hearing in two (2) In The Register of Deeds of Malabon, Metro Manila v. RTC of
successive issues of the Official Gazette at least thirty (30) days Malabon, Metro Manila, Branch 170,32 the Court struck down
prior to the date of hearing, a jurisdictional requisite; and (b) as invalid the actual publication of the notice of the petition in
the LRA’s report which declared that the technical description the Official Gazette forty-seven (47) days after the August 17,
of the subject property overlaps with other properties. The 1988 hearing, despite the fact that notice of the petition was
Republic also bewails that it was not afforded its day in court published in the May 23 and 30, 1988 issues of the Official
despite the RTC’s receipt of its notice of appearance. Gazette. Finding that the May 30, 1988 issue was released for
circulation only on October 3, 1988 and declaring that the said
The Court’s Ruling publication was not sufficient to vest jurisdiction upon the RTC
to hear and decide the petition, the Court held:
The petition is meritorious.
x x x The purpose of the publication of the notice of the petition
At the outset, the Court notes that the present amended for reconstitution in the Official Gazette is to apprise the whole
petition for reconstitution is anchored on the owner’s duplicate world that such a petition has been filed and that whoever is
copy of TCT No. 8240 – a source for reconstitution of title under minded to oppose it for good cause may do so within thirty (30)
Section 3(a)29 of RA 26 which, in turn, is governed by the days before the date set by the court for hearing the petition. It
provisions of Section 10 in relation to Section 9 of RA 26 with is the publication of such notice that brings in the whole world
respect to the publication, posting, and notice requirements.30 as a party in the case and vests the court with jurisdiction to
Section 10 reads: hear and decide it.33 (Emphasis supplied)
SEC. 10. Nothing hereinbefore provided shall prevent any Hence, while Section 9 merely required that the notice of the
registered owner or person in interest from filing the petition petition should be "published x x x twice in successive issues of
mentioned in section five of this Act directly with the proper the Official Gazette," jurisprudence expressly clarified that
Court of First Instance, based on sources enumerated in "publication" means the actual circulation or release of the
sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act: Provided, issue of the Official Gazette on which the notice of the petition
however, That the court shall cause a notice of the petition, is printed. The law could not have possibly contemplated
before hearing and granting the same, to be published in the "publication" independent of its actual dissemination to the
manner stated in section nine hereof: And, provided, further, public, for whose benefit the requisite of publication is
That certificates of title reconstituted pursuant to this section mandated in the first place. For sure, publication without actual
circulation of the printed material is worthless.
277
Consequently, the thirty-day period that precedes the Hence, in view of the defect in the mandatory requirement of
scheduled hearing should be reckoned from the time of the publication set forth in Section 10 in relation to Section 9 of RA
actual circulation or release of the last issue of the Official 26, therefore, the RTC did not acquire jurisdiction in this case,
Gazette, and not on the date of its issue as reflected on its front rendering null and void the entire proceedings before it.
cover. To interpret it otherwise, as the CA had erroneously
done in this case, would render nugatory the purposes of Finally, the Court notes that the RTC, as affirmed by the CA,
publication in reconstitution proceedings, which are to failed to give due consideration to the LRA’s report stating that
safeguard against spurious and unfounded land ownership the technical description of the subject property overlaps with
claims, to apprise all interested parties of the existence of such other properties. In light of the LRA’s finding, therefore, it
action, and to give them enough time to intervene.34 behooved the RTC – in observance of diligence and prudence –
Otherwise, unscrupulous parties would merely invoke to notify the adjoining lot owners of the proceedings or, at the
compliance with the requirement of two-time publication in the very least, to order a resurvey of the subject property, at the
Official Gazette, without regard to the date of its actual release, expense of De Asis. As the Republic had pointed out,39 the RTC
as a convenient excuse for their failure to observe the ought to have proceeded with the utmost caution, having been
mandatory prerequisite of publication. apprised of the LRA’s report on the overlapping of properties.
Records show, however, that neither the Republic nor the LRA
Moreover, while it is true that the thirty-day period in this case was afforded the opportunity to appear and present further
was short by only three (3) days, the principle of substantial evidence in support of the LRA’s report.1âwphi1 Instead, the
compliance cannot apply, as the law requires strict RTC merely disregarded the same.
compliance,35 without which the Court is devoid of authority to
pass upon and resolve the petition. As the Court has declared in On this score, it bears stressing that the nature of
the case of Castillo v. Republic:36 reconstitution proceedings under RA 26 denotes a restoration
of the instrument, which is supposed to have been lost or
x x x In all cases where the authority of the courts to proceed is destroyed, in its original form and condition.40
conferred by a statute, the mode of proceeding is mandatory,
and must be strictly complied with, or the proceeding will be On this score, it bears stressing that the nature of
utterly void. When the trial court lacks jurisdiction to take reconstitution proceedings under RA 26 denotes a restoration
cognizance of a case, it lacks authority over the whole case and of the instrument, which is supposed to have been lost or
all its aspects. All the proceedings before the trial court, destroyed, in its original form and condition.40 As such,
including its order granting the petition for reconstitution, are reconstitution must be granted only upon clear proof that the
void for lack of jurisdiction.37 (Emphasis supplied) title sought to be restored had previously existed and was
issued to the petitioner.41 Strict compliance with the
Furthermore, there is dearth of reason to afford liberality in this requirements of the law aims to thwart dishonest parties from
case as the Court had similarly done in the Imperial case, as abusing reconstitution proceedings as a means of illegally
cited by the CA. A punctilious scrutiny of the factual milieu in obtaining properties otherwise already owned by other parties.
Imperial shows that despite the apparent discrepancy between As the Court had eloquently pronounced in Director of Lands v.
the dates of issue of the Official Gazette where the notice of CA:42
the petition was published (March 27, 1995 and April 3, 1995)
and the date of the official release of the last issue (March 28, The efficacy and integrity of the Torrens system must be
1995), the thirty-day period required under Section 9 of RA 26 protected and preserved to ensure the stability and security of
was nonetheless complied with, considering that the hearing land titles for otherwise land ownership in the country would
was scheduled on May 10, 1995. Hence, it is inconsequential be rendered erratic and restless and can certainly be a potent
whether the thirty-day period was to be reckoned either from and veritable cause of social unrest and agrarian agitation. The
April 3, 1995, the date of issue of the second Official Gazette, or courts must exercise caution and vigilance in order to guard the
from March 28, 1995, the date of its official release – as the indefeasibility and imprescriptibility of the Torrens Registration
notice of the petition would still be considered as having been System against spurious claims and forged documents
published at least thirty (30) days prior to the date of hearing concocted and foisted upon the destruction and loss of many
on May 10, 1995. As the Court had ardently observed in that public records as a result of the last World War. The real
case: purpose of the Torrens System which is to quiet title to the land
must be upheld and defended, and once a title is registered,
x x x We feel, too, that the petitioner can neither be faulted nor the owner may rest secure, without the necessity of waiting in
punished for the NPO’s act of releasing the April 3, 1995 issue the portals of the court or sitting in the mirador de su casa to
early; it was a matter wholly outside the petitioner’s control avoid the possibility of losing his land.43
given that this is a decision wholly for NPO to make. What is
important, to the Court’s mind, is that the petitioner fulfilled his WHEREFORE, the instant petition is GRANTED. The assailed
obligation to cause the publication of the notice of the petition January 26, 2010 Decision and October 1, 2010 Resolution of
in two consecutive issues of the Official Gazette 30 days prior to the Court of Appeals in CA-G.R. CV No. 79569 are REVERSED
the date of hearing. We keenly realize that the early publication and SET ASIDE. The amended petition for reconstitution
of the Official Gazette more than met these requirements, as docketed as LRC Case No. Q-15289(02) is DISMISSED.
the publication transpired more than 30 days before the date of
hearing. Thus, there is every reason to exercise liberality in the 108. PROVINCE OF CAGAYAN, represented by HON. ALVARO T.
greater interest of justice.38 (Emphasis supplied) ANTONIO, Governor, and ROBERT ADAP, Environmental and
278
Natural Resources Officer, Petitioners, vs.JOSEPH LASAM order and/or preliminary injunction before the RTC, docketed
LARA, Respondent. as Civil Case No. 7077.
This is a direct recourse to the Court from the Decision1 of the
Regional Trial Court of Tuguegarao City, Cagayan, Branch 5 In their Answer dated June 10, 2008, petitioners raised the
(RTC), through a petition for review on certiorari2 under Rule following defenses: (a) the mere issuance of the ISAG Permit
45 of the Rules of Court, raising a pure question of law. In does not give Lara the right to commence his quarrying
particular, petitioners assail the RTC's June 30, 2009 Decision in operations as he still had to comply with the terms and
Civil Case No. 7077, enjoining them from disturbing the conditions stated therein; (b) Lara has neither secured all the
quarrying operations of respondent Joseph Lasam Lara (Lara). necessary permits nor paid the local fees and taxes; and (c)
Gov. Antonio was merely performing his duty to enforce all
The Facts laws and ordinances relative to the governance of the Province
of Cagayan pursuant to the provisions of RA 7160,12 otherwise
On September 14, 2007, Lara obtained an Industrial Sand and known as the "Local Government Code of 1991."13
Gravel Permit3 (ISAG Permit) from the Mines and Geosciences
Bureau (MGB) of the Department of Environment and Natural In an Order14 dated August 11, 2008, the RTC granted Lara’s
Resources (DENR), authorizing him to conduct quarrying application for a writ of preliminary injunction based on a prima
operations in a twenty-hectare area situated in Barangay facie finding that he is authorized to extract gravel and sand
Centro, Muncipality of Peñablanca (Peñablanca), Cagayan from the Permit Area. Petitioners filed a motion for
(Permit Area) and extract and dispose of sand, gravel, and other reconsideration15 which was, however denied on September
unconsolidated materials from the Permit Area. For the same 26, 2008.16
purpose, Lara obtained an Environmental Compliance
Certificate4 (ECC) from the DENR Environmental Management During the pre-trial, the parties stipulated on the following
Bureau (EMB).5 facts: (a) that Lara was able to secure an ISAG Permit from the
MGB and an ECC from the DENR-EMB; (b) that Lara deposited
On January 3, 2008, Jovy Balisi (Balisi), Lara’s representative, the amount of ₱51,500.00 with the Treasurer’s Office for the
went to the Cagayan Provincial Treasurer’s Office (Treasurer’s extraction and other related fees; and (c) that Gov. Antonio
Office) to pay the extraction fee and other fees for Lara’s issued a Stoppage Order directing Lara to stop the quarrying
quarrying operations but she was directed to first secure an operations in the Permit Area. The parties also determined that
Order of Payment from the Environmental and Natural the submission of documentary evidence would be sufficient to
Resources Officer, petitioner Robert Adap (ENRO Adap). reach a decision and as such, the RTC directed them to
However, when Balisi went to ENRO Adap, the latter refused to simultaneously file their respective memoranda.17
issue an Order of Payment. Despite various pleas from Balisi
and Atty. Victorio N. Casauay (Atty. Casauay), Lara’s counsel, The RTC Ruling
ENRO Adap remained adamant with his refusal. This prompted
Atty. Casauay to tender and deposit the amount of ₱51,500.00 In a Decision18 dated June 30, 2009, the RTC made permanent
with the Treasurer’s Office corresponding to the said extraction the writ of preliminary injunction and thus, enjoined petitioners
fee and other related fees.6 from stopping or disturbing Lara’s quarrying operations.
On January 11, 2008, Lara commenced his quarrying It held that Lara legally acquired the right to operate his
operations. Later that day, however, a total of four trucks quarrying business, as evidenced by the ISAG Permit and ECC
loaded with sand and gravel extracted from the Permit Area issued by the MGB and the EMB, respectively, which are the
were stopped and impounded by several local officials.7 government agencies tasked to grant or deny any application
Consequently, Lara filed an action for injunction with prayer for for quarrying of industrial sand and gravel.19 In this regard, the
the issuance of a writ of preliminary injunction, docketed as RTC observed that if Gov. Antonio perceived any defect in
Civil Case No. 7049, against the said officials, seeking to enjoin Lara’s ISAG Permit, the proper recourse would have been to
the stoppage of his quarrying operations. After due bring the matter to the attention of the MGB and not to issue a
proceedings, a writ of preliminary injunction was issued Stoppage Order.20 It further noted that Lara could not pay the
enabling Lara to restart his business.8 extraction and other related fees only because ENRO Adap
adamantly refused to issue an Order of Payment. In this
Nonetheless, on March 17, 2008, Lara received a Stoppage relation, the RTC concluded that there was substantial
Order9 dated March 13, 2008 (Stoppage Order) this time from compliance with the requirements since Lara, in good faith,
Cagayan Governor Alvaro T. Antonio (Gov. Antonio), directing tendered and deposited the amount of ₱51,500.00 with the
him to stop his quarrying operations for the following reasons: Treasurer’s Office, which can be treated as Lara’s payment of
(a) the ISAG Permit was not in accordance with Republic Act No. the pertinent fees.21 Finally, the RTC found no need to touch
(RA) 7942,10 otherwise known as the "Philippine Mining Act of on the necessity of securing a mayor’s permit before starting
1995," and its implementing rules and regulations; (b) Lara’s his quarrying operations, given that it is the main issue in
failure to pay sand and gravel fee under Provincial Ordinance another case, Civil Case No. 7049, pending before the same
No. 2005-07; and (c) Lara’s failure to secure all necessary court.22
permits or clearances from the local government unit
concerned as required by the ECC.11 Hence, Lara filed the Aggrieved, petitioners sought direct recourse to the Court via
present action for injunction and damages with an urgent and the instant petition.
ex-parte motion for the issuance of a temporary restraining
The Issue Before the Court
279
unless a permit has been issued by the Governor (or his deputy
The primordial issue raised for the Court’s resolution is whether as provided herein) x x x. (Emphasis and underscoring supplied)
the RTC properly issued the permanent injunction subject of
this case. A plain reading of the afore-cited provisions clearly shows that
a governor’s permit is a pre-requisite before one can engage in
Among others, petitioners argue that despite the issuance of a quarrying business in Cagayan. Records, however, reveal that
the ISAG Permit, Lara has yet to comply with its terms and Lara admittedly failed to secure the same; hence, he has no
conditions – as he has yet to secure the necessary permits and right to conduct his quarrying operations within the Permit
clearances from the local government unit concerned – and Area. Consequently, he is not entitled to any injunction.
hence, remains to be proscribed from conducting any quarrying
operations.23 In view of the foregoing, the Court need not delve into the issue
respecting the necessity of securing a mayor’s permit,
On the other hand, Lara maintains that the MGB and DENR- especially since it is the main issue in another case, Civil Case
EMB had already authorized him to extract sand and gravel No. 7049, which remains pending before the court a quo.
from the Permit Area, as evidenced by the ISAG Permit and
ECC, thereby dispensing with the need to secure any permit WHEREFORE, the petition is GRANTED. Accordingly, the June
from the local government. In any case, he contends that the 30, 2009 Decision of the Regional Trial Court of Tuguegarao
only reason why he failed to secure such permits was because City, Cagayan, Branch 5 in Civil Case No. 7077 is hereby
the local government officials deliberately refused to process REVERSED and SET ASIDE.
his applications without any legitimate reason whatsoever.24
109. ABBOTT LABORATORIES, PHILIPPINES, CECILLE A.
The Court’s Ruling TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA,
TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
The petition is meritorious. vs.PEARLIE ANN F. ALCARAZ, Respondent.
It is well-settled that a writ of injunction would issue upon the For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz)
satisfaction of two (2) requisites, namely: (a) the existence of a Motion for Reconsideration dated August 23, 2013 of the
right to be protected; and (b) acts which are violative of the Court's Decision dated July 23, 2013 (Decision).1
said right. In the absence of a clear legal right, the issuance of
the injunctive relief constitutes grave abuse of discretion. At the outset, there appears to be no substantial argument in
Injunction is not designed to protect contingent or future rights. the said motion sufficient for the Court to depart from the
Where the complainant’s right is doubtful or disputed, pronouncements made in the initial ruling. But if only to
injunction is not proper. The possibility of irreparable damage address Akaraz's novel assertions, and to so placate any doubt
without proof of actual existing right is not a ground for an or misconception in the resolution of this case, the Court
injunction.25 proceeds to shed light on the matters indicated below.
The permit to extract sand, gravel and other quarry resources The assertion does not justify the reconsideration of the
shall be issued exclusively by the provincial governor, pursuant assailed Decision.
to the ordinance of the sangguniang panlalawigan. (Emphasis
and underscoring supplied) A careful perusal of the questioned Decision will reveal that the
Court actually resolved the controversy under the above-stated
xxxx framework of analysis. Essentially, the Court found the CA to
have committed an error in holding that no grave abuse of
In connection thereto, the Sangguniang Panlalawigan of discretion can be ascribed to the NLRC since the latter
Cagayan promulgated Provincial Ordinance No. 2005-07, Article arbitrarily disregarded the legal implication of the attendant
H, Section 2H.04 of which provides: circumstances in this case which should have simply resulted in
the finding that Alcaraz was apprised of the performance
SECTION 2H.04. Permit for Gravel and Sand Extraction and standards for her regularization and hence, was properly a
Quarrying. – No person shall extract ordinary stones, gravel, probationary employee. As the Court observed, an employee’s
earth, boulders and quarry resources from public lands or from failure to perform the duties and responsibilities which have
the beds of seas, rivers, streams, creeks or other public waters been clearly made known to him constitutes a justifiable basis
280
for a probationary employee’s non-regularization. As detailed in the fact that she was well-aware of her duties and
the Decision, Alcaraz was well-apprised of her duties and responsibilities and that her failure to adequately perform the
responsibilities as well as the probationary status of her same would lead to her non-regularization and eventually, her
employment: termination.3
(a) On June 27, 2004, [Abbott Laboratories, Philippines Consequently, since the CA found that the NLRC did not commit
(Abbott)] caused the publication in a major broadsheet grave abuse of discretion and denied the certiorari petition
newspaper of its need for a Regulatory Affairs Manager, before it, the reversal of its ruling was thus in order.
indicating therein the job description for as well as the duties
and responsibilities attendant to the aforesaid position; this At this juncture, it bears exposition that while NLRC decisions
prompted Alcaraz to submit her application to Abbott on are, by their nature, final and executory4 and, hence, not
October 4, 2004; subject to appellate review,5 the Court is not precluded from
considering other questions of law aside from the CA’s finding
(b) In Abbott’s December 7, 2004 offer sheet, it was stated that on the NLRC’s grave abuse of discretion. While the focal point
Alcaraz was to be employed on a probationary status; of analysis revolves on this issue, the Court may deal with
ancillary issues – such as, in this case, the question of how a
(c) On February 12, 2005, Alcaraz signed an employment probationary employee is deemed to have been informed of
contract which specifically stated, inter alia, that she was to be the standards of his regularization – if only to determine if the
placed on probation for a period of six (6) months beginning concepts and principles of labor law were correctly applied or
February 15, 2005 to August 14, 2005; misapplied by the NLRC in its decision. In other words, the
Court’s analysis of the NLRC’s interpretation of the
(d) On the day Alcaraz accepted Abbott’s employment offer, environmental principles and concepts of labor law is not
Bernardo sent her copies of Abbott’s organizational structure completely prohibited in – as it is complementary to – a Rule 45
and her job description through e-mail; review of labor cases.
(e) Alcaraz was made to undergo a pre-employment orientation Finally, if only to put to rest Alcaraz’s misgivings on the manner
where [Allan G. Almazar] informed her that she had to in which this case was reviewed, it bears pointing out that no
implement Abbott’s Code of Conduct and office policies on "factual appellate review" was conducted by the Court in the
human resources and finance and that she would be reporting Decision. Rather, the Court proceeded to interpret the relevant
directly to [Kelly Walsh]; rules on probationary employment as applied to settled factual
findings. Besides, even on the assumption that a scrutiny of
(f) Alcaraz was also required to undergo a training program as facts was undertaken, the Court is not altogether barred from
part of her orientation; conducting the same. This was explained in the case of Career
Philippines Shipmanagement, Inc. v. Serna6 wherein the Court
(g) Alcaraz received copies of Abbott’s Code of Conduct and held as follows:
Performance Modules from [Maria Olivia T. Yabut-Misa] who
explained to her the procedure for evaluating the performance Accordingly, we do not re-examine conflicting evidence, re-
of probationary employees; she was further notified that evaluate the credibility of witnesses, or substitute the findings
Abbott had only one evaluation system for all of its employees; of fact of the NLRC, an administrative body that has expertise in
and its specialized field. Nor do we substitute our "own judgment
for that of the tribunal in determining where the weight of
(h) Moreover, Alcaraz had previously worked for another evidence lies or what evidence is credible." The factual findings
pharmaceutical company and had admitted to have an of the NLRC, when affirmed by the CA, are generally conclusive
"extensive training and background" to acquire the necessary on this Court.
skills for her job.2
Nevertheless, there are exceptional cases where we, in the
Considering the foregoing incidents which were readily exercise of our discretionary appellate jurisdiction may be
observable from the records, the Court reached the conclusion urged to look into factual issues raised in a Rule 45 petition. For
that the NLRC committed grave abuse of discretion, viz.: instance, when the petitioner persuasively alleges that there is
insufficient or insubstantial evidence on record to support the
[I]n holding that Alcaraz was illegally dismissed due to her factual findings of the tribunal or court a quo, as Section 5, Rule
status as a regular and not a probationary employee, the Court 133 of the Rules of Court states in express terms that in cases
finds that the NLRC committed a grave abuse of discretion. filed before administrative or quasi-judicial bodies, a fact may
be deemed established only if supported by substantial
To elucidate, records show that the NLRC based its decision on evidence.7 (Emphasis supplied)
the premise that Alcaraz’s receipt of her job description and
Abbott’s Code of Conduct and Performance Modules was not B. Standards for regularization;
equivalent to being actually informed of the performance conceptual underpinnings.
standards upon which she should have been evaluated on. It,
however, overlooked the legal implication of the other Alcaraz posits that, contrary to the Court’s Decision, one’s job
attendant circumstances as detailed herein which should have description cannot by and of itself be treated as a standard for
warranted a contrary finding that Alcaraz was indeed a regularization as a standard denotes a measure of quantity or
probationary and not a regular employee – more particularly quality. By way of example, Alcaraz cites the case of a
281
probationary salesperson and asks how does such employee
achieve regular status if he does not know how much he needs In this relation, it bears mentioning that the performance
to sell to reach the same. standard contemplated by law should not, in all cases, be
contained in a specialized system of feedbacks or evaluation.
The argument is untenable. The Court takes judicial notice of the fact that not all
employers, such as simple businesses or small-scale
First off, the Court must correct Alcaraz’s mistaken notion: it is enterprises, have a sophisticated form of human resource
not the probationary employee’s job description but the management, so much so that the adoption of technical
adequate performance of his duties and responsibilities which indicators as utilized through "comment cards" or "appraisal"
constitutes the inherent and implied standard for tools should not be treated as a prerequisite for every case of
regularization. To echo the fundamental point of the Decision, probationary engagement. In fact, even if a system of such kind
if the probationary employee had been fully apprised by his is employed and the procedures for its implementation are not
employer of these duties and responsibilities, then basic followed, once an employer determines that the probationary
knowledge and common sense dictate that he must adequately employee fails to meet the standards required for his
perform the same, else he fails to pass the probationary trial regularization, the former is not precluded from dismissing the
and may therefore be subject to termination.8 latter. The rule is that when a valid cause for termination exists,
the procedural infirmity attending the termination only
The determination of "adequate performance" is not, in all warrants the payment of nominal damages. This was the
cases, measurable by quantitative specification, such as that of principle laid down in the landmark cases of Agabon v. NLRC9
a sales quota in Alcaraz’s example. It is also hinged on the (Agabon) and Jaka Food Processing Corporation v. Pacot10
qualitative assessment of the employee’s work; by its nature, (Jaka). In the assailed Decision, the Court actually extended the
this largely rests on the reasonable exercise of the employer’s application of the Agabon and Jaka rulings to breaches of
management prerogative. While in some instances the company procedure, notwithstanding the employer’s
standards used in measuring the quality of work may be compliance with the statutory requirements under the Labor
conveyed – such as workers who construct tangible products Code.11 Hence, although Abbott did not comply with its own
which follow particular metrics, not all standards of quality termination procedure, its non-compliance thereof would not
measurement may be reducible to hard figures or are readily detract from the finding that there subsists a valid cause to
articulable in specific pre-engagement descriptions. A good terminate Alcaraz’s employment. Abbott, however, was
example would be the case of probationary employees whose penalized for its contractual breach and thereby ordered to pay
tasks involve the application of discretion and intellect, such as nominal damages.
– to name a few – lawyers, artists, and journalists. In these
kinds of occupation, the best that the employer can do at the As a final point, Alcaraz cannot take refuge in Aliling v.
time of engagement is to inform the probationary employee of Feliciano12 (Aliling) since the same is not squarely applicable to
his duties and responsibilities and to orient him on how to the case at bar. The employee in Aliling, a sales executive, was
properly proceed with the same. The employer cannot bear out belatedly informed of his quota requirement. Thus, considering
in exacting detail at the beginning of the engagement what he the nature of his position, the fact that he was not informed of
deems as "quality work" especially since the probationary his sales quota at the time of his engagement changed the
employee has yet to submit the required output. In the complexion of his employment. Contrarily, the nature of
ultimate analysis, the communication of performance standards Alcaraz's duties and responsibilities as Regulatory Affairs
should be perceived within the context of the nature of the Manager negates the application of the foregoing. Records
probationary employee’s duties and responsibilities. show that Alcaraz was terminated because she (a) did not
manage her time effectively; (b) failed to gain the trust of her
The same logic applies to a probationary managerial employee staff and to build an effective rapport with them; (c) failed to
who is tasked to supervise a particular department, as Alcaraz train her staff effectively; and (d) was not able to obtain the
in this case.1âwphi1 It is hardly possible for the employer, at knowledge and ability to make sound judgments on case
the time of the employee’s engagement, to map into technical processing and article review which were necessary for the
indicators, or convey in precise detail the quality standards by proper performance of her duties.13 Due to the nature and
which the latter should effectively manage the department. variety of these managerial functions, the best that Abbott
Factors which gauge the ability of the managerial employee to could have done, at the time of Alcaraz's engagement, was to
either deal with his subordinates (e.g., how to spur their inform her of her duties and responsibilities, the adequate
performance, or command respect and obedience from them), performance of which, to repeat, is an inherent and implied
or to organize office policies, are hardly conveyable at the standard for regularization; this is unlike the circumstance in
outset of the engagement since the employee has yet to be Aliling where a quantitative regularization standard, in the term
immersed into the work itself. Given that a managerial role of a sales quota, was readily articulable to the employee at the
essentially connotes an exercise of discretion, the quality of outset. Hence, since the reasonableness of Alcaraz's
effective management can only be determined through assessment clearly appears from the records, her termination
subsequent assessment. While at the time of engagement, was justified. Bear in mind that the quantum of proof which the
reason dictates that the employer can only inform the employer must discharge is only substantial evidence which, as
probationary managerial employee of his duties and defined in case law, means that amount of relevant evidence as
responsibilities as such and provide the allowable parameters a reasonable mind might accept as adequate to support a
for the same. Verily, as stated in the Decision, the adequate conclusion, even if other minds, equally reasonable, might
performance of such duties and responsibilities is, by and of conceivably opine otherwise.14 To the Court's mind, this
itself, an implied standard of regularization. threshold of evidence Abbott amply overcame in this case.
282
or two years past the original target date of August 1998,
All told, the Court hereby denies the instant motion for thereby skewing Sarabia’s projected revenues. In addition, it
reconsideration and thereby upholds the Decision in the main was compelled to divert some of its funds in order to cover cost
case. overruns. The situation became even more difficult when the
grace period for the payment of the principal loan amounts
WHEREFORE, the motion for reconsideration dated August 23, ended in 2000 which resulted in higher amortizations.
2013 of the Court's Decision dated July 23, 2013 in this case is Moreover, external events adversely affecting the hotel
hereby DENIED. industry, i.e., the September 11, 2001 terrorist attacks and the
Abu Sayyaf issue, also contributed to Sarabia’s financial
110. BANK OF THE PHILIPPINE ISLANDS, Petitioner, difficulties.15 Owing to these circumstances, Sarabia failed to
vs.SARABIA MANOR HOTEL CORPORATION, Respondent. generate enough cash flow to service its maturing obligations
to its creditors, namely: (a) BPI (in the amount of
Before the Court is a petition for review on certiorari1 assailing ₱191,476,421.42); (b) Rural Bank of Pavia (in the amount of
the Decision2 dated April 24, 2006 and Resolution3 dated ₱2,500,000.00); (c) Vic Imperial Appliance Corp. (Imperial
December 6, 2006 of the Court of Appeals, Cebu City (CA) in CA- Appliance) (in the amount of ₱5,000,000.00); (d) its various
G.R. CV. No. 81596 which affirmed with modification the suppliers (in the amount of ₱7,690,668.04); (e) the government
rehabilitation plan of respondent Sarabia Manor Hotel (for minimum corporate income tax in the amount of
Corporation (Sarabia) as approved by the Regional Trial Court of ₱547,161.18); and (f) its stockholders (in the amount of
Iloilo City, Branch 39 (RTC) through its Order4 dated August 7, ₱18,748,306.35).16
2003.
In its proposed rehabilitation plan,17 Sarabia sought for the
The Facts restructuring of all its outstanding loans, submitting that the
interest payments on the same be pegged at a uniform
Sarabia is a corporation duly organized and existing under escalating rate of: (a) 7% per annum (p.a.) for the years 2002 to
Philippine laws, with principal place of business at 101 General 2005; (b) 8% p.a. for the years 2006 to 2010; (c) 10% p.a. for the
Luna Street, Iloilo City.5 It was incorporated on February 22, years 2011 to 2013; (d) 12% p.a. for the years 2014 to 2015;
1982, with an authorized capital stock of ₱10,000,000.00, fully and (e) 14% p.a. for the year 2018. Likewise, Sarabia sought to
subscribed and paid-up, for the primary purpose of owning, make annual payments on the principal loans starting in 2004,
leasing, managing and/or operating hotels, restaurants, barber also in escalating amounts depending on cash flow. Further, it
shops, beauty parlors, sauna and steam baths, massage parlors proposed that it should pay off its outstanding obligations to
and such other businesses incident to or necessary in the the government and its suppliers on their respective due dates,
management or operation of hotels.6 for the sake of its day to day operations.
In 1997, Sarabia obtained a ₱150,000,000.00 special loan Finding Sarabia’s rehabilitation petition sufficient in form and
package from Far East Bank and Trust Company (FEBTC) in substance, the RTC issued a Stay Order18 on August 2, 2002. It
order to finance the construction of a five-storey hotel building also appointed Liberty B. Valderrama as Sarabia’s rehabilitation
(New Building) for the purpose of expanding its hotel business. receiver (Receiver). Thereafter, BPI filed its Opposition.19
An additional ₱20,000,000.00 stand-by credit line was approved
by FEBTC in the same year.7 After several hearings, the RTC gave due course to the
rehabilitation petition and referred Sarabia’s proposed
The foregoing debts were secured by real estate mortgages rehabilitation plan to the Receiver for evaluation.20
over several parcels of land8 owned by Sarabia and a
comprehensive surety agreement dated September 1, 1997 In a Recommendation21 dated July 10, 2003 (Receiver’s
signed by its stockholders.9 By virtue of a merger, Bank of the Report), the Receiver found that Sarabia may be rehabilitated
Philippine Islands (BPI) assumed all of FEBTC’s rights against and thus, made the following recommendations:
Sarabia.10
(1) Restructure the loans with Sarabia’s creditors, namely, BPI,
Sarabia started to pay interests on its loans as soon as the funds Imperial Appliance, Rural Bank of Pavia, and Barcelo Gestion
were released in October 1997. However, largely because of Hotelera, S.L. (Barcelo), under the following terms and
the delayed completion of the New Building, Sarabia incurred conditions: (a) the total outstanding balance as of December
various cash flow problems. Thus, despite the fact that it had 31, 2002 shall be recomputed, with the interest for the years
more assets than liabilities at that time,11 it, nevertheless, 2001 and 2002 capitalized and treated as part of the principal;
filed, on July 26, 2002, a Petition12 for corporate rehabilitation (b) waive all penalties; (c) extend the payment period to
(rehabilitation petition) with prayer for the issuance of a stay seventeen (17) years, i.e., from 2003 to 2019, with a two-year
order before the RTC as it foresaw the impossibility to meet its grace period in principal payment; (d) fix the interest rate at
maturing obligations to its creditors when they fall due. 6.75% p.a. plus 10% value added tax on interest for the entire
term of the restructured loans;22 (e) the interest and principal
In the said petition, Sarabia claimed that its cash position based on the amortization schedule shall be payable annually at
suffered when it was forced to take-over the construction of the last banking day of each year; and (f) any deficiency shall be
the New Building due to the recurring default of its contractor, paid personally by Sarabia’s stockholders in the event it fails to
Santa Ana – AJ Construction Corporation (contractor),13 and its generate enough cash flow; on the other hand, any excess
subsequent abandonment of the said project.14 Accordingly, funds generated at the end of the year shall be paid to the
the New Building was completed only in the latter part of 2000, creditors to accelerate the debt servicing;23
283
remained to have a positive business/profit outlook
(2) Pay Sarabia’s outstanding payables with its suppliers and the altogether.36
government so as not to disrupt hotel operations;24
The RTC further noted that while it may be true that Sarabia
(3) Convert the Advances from stockholders amounting to has been unable to comply with its existing terms with BPI, it
₱18,748,306.00 to stockholder’s equity and other advances has nonetheless complied with its obligations to its employees
amounting to ₱42,688,734.00 as of the December 31, 2002 and suppliers and pay its taxes to both local and national
tentative financial statements to Deferred Credits; the said government without disrupting the day-to-day operations of its
conversion should increase stockholders’ equity to business as an on-going concern.37
₱268,545,731.00 and bring the debt to equity ratio to 0.85:1;25
More significantly, the RTC did not give credence to BPI’s
(4) Require Sarabia’s stockholders to pay its payables to the opposition to the Receiver’s recommended rehabilitation plan
hotel recorded as Accounts Receivable – Trade, amounting to as neither BPI nor the Receiver was able to substantiate the
₱285,612.17 as of December 31, 2001, and its remaining claim that BPI’s cost of funds was at the 10% p.a. threshold. In
receivables after such date;26 this regard, the RTC gave more credence to the Receiver’s
determination of fixing the interest rate at 6.75% p.a., taking
(5) No compensation or cash dividends shall be paid to the into consideration not only Sarabia’s ability to pay based on its
stockholders during the rehabilitation period, except those who proposed interest rates, i.e., 7% to 14% p.a., but also BPI’s
are directly employed by the hotel as a full time officer, perceived cost of money based on its own published interest
employee or consultant covered by a valid contract and for a rates for deposits, i.e., 1% to 4.75% p.a., as well as the rates for
reasonable fee;27 treasury bills, i.e., 5.498% p.a. and CB overnight borrowings,
i.e., 7.094%. p.a.38
(6) All capital expenditures which are over and above what is
provided in the case flow of the rehabilitation plan which will The CA Ruling
materially affect Sarabia’s cash position but which are deemed
necessary in order to maintain the hotel’s competitiveness in In a Decision39 dated April 24, 2006, the CA affirmed the RTC’s
the industry shall be subject to the RTC’s approval prior to its ruling with the modification of reinstating the surety obligations
implementation;28 of Sarabia’s stockholders to BPI as an additional safeguard for
the effective implementation of the approved rehabilitation
(7) Terminate the management contract with Barcelo, thereby plan.40 It held that the RTC’s conclusions as to the feasibility of
saving an estimated ₱25,830,997.00 in management fees, over Sarabia’s rehabilitation was well-supported by the company’s
and above the salaries and benefits of certain managerial financial statements, both internal and independent, which
employees;29 were properly analyzed and examined by the Receiver.41 It also
upheld the 6.75%. p.a. interest rate on Sarabia’s loans, finding
(8) Appoint a new management team which would be required the said rate to be reasonable given that BPI’s interests as a
to submit a comprehensive business plan to support the creditor were properly accounted for. As published, BPI’s time
generation of the target revenue as reported in the deposit rate for an amount of ₱5,000,000.00 (with a term of
rehabilitation plan;30 360-364 days) is at 5.5% p.a.; while the benchmark ninety one-
day commercial paper, which banks used to price their loan
(9) Open a debt servicing account and transfer all excess funds averages to 6.4% p.a. in 2005, has a three-year average rate of
thereto, which in no case should be less than ₱500,000.00 at 6.57% p.a.42 As such, the 6.75% p.a. interest rate would be
the end of the month; the funds will be drawn payable to the higher than the current market interest rates for time deposits
creditors only based on the amortization schedule;31 and and benchmark commercial papers. Moreover, the CA pointed
out that should the prevailing market interest rates change as
(10) Release the surety obligations of Sarabia’s stockholders, feared by BPI, the latter may still move for the modification of
considering the adequate collaterals and securities covered by the approved rehabilitation plan.43
the rehabilitation plan and the continuing mortgages over
Sarabia’s properties.32 Aggrieved, BPI moved for reconsideration which was, however,
denied in a Resolution44 dated December 6, 2006.
The RTC Ruling
Hence, this petition.
In an Order33 dated August 7, 2003, the RTC approved
Sarabia’s rehabilitation plan as recommended by the Receiver, The Issue Before the Court
finding the same to be feasible. In this accord, it observed that
the rehabilitation plan was realistic since, based on Sarabia’s The primordial issue raised for the Court’s resolution is whether
financial history, it was shown that it has the inherent capacity or not the CA correctly affirmed Sarabia’s rehabilitation plan as
to generate funds to pay its loan obligations given the proper approved by the RTC, with the modification on the
perspective.34 The recommended rehabilitation plan was also reinstatement of the surety obligations of Sarabia’s
practical in terms of the interest rate pegged at 6.75% p.a. since stockholders.
it is based on Sarabia’s ability to pay and the creditors’
perceived cost of money.35 It was likewise found to be viable BPI mainly argues that the approved rehabilitation plan did not
since, based on the extrapolations made by the Receiver, give due regard to its interests as a secured creditor in view of
Sarabia’s revenue projections, albeit projected to slow down, the imposition of a fixed interest rate of 6.75% p.a. and the
284
extended loan repayment period.45 It likewise avers that are entitled to great weight and respect, and even accorded
Sarabia’s misrepresentations in its rehabilitation petition with finality. This especially obtains in corporate rehabilitation
remain unresolved.46 proceedings wherein certain commercial courts have been
designated on account of their expertise and specialized
On the contrary, Sarabia essentially maintains that: (a) the knowledge on the subject matter, as in this case.
present petition improperly raises questions of fact;47 (b) the
approved rehabilitation plan takes into consideration all the In any event, even discounting the above-discussed procedural
interests of the parties and the terms and conditions stated considerations, the Courts still finds BPI’s petition lacking in
therein are more reasonable than what BPI proposes;48 and (c) merit.
BPI’s allegations of misrepresentation are mere desperation
moves to convince the Court to overturn the rulings of the B. Approval of Sarabia’s
courts a quo.49 rehabilitation plan; substantive
considerations.
The Court’s Ruling
Records show that Sarabia has been in the hotel business for
The petition has no merit. over thirty years, tracing its operations back to 1972. Its hotel
building has been even considered a landmark in Iloilo, being
A. Propriety of BPI’s petition; one of its kind in the province and having helped bring progress
procedural considerations. to the community.23 Since then, its expansion was continuous
which led to its decision to commence with the construction of
It is fundamental that a petition for review on certiorari filed a new hotel building. Unfortunately, its contractor defaulted
under Rule 45 of the Rules of Court covers only questions of which impelled Sarabia to take-over the same. This significantly
law. In this relation, questions of fact are not reviewable and skewed its projected revenues and led to various cash flow
cannot be passed upon by the Court unless, the following difficulties, resulting in its incapacity to meet its maturing
exceptions are found to exist: (a) when the findings are obligations.
grounded entirely on speculations, surmises, or conjectures; (b)
when the inference made is manifestly mistaken, absurd, or Recognizing the volatile nature of every business, the rules on
impossible; (c) when there is a grave abuse of discretion; (d) corporate rehabilitation have been crafted in order to give
when the judgment is based on misappreciation of facts; (e) companies sufficient leeway to deal with debilitating financial
when the findings of fact are conflicting; (f) when in making its predicaments in the hope of restoring or reaching a sustainable
findings, the same are contrary to the admissions of both operating form if only to best
parties; (g) when the findings are contrary to those of the trial
court; (h) when the findings are conclusions without citation of accommodate the various interests of all its stakeholders, may
specific evidence on which they are based; (i) when the facts it be the corporation’s stockholders, its creditors and even the
set forth in the petition as well as in the petitioner’s main and general public. In this light, case law has defined corporate
reply briefs are not disputed by the respondent; and (j) when rehabilitation as an attempt to conserve and administer the
the findings of fact are premised on the supposed absence of assets of an insolvent corporation in the hope of its eventual
evidence and contradicted by the evidence on record.50 return from financial stress to solvency. It contemplates the
continuance of corporate life and activities in an effort to
The distinction between questions of law and questions of fact restore and reinstate the corporation to its former position of
is well-defined. A question of law exists when the doubt or successful operation and liquidity. Verily, the purpose of
difference centers on what the law is on a certain state of facts. rehabilitation proceedings is to enable the company to gain a
A question of fact, on the other hand, exists if the doubt new lease on life and thereby allow creditors to be paid their
centers on the truth or falsity of the alleged facts. This being so, claims from its earnings.54 Thus, rehabilitation shall be
the findings of fact of the CA are final and conclusive and the undertaken when it is shown that the continued operation of
Court will not review them on appeal.51 the corporation is economically more feasible and its creditors
can recover, by way of the present value of payments projected
In view of the foregoing, the Court finds BPI’s petition to be in the plan, more, if the corporation continues as a going
improper – and hence, dismissible52 – as the issues raised concern than if it is immediately liquidated.55
therein involve questions of fact which are beyond the ambit of
a Rule 45 petition for review. Among other rules that foster the foregoing policies, Section
23, Rule 4 of the Interim Rules of Procedure on Corporate
To elucidate, the determination of whether or not due regard Rehabilitation56 (Interim Rules) states that a rehabilitation plan
was given to the interests of BPI as a secured creditor in the may be approved even over the opposition of the creditors
approved rehabilitation plan partakes of a question of fact since holding a majority of the corporation’s total liabilities if there is
it will require a review of the sufficiency and weight of evidence a showing that rehabilitation is feasible and the opposition of
presented by the parties – among others, the various financial the creditors is manifestly unreasonable. Also known as the
documents and data showing Sarabia’s capacity to pay and "cram-down" clause, this provision, which is currently
BPI’s perceived cost of money – and not merely an application incorporated in the FRIA,57 is necessary to curb the majority
of law. Therefore, given the complexion of the issues which BPI creditors’ natural tendency to dictate their own terms and
presents, and finding none of the above-mentioned exceptions conditions to the rehabilitation, absent due regard to the
to exist, the Court is constrained to dismiss its petition, and greater long-term benefit of all stakeholders. Otherwise stated,
prudently uphold the factual findings of the courts a quo which it forces the creditors to accept the terms and conditions of the
285
rehabilitation plan, preferring long-term viability over prospect of substantial and continuous revenue generation is a
immediate but incomplete recovery. realistic goal.
It is within the parameters of the aforesaid provision that the Second, Sarabia has the ability to have sustainable profits over
Court examines the approval of Sarabia’s rehabilitation. a long period of time.
First, Sarabia has the financial capability to undergo Therefore, based on the above-stated reasons, the Court finds
rehabilitation. Sarabia’s rehabilitation to be feasible.
Based on the Receiver’s Report, Sarabia’s financial history ii. Manifest unreasonableness of BPI’s opposition.
shows that it has the inherent capacity to generate funds to
repay its loan obligations if applied through the proper financial Although undefined in the Interim Rules, it may be said that the
framework. The Receiver’s examination and analysis of opposition of a distressed corporation’s majority creditor is
Sarabia’s financial data reveals that the latter’s business is not manifestly unreasonable if it counter-proposes unrealistic
only an on-going but also a growing concern. Despite its payment terms and conditions which would, more likely than
financial constraints, Sarabia likewise continues to be profitable not, impede rather than aid its rehabilitation. The
with its hotelier business as its operations have not been unreasonableness becomes further manifest if the
disrupted.61 Hence, given its current fiscal position, the rehabilitation plan, in fact, provides for adequate safeguards to
fulfill the majority creditor’s claims, and yet the latter persists
286
on speculative or unfounded assumptions that his credit would own accord, a supplemental affidavit dated October 24, 200273
remain unfulfilled. that explains that the increase in its properties and assets was
indeed by recognition of revaluation increment.74 Proceeding
While Section 23, Rule 4 of the Interim Rules states that the from this fact, the CA observed that BPI actually failed to
rehabilitation court shall consider certain incidents in establish its claimed defects in light of Sarabia’s assertive and
determining whether the opposition is manifestly forceful explanation that the alleged inaccuracies do not
unreasonable,70 BPI neither proposes Sarabia’s liquidation over warrant the dismissal of its petition.75 Thus, absent any
its rehabilitation nor questions the controlling interest of compelling reason to disturb the CA's finding on this score, the
Sarabia’s shareholders or owners. It only takes exception to: (a) Court deems it proper to dismiss BPI's allegations of
the imposition of the fixed interest rate of 6.75% p.a. as misrepresentation against Sarabia.
recommended by the Receiver and as approved by the courts a
quo, proposing that the original escalating interest rates of 7%, As a final point, BPI claims that Sarabia's projections were "too
8%, 10%, 12%, and 14%, over seventeen years be applied optimistic," its management was "extremely incompetent"76
instead;71 and (b) the fact that Sarabia’s misrepresentations in and that it was even forced to pay a pre-termination penalty
the rehabilitation petition, i.e., that it physically acquired due to its previous loan with the Landbank of the Philippines.77
additional property whereas in fact the increase was mainly due Suffice it to state that bare allegations of fact should not be
to the recognition of Revaluation Increment and because of entet1ained as they are bereft of any probative value.78 In any
capital expenditures, were not taken into consideration by the event, even if it is assumed that the said allegations are
courts a quo.72 substantiated by clear and convincing evidence, the Court,
absent any cogent basis to proceed otherwise, remains
Anent the first matter, it must be pointed out that oppositions steadfast in its preclusion to thresh out matters of fact on a
which push for high interests rates are generally frowned upon Rule 45 petition, as in this case.
in rehabilitation proceedings given that the inherent purpose of
a rehabilitation is to find ways and means to minimize the All told, Sarabia's rehabilitation plan, as approved and modified
expenses of the distressed corporation during the rehabilitation by the CA, is hereby sustained. In view of the foregoing
period. It is the objective of a rehabilitation proceeding to pronouncements, the Court finds it unnecessary to delve on the
provide the best possible framework for the corporation to other ancillary issues as herein raised.
gradually regain or achieve a sustainable operating form.
Hence, if a creditor, whose interests remain well-preserved WHEREFORE, the petition is DENIED. Accordingly, the Decision
under the existing rehabilitation plan, still declines to accept dated April 24, 2006 and Resolution dated December 6, 2006 of
interests pegged at reasonable rates during the period of the Court of Appeals, Cebu City in CA-G.R. CV. No. 81596 are
rehabilitation, and, in turn, proposes rates which are largely hereby AFFIRMED.
counter-productive to the rehabilitation, then it may be said
that the creditor’s opposition is manifestly unreasonable. 111. HEIRS OF ALEJANDRA DELFIN, namely: LEOPOLDO DELFIN
(deceased), represented by his spouse, LUZ C. DELFIN, and
In this case, the Court finds BPI’s opposition on the approved children, LELANE C. DELFIN and ANASTACIA C. DELFIN,
interest rate to be manifestly unreasonable considering that: (a) MARCELITO1 DELFIN, FRANCISCO2 DELFIN, APOLLO DELFIN,
the 6.75% p.a. interest rate already constitutes a reasonable ABRILES DELFIN, LYDIA D. DACULAN, OLIVIA D. CABALLERO,
rate of interest which is concordant with Sarabia’s projected ALEJANDRO DELFIN, JULITO DELFIN, and CANDIDO DELFIN, JR.,
rehabilitation; and (b) on the contrary, BPI’s proposed Petitioners, vs.AVELINA RABADON, PACIANO PANOGALING,3
escalating interest rates remain hinged on the theoretical HILARIA RABADON, PABLO BOQUILLA, CATALINA RABADON,
assumption of future fluctuations in the market, this PACIANO RABAYA, FE RABADON, GONZALO DABON, and
notwithstanding the fact that its interests as a secured creditor ROBERTO RABADON, Respondents.
remain well-preserved.
Assailed in this petition for review on certiorari4 are the
The following observations impel the foregoing conclusion: Decision5 dated February 28, 2001 and Resolution6 dated
first, the 6.75% p.a. interest rate is actually higher than BPI’s August 2, 2004 of the Court of Appeals (CA) in CA-G.R. CV No.
perceived cost of money as evidenced by its published time 57723 which reversed and set aside the Decision7 dated June
deposit rate (for an amount of ₱5,000,000.00, with a term of 27, 1997 of the Regional Trial Court of Cebu City, Branch 58
360-364 days) which is only set at 5.5% p.a.; second, the 6.75% (RTC) in Civil Case No. CEB-14801, ordering petitioners to
p.a. is also higher than the benchmark ninety one-day
commercial paper, which is used by banks to price their loan surrender the ownership and possession of Lot No. 8217, a
averages to 6.4% p.a. in 2005, and has a three-year average 4,452 square meter parcel of land situated in Inawayan, Pardo,
rate of 6.57% p.a.; and third, BPI’s interests as a secured Cebu City (subject property), in favor of respondents and to
creditor are adequately protected by the maintenance of all render an accounting of the fruits received.
Sarabia’s existing real estate mortgages over its hotel
properties as collateral as well as by the reinstatement of the The Facts
comprehensive surety agreement of Sarabia’s stockholders,
among other terms in the approved rehabilitation plan. On October 19, 1993, respondents filed before the RTC an
action to recover the ownership and possession of the subject
As to the matter of Sarabia’s alleged misrepresentations, property from petitioners, seeking as well the payment of
records disclose that Sarabia already clarified its initial damages. Based on their complaint and the testimonies of their
statements in its rehabilitation petition by submitting, on its witnesses during trial, respondents alleged that: (a) the subject
287
property was owned by their predecessor-in-interest,8 Emiliana
Bacalso (Emiliana), pursuant to Decree No. 98992;9 (b) while The CA Ruling
the foregoing decree was lost during the last World War, its
existence could still be shown by a certification (LRA In a Decision22 dated February 28, 2001, the CA reversed the
certification) issued by the Land Registration Authority (LRA), RTC’s pronouncement, holding that respondents had the better
and a certified copy from page 19 of the daybook of cadastral right of ownership and possession over the subject property. It
lots issued by the Register of Deeds (RD) of Cebu City (daybook observed that, apart from the self-serving testimonies of some
entry);10 (c) after Emiliana’s death, Genaro Rabadon took over of the petitioners, the only evidence adduced by them in
the possession of the subject property and upon his death, his support of their claim are mere copies of tax declarations and
children, herein respondents, took over its possession until tax receipts over the subject property and a Report dated July
1988;11 (d) in 1989, they discovered that the said property was 14, 1993 of one Director Silverio G. Perez of the Department of
already in the possession of petitioner Alejandra Delfin Registration of the LRA (LRA Report) to the effect that the
(Alejandra) and some of her children and their families already property in question is covered by TCT No. 20910. The CA
constructed their houses thereon;12 and (e) when they stressed that tax declarations and tax receipts are not
confronted Alejandra, she claimed that petitioners’ conclusive evidence of ownership or of the right to possess the
predecessor-in-interest, Remegio Navares (Remegio) previously land when not supported by other evidence of actual
bought the said property; however, when they asked to see a possession which remained wanting in this case. In this relation,
copy of the deed of sale, she could not produce the same.13 it found that the LRA Report could not qualify as proof of
possession since the report failed to mention that the subject
For their part, petitioners countered that: (a) they inherited the property actually belongs to petitioners’ predecessor-in-
subject property from their predecessor-in-interest, Remegio, interest. In fact, the LRA Report even affirmed that the subject
who bought the foregoing even before the second World War; property was covered by a decree issued to Emiliana and her
(b) the subject property was issued a certificate of title in the husband, Dionisio Rabadon. Further, when TCT No. 20910 was
name of Remegio, however, the said title was lost;14 (c) sought to be reconstituted by Alejandra, one Juanito
Alejandra inherited the subject property by virtue of an extra- Montenegro (RD representative) of the Cebu City RD testified
judicial settlement and after its execution, she and her children, that the said title does not cover the subject property and that
petitioners Leopoldo, Francisco and Marcelito Delfin, took over the Cebu City RD has no record available for Lot No. 8217.
the possession of the same;15 and (d) the subject property had These findings led to the dismissal of Alejandra’s petition for
been declared by them for taxation purposes and they paid the reconstitution and considering these circumstances, the CA
corresponding realty taxes due thereon.16 By way of stated that the LRA Report is inferior to the testimony of the RD
affirmative defense, petitioners further contended, inter alia, representative.23
that respondents’ demands were already barred by laches,
given that they took about 55 years to file their complaint.17 Also, the CA observed that petitioners offered no credible
explanation as to why the subject property was declared in the
The RTC Ruling name of their predecessor-in-interest, Remegio, and that the
tax declarations were only allowed on the supposition that the
In a Decision18 dated June 27, 1997, the RTC ruled that subject property was covered by TCT No. 20910 in the name of
petitioners had the better right to the ownership and Remegio, which entry was, as earlier mentioned, shown to be
possession of the subject property. It based its conclusion on erroneous.24 Anent the issue of prescription, the CA
the fact that the subject property was declared by petitioners pronounced that petitioners were unable to prove that they
for taxation purposes and that they paid the realty taxes due have been in possession of the subject property since 1938.
thereon. It held that while tax declarations and tax receipts are Neither are respondents guilty of laches since there is no
not incontrovertible evidence of ownership, they become proof evidence on record which would show that they omitted to
of ownership when accompanied by proof of actual possession assert their claim over the subject property.25 Respondents
such as petitioners’ continuous declaration of the subject were, however, ordered to reimburse petitioners of the taxes
property for taxation purposes, their payments of the paid by them during the period of their possession, including
corresponding taxes, and the construction of their respective legal interest. Dissatisfied, petitioners moved for
houses thereon. It also noted that Alejandra filed a petition for reconsideration which was denied in a Resolution26 dated
the reconstitution of Remegio’s title, i.e., Transfer Certificate of August 2, 2004. Hence, the instant petition.
Title (TCT) No. 20910 in LRC No. 9469 before the Regional Trial
Court of Cebu City, Branch 16.19 The Issue Before the Court
On the other hand, the RTC observed that while it is undisputed The essential issue in this case is whether or not respondents
that the subject property has been issued Decree No. 98992 have the better right to the ownership and possession of the
and for which an original certificate of title was issued to subject property.
Emiliana, respondents have not shown any efforts to locate the
said title nor to reconstitute the same. Neither have they The Court’s Ruling
attempted to declare the subject property for taxation
purposes nor have they shown any proof that they paid the The petition is bereft of merit.
realty taxes due thereon, thereby negating their claim of
ownership.20 Moreover, the RTC pronounced that respondents At the outset, it bears noting that the Court may proceed to
were guilty of laches.21 Aggrieved, respondents elevated the evaluate the evidence on record even on a Rule 45 petition for
matter on appeal.
288
review in the event that the findings of the CA are contrary to four years removed from the time petitioners entered the
that of the RTC,27 as in this case. property in 1989.35 As such, laches does not exist.
After such evaluation, the Court finds that the respondents In view of the pronouncements made herein, the Court deems
have shown a better right to the ownership and possession of it unnecessary to delve on the other ancillary issues in this case.
the subject property.1âwphi1
WHEREFORE, the petition is DENIED. Accordingly, the Decision
As may be gleaned from the records, the probative value of dated February 28, 2001 and Resolution dated August 2, 2004
petitioners’ evidence, which consist of tax declarations and tax of the Court of Appeals in CA-G.R. CV No. 57723 are hereby
receipts, pales in comparison to that of respondents’ evidence AFFIRMED.
which consists of a decree of ownership, i.e., Decree No. 98992,
under the name of their predecessor-in-interest, Emiliana. 112. SPO1 RAMON LIHAYLIHAY1 AND C/INSP. VIRGILIO V.
While the actual copy of the said decree was lost, the existence VINLUAN, Petitioners, vs.PEOPLE OF THE PHILIPPINES,
of the said decree was actually proven by the LRA certification Respondent.
and the daybook entry. Likewise, the RTC itself observed that it
is undisputable that the subject property has been issued Assailed in this petition for review on certiorari2 are the
Decree No. 98992, for which an original certificate of title was Decision3 dated August 8, 2008 and Resolution4 dated
issued to Emiliana.28 It is an elemental rule that a decree of February 12, 2010 of the Sandiganbayan in Criminal Case No.
registration bars all claims and rights which arose or may have 22098 which found petitioners Virgilio V. Vinluan (Vii1luan) and
existed prior to the decree of registration. By the issuance of Ramon Lihaylihay (Lihaylihay) guilty beyond reasonable doubt
the decree, the land is bound and title thereto quieted, subject of the crime of violation of Section 3(e) of Republic Act No. (RA)
only to certain exceptions29 under the property registration 3019, otherwise known as the "Anti-Graft and Corrupt Practices
decree.30 In the case of Ferrer-Lopez v. CA,31 the Court ruled Act."
that as against an array of proofs consisting of tax declarations
and/or tax receipts which are not conclusive evidence of The Facts
ownership nor proof of the area covered therein, an original
certificate of title, which indicates true and legal ownership by Acting on the special audit report5 submitted by the
the registered owners over the disputed premises, must Commission on Audit, the Philippine National Police (PNP)
prevail. Accordingly, respondents’ Decree No. 98992 for which conducted an internal investigation6 on the purported "ghost"
an original certificate of title was issued should be accorded purchases of combat, clothing, and individual equipment (CCIE)
greater weight as against the tax declarations and tax receipts worth ₱133,000,000.00 which were allegedly purchased from
presented by petitioners in this case. the PNP Service Store System (SSS) and delivered to the PNP
General Services Command (GSC). As a result of the internal
Besides, tax declarations and tax receipts may only become the investigation, an Information7 was filed before the
basis of a claim for ownership when they are coupled with Sandiganbayan, charging 10 PNP officers, including, among
proof of actual possession of the property.32 In this case, others, Vinluan and Lihaylihay, for the crime of violation of
records are bereft of any showing that petitioners, or any of Section 3(e) of RA 3019, the accusatory portion of which reads:
their predecessors-in-interest, have been in actual possession
of the subject property prior to 1989 as they claim. The tax That on January 3, 6, 8, 9 and 10, 1992, and for sometime
declarations and tax receipts are insufficient to prove their subsequent thereto, in Quezon City, Philippines, and within the
proffered theory that their predecessor-in-interest, Remegio, jurisdiction of this Honorable Court, the above-named accused
was the lawful possessor and owner of the foregoing property public officers namely: Gen. Cesar P. Nazareno, being then the
even before the last World War. In fact, petitioners altogether Director General of the Philippine National Police (PNP); Gen.
failed to prove the legitimacy of Remegio's possession and Guillermo T. Domondon, Director for Comptrollership, PNP; Sr.
ownership since they failed to present the pe1iinent deed of Supt. Bernardo Alejandro, Administrator, PNP Service Store
sale or any other evidence of the latter's title. On the contrary, System; Sr. Supt. Arnulfo Obillos, Director, PNP, General
aside from the LRA certification and daybook entry which prove Services Command (GSC); C/Insp. Virgilio Vinluan, Chairman,
the existence of Decree No. 98992, respondents' possession of Inspection and Acceptance Committee, PNP, GSC; C/Insp.
the subject property prior to petitioners' entry in 1989 was Pablito Magnaye, Member, Inspection and Acceptance
attested to by one Marcelina Tabora33 who. as the CA notes, Committee, PNP, GSC; Sr. Insp. Amado Guiriba, Jr., Member,
appears to be an unbiased witness.34 All told, by sheer Inspection and Acceptance Committee, PNP, GSC; SPO1 Ramon
preponderance of evidence, respondents have shown a better Lihay-Lihay, Inspector, Office of the Directorate for
right to the ownership and possession of the subject property Comptrollership, PNP; Chief Supt. Jose M. Aquino, Director,
and hence, must be awarded the same. Finance Service, PNP; and Sr. Supt. Marcelo Castillo III, Chief,
Gen. Materials Office/Technical Inspector, PNP, while in the
As to the issue of laches, suffice it to state that petitioners were performance of their respective official and administrative
not able to adduce any sufficient evidence to demonstrate that functions as such, taking advantage of their positions,
respondents unduly slept on their rights for an unreasonable committing the offense in relation to their office and
length of time. Quite the contrary, records reveal that conspiring, confederating with one another, did then and there
respondents and their predecessors-in-interest have been in willfully, unlawfully and criminally, through evident bad faith,
possession of the subject property since the 1950's and that cause undue injury to the government in the following manner:
they filed their complaint on October 19, 1993, which is only
289
Accused Gen. Nazareno in his capacity as Chief, PNP and there was a "splitting" of the subject transactions into
concurrently Board Chairman of the PNP Service Store System, ₱500,000.00 each to avoid the review of a higher authority as
surreptitiously channeled PNP funds to the PNP SSS through well as to make it fall within the signing authority of Obillos;
"Funded RIVs" valued at ₱8 [M]illion and Director Domondon and (c) they failed to refute the prosecution’s claim that the
released ASA No. 000-200-004-92 (SN-1353) without proper subject CCIE items were never received by Supply Accountable
authority from the National Police Commission (NAPOLCOM) Officer of the GSC (GSC SAO), Dante Mateo (Mateo), nor
and Department of Budget and Management (DBM), and delivered to its end-users,17 hence, leading to the conclusion
caused it to appear that there were purchases and deliveries of that the subject transactions were indeed "ghost" purchases
combat clothing and individual equipment (CCIE) to the General which resulted to an ₱8,000,000.00 loss to the government. In
Service Command (GSC), PNP, by deliberately and maliciously view of their conviction, Obillos, Vinluan, and Lihaylihay were
using funds for personal services and divided the invoices of not sentenced to suffer imprisonment for a term of six years and
more than ₱500,000.00 each, pursuant to which the following one month, as minimum, to nine years and one day, as
invoices were made and payments were effected therefor maximum, including the penalty of perpetual disqualification
through the corresponding checks, to wit: from public office. They were likewise ordered to jointly and
severally indemnify the government the amount of
₱8,000,000.00.18 Aggrieved, Obillos, Vinluan, and Lihaylihay
thereafter, accused members of the Inspection and Acceptance filed their separate motions for reconsideration which were all
Committee together with respondents Marcelo Castillo III and denied in a Resolution19 dated February 12, 2010. Hence, the
Ramon Lihay-Lihay certified or caused to be certified that the instant petition.
CCIE items covered by the aforementioned invoices were
delivered, properly inspected and accepted, and subsequently The Issue Before the Court
distributed to the end-users, when in truth and in fact, as
accused well knew, no such purchases of CCIE items were made The essential issue in this case is whether or not petitioners’
and no items were delivered, inspected, accepted and conviction for the crime of violation of Section 3(e) of RA 3019
distributed to the respective end-users; that despite the fact was proper.
that no deliveries were made, respondent Alejandro claimed
payment therefor, and respondent Obillos approved the The Court’s Ruling
disbursement vouchers therefor as well as the checks
authorizing payment which was countersigned by respondent The petition lacks merit.
Aquino; and as a result, the government, having been caused to
pay for the inexistent purchases and deliveries, suffered undue At the outset, it bears pointing out that in appeals from the
injury in the amount of EIGHT MILLION PESOS (₱8,000,000.00), Sandiganbayan, as in this case, only questions of law and not
more or less. questions of fact may be raised. Issues brought to the Court on
whether the prosecution was able to prove the guilt of the
CONTRARY TO LAW.8 accused beyond reasonable doubt, whether the presumption of
innocence was sufficiently debunked, whether or not
Four of the above-named accused died during the pendency of conspiracy was satisfactorily established, or whether or not
the case, while Chief Supt. Jose M. Aquino was dropped from good faith was properly appreciated, are all, invariably,
the Information for lack of probable cause.9 As such, only questions of fact.20 Hence, absent any of the recognized
Director Guillermo Domondon, Sr. (Domondon), Supt. Arnulfo exceptions to the above-mentioned rule,21 the
Obillos (Obillos), C/Inspector Vinluan, Sr. Inspector Amado Sandiganbayan’s findings on the foregoing matters should be
Guiriba, Jr. (Guiriba), and SPO1 Lihaylihay remained as accused deemed as conclusive.
in the subject case. During their arraignment, Domondon,
Obillos, Vinluan, and Lihaylihay all pleaded not guilty to the Petitioners were charged with the crime of violation of Section
crime charged,10 while Guiriba remained at large.11 3(e)22 of RA 3019 which has the following essential elements:
(a) the accused must be a public officer discharging
The Sandiganbayan Ruling administrative, judicial or official functions; (b) he must have
acted with manifest partiality, evident bad faith or gross
On August 8, 2008, the Sandiganbayan rendered the assailed inexcusable negligence; and (c) his action caused any undue
Decision,12 exonerating Domondon but finding Obillos, injury to any party, including the government, or gave any
Vinluan, and Lihaylihay guilty beyond reasonable doubt of the private party unwarranted benefits, advantage or preference in
crime charged.13 It found that all the essential elements of the the discharge of his functions.23 As observed by the
crime of violation of Section 3(e) of RA 3019 were present in Sandiganbayan, all these elements are extant in this case:
the case, in particular that: (a) Obillos, Vinluan, and Lihaylihay
are public officers discharging administrative functions; (b) they As to the first element, it is undisputed that both petitioners
have acted with evident bad faith in the discharge of their were public officers discharging administrative functions at the
respective functions considering that: (1) seven of the sixteen time material to this case.
Requisition and Invoice Vouchers (RIVs) bore erasures and/or
superimposition to make it appear that the transactions were As to the second element, records show that Vinluan, in his
entered into in 1992 instead of 1991;14 (2) the details of the capacity as Chairman of the Inspection and Acceptance
supplies purportedly received and inspected were not reflected Committee, signed the 16 certificates of acceptance, inventory,
in the Reports of Public Property Purchased, thus, indicating and delivery of articles from the PNP SSS despite its
that no actual inspection of the items were made;15 and (3) incompleteness or lack of material dates, while Lihaylihay
290
certified to the correctness of the Inspection Report Forms supporting documents attached to them, and not rely heavily
even if no such deliveries were made.24 Petitioners’ claim that on the recommendations of his subordinates.31 (Emphasis
the subject CCIE items were received by GSC SAO Mateo25 is supplied)
belied by the absence of any proof as to when the said
deliveries were made. Moreover, the supposed deliveries to the Equally compelling is the nature of petitioners’ responsibilities
Narcotics Command26 were properly rejected by the and their role in the purchasing of the CCIE items in this case
Sandiganbayan considering that the said transactions pertained which should have led them to examine with greater detail the
to a different set of end-users other than the PNP GSC. Hence, documents which they were made to approve. As held in the
having affixed their signatures on the disputed documents recent case of Bacasmas v.
despite the glaring defects found therein, petitioners were
properly found to have acted with evident bad faith in Sandiganbayan,32 when there are reasons for the heads of
approving the "ghost" purchases in the amount of offices to further examine the documents in question, they
₱8,000,000.00.27 To note, their concerted actions, when taken cannot seek refuge by invoking the Arias doctrine:
together, demonstrate a common design28 which altogether
justifies the finding of conspiracy.1âwphi1 Petitioners cannot hide behind our declaration in Arias v.
Sandiganbayan charge just because they did not personally
Lastly, as to the third element, petitioners’ participation in examine every single detail before they, as the final approving
facilitating the payment of non-existent CCIE items resulted to authorities, affixed their signatures to certain documents. The
an ₱8,000,000.00 loss on the part of the government.1âwphi1 Court explained in that case that conspiracy was not adequately
proven, contrary to the case at bar in which petitioners’ unity of
Thus, considering the presence of all its elements, the Court purpose and unity in the execution of an unlawful objective
sustains the conviction of petitioners for the crime of violation were sufficiently established. Also, unlike in Arias, where there
of Section 3(e) of RA 3019. were no reasons for the heads of offices to further examine
each voucher in detail, petitioners herein, by virtue of the duty
In this relation, it must be clarified that the ruling in Arias v. given to them by law as well as by rules and regulations, had
Sandiganbayan29 (Arias) cannot be applied to exculpate the responsibility to examine each voucher to ascertain
petitioners in view of the peculiar circumstances in this case whether it was proper to sign it in order to approve and
which should have prompted them to exercise a higher degree disburse the cash advance.33 (Emphasis supplied)
of circumspection, and consequently, go beyond what their
subordinates had prepared. In particular, the tampered dates Finally, on the matter of the admissibility of the prosecution’s
on some of the RIVs, the incomplete certification by GSC SAO evidence, suffice it to state that, except as to the checks,34 the
Mateo on the date of receipt of the CCIE items, the missing parties had already stipulated on the subject documents’
details on the Reports of Public Property Purchased and the fact existence and authenticity and accordingly, waived any
that sixteen checks all dated January 15, 1992 were payable to objections thereon.35 In this respect, petitioners must bear the
PNP SSS should have aroused a reasonable sense of suspicion consequences of their admission and cannot now be heard to
or curiosity on their part if only to determine that they were complain against the admissibility of the evidence against them
not approving a fraudulent transaction. In a similar case where by harking on the best evidence rule. In any event, what is
the documents in question bore irregularities too evident to sought to be established is the mere general appearance of
ignore, the Court in Cruz v. Sandiganbayan30 carved out an forgery which may be readily observed through the marked
exception to the Arias doctrine and as such, held: alterations and superimpositions on the subject documents,
even without conducting a comparison with any original
Unlike in Arias, however, there exists in the present case an document as in the case of forged signatures where the
exceptional circumstance which should have prodded signature on the document in question must always be
petitioner, if he were out to protect the interest of the compared to the signature on the original document to
municipality he swore to serve, to be curious and go beyond ascertain if there was indeed a forgery.
what his subordinates prepared or recommended. In fine, the
added reason contemplated in Arias which would have put WHEREFORE, the petition is OENIED. The Decision dated August
petitioner on his guard and examine the check/s and vouchers 8, 2008 and Resolution dated February 12, 2010 of the
with some degree of circumspection before signing the same Sandiganbayan in Criminal Case No. 22098 are hereby
was obtaining in this case. AFFIRMED.
We refer to the unusual fact that the checks issued as payment 113. THE LAW FIRM OF CHAVEZ MIRANDA AND ASEOCHE,
for construction materials purchased by the municipality were REPRESENTED BY ITS FOUNDING PARTNER, FRANCISCO I.
not made payable to the supplier, Kelly Lumber, but to CHAVEZ, PETITIONER, vs.ATTY. JOSEJINA C. FRIA,
petitioner himself even as the disbursement vouchers attached RESPONDENT.
thereto were in the name of Kelly Lumber. The discrepancy
between the names indicated in the checks, on one hand, and This is a direct recourse to the Court from the Regional Trial
those in the disbursement vouchers, on the other, should have Court of Muntinlupa City, Branch 276 (RTC), through a petition
alerted petitioner - if he were conscientious of his duties as he for review on certiorari,1 raising a pure question of law. In
purports to be - that something was definitely amiss. The fact particular, petitioner The Law Firm of Chavez Miranda and
that the checks for the municipality’s purchases were made Aseoche (The Law Firm) assails the Resolution2 dated January
payable upon his order should, without more, have prompted 8, 2008 and Order3 dated May 16, 2008 of the RTC in S.C.A.
petitioner to examine the same further together with the
291
Case No. 07-096, upholding the dismissal of Criminal Case No. the draft writ since on April 18, 2006, the presiding judge issued
46400 for lack of probable cause. an Order stating that he himself shall sign and issue the
same.13
The Facts
On July 31, 2006, the prosecutor issued a Memorandum14
On July 31, 2006, an Information4 was filed against respondent recommending, inter alia, that Atty. Fria be indicted for the
Atty. Josejina C. Fria (Atty. Fria), Branch Clerk of Court of the crime of Open Disobedience. The corresponding Information
Regional Trial Court of Muntinlupa City, Branch 203 (Branch was thereafter filed before the Metropolitan Trial Court of
203), charging her for the crime of Open Disobedience under Muntinlupa City, Branch 80 (MTC), docketed as Criminal Case
Article 2315 of the Revised Penal Code (RPC). The accusatory No. 46400.
portion of the said information reads:
The Proceedings Before the MTC
The undersigned 2nd Assistant City Prosecutor accuses ATTY.
JOSEJINA C. FRIA of the crime of Viol. of Article 231 of the On September 4, 2006, Atty. Fria filed a Motion for
Revised Penal Code, committed as follows: Determination of Probable Cause15 (motion) which The Law
Firm opposed16 on the ground that the Rules on Criminal
That on or about the 2nd day of February, 2006, or on dates Procedure do not empower trial courts to review the
subsequent thereto, in the City of Muntinlupa, Philippines and prosecutor’s finding of probable cause and that such rules only
within the jurisdiction of this Honorable Court, the above- give the trial court judge the duty to determine whether or not
named accused, a public officer she being the Branch Clerk of a warrant of arrest should be issued against the accused.
Court of the Regional Trial Court Branch 203, Muntinlupa City,
did then and there willfully, unlawfully and feloniously refused Pending resolution of her motion, Atty. Fria filed a
openly, without any legal justification to obey the order of the Manifestation with Motion17 dated November 17, 2006,
said court which is of superior authority, for the issuance of a stating that the Court had rendered a Decision in the case of
writ of execution which is her ministerial duty to do so in Civil Reyes v. Balde II (Reyes)18 – an offshoot of Civil Case No. 03-
Case No. 03-110 entitled Charles Bernard Reyes, doing business 110 – wherein it was held that Branch 203 had no jurisdiction
under the name and style CBH Reyes Architects vs. Spouses over the foregoing civil case.19 In response, The Law Firm filed
Cesar and Mely Esquig and Rosemarie Papas, which has its Comment/Opposition,20 contending that Atty. Fria already
become final and executory since February 2, 2006, despite committed the crime of Open Disobedience 119 days before
requests therefor, if only to execute/enforce said decision the Reyes ruling was rendered and hence, she remains
dated July 29, 2005 rendered within the scope of its jurisdiction criminally liable for the afore-stated charge.
and issued with all the legal formalities, to the damage and
prejudice of the plaintiff thereof. In an Omnibus Order21 dated January 25, 2007, the MTC
ordered the dismissal of Criminal Case No. 46400 for lack of
probable cause. It found that aside from the fact that Atty. Fria
Contrary to law. is a judicial officer, The Law Firm failed to prove the existence
of the other elements of the crime of Open Disobedience.22 In
Muntinlupa City, July 31, 2006.6 particular, the second element of the crime, i.e., that there is a
judgment, decision, or order of a superior authority made
Based on the records, the undisputed facts are as follows: within the scope of its jurisdiction and issued with all legal
formalities, unlikely existed since the Court already declared as
The Law Firm was engaged as counsel by the plaintiff in Civil null and void the entire proceedings in Civil Case No. 03-110
Case No. 03-110 instituted before Branch 203.7 On July 29, due to lack of jurisdiction. In this regard, the MTC opined that
2005, judgment was rendered in favor of the plaintiff (July 29, such nullification worked retroactively to warrant the dismissal
2005 judgment), prompting the defendant in the same case to of the case and/or acquittal of the accused at any stage of the
appeal. However, Branch 203 disallowed the appeal and proceedings.23
consequently ordered that a writ of execution be issued to
enforce the foregoing judgment.8 Due to the denial of the Dissatisfied, The Law Firm moved for reconsideration24 which
defendant’s motion for reconsideration, the July 29, 2005 was, however, denied in a Resolution25 dated July 13, 2007.
judgment became final and executory. 9 Accordingly, it elevated the matter on certiorari.26
In its Complaint-Affidavit10 dated February 12, 2006, The Law The RTC Ruling
Firm alleged that as early as April 4, 2006, it had been following
up on the issuance of a writ of execution to implement the July In a Resolution27 dated January 8, 2008, the RTC affirmed the
29, 2005 judgment. However, Atty. Fria vehemently refused to MTC’s ruling, finding no grave abuse of discretion on the latter’s
perform her ministerial duty of issuing said writ. part since its dismissal of Criminal Case No. 46400 for lack of
probable cause was "in full accord with the law, facts, and
In her Counter-Affidavit11 dated June 13, 2006, Atty. Fria jurisprudence."28
posited that the draft writ of execution (draft writ) was not
addressed to her but to Branch Sheriff Jaime Felicen (Felicen), Aggrieved, The Law Firm filed a Motion for Reconsideration29
who was then on leave. Neither did she know who the which was equally denied by the RTC in an Order30 dated May
presiding judge would appoint as special sheriff on Felicen’s 16, 2008. Hence, the instant petition.
behalf.12 Nevertheless, she maintained that she need not sign
292
The Issue Before the Court In other words, once the information is filed with the court and
the judge proceeds with his primordial task of evaluating the
The essential issue in this case is whether or not the RTC erred evidence on record, he may either: (a) issue a warrant of arrest,
in sustaining the MTC’s dismissal of the case for Open if he finds probable cause; (b) immediately dismiss the case, if
Disobedience against Atty. Fria, i.e., Criminal Case No. 46400, the evidence on record clearly fails to establish probable cause;
for lack of probable cause. and (c) order the prosecutor to submit additional evidence, in
case he doubts the existence of probable cause.32 (Emphasis
The Court’s Ruling and underscoring supplied; citations omitted)
The petition is bereft of merit. Applying these principles to the case at bar would lead to the
conclusion that the MTC did not gravely abuse its discretion in
Under Section 5(a) of the Revised Rules of Criminal Procedure, dismissing Criminal Case No. 46400 for lack of probable cause.
a trial court judge may immediately dismiss a criminal case if The dismissal ought to be sustained since the records clearly
the evidence on record clearly fails to establish probable cause, disclose the unmistakable absence of the integral elements of
viz: the crime of Open Disobedience. While the first element, i.e.,
that the offender is a judicial or executive officer, concurs in
Sec. 5. When warrant of arrest may issue. – (a) By the Regional view of Atty. Fria’s position as Branch Clerk of Court, the second
Trial Court. – Within ten (10) days from the filing of the and third elements of the crime evidently remain wanting.
complaint or information, the judge shall personally evaluate
the resolution of the prosecutor and its supporting evidence. To elucidate, the second element of the crime of Open
He may immediately dismiss the case if the evidence on record Disobedience is that there is a judgment, decision, or order of a
clearly fails to establish probable cause. If he finds probable superior authority made within the scope of its jurisdiction and
cause, he shall issue a warrant of arrest, or a commitment order issued with all legal formalities. In this case, it is undisputed
if the accused has already been arrested pursuant to a warrant that all the proceedings in Civil Case No. 03-110 have been
issued by the judge who conducted preliminary investigation or regarded as null and void due to Branch 203’s lack of
when the complaint or information was filed pursuant to jurisdiction over the said case. This fact has been finally settled
section 6 of this Rule. In case of doubt on the existence of in Reyes where the Court decreed as follows:
probable cause, the judge may order the prosecutor to present
additional evidence within five (5) days from notice and the WHEREFORE, in view of the foregoing, the instant petition is
issue must be resolved by the court within thirty (30) days from DENIED. x x x The Presiding Judge of the Regional Trial Court of
the filing of the complaint of information. (Emphasis and Muntinlupa City, Branch 203 is PERMANENTLY ENJOINED from
underscoring supplied) proceeding with Civil Case No. 03-110 and all the proceedings
therein are DECLARED NULL AND VOID. x x x The Presiding
It must, however, be observed that the judge’s power to Judge of the Regional trial Court of Muntinlupa City, Branch 203
immediately dismiss a criminal case would only be warranted is further DIRECTED to dismiss Civil Case No. 03-110 for lack of
when the lack of probable cause is clear. In De Los Santos-Dio v. jurisdiction.33 (Emphasis and underscoring supplied)
CA,31 the Court illumined that a clear-cut case of lack of
probable cause exists when the records readily show Hence, since it is explicitly required that the subject issuance be
uncontroverted, and thus, established facts which unmistakably made within the scope of a superior authority’s jurisdiction, it
negate the existence of the elements of the crime charged, viz: cannot therefore be doubted that the second element of the
crime of Open Disobedience does not exist. Lest it be
While a judge’s determination of probable cause is generally misunderstood, a court – or any of its officers for that matter –
confined to the limited purpose of issuing arrest warrants, which has no jurisdiction over a particular case has no authority
Section 5(a), Rule 112 of the Revised Rules of Criminal to act at all therein. In this light, it cannot be argued that Atty.
Procedure explicitly states that a judge may immediately Fria had already committed the crime based on the premise
dismiss a case if the evidence on record clearly fails to establish that the Court’s pronouncement as to Branch 203’s lack of
probable cause x x x. jurisdiction came only after the fact. Verily, Branch 203’s lack of
jurisdiction was not merely a product of the Court’s
In this regard, so as not to transgress the public prosecutor’s pronouncement in Reyes. The said fact is traced to the very
authority, it must be stressed that the judge’s dismissal of a inception of the proceedings and as such, cannot be accorded
case must be done only in clear-cut cases when the evidence on temporal legal existence in order to indict Atty. Fria for the
record plainly fails to establish probable cause – that is when crime she stands to be prosecuted.
the records readily show uncontroverted, and thus, established
facts which unmistakably negate the existence of the elements Proceeding from this discussion, the third element of the crime,
of the crime charged. On the contrary, if the evidence on record i.e., that the offender, without any legal justification, openly
shows that, more likely than not, the crime charged has been refuses to execute the said judgment, decision, or order, which
committed and that respondent is probably guilty of the same, he is duty bound to obey, cannot equally exist. Indubitably,
the judge should not dismiss the case and thereon, order the without any jurisdiction, there would be no legal order for Atty.
parties to proceed to trial. In doubtful cases, however, the Fria to implement or, conversely, disobey. Besides, as the MTC
appropriate course of action would be to order the correctly observed, there lies ample legal justifications that
presentation of additional evidence.1âwphi1 prevented Atty. Fria from immediately issuing a writ of
execution.34
293
In fine, based on the above-stated reasons, the Court holds that On October 7, 1997, Rosario’s children, namely, Grace, Proceso,
no grave abuse of discretion can be attributed to the MTC as Jr., Henry, Andrew, Glory, Miriam Rose, Joseph (all surnamed
correctly found by the RTC. It is well-settled that an act of a Andrade), Jasmin Blaza, and Charity A. Santiago (Andrades),
court or tribunal can only be considered as with grave abuse of filed a complaint13 for reconveyance and annulment of deeds
discretion when such act is done in a "capricious or whimsical of conveyance and damages against Bobby before the RTC,
exercise of judgment as is equivalent to lack of jurisdiction." docketed as Civil Case No. CEB 20969. In their complaint, they
The abuse of discretion must be so patent and gross as to alleged that the transaction between Rosario and Bobby
amount to an "evasion of a positive duty or to a virtual refusal (subject transaction) was not one of sale but was actually an
to perform a duty enjoined by law, or to act at all in equitable mortgage which was entered into to secure Rosario’s
contemplation of law, as where the power is exercised in an indebtedness with Bobby. They also claimed that since the
arbitrary and despotic manner by reason of passion and subject properties were inherited by them from their father,
hostility."35 Consequently, the dismissal of Criminal Case No. Proceso Andrade, Sr. (Proceso, Sr.), the subject properties were
46400 for lack of probable cause is hereby sustained. conjugal in nature, and thus, Rosario had no right to dispose of
their respective shares therein. In this light, they argued that
WHEREFORE, the petition is DENIED. The Resolution dated they remained as co-owners of the subject properties together
January 8, 2008 and Order dated May 16, 2008 of the Regional with Bobby, despite the issuance of the TCTs in his name.
Trial Court of Muntinlupa City, Branch 276 in S.C.A. Case No. 07-
096 are hereby AFFIRMED. In his defense, Bobby contended that the subject properties
were solely owned by Rosario per the TCTs issued in her
114. BOBBY TAN, PETITIONER, vs. name14 and that he had validly acquired the same upon
GRACE ANDRADE, PROCESO ANDRADE, JR., CHARITY A. Proceso, Jr.’s failure to exercise his option to buy back the
SANTIAGO, HENRY ANDRADE, ANDREW ANDRADE, JASMIN subject properties.15 He also interposed the defenses of
BLAZA, GLORY ANDRADE, MIRIAM ROSE ANDRADE, AND prescription and laches against the Andrades.16
JOSEPH ANDRADE, RESPONDENTS.
The RTC Ruling
x-----------------------x
On April 6, 2001, the RTC rendered a Judgment17 dismissing
G.R. No. 172017 GRACE ANDRADE, CHARITY A. SANTIAGO, the Andrades’ complaint.
HENRY ANDRADE, ANDREW ANDRADE, JASMIN BLAZA,
MIRIAM ROSE ANDRADE, AND JOSEPH ANDRADE, It ruled that the subject transaction was a bona fide sale and
PETITIONERS, vs.BOBBY TAN, RESPONDENT. not an equitable mortgage as can be gleaned from its terms and
conditions, noting further that the subject deed of sale was not
Before the Court are consolidated petitions for review on even questioned by the Andrades at the time of its execution.
certiorari1 assailing the Decision2 dated July 26, 2005 and As Proceso, Jr. failed to exercise his option to buy back the
Resolution3 dated March 3, 2006 of the Court of Appeals (CA) subject properties, the titles thereto were validly consolidated
in CA-G.R. CV No. 71987 which affirmed with modification the in Bobby’s favor, resulting to the issuance of TCTs in his name
Judgment[4] dated April 6, 2001 of the Regional Trial Court of which are deemed to be conclusive proof of his ownership
Cebu City, Branch 19 (RTC) in Civil Case No. CEB 20969. thereto.18 As regards the nature of the subject properties, the
RTC found that they "appeared to be the exclusive properties of
The Facts Rosario."19 Finally, it found that the Andrades’ claim over the
subject properties had already prescribed and that laches had
Rosario Vda. De Andrade (Rosario) was the registered owner of already set in.20
four parcels of land known as Lots 17, 18, 19, and 205 situated
in Cebu City (subject properties) which she mortgaged to and Dissatisfied, the Andrades elevated the matter on appeal.
subsequently foreclosed by one Simon6 Diu (Simon).7 When
the redemption period was about to expire, Rosario sought the The CA Ruling
assistance of Bobby Tan (Bobby) who agreed to redeem the
subject properties.8 Thereafter, Rosario sold the same to Bobby On July 26, 2005, the CA rendered the assailed Decision21
and her son, Proceso Andrade, Jr. (Proceso, Jr.), for upholding in part the RTC’s ruling.
₱100,000.00 as evidenced by a Deed of Absolute Sale9 dated
April 29, 1983 (subject deed of sale). On July 26, 1983, Proceso, It found that the subject deed of sale was indeed what it
Jr. executed a Deed of Assignment,10 ceding unto Bobby his purports to be, i.e., a bona fide contract of sale. In this accord,
rights and interests over the subject properties in consideration it denied the Andrades’ claim that the subject transaction was
of ₱50,000.00. The Deed of Assignment was signed by, among an equitable mortgage since their allegation that the purchase
others, Henry Andrade (Henry), one of Rosario’s sons, as price was unusually low was left unsupported by any evidence.
instrumental witness. Notwithstanding the aforementioned Also, their averment that they have been in continuous
Deed of Assignment, Bobby extended an Option to Buy11 the possession of the subject properties was belied by the
subject properties in favor of Proceso, Jr., giving the latter until testimony of Andrew Andrade (Andrew) who stated that Bobby
7:00 in the evening of July 31, 1984 to purchase the same for was already in possession of the same. 22
the sum of ₱310,000.00. When Proceso, Jr. failed to do so,
Bobby consolidated his ownership over the subject properties, Nevertheless, the CA ruled that the subject properties belong to
and the TCTs12 therefor were issued in his name. the conjugal partnership of Rosario and her late husband,
Proceso, Sr., and thus, she co-owned the same together with
294
her children, the Andrades.23 In this respect, the sale was valid Consequently, the Andrades’ petition in G.R. No. 172017 must
only with respect to Rosario’s pro-indiviso share in the subject therefore be denied.
properties and it cannot prejudice the share of the Andrades
since they did not consent to the sale.24 In effect, a resulting B. Characterization of the subject properties.
trust was created between Bobby and the Andrades25 and, as
such, prescription and/or laches has yet to set in so as to bar With respect to the nature of the subject properties, the courts
them from instituting the instant case.26 Accordingly, the CA a quo were at variance such that the RTC, on the one hand,
ordered Bobby to reconvey to the Andrades their share in the ruled that the said properties were exclusive properties of
subject properties.27 Rosario,35 while the CA, on the other hand, pronounced that
they are conjugal in nature.36 In this regard, the consequent
In view of the CA’s pronouncement, the parties filed their course of action would be for the Court to conduct a re-
respective motions for reconsideration. For the Andrades’ part, examination of the evidence if only to determine which among
they sought the reconsideration of the CA’s finding as to its the two is correct, 37 as an exception to the proscription in Rule
characterization of the subject transaction as one of sale, 45 petitions.
insisting that it is actually an equitable mortgage.28 As for
Bobby’s part, he maintained that the sale should have covered Pertinent to the resolution of this second issue is Article 160 of
the entirety of the subject properties and not only Rosario’s the Civil Code38 which states that "[a]ll property of the
pro-indiviso share.29 Both motions for reconsideration were, marriage is presumed to belong to the conjugal partnership,
however, denied by the CA in a Resolution30 dated March 3, unless it be proved that it pertains exclusively to the husband
2006. or to the wife." For this presumption to apply, the party
invoking the same must, however, preliminarily prove that the
Hence, the present consolidated petitions. property was indeed acquired during the marriage. As held in
Go v. Yamane:39
Issues Before the Court
x x x As a condition sine qua non for the operation of [Article
The present controversy revolves around the CA’s 160] in favor of the conjugal partnership, the party who invokes
characterization of the subject properties as well as of the the presumption must first prove that the property was
subject transaction between Rosario and Bobby. acquired during the marriage.
In G.R. No. 172017, the Andrades submit that the CA erred in In other words, the presumption in favor of conjugality does
ruling that the subject transaction is in the nature of a sale, not operate if there is no showing of when the property alleged
while in G.R. No. 171904, Bobby contends that the CA erred in to be conjugal was acquired. Moreover, the presumption may
ruling that the subject properties are conjugal in nature. be rebutted only with strong, clear, categorical and convincing
evidence. There must be strict proof of the exclusive ownership
The Court’s Ruling of one of the spouses, and the burden of proof rests upon the
party asserting it.40 (Citations omitted)
A. Characterization of the subject transaction.
Corollarily, as decreed in Valdez v. CA,41 the presumption
Settled is the rule that when the trial court's factual findings under Article 160 cannot be made to apply where there is no
have been affirmed by the CA, said findings are generally showing as to when the property alleged to be conjugal was
conclusive and binding upon the Court, and may no longer be acquired:
reviewed on Rule 45 petitions.31 While there exists exceptions
to this rule – such as when the CA’s and RTC’s findings are in x x x The issuance of the title in the name solely of one spouse
conflict with each other32 – the Court observes that none is not determinative of the conjugal nature of the property,
applies with respect to the ruling that the subject transaction since there is no showing that it was acquired during the
was one of sale and not an equitable mortgage. Records readily marriage of the Spouses Carlos Valdez, Sr. and Josefina L.
reveal that both the RTC and the CA observed that there is no Valdez. The presumption under Article 160 of the New Civil
clear and convincing evidence to show that the parties agreed Code, that property acquired during marriage is conjugal, does
upon a mortgage. Hence, absent any glaring error therein or not apply where there is no showing as to when the property
any other compelling reason to hold otherwise, this finding alleged to be conjugal was acquired. The presumption cannot
should now be deemed as conclusive and perforce must stand. prevail when the title is in the name of only one spouse and the
As echoed in the case of Ampo v. CA:33 rights of innocent third parties are involved. Moreover, when
the property is registered in the name of only one spouse and
x x x Factual findings of the Court of Appeals are conclusive on there is no showing as to when the property was acquired by
the parties and not reviewable by this Court – and they carry same spouse, this is an indication that the property belongs
even more weight when the Court of Appeals affirms the exclusively to the said spouse.
factual findings of the trial court, and in the absence of any
showing that the findings complained of are totally devoid of In this case, there is no evidence to indicate when the property
support in the evidence on record, or that they are so glaringly was acquired by petitioner Josefina.1âwphi1 Thus, we agree
erroneous as to constitute serious abuse of discretion, such with petitioner Josefina’s declaration in the deed of absolute
findings must stand.34 sale she executed in favor of the respondent that she was the
absolute and sole owner of the property. x x x.42
295
In this case, records reveal that the conjugal partnership of Petron, which is engaged in the manufacture and marketing of
Rosario and her husband was terminated upon the latter’s petroleum products, imports alkylate as a raw material or
death on August 7, 197843 while the transfer certificates of blending component for the manufacture of ethanol-blended
title over the subject properties were issued on September 28, motor gasoline.4 For the period January 2009 to August 2011,
1979 and solely in the name of "Rosario Vda. de Andrade, of as well as for the month of April 2012, Petron transacted an
legal age, widow, Filipino."44 Other than their bare allegation, aggregate of 22 separate importations for which petitioner the
no evidence was adduced by the Andrades to establish that the Commissioner of Internal Revenue (CIR) issued Authorities to
subject properties were procured during the coverture of their Release Imported Goods (ATRIGs), categorically stating that
parents or that the same were bought with conjugal funds. Petron's importation of alkylate is exempt from the payment of
Moreover, Rosario’s declaration that she is the absolute owner the excise tax because it was not among those articles
of the disputed parcels of land in the subject deed of sale45 enumerated as subject to excise tax under Title VI of Republic
was not disputed by her son Proceso, Jr., who was a party to Act No. (RA) 8424,5 as amended, or the 1997 National Internal
the same. Hence, by virtue of these incidents, the Court Revenue Code (NIRC). With respect, however, to Petron's
upholds the RTC’s finding46 that the subject properties were alkylate importations covering the period September 2011 to
exclusive or sole properties of Rosario. June 2012 (excluding April 2012), the CIR inserted, without
prior notice, a reservation for all ATRIGs issued,6 stating that:
Besides, the Court observes that laches had already set in,
thereby precluding the Andrades from pursuing their claim. This is without prejudice to the collection of the corresponding
Case law defines laches as the "failure to assert a right for an excise taxes, penalties and interest depending on the final
unreasonable and unexplained length of time, warranting a resolution of the Office of the Commissioner on the issue of
presumption that the party entitled to assert it has either whether this item is subject to the excise taxes under the
abandoned or declined to assert it."47 National Internal Revenue Code of 1997, as amended.7
Records disclose that the Andrades took 14 years before filing In June 2012, Petron imported 12,802,660 liters of alkylate and
their complaint for reconveyance in 1997. The argument that paid value-added tax (VAT) in the total amount of
they did not know about the subject transaction is clearly belied ?41,657,533.00 as evidenced by Import Entry and Internal
by the facts on record. It is undisputed that Proceso, Jr. was a Revenue Declaration (IEIRD) No. SN 122406532. Based on the
co-vendee in the subject deed of sale,48 while Henry was an Final Computation, said importation was subjected by the
instrumental witness to the Deed of Assignment49 and Option Collector of Customs of Port Limay, Bataan, upon instructions of
to Buy50 both dated July 26, 1983. Likewise, Rosario’s sons, the Commissioner of Customs (COC), to excise taxes of ₱4.35
Proceso, Jr. and Andrew, did not question the execution of the per liter, or in the aggregate amount of ₱55,691,571.00, and
subject deed of sale made by their mother to Bobby.51 These consequently, to an additional VAT of 12% on the imposed
incidents can but only lead to the conclusion that they were excise tax in the amount of ₱6,682,989.00.8 The imposition of
well-aware of the subject transaction and yet only pursued the excise tax was supposedly premised on Customs
their claim 14 years after the sale was executed. Memorandum Circular (CMC) No. 164-2012 dated July 18,
2012, implementing the Letter dated June 29, 2012 issued by
Due to the above-stated reasons, Bobby’s petition in G.R. No. the CIR, which states that:
171904 is hereby granted.
[A]lkylate which is a product of distillation similar to that of
WHEREFORE, the Court hereby (a) GRANTS the petition of naphta, is subject to excise tax under Section 148( e) of the
Bobby Tan in G.R. No. 171904; and (b) DENIES the petition of National Internal Revenue Code (NIRC) of 1997. 9
Grace Andrade, Charity A. Santiago, Henry Andrade, Andrew
Andrade, Jasmin Blaza, Miriam Rose Andrade, and Joseph In view of the CIR's assessment, Petron filed before the CTA a
Andrade in G.R. No. 172017. Accordingly, the Decision dated petition for review,10 docketed as CTA Case No. 8544, raising
July 26, 2005 and Resolution dated March 3, 2006 of the Court the issue of whether its importation of alkylate as a blending
of Appeals in CA-G.R. CV No. 71987 are hereby REVERSED and component is subject to excise tax as contemplated under
SET ASIDE, and the April 6, 2001 Decision of the Regional Trial Section 148 (e) of the NIRC.
Court of Cebu City, Branch 19 in Civil Case No. CEB 20969 is
REINSTATED. On October 5, 2012, the CIR filed a motion to dismiss on the
grounds of lack of jurisdiction and prematurity.11
115. COMMISSION OF INTERNAL REVENUE, Petitioner,
vs.COURT OF TAX APPEALS (SECOND DIVISION) and PETRON Initially, in a Resolution12 dated November 15, 2012, the CTA
CORPORATION,* Respondents. granted the CIR's motion and dismissed the case. However, on
Petron's motion for reconsideration,13 it reversed its earlier
Assailed in this petition for certiorari1 are the Resolutions dated disposition in a Resolution14 dated February 13, 2013, and
February 13, 20132 and May 8, 20133 of the Court of Tax eventually denied the CIR's motion for reconsideration15
Appeals, Second Division (CTA) in CTA Case No. 8544 reversing therefrom in a Resolution16 dated May 8, 2013. In effect, the
and setting aside the earlier dismissal of the petition for review CTA gave due course to Petron's petition, finding that: (a) the
filed by private respondent Petron Corporation (Petron) in the controversy was not essentially for the determination of the
said case on the bases of prematurity and lack of jurisdiction. constitutionality, legality or validity of a law, rule or regulation
but a question on the propriety or soundness of the CIR's
The Facts interpretation of Section 148 (e) of the NIRC which falls within
the exclusive jurisdiction of the CTA under Section 4 thereof,
296
particularly under the phrase "other matters arising under [the the CIR or the COC.1âwphi1 Conversely, it has no jurisdiction to
NIRC]";17 and (b) there are attending circumstances that determine the validity of a ruling issued by the CIR or the COC
exempt the case from the rule on non-exhaustion of in the exercise of their quasi-legislative powers to interpret tax
administrative remedies, such as the great irreparable damage laws. These observations may be deduced from a reading of
that may be suffered by Petron from the CIR's final assessment Section 7 of RA 1125,22 as amended by RA 9282,23 entitled "An
of excise tax on its importation.18 Act Creating the Court of Tax Appeals," enumerating the cases
over which the CT A may exercise its jurisdiction:
Aggrieved, the CIR sought immediate recourse to the Court,
through the instant petition, alleging that the CTA committed Sec. 7. Jurisdiction. -The CTA shall exercise:
grave abuse of discretion when it assumed authority to take
cognizance of the case despite its lack of jurisdiction to do so.19 a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:
The Issue Before the Court
1. Decisions of the Commissioner of Internal Revenue in cases
The core issue to be resolved is whether or not the CTA involving disputed assessments, refunds of internal revenue
properly assumed jurisdiction over the petition assailing the taxes, fees or other charges, penalties in relation thereto, or
imposition of excise tax on Petron's importation of alkylate other matters arising under the National Internal Revenue or
based on Section 148 (e) of the NIRC. other laws administered by the Bureau of Internal Revenue;
1. Exclusive original jurisdiction in tax collection cases involving The power to decide disputed assessments, refunds of internal
final and executory assessments for taxes, fees, charges and revenue taxes, fees or other charges, penalties imposed in
penalties: Provided, however, That collection cases where the relation thereto, or other matters arising under this Code or
principal amount of taxes and fees, exclusive of charges and other laws or portions thereof administered by the Bureau of
penalties, claimed is less than One million pesos Internal Revenue is vested in the commissioner, subject to the
(₱1,000,000.00) shall be tried by the proper Municipal Trial exclusive appellate jurisdiction of the Court of Tax Appeals.
Court, Metropolitan Trial Court and Regional Trial Court. (Emphases and underscoring supplied)
a. Over appeals from the judgments, resolutions or orders of As the CIR aptly pointed out, the phrase "other matters arising
the Regional Trial Courts in tax collection cases originally under this Code," as stated in the second paragraph of Section
decided by them, in their respective territorial jurisdiction. 4 of the NIRC, should be understood as pertaining to those
matters directly related to the preceding phrase "disputed
b. Over petitions for review of the judgments, resolutions or assessments, refunds of internal revenue taxes, fees or other
orders of the Regional Trial Courts in the exercise of their charges, penalties imposed in relation thereto" and must
appellate jurisdiction over tax collection cases originally therefore not be taken in isolation to invoke the jurisdiction of
decided by the Metropolitan Trial Courts, Municipal Trial Courts the CTA.27 In other words, the subject phrase should be used
and Municipal Circuit Trial Courts, in their respective only in reference to cases that are, to begin with, subject to the
jurisdiction. (Emphasis supplied) exclusive appellate jurisdiction of the CTA, i.e., those
controversies over which the CIR had exercised her quasi-
In this case, Petron's tax liability was premised on the COC's judicial functions or her power to decide disputed assessments,
issuance of CMC No. 164-2012, which gave effect to the CIR's refunds or internal revenue taxes, fees or other charges,
June 29, 2012 Letter interpreting Section 148 (e) of the NIRC as penalties imposed in relation thereto, not to those that
to include alkyl ate among the articles subject to customs involved the CIR's exercise of quasi-legislative powers.
duties, hence, Petron's petition before the CTA ultimately
challenging the legality and constitutionality of the CIR's In Enrile v. Court of Appeals,28 the Court, applying the
aforesaid interpretation of a tax provision. In line with the statutory construction principle of ejusdem generis,29
foregoing discussion, however, the CIR correctly argues that the explained the import of using the general clause "other matters
CT A had no jurisdiction to take cognizance of the petition as its arising under the Customs Law or other law or part of law
298
administered by the Bureau of Customs" in the enumeration of such decision or ruling or after the expiration of the period
cases subject to the exclusive appellate jurisdiction of the CTA, fixed by law for action as referred to in Section 7(a)(2) herein.
saying that: [T]he 'other matters' that may come under the
general clause should be of the same nature as those that have xxxx
preceded them applying the rule of construction known as
ejusdem generis.30 (Emphasis and underscoring supplied) In this case, there was even no tax assessment to speak of.
While customs collector Federico Bulanhagui himself admitted
Hence, as the CIR's interpretation of a tax provision involves an during the CTA's November 8, 2012 hearing that the
exercise of her quasi-legislative functions, the proper recourse computation he had written at the back page of the IEIRD
against the subject tax ruling expressed in CMC No. 164-2012 is served as the final assessment imposing excise tax on Petron's
a review by the Secretary of Finance and ultimately the regular importation of alkylate,33 the Court concurs with the CIR's
courts. In Commissioner of Customs v. Hypermix Feeds stance that the subject IEIRD was not yet the customs
Corporation,31 the Court has held that: collector's final assessment that could be the proper subject of
review. And even if it were, the same should have been brought
The determination of whether a specific rule or set of rules first for review before the COC and not directly to the CTA. It
issued by an administrative agency contravenes the law or the should be stressed that the CTA has no jurisdiction to review by
constitution is within the jurisdiction of the regular courts. appeal, decisions of the customs collector.34 The TCC
Indeed, the Constitution vests the power of judicial review or prescribes that a party adversely affected by a ruling or decision
the power to declare a law, treaty, international or executive of the customs collector may protest such ruling or decision
agreement, presidential decree, order, instruction, ordinance, upon payment of the amount due35 and, if aggrieved by the
or regulation in the courts, including the regional trial courts. action of the customs collector on the matter under protest,
This is within the scope of judicial power, which includes the may have the same reviewed by the COC.36 It is only after the
authority of the courts to determine in an appropriate action COC shall have made an adverse ruling on the matter may the
the validity of the acts of the political departments. x x x.32 aggrieved party file an
Besides, Petron prematurely invoked the jurisdiction of the CT appeal to the CT A.37
A. Under Section 7 of RA 1125, as amended by RA 9282, what is
appealable to the CT A is the decision of the COC over a Notably, Petron admitted to not having filed a protest of the
customs collector's adverse ruling on a taxpayer's protest: assessment before the customs collector and elevating a
possible adverse ruling therein to the COC, reasoning that such
SEC. 7. Jurisdiction. -The CTA shall exercise: a procedure would be costly and impractical, and would
unjustly delay the resolution of the issues which, being purely
a. Exclusive appellate jurisdiction to review by appeal, as herein legal in nature anyway, were also beyond the authority of the
provided: customs collector to resolve with finality.38 This admission is at
once decisive of the issue of the CTA's jurisdiction over the
1. Decisions of the Commissioner of Internal Revenue in cases petition. There being no protest ruling by the customs collector
involving disputed assessments, refunds of internal revenue that was appealed to the COC, the filing of the petition before
taxes, fees or other charges, penalties in relation thereto, or the CTA was premature as there was nothing yet to review.39
other matters arising under the National Internal Revenue or
other laws administered by the Bureau of Internal Revenue; Verily, the fact that there is no decision by the COC to appeal
from highlights Petron's failure to exhaust administrative
xxxx remedies prescribed by law. Before a party is allowed to seek
the intervention of the courts, it is a pre-condition that he avail
4. Decisions of the Commissioner of Customs in cases involving of all administrative processes afforded him, such that if a
liability for customs duties, fees or other money charges, remedy within the administrative machinery can be resorted to
seizure, detention or release of property affected, fines, by giving the administrative officer every opportunity to decide
forfeitures or other penalties in relation thereto, or other on a matter that comes within his jurisdiction, then such
matters arising under the Customs Law or other laws remedy must be exhausted first before the court's power of
administered by the Bureau of Customs; judicial review can be sought, otherwise, the premature resort
to the court is fatal to one's cause of action.40 While there are
xxxx exceptions to the principle of exhaustion of administrative
remedies, it has not been sufficiently shown that the present
Section 11 of the same law is no less categorical in stating that case falls under any of the exceptions.
what may be the subject of an appeal to the CT A is a decision,
ruling or inaction of the CIR or the COC, among others: WHEREFORE, the petition is GRANTED. The Resolutions dated
February 13, 2013 and May 8, 2013 of the Court of Tax Appeals
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. – (CTA), Second Division in CTA Case No. 8544 are hereby
Any party adversely affected by a decision, ruling or inaction of REVERSED and SET ASIDE. The petition for review filed by
the Commissioner of Internal Revenue, the Commissioner of private respondent Petron Corporation before the CTA is
Customs, the Secretary of Finance, the Secretary of Trade and DISMISSED for lack of jurisdiction and prematurity.
Industry or the Secretary of Agriculture or the Central Board of
Assessment Appeals or the Regional Trial Courts may file an 115. RE: REQUEST FOR GUIDANCE/CLARIFICATION ON SECTION
appeal with the CTA within thirty (30) days after the receipt of 7, RULE III OF REPUBLIC ACT NO. 10154 REQUIRING RETIRING
299
GOVERNMENT EMPLOYEES TO SECURE A CLEARANCE OF WHEREFORE, the requirement of seeking a Clearance of
PENDENCY/NON-PENDENCY OF CASE/S FROM THE CIVIL Pendency/Non-Pendency of Administrative Case from the Civil
SERVICE COMMISSION. Service Commission embodied in Section 7, Rule III of the
Implementing Rules and Regulations of Republic Act No. 10154
RESOLUTION is declared INAPPLICABLE to retiring employees of the Judiciary.
For their part, Sps. Endaya filed their Answer,19 admitting the Meanwhile, counsel for petitioners, Atty. German A. Gineta,
execution and genuineness of the contract to sell and the passed away on June 12, 2006,35 hence, the notice of the
passbook. However, they countered that Dolores did not pay August 18, 2006 Decision sent to him was returned unserved.36
the stipulated down payment and remitted only a total of 22 On the other hand, the notice sent to petitioners at No. 2,
installments. After her death in1992, petitioners no longer Barangay San Martin de Porres, Parañaque City, was likewise
remitted any installment. Sps. Endaya also averred that prior to returned unserved for the reason "insufficient address."37
Dolores' death, the parties agreed to a restructuring of the Nonetheless, the CA deemed the service of the said notice to
contract to sell whereby Dolores agreed to give a "bonus" of them as valid and complete as of March 9, 2007 pursuant to
₱265,673.93 and to pay interest at the increased rate of 24% Section 8,38 Rule 13 of the Rules of Court (Rules). Accordingly,
p.a. on the outstanding balance. They further claimed that in it directed39 the Division Clerk of Court to issue the
April 1996, when the balance of the purchase price stood at corresponding Entry of Judgment. An Entry of Judgment40 was,
₱1,699,671.69, a final restructuring of the contract to sell was thus, made in the CA Book of Entries of Judgments certifying
agreed with petitioners, fixing the obligation at ₱3,000,000.00. that the August 18, 2006 Decision became final and executory
Thereafter, the latter paid a total of ₱380,000.00 on two on March 25, 2007.The records were thereafter remanded41 to
separate occasions,20 leaving a balance of ₱2,620,000.00. In the RTC.
any event, Sps. Endaya pointed out that the automatic
cancellation clause under the foregoing contract rendered the In July 2009, respondent Titus Endaya, heir of Sps. Endaya,42
same cancelled as early as 1981 with Dolores’ failure to make a demanded43 petitioners to vacate the subject properties,
down payment and to faithfully pay the installments;21 hence, which they refused.
petitioners’ complaint for specific performance must fail. In
addition, Sps. Endaya interposed a counterclaim for the alleged On November 10, 2009, petitioners filed the instant petition
unpaid balance of ₱2,620,000.00, plus damages, attorney's fees invoking the benevolence of the Court to set aside the CA’s
and costs of suit.22 August 18, 2006 Decision and, instead, reinstate the RTC
Decision in the interest of substantial justice. They claimed that
In their Reply with Answer to Counterclaim,23 petitioners they had no knowledge of the demise of their counsel;
denied the existence of any restructuring of the contract to sell, therefore, they were unable to file a timely motion for
invoking24 the Dead Man's Statute25 and the Statute of reconsideration before the CA or the proper petition before the
Frauds.26 In turn, Sps. Endaya filed a Rejoinder,27 challenging Court. Further, they contend that they have proven full
the inapplicability of the foregoing principles since the case was payment of the purchase price within the payment period as
not filed against an estate or an administrator of an estate, and required by the contract to sell.
in view of the partial performance of the contract to sell.28
For their part, the heirs of Sps. Endaya (respondents)
While the oral depositions of Sps. Endaya were taken at the 4th objected44 to the belated filing of the petition long after the
Municipal Circuit Trial Court of Malvar-Balete, Batangas on said CA Decision had lapsed into finality, especially as the
account of their frailty and old age, they, however, did not petition raised factual issues that are improper in a petition for
make a formal offer of their depositions and documentary review on certiorari under Rule 45 of the Rules. In any case,
evidence. Hence, the case was submitted for decision on the they countered that the CA correctly held that petitioners failed
basis of the petitioners' evidence.29 to fully comply with their obligations under the contract to sell;
thus, respondents are under no obligation to execute any deed
The RTC Ruling of sale over the subject properties in favor of petitioners.
In a Decision30 dated August 7, 2000, the RTC found that On September 22, 2010, the Court gave due course to the
petitioners were able to prove by a preponderance of evidence petition and required the parties to file their respective
the fact of full payment of the purchase price for the subject memoranda,45 which they duly submitted.
properties.31 As such, it ordered Sps. Endaya to execute a deed
of absolute sale covering the sale of the subject properties in The Issues Before the Court
petitioners’ favor and to pay them attorney's fees and costs of
suit.32 Dissatisfied, Sps. Endaya elevated the matter to the CA.
301
The principal issues in this case are: (a) whether or not sale.54 On the other hand, in a conditional contract of sale, the
petitioners’ right to appeal before the Court should be upheld; fulfillment of the suspensive condition renders the sale
and (b) whether or not respondents should execute a deed of absolute and the previous delivery of the property has the
sale over the subject properties in favor of petitioners. effect of automatically transferring the seller’s ownership or
title to the property to the buyer.55
The Court's Ruling
Keeping with these principles, the Court finds that respondents
The petition is partly meritorious. had no obligation to petitioners to execute a deed of sale over
the subject properties. As aptly pointed out by the CA, aside
Anent the first issue, it is observed that the CA erroneously sent from the payment of the purchase price and 12% interest p.a.
the notice of the assailed August 18, 2006 Decision to on the outstanding balance, the contract to sell likewise
petitioners at No. 2, Barangay San Martin de Porres, Parañaque imposed upon petitioners the obligation to pay the real
City, instead of their address of record, i.e., Marian Road 2, property taxes over the subject properties as well as 12%
Brgy. San Martin de Porres, Parañaque, Metro Manila46 and interest p.a. on the arrears.56 However, the summary of
thus, was returned unserved for the reason "insufficient payments57 as well as the statement of account58 submitted
address."47 by petitioners clearly show that only the payments
corresponding to the principal obligation and the 12% interest
The notices of the Entry of Judgment48 and the transmittal p.a. on the outstanding balance were considered in arriving at
letter49 to the Clerk of Court of the RTC indicate this fact. As the amount of ₱952,152.00. The Court has examined the
such, there was clearly no proper and valid service of the said petition59 as well as petitioners' memorandum60 and found no
CA Decision which deprived petitioners of the opportunity to justifiable reason for the said omission. Hence, the reasonable
file a motion for reconsideration before the CA and/or further conclusion would therefore be that petitioners indeed failed to
appeal to the Court. Verily, it would be unjust and unfair to comply with all their obligations under the contract to sell and,
allow petitioners to suffer the adverse effects of the premature as such, have no right to enforce the same. Consequently, there
entry of judgment made by the CA. Therefore, the Court deems lies no error on the part of the CA in reversing the RTC Decision
it prudent to set aside the foregoing entry and upholds and dismissing petitioners’ complaint for specific performance
petitioners' right to appeal. seeking to compel respondents to execute a deed of sale over
the subject properties.
Nevertheless, with respect to the second issue, a thorough
review of the records reveals no sufficient reason to warrant WHEREFORE, the Entry of Judgment in CA-G.R. CV No. 68465 is
the reversal of the CA’s August 18, 2006 Decision dismissing hereby LIFTED. The Decision dated August 18, 2006 of the Court
petitioners' complaint for specific performance which sought to of Appeals in the said case is, however, AFFIRMED.
enforce the contract to sell and to compel respondents to
execute a deed of sale over the subject properties.1âwphi1 117. MARIA CRISTINA ZABALJAUREGUI PITCHER, Complainant,
vs.ATTY. RUSTICO B. GAGATE, Respondent.
A contract to sell is defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of For the Court s resolution is an administrative complaint1 filed
the subject property despite delivery thereof to the prospective by Maria Cristina Zabaljauregui Pitcher (complainant) against
buyer, binds himself to sell the said property exclusively to the Atty. Rustico B. Gagate (respondent), . charging him for gross
latter upon his fulfillment of the conditions agreed upon, i.e., ignorance of the law and unethical practice of law.
the full payment of the purchase price50 and/or compliance
with the other obligations stated in the contract to sell. Given The facts
its contingent nature, the failure of the prospective buyer to
make full payment51 and/or abide by his commitments stated Complainant claimed to be the legal wife of David B. Pitcher
in the contract to sell prevents the obligation of the prospective (David),2 a British national who passed away on June 18, 2004.3
seller to execute the corresponding deed of sale to effect the Prior to his death, David was engaged in business in the
transfer of ownership to the buyer from arising. As discussed in Philippines and owned, among others, 40% of the
Sps. Serrano and Herrera v. Caguiat:52 shareholdings in Consulting Edge, Inc.4 (Consulting Edge), a
domestic corporation. In order to settle the affairs of her
A contract to sell is akin to a conditional sale where the efficacy deceased husband, complainant engaged the services of
or obligatory force of the vendor's obligation to transfer title is respondent.5
subordinated to the happening of a future and uncertain event,
so that if the suspensive condition does not take place, the On June 22, 2004, complainant and respondent met with
parties would stand as if the conditional obligation had never Katherine Moscoso Bantegui Bantegui),6 a major stockholder of
existed. x x x.53 Consulting Edge,7 in order to discuss the settlement of David’s
interest in the company.8 They agreed to another meeting
To note, while the quality of contingency inheres in a contract which was, however, postponed by Bantegui. Suspecting that
to sell, the same should not be confused with a conditional the latter was merely stalling for time in order to hide
contract of sale. In a contract to sell, the fulfillment of the something, respondent insisted that the appointment proceed
suspensive condition will not automatically transfer ownership as scheduled.9
to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title Eventually, the parties agreed to meet at the company
to the prospective buyer by entering into a contract of absolute premises on June 28, 2004. However, prior to the scheduled
302
meeting, complainant was prevailed upon by respondent to put Edge.27 Hence, the actions taken by respondent, such as the
a paper seal on the door of the said premises, assuring her that placing of paper seal on the door of the company premises and
the same was legal.10 the changing of its lock, were all uncalled for. Worse, when
faced with the counter legal measures to his actions, he
On the scheduled meeting, Bantegui expressed disappointment abandoned his client's cause.28 Commissioner Magpayo found
over the actions of complainant and respondent, which that respondent’s acts evinced a lack of adequate preparation
impelled her to just leave the matter for the court to settle. She and mastery of the applicable laws on his part, in violation of
then asked them to leave, locked the office and refused to give Canon 529 of the Code of Professional Responsibity (Code),
them a duplicate key.11 warranting his suspension from the practice of law for a period
of six months.30
Subsequently, however, respondent, without the consent of
Bantegui, caused the change in the lock of the Consulting Edge The IBP Board of Governors adopted and approved the
office door,12 which prevented the employees thereof from aforementioned Report and Recommendation in Resolution No.
entering and carrying on the operations of the company. This XX-2011-261 dated November 19, 2011 (November 19, 2011
prompted Bantegui to file before the Office of the City Resolution), finding the same to be fully supported by the
Prosecutor of Makati (Prosecutor’s Office) a complaint for grave evidence on record and the applicable laws and rules.31
coercion against complainant and respondent.13 In turn,
respondent advised complainant that criminal and civil cases In a Resolution32 dated October 8, 2012, the Court noted the
should be initiated against Bantegui for the recovery of David's Notice of the IBP’s November 19, 2011 Resolution, and referred
personal records/business interests in Consulting Edge.14 Thus, the case to the Office of the Bar Confidant (OBC) for evaluation,
on January 17, 2005, the two entered in Memorandum of report and recommendation.33
Agreement,15 whereby respondent undertook the filing of the
cases against Bantegui, for which complainant paid the amount The OBC's Report and Recommendation
of ₱150,000.00 as acceptance fee and committed herself to pay
respondent ₱1,000.00 for every court hearing.16 On February 11, 2013, the OBC submitted a Report and
Recommendation34 dated February 6, 2013, concluding that
On November 18, 2004, the Prosecutor’s Office issued a respondent grossly neglected his duties to his client and failed
Resolution17 dated October 13, 2004, finding probable cause to to safeguard the latter's rights and interests in wanton
charge complainant and respondent for grave coercion. The disregard of his duties as a lawyer.35 It deemed that the six-
corresponding Information was filed before the Metropolitan month suspension from the practice of law as suggested by the
Trial Court of Makati City, Branch 63, docketed as Criminal Case IBP was an insufficient penalty and, in lieu thereof,
No. 337985 (grave coercion case), and, as a matter of course, recommended that respondent be suspended for three
warrants of arrest were issued against them.18 Due to the years.36 Likewise, it ordered respondent to return the
foregoing, respondent advised complainant to go into hiding ₱150,000.00 he received from complainant as acceptance
until he had filed the necessary motions in court. Eventually, fee.37
however, respondent abandoned the grave coercion case and
stopped communicating with complainant.19 Failing to reach The Court's Ruling
respondent despite diligent efforts,20 complainant filed the
instant administrative case before the Integrated Bar of the After a careful perusal of the records, the Court concurs with
Philippines (IBP) - Commission on Bar Discipline (CBD), and adopts the findings and conclusions of the OBC.
docketed as CBD Case No. 06-1689.
The Court has repeatedly emphasized that the relationship
Despite a directive21 from the IBP-CBD, respondent failed to between a lawyer and his client is one imbued with utmost
file his answer to the complaint. The case was set for trust and confidence. In this regard, clients are led to expect
mandatory conference on November 24, 2006,22 which was that lawyers would be ever-mindful of their cause and
reset twice,23 on January 12, 2007 and February 2, 2007, due accordingly exercise the required degree of diligence in
to the absence of respondent. The last notice sent to handling their affairs. For his part, the lawyer is expected to
respondent, however, was returned unserved for the reason maintain at all times a high standard of legal proficiency, and to
"moved out."24 In view thereof, Investigating Commissioner devote his full attention, skill, and competence to the case,
Tranquil S. Salvador III declared the mandatory conference regardless of its importance and whether he accepts it for a fee
terminated and required the parties to submit their position or for free.38 To this end, he is enjoined to employ only fair and
papers, supporting documents, and affidavits.25 honest means to attain lawful objectives.39 These principles
are embodied in Canon 17, Rule 18.03 of Canon 18, and Rule
The IBP’s Report and Recommendation 19.01 of Canon 19 of the Code which respectively state:
On March 18, 2009, Investigating Commissioner Pedro A. CANON 17 - A lawyer owes fidelity to the cause of his client and
Magpayo, Jr. (Commissioner Magpayo) issued a Report and he shall be mindful of the trust and confidence reposed in him.
Recommendation,26 observing that respondent failed to
safeguard complainant's legitimate interest and abandoned her CANON 18 – A lawyer shall serve his client with competence
in the grave coercion case. Commissioner Magpayo pointed out and diligence.
that Bantegui is not legally obliged to honor complainant as
subrogee of David because complainant has yet to establish her xxxx
kinship with David and, consequently, her interest in Consulting
303
Rule 18.03 – A lawyer shall not neglect a legal matter entrusted respondent’s gross and inexcusable neglect by leaving his client
to him, and his negligence in connection therewith shall render totally unrepresented in a criminal case, it cannot be doubted
him liable. that he violated Canon 17, Rule 18.03 of Canon 18, and Rule
19.01 of Canon 19 of the Code.
xxxx
In addition, it must be pointed out that respondent failed to file
CANON 19 – A lawyer shall represent his client with zeal within his answer to the complaint despite due notice.1âwphi1 This
the bounds of the law. demonstrates not only his lack of responsibility but also his lack
of interest in clearing his name, which, as case law directs, is
Rule 19.01 – A lawyer shall employ only fair and honest means constitutive of an implied admission of the charges leveled
to attain the lawful objectives of his client and shall not against him.42 In fine, respondent should be held
present, participate in presenting or threaten to present administratively liable for his infractions as herein discussed.
unfounded criminal charges to obtain an improper advantage in That said, the Court now proceeds to determine the
any case or proceeding. appropriate penalty to be imposed against respondent.
xxxx Several cases show that lawyers who have been held liable for
gross negligence for infractions similar to those committed by
Keeping with the foregoing rules, the Court finds that respondent were suspended from the practice of law for a
respondent failed to exercise the required diligence in handling period of two years. In Jinon v. Jiz,43 a lawyer who neglected
complainant’s cause since he: first, failed to represent her his client's case, misappropriated the client's funds and
competently and diligently by acting and proffering professional disobeyed the IBP’s directives to submit his pleadings and
advice beyond the proper bounds of law; and, second, attend the hearings was suspended from the practice of law for
abandoned his client’s cause while the grave coercion case two years. In Small v. Banares,44 the Court meted a similar
against them was pending. penalty against a lawyer who failed to render any legal service
even after receiving money from the complainant; to return the
Anent the first infraction, it bears emphasis that complainant's money and documents he received despite demand; to update
right over the properties of her deceased husband, David, has his client on the status of her case and respond to her requests
yet to be sufficiently established. As such, the high-handed for information; and to file an answer and attend the
action taken by respondent to enforce complainant's claim of mandatory conference before the IBP. Also, in Villanueva v.
ownership over the latter’s interest in Consulting Edge – i.e., Gonzales,45 a lawyer who neglected complainant’s cause;
causing the change of the office door lock which thereby refused to immediately account for his client’s money and to
prevented the free ingress and egress of the employees of the return the documents received; failed to update his client on
said company – was highly improper. Verily, a person cannot the status of her case and to respond to her requests for
take the law into his own hands, regardless of the merits of his information; and failed to submit his answer and to attend the
theory. In the same light, respondent's act of advising mandatory conference before the IBP was suspended from the
complainant to go into hiding in order to evade arrest in the practice of law for two years. However, the Court observes
criminal case can hardly be maintained as proper legal advice that, in the present case, complainant was subjected to a graver
since the same constitutes transgression of the ordinary injury as she was prosecuted for the crime of grave coercion
processes of law. By virtue of the foregoing, respondent clearly largely due to the improper and erroneous advice of
violated his duty to his client to use peaceful and lawful respondent. Were it not for respondent’s imprudent
methods in seeking justice,40 in violation of Rule 19.01, Canon counseling, not to mention his act of abandoning his client
19 of the Code as above-quoted. To note further, since such during the proceedings, complainant would not have unduly
courses of action were not only improper but also erroneous, suffered the harbors of a criminal prosecution. Thus,
respondent equally failed to serve his client with competence considering the superior degree of the prejudice caused to
and diligence in violation of Canon 18 of the Code. In the same complainant, the Court finds it apt to impose against
regard, he also remained unmindful of his client’s trust in him – respondent a higher penalty of suspension from the practice of
in particular, her trust that respondent would only provide her law for a period of three years as recommended by the OBC.
with the proper legal advice in pursuing her interests – thereby
violating Canon 17 of the Code. In the same light, the Court sustains the OBC’s
recommendation for the return of the ₱150,000.00 acceptance
With respect to the second infraction, records definitively bear fee received by respondent from complainant since the same is
out that respondent completely abandoned complainant during intrinsically linked to his professional engagement. While the
the pendency of the grave coercion case against them; this Court has previously held that disciplinary proceedings should
notwithstanding petitioner’s efforts to reach him as well as his only revolve around the determination of the respondent-
receipt of the ₱150,000.00 acceptance fee. It is hornbook lawyer’s administrative and not his civil liability,46 it must be
principle that a lawyer’s duty of competence and diligence clarified that this rule remains applicable only to claimed
includes not merely reviewing the cases entrusted to his care or liabilities which are purely civil in nature – for instance, when
giving sound legal advice, but also consists of properly the claim involves moneys received by the lawyer from his
representing the client before any court or tribunal, attending client in a transaction separate and distinct and not intrinsically
scheduled hearings or conferences, preparing and filing the linked to his professional engagement (such as the acceptance
required pleadings, prosecuting the handled cases with fee in this case). Hence, considering further that the fact of
reasonable dispatch, and urging their termination even without respondent’s receipt of the ₱150,000.00 acceptance fee from
prodding from the client or the court.41 Hence, considering
304
complainant remains undisputed,47 the Court finds the return During the taxable years 2004 and 2005, GST filed Quarterly
of the said fee, as recommended by the OBC, to be in order. VAT Returns showing its zero-rated sales, as follows:9
WHEREFORE respondent Atty. Rustico B. Gagate is found guilty Period Date of Filing Zero-Rated Sales
of violating Canon 17 Rule 18.03 of Canon 18 and Rule 19.01 of 1st Quarter of year 2004
Canon 19 of the Code of Professional Responsibility.
Accordingly, he is hereby SUSPENDED from the practice of law April 16, 2004 P 77,687,420.54
for a period of three 3) years, effective upon the finality of this 2nd Quarter of year 2004
Decision, with a stem warning that a repetition of the same or
similar acts will be dealt with more severely. October 26, 2005 51,147,677.80
Claiming unutilized excess input VAT in the total amount of
Further, respondent is ORDERED to return to complainant ₱32,722,109.68 attributable to the foregoing zero-rated
Maria Cristina Zabaljauregui Pitcher the ₱150,000.00 sales,10 GST filed before the Bureau of Internal Revenue (BIR)
acceptance fee he received from the latter within ninety (90) separate claims for refund on the following dates:11
days from the finality of this Decision. Failure to comply with
the foregoing directive will warrant the imposition of a more For failure of the CIR to act on its administrative claims, GST
severe penalty. filed a petition for review before the CTA on March 17, 2006.
After due proceedings, the CTA First Division rendered a
Let a copy of this Decision be furnished the Office of the Bar Decision12 on January 27, 2009 granting GST’s claims for refund
Confidant, the Integrated Bar of the Philippines, and the Office but at the reduced amount of ₱27,369,114.36. The CIR was also
of the Court Administrator for circulation to all the courts. ordered to issue the corresponding tax credit certificate.13
118. REPUBLIC OF THE PHILIPPINES represented by the The CIR moved for reconsideration, which was denied14 by the
Commissioner of Internal Revenue, Petitioner, vs. CTA First Division for lack of merit, thus, prompting the
GST PHILIPPINES, INC., Respondent. elevation of the case to the CTA En Banc via a petition for
review.15
It is true that every citizen has a civic responsibility nay an
obligation to honestly pay the right taxes as a contribution to The CIR raised therein the failure of GST to substantiate its
the government in order to keep and maintain a civilized entitlement to a refund,16 and argued that the judicial appeal
society. Corollarily, the government is expected to implement to the CTA was filed beyond the reglementary periods
tax laws in good faith; to discharge its duty to collect what is prescribed in Section 112 of RA 842417 (Tax Code).18
due to it; and consistent with the principles of fair play and
equity to justly return what has been erroneously and On October 30, 2009, the CTA En Banc affirmed19 the Decision
excessively given to it after careful verification but without of the CTA First Division finding GST’s administrative and
infringing upon the fundamental rights of the taxpayer. judicial claims for refund to have been filed well within the
prescribed periods provided in the Tax Code.20 The CIR’s
In this Petition for Review on Certiorari1 under Rule 45 of the motion for reconsideration was denied by the CTA En Banc in
1997 Rules of Civil Procedure, petitioner Republic of the its Resolution21 dated January 5, 2010.
Philippines, represented by the Commissioner of Internal
Revenue (CIR), assails the October 30, 2009 Decision2 and Hence, the instant petition.
January 5, 2010 Resolution3 of the Court of Tax Appeals (CTA)
En Banc in C.T.A. EB No. 484, granting respondent GST The Issue
Philippines, Inc. (GST) a refund of its unutilized excess input
value added tax (VAT) attributable to zero-rated sales for the The CIR no longer raises the alleged failure of GST to comply
four quarters of taxable year 2004 and the first three quarters with the substantiation requirements for the questioned claims
of taxable year 2005. for refund nor questions the reduced award granted by the CTA
En Banc in the amount of ₱27,369,114.36. Thus, the lone issue
The facts for resolution is whether GST’s action for refund has complied
with the prescriptive periods under the Tax Code.
GST is a corporation duly organized and existing under the laws
of the Philippines, and primarily engaged in the business of The Ruling of the Court
manufacturing, processing, selling, and dealing in all kinds of Laws Providing Refunds or Tax
iron, steel or other metals.4 It is a duly registered VAT Credit of Unutilized Excess Input VAT
enterprise with taxpayer identification number 000-155-645-
000,5 which deals with companies registered with (1) the Board Refund or tax credit of unutilized excess input VAT has been
of Investments (BOI) pursuant to Executive Order No. (EO) allowed as early as in the Original VAT Law – EO 273.22 This
226,6 whose manufactured products are 100% exported to was later amended by RA 771623 and RA 8424, and further
foreign countries; and (2) the Philippine Economic Zone amended by RA 933724 which took effect on November 1,
Authority (PEZA).7 Sales made by a VAT-registered person to a 2005.25 Since GST’s claims for refund covered the periods
PEZA-registered entity are considered exports to a foreign before the effectivity of RA 9337, the old provision on VAT
country subject to a zero rate.8 refund, specifically Section 112, as amended by RA 8424, shall
apply.26 It reads:
305
Section 112. Refunds or Tax Credits of Input Tax. – failure of respondent to wait for the 120-day period to expire. It
failed to exhaust the available administrative remedies. Hence,
(A) Zero-rated or Effectively Zero-rated Sales. – Any VAT- the instant petition is likewise dismissible for lack of cause of
registered person, whose sales are zero-rated or effectively action.30
zero-rated may, within two (2) years after the close of the
taxable quarter when the sales were made, apply for the For its part, GST asserts that under Section 112 (A) of the Tax
issuance of a tax credit certificate or refund of creditable input Code, the prescriptive period is complied with if both the
tax due or paid attributable to such sales, except transitional administrative and judicial claims are filed within the two-year
input tax, to the extent that such input tax has not been applied prescriptive period;31 and that compliance with the 120-day
against output tax: x x x. (Emphasis supplied) and 30-day periods under Section 112 (D) of the Tax Code is not
mandatory.32 It explained that the 30-day period only refers to
xxxx a case where a decision is rendered by the CIR and not when
the claim for refund is not acted upon, in which case, the
(D) Period within which Refund or Tax Credit of Input Taxes taxpayer may appeal to the CTA anytime even prior to or after
shall be Made. – In proper cases, the Commissioner shall grant the expiration of the 120-day period as long as it is within the
a refund or issue the tax credit certificate for creditable input two-year prescriptive period. On the other hand, the CIR may
taxes within one hundred twenty (120) days from the date of still choose to resolve the administrative claim even beyond the
submission of complete documents in support of the 120-day period. In any case, compliance with the 120-day and
application filed in accordance with Subsections (A) and (B) 30-day periods is merely directory and permissive, not
hereof. mandatory nor jurisdictional.33
In case of full or partial denial of the claim for tax refund or tax The 120+30 day periods are
credit, or the failure on the part of the Commissioner to act on mandatory and jurisdictional.
the application within the period prescribed above, the
taxpayer affected may, within thirty (30) days from the receipt The Court had already clarified in the case of CIR v. Aichi
of the decision denying the claim or after the expiration of the Forging Company of Asia, Inc. (Aichi),34 promulgated on
one hundred twenty day-period, appeal the decision or the October 6, 2010, that the two-year prescriptive period applies
unacted claim with the Court of Tax Appeals. (Emphasis only to administrative claims and not to judicial claims.
supplied) Morever, it was ruled that the 120-day and 30-day periods are
not merely directory but mandatory. Accordingly, the judicial
The CIR, adopting the dissenting opinion27 of CTA Presiding claim of Aichi, which was simultaneously filed with its
Justice Ernesto D. Acosta to the CTA En Banc Decision dated administrative claim, was found to be premature. The Court
October 30, 2009, maintains that the two-year prescriptive held:
period under Section 112 (A) of the Tax Code reckoned from
the close of the taxable quarter involved is limited only to the In fact, applying the two-year period to judicial claims would
filing of an administrative – not judicial – claim.28 In turn, render nugatory Section 112(D) [now Section 112 (C)] of the
under paragraph (D) of the same Section, the CIR has 120 days NIRC, which already provides for a specific period within which
to decide on the claim counted from the date of the submission a taxpayer should appeal the decision or inaction of the CIR.
of complete documents and not from the mere filing of the
administrative claim. The taxpayer then has 30 days from The second paragraph of Section 112(D) [now Section 112 (C)]
receipt of the adverse decision, or from the expiration of the of the NIRC envisions two scenarios: (1) when a decision is
120-day period without the CIR acting upon the claim, to issued by the CIR before the lapse of the 120-day period; and
institute his judicial claim before the CTA.29 (2) when no decision is made after the 120-day period. In both
instances, the taxpayer has 30 days within which to file an
Thus, in the present case, the claims filed for the four quarters appeal with the CTA. As we see it then, the 120-day period is
of taxable year 2004, as well as the first quarter of taxable year crucial in filing an appeal with the CTA.35 (Emphasis supplied)
2005, had already prescribed. While those of the second and
third quarters of taxable year 2005 were prematurely filed, as The taxpayer will always have 30 days to file the judicial claim
summarized in the table presented by Justice Acosta, to wit: even if the Commissioner acts only on the 120th day, or does
not act at all during the 120-day period. With the 30-day period
Applying the above discourse in the case at bar, a table is always available to the taxpayer, the taxpayer can no longer file
prepared for easy reference: a judicial claim for refund or tax credit of unutilized excess input
VAT without waiting for the Commissioner to decide until the
Based on the above, the filing of the Petition for Review before expiration of the 120-day period.36 Failure to comply with the
the First Division has already prescribed with respect to the 120-day waiting period violates the doctrine of exhaustion of
administrative claim filed on June 9, 2004; August 12, 2004; administrative remedies and renders the petition premature
February 18, 2005; and May 11, 2005 for being filed beyond the and thus without a cause of action, with the effect that the CTA
30th day provided under the second paragraph of Section 112 does not acquire jurisdiction over the taxpayer’s petition.37
(D) of the NIRC of 1997. The petition is therefore dismissible for
being out of time. San Roque case provides exception to the strict compliance
with the 120-day period
Anent the administrative claim filed on November 18, 2005, the
filing of the petition before the First Division is premature for
306
While the Court En Banc reiterated in the recent consolidated in Aichi on October 6, 2010, where it was held that the 120+30
cases of CIR v. San Roque Power Corporation ( San Roque ),38 day periods are mandatory and jurisdictional.42
promulgated on February 12, 2013, that the 120-day period is
mandatory and jurisdictional, however, it categorically held that Therefore, GST can benefit from BIR Ruling No. DA-489-03 with
BIR Ruling No. DA-489-03 dated December 10, 2003 provided a respect to its claims for refund of unutilized excess input VAT
valid claim for equitable estoppel under Section 24639 of the for the second and third quarters of taxable year 2005 which
Tax Code. BIR Ruling No. DA-489-03 expressly states that the were filed before the CIR on November 18, 2005 but elevated
"taxpayer-claimant need not wait for the lapse of the 120-day to the CTA on March 17, 2006 before the expiration of the 120-
period before it could seek judicial relief with the CTA by way of day period (March 18, 2006 being the 120th day). BIR Ruling
Petition for Review."40 Speaking through Associate Justice No. DA-489-03 effectively shielded the filing of GST's judicial
Antonio T. Carpio, the Court ratiocinated as follows: claim from the vice of prematurity.43
There is no dispute that the 120-day period is mandatory and GST's claims, however, for the four quarters of taxable year
jurisdictional, and that the CTA does not acquire jurisdiction 2004 and the first quarter of taxable year 2005 should be
over a judicial claim that is filed before the expiration of the denied for late filing of the petition for review before the CTA.
120-day period. There are, however, two exceptions to this GST filed its VAT Return for the first quarter of 2004 on April 16,
rule. The first exception is if the Commissioner, through a 2004. Reckoned from the close of the first taxable quarter of
specific ruling, misleads a particular taxpayer to prematurely 2004 on March 31, 2004, the administrative claim filed on June
file a judicial claim with the CTA. Such specific ruling is 9, 2004 was well within the required two-year prescriptive
applicable only to such particular taxpayer. The second period from the close of the taxable quarter, the last day of
exception is where the Commissioner, through a general filing being March 31, 2006. The CIR then had 120 days from
interpretative rule issued under Section 4 of the Tax Code, June 9, 2004, or until October 7, 2004, to decide the claim.
misleads all taxpayers into filing prematurely judicial claims Since the Commissioner did not act on the claim within the said
with the CTA. In these cases, the Commissioner cannot be period, GST had 30 days from October 7, 2004, or until
allowed to later on question the CTA's assumption of November 6, 2004, to file its judicial claim. However, GST filed
jurisdiction over such claim since equitable estoppel has set in its petition for review before the CTA only on March 17, 2006,
as expressly authorized under Section 246 of the Tax Code. or 496 days after the last day of filing. In short, GST was late by
one year and 131 days in filing its judicial claim.
Section 4 of the Tax Code, a new provision introduced by RA
8424, expressly grants to the Commissioner the power to For the second quarter of taxable year 2004, GST filed its
interpret tax laws, thus: administrative claim on August 12, 2004. The 120-day period
from the filing of such claim ended on December 10, 2004, and
Sec. 4. Power of the Commissioner To Interpret Tax Laws and the 30th day within which to file a judicial claim fell on January
To Decide Tax Cases. – The power to interpret the provisions of 9, 2005. However, GST filed its petition for review before the
this Code and other tax laws shall be under the exclusive and CTA only on March 17, 2006, or 432 days after the last day of
original jurisdiction of the Commissioner, subject to review by filing.
the Secretary of Finance.
GST was late by one year and 67 days in filing its judicial claim.
The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in For the third and fourth quarters of taxable year 2004, GST filed
relation thereto, or other matters arising under this Code or its administrative claims on February 18, 2005. The 120th day,
other laws or portions thereof administered by the Bureau of or June 18, 2005, lapsed without any action from the CIR. Thus,
Internal Revenue is vested in the Commissioner, subject to the GST had 30 days therefrom, or until July 18, 2005, to file its
exclusive appellate jurisdiction of the Court of Tax Appeals. judicial claim, but it did so only on March 17, 2006, or 242 days
after the last day of filing. GST was late by 242 days in filing its
Since the Commissioner has exclusive and original jurisdiction judicial claim.
to interpret tax laws, taxpayers acting in good faith should not
be made to suffer for adhering to general interpretative rules of Finally, for the first quarter of taxable year 2005, GST filed its
the Commissioner interpreting tax laws, should such administrative claim on May 11, 2005.1âwphi1 The 120-day
interpretation later turn out to be erroneous and be reversed period ended on September 8, 2005, again with no action from
by the Commissioner or this Court. Indeed, Section 246 of the the CIR. Nonetheless, GST failed to elevate its claim to the CTA
Tax Code expressly provides that a reversal of a BIR regulation within 30 days, or until October 8, 2005. The petition for review
or ruling cannot adversely prejudice a taxpayer who in good filed by GST on March 17, 2006, or 160 days after the last day of
faith relied on the BIR regulation or ruling prior to its reversal. x filing was, therefore, late.
x x.41
Following is a tabular summation of the relevant dates of GST's
BIR Ruling No. DA-489-03 was classified in San Roque as a administrative and judicial claims, and the corresponding action
general interpretative rule having been made in response to a on said claims:
query by a government agency tasked with processing tax
refunds and credits – the One Stop Shop Inter-Agency Tax 1âwphi1
Credit and Drawback Center of the Department of Finance. As Taxable Period Filing of Administrative claim 120th day
such, all taxpayers can rely on said ruling from the time of its [Section 112(D), NIRC of 1997] 30th day [Section
issuance on December 10, 2003 up to its reversal by this Court
307
112(D), NIRC of 1997] Filing of Judicia lClaim just concluded May 13, 2013 National Elections.3 Wigberto ran
Remarks Action on Claim under the banner of the Liberal Party; Alvin John was the
official congressional candidate of Lapiang Manggagawa; while
pursuant to BIR Ruling No. DA-489-03 Angelina was fielded by the National People’s Coalition.4
As may be observed from the Court's application of the 120+30
day periods to GST's claims, the 120-day period is uniformly On October 10, 2012, Wigberto filed before the COMELEC two
reckoned from the date of the filing of the administrative separate petitions: first, to cancel Alvin John’s CoC;5 and,
claims. The CIR insists,44 however, that the filing of the second, to declare him as a nuisance candidate.6 The said
administrative claim was not necessarily the same time when petitions were docketed as SPA Nos. 13-056 (DC) and 13-057
the complete supporting documents were submitted to the (DC), respectively.
Commissioner.
In a Resolution7 dated January 29, 2013, the COMELEC First
The Court agrees. However, this issue is not determinative of Division dismissed both petitions for lack of merit. On
the resolution of this case for failure of the CIR to show that Wigberto’s motion for reconsideration,8 the COMELEC En Banc,
GST further submitted supporting documents subsequent to in a Resolution9 dated April 25, 2013, upheld the COMELEC
the filing of its administrative claims. Thus, the reckoning date First Division’s ruling in SPA No. 13-057 (DC) that Alvin John was
of the 120-day period commenced simultaneously45 with the not a nuisance candidate as defined under Section 6910 of
filing of the administrative claims when GST was presumed to Batas Pambansa Bilang 881, as amended, otherwise known as
have attached the relevant documents to support its the "Omnibus Election Code of the Philippines" (OEC).11
applications for refund or tax credit. However, in SPA No. 13-056 (DC), it granted the motion for
reconsideration and cancelled Alvin John’s CoC for having
As a final note, it is incumbent on the Court to emphasize that committed false material representations concerning his
tax refunds partake of the nature of tax exemptions which are a residency in accordance with Section 7812 of the OEC.13
derogation of the power of taxation of the State. Consequently,
they are construed strictly against a taxpayer and liberally in On May 15, 2013, Wigberto filed a 2nd Motion for Partial
favor of the State.46 Thus, as emphasized in Aichi, a taxpayer Reconsideration14 of the COMELEC En Banc ’s ruling in SPA No.
must prove not only its entitlement to a refund but also its 13-057 (DC) on the ground of newly discovered evidence. He
compliance with prescribed procedures.47 alleged that Alvin John’s candidacy was not bona fide because:
(a) Alvin John was merely forced by his father to file his CoC; (b)
WHEREFORE, the petition is PARTLY GRANTED. The Decision he had no election paraphernalia posted in official COMELEC
dated October 30, 2009 of the Court of Tax Appeals En Banc in posting areas in several barangays of Gumaca, Quezon
C.T.A. EB No. 484, affirming the Decision dated January 27, Province; (c) he did not even vote during the May 13, 2013
2009 of the CTA First Division in C.T.A. Case No. 7419, is National Elections; and (d) his legal representation appeared to
AFFIRMED with MODIFICATION. The claims of respondent GST have been in collusion with the lawyers of Angelina.15
Philippines, Inc. for refund or tax credit for unutilized excess
input VAT for the four quarters of taxable year 2004, as well as On May 15 and 16, 2013, Wigberto filed with the COMELEC En
the first quarter of taxable year 2005 are hereby DENIED for Banc an Extremely Urgent Motion to Admit Additional and
being filed beyond the prescriptive period, while the claims for Newly Discovered Evidence and to Urgently Resolve Motion for
refund for the second and third quarters of taxable year 2005 Reconsideration16 and an Urgent Manifestation and
are GRANTED. Accordingly, the Commissioner of Internal Supplemental17 thereto. These motions, however, remained
Revenue is ordered to refund or, in the alternative, to issue a un-acted upon until the filing of the present petition before the
tax credit certificate to respondent GST Philippines, Inc. Court on May 27, 2013. Thus, in order to avoid charges of
corresponding only to the amount representing unutilized forum-shopping, said motions were withdrawn by Wigberto.
excess input VAT for the second and third quarters of taxable
year 2005 out of the total amount of ₱27,369,114.36 awarded In a related development, despite the cancellation of Alvin
by the CTA. John’s CoC due to his material misrepresentations therein, his
name was not deleted from – and thus, remained printed on –
119. WIGBERTO R. TAÑADA, JR. Petitioner, vs.COMMISSION the ballot, prompting Wigberto to file a motion18 with the
ON ELECTIONS ANGELINA D. TAN, AND ALVIN JOHN S. Provincial Board of Canvassers of Quezon Province (PBOC)
TAÑADA, Respondents. asking that the votes cast in the name of Alvin John be credited
to him instead in accordance with the Court’s ruling in Dela
Assailed in this petition for certiorari1 under Rule 65 in relation Cruz v. COMELEC19 and COMELEC Resolution No. 9599.20 The
to Rule 64 of the Rules of Court is the Resolution2 dated April PBOC, however, denied Wigberto’s motion in a Resolution21
25, 2013 of the Commission on Elections (COMELEC) En Banc dated May 16, 2013, holding that the votes of Alvin John could
declaring respondent Alvin John S. Tañada not a nuisance not be counted in favor of Wigberto because the cancellation of
candidate. the former’s CoC was on the basis of his material
misrepresentations under Section 78 of the OEC and not on
The Facts being a nuisance candidate under Section 69 of the same law.
Consequently, the PBOC canvassed the votes of all three
Petitioner Wigberto R. Tañada, Jr., (Wigberto) and respondents contenders separately, and thereafter, on May 16, 2013,
Angelina D. Tan (Angelina) and Alvin John S. Tañada (Alvin John) proclaimed Angelina as the winning candidate for the position
were contenders for the position of Member of the House of of Member of the House of Representatives for the 4th District
Representatives for the 4th District of Quezon Province in the of Quezon Province.22 According to Wigberto, it was for the
308
foregoing reason that he impleaded Angelina as a party-
respondent in the instant petition for certiorari.23 Case law states that the proclamation of a congressional
candidate following the election divests the COMELEC of
It appears, however, that Wigberto had already filed with the jurisdiction over disputes relating to the election, returns, and
COMELEC a Petition to Annul the Proclamation of Angelina qualifications of the proclaimed representative in favor of the
(Petition to Annul) under SPC No. 13-013, asserting that had the HRET.29 The phrase "election, returns and qualifications" refers
PBOC followed pertinent rulings,24 the votes cast for Alvin John to all matters affecting the validity of the contestee’s title.30 In
would have been counted in his favor which could have particular, the term "election" refers to the conduct of the
resulted in his victory.25 While the Petition to Annul was still polls, including the listing of voters, the holding of the electoral
pending resolution, Wigberto initiated the instant certiorari campaign, and the casting and counting of the votes; "returns"
case against the COMELEC En Banc Resolution dated April 25, refers to the canvass of the returns and the proclamation of the
2013 declaring Alvin John not a nuisance candidate.1âwphi1 winners, including questions concerning the composition of the
board of canvassers and the authenticity of the election
On July 3, 2013, Wigberto filed a Manifestation26 informing the returns; and "qualifications" refers to matters that could be
Court that he had caused the filing of an Election Protest Ad raised in a quo warranto proceeding against the proclaimed
Cautelam entitled " Wigberto R. Tañada, Jr. v. Angelina ‘Helen’ winner, such as his disloyalty or ineligibility or the inadequacy
D. Tan, " before the House of Representatives Electoral Tribunal of his CoC.31
(HRET), which was docketed as Electoral Protest Case No. 13-
018. In the foregoing light, considering that Angelina had already
been proclaimed as Member of the House of Representatives
The Office of the Solicitor General (OSG), on behalf of public for the 4th District of Quezon Province on May 16, 2013, as she
respondent COMELEC, affirmed in its Comment dated August has in fact taken her oath and assumed office past noon time of
18, 2013,27 that an Election Protest Ad Cautelam had, indeed, June 30, 2013,32 the Court is now without jurisdiction to
been filed by Wigberto against Angelina before the HRET, resolve the case at bar. As they stand, the issues concerning the
praying that he be declared the winner in the 2013 conduct of the canvass and the resulting proclamation of
congressional race in the 4th District of Quezon Province. It also Angelina as herein discussed are matters which fall under the
alleged that on June 28, 2013, the COMELEC Second Division scope of the terms "election" and "returns" as above-stated
issued a Resolution annulling the proclamation of Angelina as and hence, properly fall under the HRET’s sole jurisdiction.
Member of the House of Representatives for the 4th District of
Quezon Province. The propriety of this ruling is now pending WHEREFORE, the petition is DISMISSED.
resolution before the COMELEC En Banc.28
120. OFFICE OF THE OMBUDSMAN (VISAYAS), Petitioner, vs.
The Issues Before the Court COURT OF APPEALS and BERMELA A. GABUYA, Respondents.
Wigberto assails the COMELEC En Banc Resolution dated April Assailed in this petition for Certiorari1 are the Decision2 dated
25, 2013 declaring that Alvin John was not a nuisance candidate March 19, 2009 and Resolution3 dated July 31, 2009 of the
as defined under Section 69 of the OEC. In consequence, he Court of Appeals, Cebu City (CA) in CA-G.R. SP. No. 03874 which
seeks that the votes cast in favor of Alvin John be credited to granted respondent Bermela A Gabuya's (Gabuya) application
him and, thereafter, to be declared the winning candidate for for the issuance of a writ of preliminary injunction against the
the congressional post. implementation of the Decision4 dated February 28, 2006
rendered by the Office of the Ombudsman - Visayas
The Court’s Ruling (Ombudsman) in OMB-V-A-03-0736-L ordering Gabuya's
dismissal from government service.
The petition must fail.
The Facts
Section 17, Article VI of the 1987 Philippine Constitution
provides that the HRET is the sole judge of all contests relating Sometime in December 2003, Angelita Perez-Nengasca
to the election, returns, and qualifications of its respective (Nengasca) and Teresita Candar-Bracero (Bracero), representing
members: themselves, as estate agents, offered to mortgage to Vicente R.
Teo (Teo) for the amount of ₱500,000.00 a parcel of land
Sec. 17. The Senate and the House of Representatives shall purportedly owned by the heirs of Melquiades S. Silva (Silva),
each have an Electoral Tribunal which shall be the sole judge of covered by Transfer Certificate of Title (TCT) No. T-29438.5
all contests relating to the election, returns, and qualifications However, upon verification with the Registry of Deeds of the
of their respective Members. Each Electoral Tribunal, shall be Province of Cebu, Teo learned that the said TCT was already
composed of nine Members, three of whom shall be Justices of cancelled, prompting him to seek the assistance of the National
the Supreme Court to be designated by the Chief Justice, and Bureau of Investigation (NBI).6
the remaining six shall be Members of the Senate or the House
of Representatives, as the case may be, who shall be chosen on On December 10, 2003, the NBI set an entrapment operation at
the basis of proportional representation from the political Teo’s residence. In the process, Mario Padigos (Padigos) who
parties and the parties or organizations registered under the posed as one of the heirs of Silva, and one Gwendolyn A.
party-list system represented therein. The senior Justice in the Bascon (Bascon) were arrested in the act of counting the
Electoral Tribunal shall be its Chairman. (Emphasis and marked money representing the proceeds of the mortgage. The
underscoring supplied)
309
NBI also accosted Nengasca and Bracero who were stationed injunction. However, said motion was denied by the CA in a
outside Teo’s house.7 Resolution23 dated July 31, 2009. Hence, the instant petition.
During the investigation, Padigos, Bascon, Nengasca and Meanwhile, acting on a second motion for partial
Bracero confessed that they acted under the instructions of reconsideration in G.R. No. 175573, the Court modified its 2008
Gabuya. Thus, the NBI hatched a second entrapment operation Samaniego ruling in a Resolution dated October 5, 2010 (2010
at the La Fortuna Bakery whereat Gabuya, after receiving from Samaniego ruling) , "particularly its pronouncement with
Nengasca a plastic bag with the marked money, was arrested.8 respect to the stay of the decision of the Ombudsman during
At that time, Gabuya was a government employee, holding the the pendency of an appeal."24 The dispositive portion of the
position of Administrative Officer II in the Cebu Provincial 2010 Samaniego ruling thus reads:25
Detention and Rehabilitation Center. Hence, following her
arrest, the NBI filed an administrative complaint against Gabuya WHEREFORE, the second motion for partial reconsideration is
for grave misconduct before the Ombudsman, docketed as hereby GRANTED.
OMB-V-A-03-0736-L.9
Our decision dated September 11, 2008 is MODIFIED insofar as
For her part, Gabuya maintained her innocence claiming that: it declared that the imposition of the penalty is stayed by the
(a) she did not conspire to defraud Teo; (b) Teo never filing and pendency of CA-G.R. SP No. 89999. The decision of
mentioned her in his affidavit;10 (c) she was found negative of the Ombudsman is immediately executory pending appeal and
yellow fluorescent powder;11 (d) Padigos attested that she may not be stayed by the filing of the appeal or the issuance of
(Gabuya) had no participation in the conspiracy;12 and (e) she an injunctive writ.
cannot be held administratively liable for the subject acts since
they are not related to the functions of her office and her SO ORDERED. (Emphases and underscoring supplied)
apprehension occurred during lunch break.13
The Issue Before the Court
The Ombudsman Ruling
The essential issue in this case is whether or not the CA gravely
In a Decision14 dated February 28, 2006 (February 28, 2006 abused its discretion in: (a) remanding the case to the
Decision), the Ombudsman found Gabuya guilty of grave Ombudsman; and (b) issuing a writ of preliminary injunction
misconduct and ordered her dismissal from service with the notwithstanding such remand.
accessory penalties cancellation of eligibility, forfeiture of
retirement benefits and perpetual disqualification from re- The Court’s Ruling
employment in the government service.15
The petition is partly granted.
On July 18, 2008, Gabuya filed a motion for reconsideration
with the Ombudsman.16 Pending its resolution, she filed a The factual circumstances of the case reveal that Gabuya
petition for review with prayer for the issuance of a writ of committed forum shopping when she filed a petition for review
preliminary injunction17 before the CA (CA Petition), docketed before the CA, i.e. , the CA Petition, seeking to reverse and set
as CA-G.R. SP. No. 03874. aside the Ombudsman’s February 28, 2006 Decision dismissing
her from service, notwithstanding the pendency before the
The CA Ruling and Subsequent Proceedings Ombudsman of her motion for reconsideration of the same
decision praying for the same relief . In relation thereto, she
In a Decision18 dated March 19, 2009, the CA found that also failed to comply with the requirements of a certificate
Gabuya has a pending motion for reconsideration of the against forum shopping under Section 5, Rule 7 of the Rules of
Ombudsman’s February 28, 2006 Decision which was not Court26 (certification requirement) since the certificate she
disclosed in the certificate of non-forum shopping attached to attached to the CA Petition did not include a "complete
the CA Petition. As such, the CA remanded the case to the statement of the present status " of the aforesaid motion for
Ombudsman so that it may decide the motion with dispatch.19 reconsideration pending before the Ombudsman. Notably, the
act of forum shopping and the violation of the certification
Nevertheless, the CA granted Gabuya’s application for the requirement – while considered as peculiar procedural
issuance of a writ preliminary injunction, temporarily enjoining infractions – similarly constitute grounds for the dismissal of
the immediate implementation of her dismissal from service. It the case. As explained in Abbott Laboratories Phils. v.
cited as basis the Court’s Decision dated September 11, 2008 in Alcaraz:27
G.R. No. 175573, entitled
x x x The distinction between the prohibition against forum
Office of the Ombudsman v. Samaniego20 (2008 Samaniego shopping and the certification requirement should by now be
ruling), where it was held that the mere filing of an appeal is too elementary to be misunderstood. To reiterate, compliance
sufficient to stay the execution of the Ombudsman’s adverse with the certification against forum shopping is separate from
decision involving disciplinary cases.21 and independent of the avoidance of the act of forum shopping
itself. There is a difference in the treatment between failure to
Dissatisfied, the Ombudsman filed an Omnibus Motion22 dated comply with the certification requirement and violation of the
April 1, 2009 seeking the: (a) reconsideration of the Decision prohibition against forum shopping not only in terms of
dated March 19, 2009; and (b) lifting of the writ of preliminary imposable sanctions but also in the manner of enforcing them.
The former constitutes sufficient cause for the dismissal
310
without prejudice to the filing of the complaint or initiatory MODIFIED in that he writ of preliminary i{\junction is LIFTED
pleading upon motion and after hearing, while the latter is a and DISSOLVED.
ground for summary dismissal thereof and for direct contempt.
x x x. (Emphases supplied) 121. AZUCENA SEGOVIA-RIBAYA, Complainant, vs.ATTY.
BARTOLOME C. LAWSIN, Respondent.
Despite the foregoing violations, the Court observes that the
CA, instead of dismissing the case as would have been For the Court’s resolution is an administrative complaint1 filed
warranted under the Rules, opted to remand the same to the by Azucena Segovia-Ribaya (complainant) against Atty.
Ombudsman for the latter to resolve Gabuya’s motion for Bartolome C. Lawsin (respondent), the antecedents of which
reconsideration. It must, however, be borne in mind that a are detailed as follows:
remand and a dismissal are distinct procedural concepts and
hence should not be confused with one another, else the Rules The Facts
be subverted. On the one hand, a remand means an order "to
send back"; or the " sending of the case back to the same court On November 18, 2005, the parties entered into a retainership
out where it came for the purpose of having some action on it agreement2 (retainer) whereby respondent undertook to, inter
there";28 and, on the other hand, a dismissal refers to an order alia process the registration and eventually deliver, within a
or judgment finally disposing of an action, suit, motion, etc. period of six (6 ) months,3 the certificate of title over a certain
which may either be with prejudice or without.29 The dismissal parcel of land (subject land) in favor of complainant acting as
is deemed "with prejudice" when the adjudication is based on the representative of the Heirs of the late Isabel Segovia. In
the merits and bars the right to bring an action on the same connection therewith, respondent received from complainant
claim or cause30 and "without prejudice" when the case can be the amounts of ₱15,000.00 and ₱39,000.004 to cover for the
refiled despite its having been previously dismissed.31 litigation and land registration expenses, respectively.
Be that as it may, the Court finds no grave abuse of discretion Notwithstanding the expenditure of the ₱39,000.00 given for
on the part of the CA in remanding the case to the Ombudsman registration expenses (subject amount) and the lapse of more
for resolution of petitioner’s motion for reconsideration, absent than three (3) years from the retainer’s date, complainant
any showing that it exercised its discretion in a whimsical, alleged that respondent, without proper explanation, failed to
capricious, and arbitrary manner.32 In this respect, the instant fulfill his undertaking to register the subject land and deliver to
petition for certiorari lacks merit33 and the remand of the case complainant the certificate of title over the same. As
must stand. This is in addition to the fact that the nullification complainant was tired of respondent’s excuses, she finally
of the remand would only serve to unduly delay the decided to just withdraw the subject amount from respondent.
proceedings in this case. For such purpose, she confronted the latter at his office and
also subsequently sent him two (2) demand letters,5 but all to
The petition, however, is partly granted insofar as it prays for no avail.6 Hence, complainant was prompted to file the instant
the lifting of the writ of preliminary injunction. administrative complaint.
Verily, it is a standing rule that a writ of preliminary injunction is In his Comment,7 respondent admitted that he indeed received
merely provisional in nature and is integrally linked to the the subject amount from complainant but averred that after
subsistence of the proceedings in the main case.34 Stated receiving the same, the latter’s brother, Erlindo, asked to be
differently, the ancillary remedy of preliminary i{\junction reimbursed the amount of ₱7,500.00 which the latter
cannot exist except only as part or an incident of an purportedly paid to the land surveyor.8 Respondent likewise
independent action or proceeding.35 Thus, since the CA already alleged that he later found out that he could not perform his
remanded the case to the Ombudsman for the purpose of undertaking under the retainer because the ownership of the
resolving Gabuya's pending motion for reconsideration, the writ subject land was still under litigation.9 Finally, respondent
of preliminary injunction issued by it, absent any countervailing stated that he wanted to return the balance of the subject
justification therefor, must be dissolved. In this relation, it is amount to complainant after deducting what Erlindo took from
observed that the CA s issuance of the aforesaid writ was him, but was only prevented to do so because he was maligned
essentially hinged on the 2008 Samaniego ruling which, by complainant when she went to his office and there, shouted
however, did not contain any pronouncement on the legal and called him names in the presence of his staff.10
status of the writ issued in that case. The Court only remarked
that the injunctive writ issued in Samaniego was a "mere In the Court’s Resolutions dated December 17, 200811 and
superfluity" and, in fact, ordered the same to be "lifted" since March 2, 2009,12 the case was referred to the Integrated Bar of
the appeal of the Ombudsman's decision already had the effect the Philippines (IBP) for investigation, report, and
of staying its execution.36 In any case, the treatment of appeals recommendation. After both parties failed to appear during the
of Ombudsman decisions had already been modified by the mandatory conference, IBP Investigating Commissioner Atty.
Court in the 2010 Samaniego ruling as above-explained. As Salvador B. Hababag (Investigating Commissioner) required the
such, the general postulate on writs of preliminary injunction, parties to submit their respective position papers.13
as above-discussed, must be applied. Complainant filed her position paper14 on October 8, 2009,
while respondent failed to do so.
WHEREFORE the petition is GRANTED. The Decision dated
March 19, 2009 and Resolution dated July 31, 2009 of the Court The IBP’s Report and Recommendation
of Appeals, Cebu City in CA-G.R. SP. No. 03874 are hereby
311
On November 6, 2009, the Investigating Commissioner issued he has secured for his client as provided for in the Rules of
his Report and Recommendation,15 finding respondent to have Court.
violated Rules 16.01 and 16.03, Canon 16 of the Code of
Professional Responsibility (Code) for his failure to properly Records disclose that respondent admitted the receipt of the
account for the money entrusted to him without any adequate subject amount from complainant to cover for pertinent
explanation why he could not return the same. The registration expenses but posited his failure to return the same
Investigating Commissioner found that respondent’s acts due to his client’s act of confronting him at his office wherein
demonstrated his "lack of candor, fairness, and loyalty to his she shouted and called him names. With the fact of receipt
client, who entrusted him with money and documents for the being established, it was then respondent’s obligation to return
registration of the subject land."16 The Investigating the money entrusted to him by complainant. To this end,
Commissioner likewise held that respondent’s failure to return suffice it to state that complainant’s purported act of
the subject amount, despite being given "adequate time to "maligning" respondent does not justify the latter’s failure to
return"17 the same, "not to mention the repeated x x x properly account for and return his client’s money upon due
demands made upon him,"18 constitutes "gross dishonesty, demand. Verily, a lawyer’s duty to his client is one essentially
grave misconduct, and even misappropriation of money"19 in imbued with trust so much so that it is incumbent upon the
violation of the above-stated rules. In view of the foregoing, the former to exhaust all reasonable efforts towards its faithful
Investigating Commissioner recommended that respondent be compliance. In this case, despite that singular encounter,
suspended from the practice of law for a period of six (6) respondent had thereafter all the opportunity to return the
months, with a stern warning that a repetition of the same or subject amount but still failed to do so. Besides, the obligatory
similar offenses in the future shall be dealt with more force of said duty should not be diluted by the temperament or
severely.20 occasional frustrations of the lawyer’s client, especially so when
the latter remains unsatisfied by the lawyer’s work. Indeed, a
In a Resolution21 dated December 29, 2012, the IBP Board of lawyer must deal with his client with professional maturity and
Governors adopted and approved the Investigating commit himself towards the objective fulfillment of his
Commissioner’s Report and Recommendation with responsibilities. If the relationship is strained, the correct
modification, ordering the return of the amount of course of action is for the lawyer to properly account for his
₱31,500.00,22 with legal interest and within thirty (30) days affairs as well as to ensure the smooth turn-over of the case to
from receipt of notice, to complainant. another lawyer. Except only for the retaining lien exception23
under Rule 16.03, Canon 16 of the Code, the lawyer should not
The Issue Before the Court withhold the property of his client. Unfortunately, absent the
applicability of such exception or any other justifiable reason
The essential issue in this case is whether or not respondent therefor, respondent still failed to perform his duties under
should be held administratively liable for violating Rules 16.01 Rules 16.01 and 16.03, Canon 16 of the Code which perforce
and 16.03, Canon 16 of the Code. warrants his administrative liability.
The Court’s Ruling The Court, however, deems it proper to increase the IBP’s
recommended period of suspension from the practice of law
The Court concurs with and affirms the findings of the IBP from six (6) months to one (1) year in view of his concomitant
anent respondent’s administrative liability but deems it proper failure to exercise due diligence in handling his client’s cause as
to: (a) extend the recommended period of suspension from the mandated by Rules 18.03 and 18.04, Canon 18 of the Code:
practice of law from six (6) months to one (1) year; and (b)
delete the recommended order for the return of the amount of CANON 18 - A LAWYER SHALL SERVE HIS CLIENT WITH
₱31,500.00. COMPETENCE AND DILIGENCE. Rule 18.03 - A lawyer shall not
neglect a legal matter entrusted to him, and his negligence in
Anent respondent’s administrative liability, the Court agrees connection therewith shall render him liable.
with the IBP that respondent’s failure to properly account for
and duly return his client’s money despite due demand is Rule 18.04 - A lawyer shall keep the client informed of the
tantamount to a violation of Rules 16.01 and 16.03, Canon 16 of status of his case and shall respond within a reasonable time to
the Code which respectively read as follows: the client's request for information.
CANON 16 – A LAWYER SHALL HOLD IN TRUST ALL MONEYS After a judicious scrutiny of the records, the Court observes
AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS that respondent did not only accomplish his undertaking under
POSSESSION. the retainer, but likewise failed to give an adequate explanation
for such non-performance despite the protracted length of time
Rule 16.01 – A lawyer shall account for all money or property given for him to do so. As such omissions equally showcase
collected or received for or from the client. respondent’s non-compliance with the standard of proficiency
required of a lawyer as embodied in the above-cited rules, the
Rule 16.03 – A lawyer shall deliver the funds and property of his Court deems it apt to extend the period of his suspension from
client when due or upon demand.1âwphi1 However, he shall the practice of law from six (6) months to one (1) year similar to
have a lien over the funds and may apply so much thereof as the penalty imposed in the case of Del Mundo v. Capistrano.24
may be necessary to satisfy his lawful fees and disbursements,
giving notice promptly thereafter to his client. He shall also As a final point, the Court must clarify that the foregoing
have a lien to the same extent on all judgments and executions resolution should not include a directive for the return of the
312
amount of ₱31,500.00 as recommended by the IBP Board of conceptual underpinnings before detailing the particulars of the
Governors. The same amount was given by complainant to constitutional challenge.
respondent to cover for registration expenses; hence, its return
partakes the nature of a purely civil liability which should not be The Facts
dealt with during an administrative-disciplinary proceeding. In
Tria-Samonte v. Obias,25 the Court recently held that its I. Pork Barrel: General Concept.
"findings during administrative-disciplinary proceedings have
no bearing on the liabilities of the parties involved which are "Pork Barrel" is political parlance of American -English origin.3
purely civil in nature – meaning, those liabilities which have no Historically, its usage may be traced to the degrading ritual of
intrinsic link to the lawyer's professional engagement – as the rolling out a barrel stuffed with pork to a multitude of black
same should be threshed out in a proper proceeding of such slaves who would cast their famished bodies into the porcine
nature." This pronouncement the Court applies to this case and feast to assuage their hunger with morsels coming from the
thus, renders a disposition solely on respondent’s generosity of their well-fed master.4 This practice was later
administrative liability. compared to the actions of American legislators in trying to
direct federal budgets in favor of their districts.5 While the
WHEREFORE, respondent Atty. Bartolome C. Lawsin is found advent of refrigeration has made the actual pork barrel
guilty of violating Rules 16.01 and 16.03, Canon 16, and Rules obsolete, it persists in reference to political bills that "bring
18.03 and 18.04, Canon 18 of the Code of Professional home the bacon" to a legislator‘s district and constituents.6 In a
Responsibility. Accordingly, he is hereby SUSPENDED from the more technical sense, "Pork Barrel" refers to an appropriation
practice of law for a period of one (1) year effective upon his of government spending meant for localized projects and
receipt of this Resolution with a stem warning that a repetition secured solely or primarily to bring money to a representative's
of the same or similar acts will be dealt with more severely. district.7 Some scholars on the subject further use it to refer to
legislative control of local appropriations.8
Let a copy of this Resolution be furnished the Office of the Bar
Confidant the Integrated Bar of the Philippines and the Office of In the Philippines, "Pork Barrel" has been commonly referred to
the Court Administrator for circulation to all the courts. as lump-sum, discretionary funds of Members of the
Legislature,9 although, as will be later discussed, its usage
122. GRECO ANTONIOUS BEDA B. BELGICA JOSE M. VILLEGAS would evolve in reference to certain funds of the Executive.
JR. JOSE L. GONZALEZ REUBEN M. ABANTE and QUINTIN
PAREDES SAN DIEGO, Petitioners, vs.HONORABLE EXECUTIVE II. History of Congressional Pork Barrel in the Philippines.
SECRETARY PAQUITO N. OCHOA JR. SECRETARY OF BUDGET
AND MANAGEMENT FLORENCIO B. ABAD, NATIONAL A. Pre-Martial Law Era (1922-1972).
TREASURER ROSALIA V. DE LEON SENATE OF THE PHILIPPINES
represented by FRANKLIN M. DRILON m his capacity as Act 3044,10 or the Public Works Act of 1922, is considered11 as
SENATE PRESIDENT and HOUSE OF REPRESENTATIVES the earliest form of "Congressional Pork Barrel" in the
represented by FELICIANO S. BELMONTE, JR. in his capacity as Philippines since the utilization of the funds appropriated
SPEAKER OF THE HOUSE, Respondents. therein were subjected to post-enactment legislator approval.
Particularly, in the area of fund release, Section 312 provides
x-----------------------x that the sums appropriated for certain public works projects13
"shall be distributed x x x subject to the approval of a joint
G.R. No. 208493 SOCIAL JUSTICE SOCIETY (SJS) PRESIDENT committee elected by the Senate and the House of
SAMSON S. ALCANTARA, Petitioner, vs.HONORABLE FRANKLIN Representatives. "The committee from each House may also
M. DRILON in his capacity as SENATE PRESIDENT and authorize one of its members to approve the distribution made
HONORABLE FELICIANO S. BELMONTE, JR., in his capacity as by the Secretary of Commerce and Communications."14 Also, in
SPEAKER OF THE HOUSE OF REPRESENTATIVES, Respondents. the area of fund realignment, the same section provides that
the said secretary, "with the approval of said joint committee,
x-----------------------x or of the authorized members thereof, may, for the purposes of
said distribution, transfer unexpended portions of any item of
G.R. No. 209251 PEDRITO M. NEPOMUCENO, Former Mayor- appropriation under this Act to any other item hereunder."
Boac, Marinduque Former Provincial Board Member -Province
of Marinduque, Petitioner, vs.PRESIDENT BENIGNO SIMEON C. In 1950, it has been documented15 that post-enactment
AQUINO III* and SECRETARY FLORENCIO BUTCH ABAD, legislator participation broadened from the areas of fund
DEPARTMENT OF BUDGET AND MANAGEMENT, Respondents. release and realignment to the area of project identification.
During that year, the mechanics of the public works act was
"Experience is the oracle of truth."1 modified to the extent that the discretion of choosing projects
was transferred from the Secretary of Commerce and
-James Madison Communications to legislators. "For the first time, the law
carried a list of projects selected by Members of Congress, they
Before the Court are consolidated petitions2 taken under Rule ‘being the representatives of the people, either on their own
65 of the Rules of Court, all of which assail the constitutionality account or by consultation with local officials or civil
of the Pork Barrel System. Due to the complexity of the subject leaders.‘"16 During this period, the pork barrel process
matter, the Court shall heretofore discuss the system‘s commenced with local government councils, civil groups, and
individuals appealing to Congressmen or Senators for projects.
313
Petitions that were accommodated formed part of a legislator‘s any limitation or qualification, and that they could identify any
allocation, and the amount each legislator would eventually get kind of project, from hard or infrastructure projects such as
is determined in a caucus convened by the majority. The roads, bridges, and buildings to "soft projects" such as
amount was then integrated into the administration bill textbooks, medicines, and scholarships.27
prepared by the Department of Public Works and
Communications. Thereafter, the Senate and the House of D. Fidel Valdez Ramos (Ramos) Administration (1992-1998).
Representatives added their own provisions to the bill until it
was signed into law by the President – the Public Works Act.17 The following year, or in 1993,28 the GAA explicitly stated that
In the 1960‘s, however, pork barrel legislation reportedly the release of CDF funds was to be made upon the submission
ceased in view of the stalemate between the House of of the list of projects and activities identified by, among others,
Representatives and the Senate.18 individual legislators. For the first time, the 1993 CDF Article
included an allocation for the Vice-President.29 As such,
B. Martial Law Era (1972-1986). Representatives were allocated ₱12.5 Million each in CDF
funds, Senators, ₱18 Million each, and the Vice-President, ₱20
While the previous" Congressional Pork Barrel" was apparently Million.
discontinued in 1972 after Martial Law was declared, an era
when "one man controlled the legislature,"19 the reprieve was In 1994,30 1995,31 and 1996,32 the GAAs contained the same
only temporary. By 1982, the Batasang Pambansa had already provisions on project identification and fund release as found in
introduced a new item in the General Appropriations Act (GAA) the 1993 CDF Article. In addition, however, the Department of
called the" Support for Local Development Projects" (SLDP) Budget and Management (DBM) was directed to submit reports
under the article on "National Aid to Local Government Units". to the Senate Committee on Finance and the House Committee
Based on reports,20 it was under the SLDP that the practice of on Appropriations on the releases made from the funds.33
giving lump-sum allocations to individual legislators began, with
each assemblyman receiving ₱500,000.00. Thereafter, Under the 199734 CDF Article, Members of Congress and the
assemblymen would communicate their project preferences to Vice-President, in consultation with the implementing agency
the Ministry of Budget and Management for approval. Then, concerned, were directed to submit to the DBM the list of 50%
the said ministry would release the allocation papers to the of projects to be funded from their respective CDF allocations
Ministry of Local Governments, which would, in turn, issue the which shall be duly endorsed by (a) the Senate President and
checks to the city or municipal treasurers in the assemblyman‘s the Chairman of the Committee on Finance, in the case of the
locality. It has been further reported that "Congressional Pork Senate, and (b) the Speaker of the House of Representatives
Barrel" projects under the SLDP also began to cover not only and the Chairman of the Committee on Appropriations, in the
public works projects, or so- called "hard projects", but also case of the House of Representatives; while the list for the
"soft projects",21 or non-public works projects such as those remaining 50% was to be submitted within six (6) months
which would fall under the categories of, among others, thereafter. The same article also stated that the project list,
education, health and livelihood.22 which would be published by the DBM,35 "shall be the basis for
the release of funds" and that "no funds appropriated herein
C. Post-Martial Law Era: shall be disbursed for projects not included in the list herein
required."
Corazon Cojuangco Aquino Administration (1986-1992).
The following year, or in 1998,36 the foregoing provisions
After the EDSA People Power Revolution in 1986 and the regarding the required lists and endorsements were
restoration of Philippine democracy, "Congressional Pork reproduced, except that the publication of the project list was
Barrel" was revived in the form of the "Mindanao Development no longer required as the list itself sufficed for the release of
Fund" and the "Visayas Development Fund" which were CDF Funds.
created with lump-sum appropriations of ₱480 Million and
₱240 Million, respectively, for the funding of development The CDF was not, however, the lone form of "Congressional
projects in the Mindanao and Visayas areas in 1989. It has been Pork Barrel" at that time. Other forms of "Congressional Pork
documented23 that the clamor raised by the Senators and the Barrel" were reportedly fashioned and inserted into the GAA
Luzon legislators for a similar funding, prompted the creation of (called "Congressional Insertions" or "CIs") in order to
the "Countrywide Development Fund" (CDF) which was perpetuate the ad ministration‘s political agenda.37 It has been
integrated into the 1990 GAA24 with an initial funding of ₱2.3 articulated that since CIs "formed part and parcel of the
Billion to cover "small local infrastructure and other priority budgets of executive departments, they were not easily
community projects." identifiable and were thus harder to monitor." Nonetheless, the
lawmakers themselves as well as the finance and budget
Under the GAAs for the years 1991 and 1992,25 CDF funds officials of the implementing agencies, as well as the DBM,
were, with the approval of the President, to be released directly purportedly knew about the insertions.38 Examples of these CIs
to the implementing agencies but "subject to the submission of are the Department of Education (DepEd) School Building Fund,
the required list of projects and activities."Although the GAAs the Congressional Initiative Allocations, the Public Works Fund,
from 1990 to 1992 were silent as to the amounts of allocations the El Niño Fund, and the Poverty Alleviation Fund.39 The
of the individual legislators, as well as their participation in the allocations for the School Building Fund, particularly, ―shall be
identification of projects, it has been reported26 that by 1992, made upon prior consultation with the representative of the
Representatives were receiving ₱12.5 Million each in CDF legislative district concerned.”40 Similarly, the legislators had
funds, while Senators were receiving ₱18 Million each, without
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the power to direct how, where and when these appropriations Significantly, it was during this era that provisions which
were to be spent.41 allowed formal participation of non-governmental
organizations (NGO) in the implementation of government
E. Joseph Ejercito Estrada (Estrada) Administration (1998-2001). projects were introduced. In the Supplemental Budget for 2006,
with respect to the appropriation for school buildings, NGOs
In 1999,42 the CDF was removed in the GAA and replaced by were, by law, encouraged to participate. For such purpose, the
three (3) separate forms of CIs, namely, the "Food Security law stated that "the amount of at least ₱250 Million of the
Program Fund,"43 the "Lingap Para Sa Mahihirap Program ₱500 Million allotted for the construction and completion of
Fund,"44 and the "Rural/Urban Development Infrastructure school buildings shall be made available to NGOs including the
Program Fund,"45 all of which contained a special provision Federation of Filipino-Chinese Chambers of Commerce and
requiring "prior consultation" with the Member s of Congress Industry, Inc. for its "Operation Barrio School" program, with
for the release of the funds. capability and proven track records in the construction of public
school buildings x x x."62 The same allocation was made
It was in the year 200046 that the "Priority Development available to NGOs in the 2007 and 2009 GAAs under the DepEd
Assistance Fund" (PDAF) appeared in the GAA. The requirement Budget.63 Also, it was in 2007 that the Government
of "prior consultation with the respective Representative of the Procurement Policy Board64 (GPPB) issued Resolution No. 12-
District" before PDAF funds were directly released to the 2007 dated June 29, 2007 (GPPB Resolution 12-2007),
implementing agency concerned was explicitly stated in the amending the implementing rules and regulations65 of RA
2000 PDAF Article. Moreover, realignment of funds to any 9184,66 the Government Procurement Reform Act, to include,
expense category was expressly allowed, with the sole as a form of negotiated procurement,67 the procedure
condition that no amount shall be used to fund personal whereby the Procuring Entity68 (the implementing agency) may
services and other personnel benefits.47 The succeeding PDAF enter into a memorandum of agreement with an NGO,
provisions remained the same in view of the re-enactment48 of provided that "an appropriation law or ordinance earmarks an
the 2000 GAA for the year 2001. amount to be specifically contracted out to NGOs."69
Justice Carpio: And so the President cannot refuse to The applicability of the second exception is also apparent from
implement the General Appropriations Act, correct? the nature of the interests involved
Solicitor General Jardeleza: Well, that is our answer, Your – the constitutionality of the very system within which
Honor. In the case, for example of the PDAF, the President has significant amounts of public funds have been and continue to
a duty to execute the laws but in the face of the outrage over be utilized and expended undoubtedly presents a situation of
PDAF, the President was saying, "I am not sure that I will exceptional character as well as a matter of paramount public
continue the release of the soft projects," and that started, interest. The present petitions, in fact, have been lodged at a
Your Honor. Now, whether or not that … (interrupted) time when the system‘s flaws have never before been
magnified. To the Court‘s mind, the coalescence of the CoA
Justice Carpio: Yeah. I will grant the President if there are Report, the accounts of numerous whistle-blowers, and the
anomalies in the project, he has the power to stop the releases government‘s own recognition that reforms are needed "to
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address the reported abuses of the PDAF"130 demonstrates a just resurface wearing a different collar."135 In Sanlakas v.
prima facie pattern of abuse which only underscores the Executive Secretary,136 the government had already
importance of the matter. It is also by this finding that the backtracked on a previous course of action yet the Court used
Court finds petitioners‘ claims as not merely theorized, the "capable of repetition but evading review" exception in
speculative or hypothetical. Of note is the weight accorded by order "to prevent similar questions from re- emerging."137 The
the Court to the findings made by the CoA which is the situation similarly holds true to these cases. Indeed, the myriad
constitutionally-mandated audit arm of the government. In of issues underlying the manner in which certain public funds
Delos Santos v. CoA,131 a recent case wherein the Court are spent, if not resolved at this most opportune time, are
upheld the CoA‘s disallowance of irregularly disbursed PDAF capable of repetition and hence, must not evade judicial
funds, it was emphasized that: review.
The COA is endowed with enough latitude to determine, B. Matters of Policy: the Political Question Doctrine.
prevent, and disallow irregular, unnecessary, excessive,
extravagant or unconscionable expenditures of government The "limitation on the power of judicial review to actual cases
funds. It is tasked to be vigilant and conscientious in and controversies‖ carries the assurance that "the courts will
safeguarding the proper use of the government's, and not intrude into areas committed to the other branches of
ultimately the people's, property. The exercise of its general government."138 Essentially, the foregoing limitation is a
audit power is among the constitutional mechanisms that gives restatement of the political question doctrine which, under the
life to the check and balance system inherent in our form of classic formulation of Baker v. Carr,139 applies when there is
government. found, among others, "a textually demonstrable constitutional
commitment of the issue to a coordinate political department,"
It is the general policy of the Court to sustain the decisions of "a lack of judicially discoverable and manageable standards for
administrative authorities, especially one which is resolving it" or "the impossibility of deciding without an initial
constitutionally-created, such as the CoA, not only on the basis policy determination of a kind clearly for non- judicial
of the doctrine of separation of powers but also for their discretion." Cast against this light, respondents submit that the
presumed expertise in the laws they are entrusted to enforce. "the political branches are in the best position not only to
Findings of administrative agencies are accorded not only perform budget-related reforms but also to do them in
respect but also finality when the decision and order are not response to the specific demands of their constituents" and, as
tainted with unfairness or arbitrariness that would amount to such, "urge the Court not to impose a solution at this
grave abuse of discretion. It is only when the CoA has acted stage."140
without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, that this The Court must deny respondents‘ submission.
Court entertains a petition questioning its rulings. x x x.
(Emphases supplied) Suffice it to state that the issues raised before the Court do not
present political but legal questions which are within its
Thus, if only for the purpose of validating the existence of an province to resolve. A political question refers to "those
actual and justiciable controversy in these cases, the Court questions which, under the Constitution, are to be decided by
deems the findings under the CoA Report to be sufficient. the people in their sovereign capacity, or in regard to which full
discretionary authority has been delegated to the Legislature or
The Court also finds the third exception to be applicable largely executive branch of the Government. It is concerned with
due to the practical need for a definitive ruling on the system‘s issues dependent upon the wisdom, not legality, of a particular
constitutionality. As disclosed during the Oral Arguments, the measure."141 The intrinsic constitutionality of the "Pork Barrel
CoA Chairperson estimates that thousands of notices of System" is not an issue dependent upon the wisdom of the
disallowances will be issued by her office in connection with the political branches of government but rather a legal one which
findings made in the CoA Report. In this relation, Associate the Constitution itself has commanded the Court to act upon.
Justice Marvic Mario Victor F. Leonen (Justice Leonen) pointed Scrutinizing the contours of the system along constitutional
out that all of these would eventually find their way to the lines is a task that the political branches of government are
courts.132 Accordingly, there is a compelling need to formulate incapable of rendering precisely because it is an exercise of
controlling principles relative to the issues raised herein in judicial power. More importantly, the present Constitution has
order to guide the bench, the bar, and the public, not just for not only vested the Judiciary the right to exercise judicial power
the expeditious resolution of the anticipated disallowance but essentially makes it a duty to proceed therewith. Section 1,
cases, but more importantly, so that the government may be Article VIII of the 1987 Constitution cannot be any clearer: "The
guided on how public funds should be utilized in accordance judicial power shall be vested in one Supreme Court and in such
with constitutional principles. lower courts as may be established by law. It includes the duty
of the courts of justice to settle actual controversies involving
Finally, the application of the fourth exception is called for by rights which are legally demandable and enforceable, and to
the recognition that the preparation and passage of the determine whether or not there has been a grave abuse of
national budget is, by constitutional imprimatur, an affair of discretion amounting to lack or excess of jurisdiction on the
annual occurrence.133 The relevance of the issues before the part of any branch or instrumentality of the Government." In
Court does not cease with the passage of a "PDAF -free budget Estrada v. Desierto,142 the expanded concept of judicial power
for 2014."134 The evolution of the "Pork Barrel System," by its under the 1987 Constitution and its effect on the political
multifarious iterations throughout the course of history, lends a question doctrine was explained as follows:143
semblance of truth to petitioners‘ claim that "the same dog will
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To a great degree, the 1987 Constitution has narrowed the may be classified as matters "of transcendental importance, of
reach of the political question doctrine when it expanded the overreaching significance to society, or of paramount public
power of judicial review of this court not only to settle actual interest."148 The CoA Chairperson‘s statement during the Oral
controversies involving rights which are legally demandable and Arguments that the present controversy involves "not merely a
enforceable but also to determine whether or not there has systems failure" but a "complete breakdown of controls"149
been a grave abuse of discretion amounting to lack or excess of amplifies, in addition to the matters above-discussed, the
jurisdiction on the part of any branch or instrumentality of seriousness of the issues involved herein. Indeed, of greater
government. Heretofore, the judiciary has focused on the "thou import than the damage caused by the illegal expenditure of
shalt not's" of the Constitution directed against the exercise of public funds is the mortal wound inflicted upon the
its jurisdiction. With the new provision, however, courts are fundamental law by the enforcement of an invalid statute.150
given a greater prerogative to determine what it can do to All told, petitioners have sufficient locus standi to file the
prevent grave abuse of discretion amounting to lack or excess instant cases.
of jurisdiction on the part of any branch or instrumentality of
government. Clearly, the new provision did not just grant the D. Res Judicata and Stare Decisis.
Court power of doing nothing. x x x (Emphases supplied)
Res judicata (which means a "matter adjudged") and stare
It must also be borne in mind that ― when the judiciary decisis non quieta et movere (or simply, stare decisis which
mediates to allocate constitutional boundaries, it does not means "follow past precedents and do not disturb what has
assert any superiority over the other departments; does not in been settled") are general procedural law principles which both
reality nullify or invalidate an act of the legislature or the deal with the effects of previous but factually similar
executive, but only asserts the solemn and sacred obligation dispositions to subsequent cases. For the cases at bar, the
assigned to it by the Constitution."144 To a great extent, the Court examines the applicability of these principles in relation
Court is laudably cognizant of the reforms undertaken by its co- to its prior rulings in Philconsa and LAMP.
equal branches of government. But it is by constitutional force
that the Court must faithfully perform its duty. Ultimately, it is The focal point of res judicata is the judgment. The principle
the Court‘s avowed intention that a resolution of these cases states that a judgment on the merits in a previous case
would not arrest or in any manner impede the endeavors of the rendered by a court of competent jurisdiction would bind a
two other branches but, in fact, help ensure that the pillars of subsequent case if, between the first and second actions, there
change are erected on firm constitutional grounds. After all, it is exists an identity of parties, of subject matter, and of causes of
in the best interest of the people that each great branch of action.151 This required identity is not, however, attendant
government, within its own sphere, contributes its share hereto since Philconsa and LAMP, respectively involved
towards achieving a holistic and genuine solution to the constitutional challenges against the 1994 CDF Article and 2004
problems of society. For all these reasons, the Court cannot PDAF Article, whereas the cases at bar call for a broader
heed respondents‘ plea for judicial restraint. constitutional scrutiny of the entire "Pork Barrel System." Also,
the ruling in LAMP is essentially a dismissal based on a
C. Locus Standi. procedural technicality – and, thus, hardly a judgment on the
merits – in that petitioners therein failed to present any
"The gist of the question of standing is whether a party alleges "convincing proof x x x showing that, indeed, there were direct
such personal stake in the outcome of the controversy as to releases of funds to the Members of Congress, who actually
assure that concrete adverseness which sharpens the spend them according to their sole discretion" or "pertinent
presentation of issues upon which the court depends for evidentiary support to demonstrate the illegal misuse of PDAF
illumination of difficult constitutional questions. Unless a in the form of kickbacks and has become a common exercise of
person is injuriously affected in any of his constitutional rights unscrupulous Members of Congress." As such, the Court up
by the operation of statute or ordinance, he has no held, in view of the presumption of constitutionality accorded
standing."145 to every law, the 2004 PDAF Article, and saw "no need to
review or reverse the standing pronouncements in the said
Petitioners have come before the Court in their respective case." Hence, for the foregoing reasons, the res judicata
capacities as citizen-taxpayers and accordingly, assert that they principle, insofar as the Philconsa and LAMP cases are
"dutifully contribute to the coffers of the National concerned, cannot apply.
Treasury."146 Clearly, as taxpayers, they possess the requisite
standing to question the validity of the existing "Pork Barrel On the other hand, the focal point of stare decisis is the
System" under which the taxes they pay have been and doctrine created. The principle, entrenched under Article 8152
continue to be utilized. It is undeniable that petitioners, as of the Civil Code, evokes the general rule that, for the sake of
taxpayers, are bound to suffer from the unconstitutional usage certainty, a conclusion reached in one case should be
of public funds, if the Court so rules. Invariably, taxpayers have doctrinally applied to those that follow if the facts are
been allowed to sue where there is a claim that public funds are substantially the same, even though the parties may be
illegally disbursed or that public money is being deflected to different. It proceeds from the first principle of justice that,
any improper purpose, or that public funds are wasted through absent any powerful countervailing considerations, like cases
the enforcement of an invalid or unconstitutional law,147 as in ought to be decided alike. Thus, where the same questions
these cases. relating to the same event have been put forward by the
parties similarly situated as in a previous case litigated and
Moreover, as citizens, petitioners have equally fulfilled the decided by a competent court, the rule of stare decisis is a bar
standing requirement given that the issues they have raised to any attempt to re-litigate the same issue.153
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ruling in Philconsa insofar as it validated the post-enactment
Philconsa was the first case where a constitutional challenge identification authority of Members of Congress on the guise
against a Pork Barrel provision, i.e., the 1994 CDF Article, was that the same was merely recommendatory. This postulate
resolved by the Court. To properly understand its context, raises serious constitutional inconsistencies which cannot be
petitioners‘ posturing was that "the power given to the simply excused on the ground that such mechanism is
Members of Congress to propose and identify projects and "imaginative as it is innovative." Moreover, it must be pointed
activities to be funded by the CDF is an encroachment by the out that the recent case of Abakada Guro Party List v.
legislature on executive power, since said power in an Purisima155 (Abakada) has effectively overturned Philconsa‘s
appropriation act is in implementation of the law" and that "the allowance of post-enactment legislator participation in view of
proposal and identification of the projects do not involve the the separation of powers principle. These constitutional
making of laws or the repeal and amendment thereof, the only inconsistencies and the Abakada rule will be discussed in
function given to the Congress by the Constitution."154 In greater detail in the ensuing section of this Decision.
deference to the foregoing submissions, the Court reached the
following main conclusions: one, under the Constitution, the As for LAMP, suffice it to restate that the said case was
power of appropriation, or the "power of the purse," belongs to dismissed on a procedural technicality and, hence, has not set
Congress; two, the power of appropriation carries with it the any controlling doctrine susceptible of current application to
power to specify the project or activity to be funded under the the substantive issues in these cases. In fine, stare decisis would
appropriation law and it can be detailed and as broad as not apply.
Congress wants it to be; and, three, the proposals and
identifications made by Members of Congress are merely II. Substantive Issues.
recommendatory. At once, it is apparent that the Philconsa
resolution was a limited response to a separation of powers A. Definition of Terms.
problem, specifically on the propriety of conferring post-
enactment identification authority to Members of Congress. On Before the Court proceeds to resolve the substantive issues of
the contrary, the present cases call for a more holistic these cases, it must first define the terms "Pork Barrel System,"
examination of (a) the inter-relation between the CDF and "Congressional Pork Barrel," and "Presidential Pork Barrel" as
PDAF Articles with each other, formative as they are of the they are essential to the ensuing discourse.
entire "Pork Barrel System" as well as (b) the intra-relation of
post-enactment measures contained within a particular CDF or Petitioners define the term "Pork Barrel System" as the
PDAF Article, including not only those related to the area of "collusion between the Legislative and Executive branches of
project identification but also to the areas of fund release and government to accumulate lump-sum public funds in their
realignment. The complexity of the issues and the broader legal offices with unchecked discretionary powers to determine its
analyses herein warranted may be, therefore, considered as a distribution as political largesse."156 They assert that the
powerful countervailing reason against a wholesale application following elements make up the Pork Barrel System: (a) lump-
of the stare decisis principle. sum funds are allocated through the appropriations process to
an individual officer; (b) the officer is given sole and broad
In addition, the Court observes that the Philconsa ruling was discretion in determining how the funds will be used or
actually riddled with inherent constitutional inconsistencies expended; (c) the guidelines on how to spend or use the funds
which similarly countervail against a full resort to stare decisis. in the appropriation are either vague, overbroad or inexistent;
As may be deduced from the main conclusions of the case, and (d) projects funded are intended to benefit a definite
Philconsa‘s fundamental premise in allowing Members of constituency in a particular part of the country and to help the
Congress to propose and identify of projects would be that the political careers of the disbursing official by yielding rich
said identification authority is but an aspect of the power of patronage benefits.157 They further state that the Pork Barrel
appropriation which has been constitutionally lodged in System is comprised of two (2) kinds of discretionary public
Congress. From this premise, the contradictions may be easily funds: first, the Congressional (or Legislative) Pork Barrel,
seen. If the authority to identify projects is an aspect of currently known as the PDAF;158 and, second, the Presidential
appropriation and the power of appropriation is a form of (or Executive) Pork Barrel, specifically, the Malampaya Funds
legislative power thereby lodged in Congress, then it follows under PD 910 and the Presidential Social Fund under PD 1869,
that: (a) it is Congress which should exercise such authority, and as amended by PD 1993.159
not its individual Members; (b) such authority must be
exercised within the prescribed procedure of law passage and, Considering petitioners‘ submission and in reference to its local
hence, should not be exercised after the GAA has already been concept and legal history, the Court defines the Pork Barrel
passed; and (c) such authority, as embodied in the GAA, has the System as the collective body of rules and practices that govern
force of law and, hence, cannot be merely recommendatory. the manner by which lump-sum, discretionary funds, primarily
Justice Vitug‘s Concurring Opinion in the same case sums up the intended for local projects, are utilized through the respective
Philconsa quandary in this wise: "Neither would it be participations of the Legislative and Executive branches of
objectionable for Congress, by law, to appropriate funds for government, including its members. The Pork Barrel System
such specific projects as it may be minded; to give that involves two (2) kinds of lump-sum discretionary funds:
authority, however, to the individual members of Congress in
whatever guise, I am afraid, would be constitutionally First, there is the Congressional Pork Barrel which is herein
impermissible." As the Court now largely benefits from defined as a kind of lump-sum, discretionary fund wherein
hindsight and current findings on the matter, among others, the legislators, either individually or collectively organized into
CoA Report, the Court must partially abandon its previous committees, are able to effectively control certain aspects of
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the fund’s utilization through various post-enactment measures (a) interference with and/or (b) assumption of another
and/or practices. In particular, petitioners consider the PDAF, as department‘s functions.
it appears under the 2013 GAA, as Congressional Pork Barrel
since it is, inter alia, a post-enactment measure that allows The enforcement of the national budget, as primarily contained
individual legislators to wield a collective power;160 and in the GAA, is indisputably a function both constitutionally
assigned and properly entrusted to the Executive branch of
Second, there is the Presidential Pork Barrel which is herein government. In Guingona, Jr. v. Hon. Carague173 (Guingona,
defined as a kind of lump-sum, discretionary fund which allows Jr.), the Court explained that the phase of budget execution
the President to determine the manner of its utilization. For "covers the various operational aspects of budgeting" and
reasons earlier stated,161 the Court shall delimit the use of accordingly includes "the evaluation of work and financial plans
such term to refer only to the Malampaya Funds and the for individual activities," the "regulation and release of funds"
Presidential Social Fund. as well as all "other related activities" that comprise the budget
execution cycle.174 This is rooted in the principle that the
With these definitions in mind, the Court shall now proceed to allocation of power in the three principal branches of
discuss the substantive issues of these cases. government is a grant of all powers inherent in them.175 Thus,
unless the Constitution provides otherwise, the Executive
B. Substantive Issues on the Congressional Pork Barrel. department should exclusively exercise all roles and
prerogatives which go into the implementation of the national
1. Separation of Powers. budget as provided under the GAA as well as any other
appropriation law.
a. Statement of Principle.
In view of the foregoing, the Legislative branch of government,
The principle of separation of powers refers to the much more any of its members, should not cross over the field
constitutional demarcation of the three fundamental powers of of implementing the national budget since, as earlier stated,
government. In the celebrated words of Justice Laurel in Angara the same is properly the domain of the Executive. Again, in
v. Electoral Commission,162 it means that the "Constitution has Guingona, Jr., the Court stated that "Congress enters the
blocked out with deft strokes and in bold lines, allotment of picture when it deliberates or acts on the budget proposals of
power to the executive, the legislative and the judicial the President. Thereafter, Congress, "in the exercise of its own
departments of the government."163 To the legislative branch judgment and wisdom, formulates an appropriation act
of government, through Congress,164 belongs the power to precisely following the process established by the Constitution,
make laws; to the executive branch of government, through the which specifies that no money may be paid from the Treasury
President,165 belongs the power to enforce laws; and to the except in accordance with an appropriation made by law."
judicial branch of government, through the Court,166 belongs Upon approval and passage of the GAA, Congress‘ law -making
the power to interpret laws. Because the three great powers role necessarily comes to an end and from there the Executive‘s
have been, by constitutional design, ordained in this respect, role of implementing the national budget begins. So as not to
"each department of the government has exclusive cognizance blur the constitutional boundaries between them, Congress
of matters within its jurisdiction, and is supreme within its own must "not concern it self with details for implementation by the
sphere."167 Thus, "the legislature has no authority to execute Executive."176
or construe the law, the executive has no authority to make or
construe the law, and the judiciary has no power to make or The foregoing cardinal postulates were definitively enunciated
execute the law."168 The principle of separation of powers and in Abakada where the Court held that "from the moment the
its concepts of autonomy and independence stem from the law becomes effective, any provision of law that empowers
notion that the powers of government must be divided to avoid Congress or any of its members to play any role in the
concentration of these powers in any one branch; the division, implementation or enforcement of the law violates the
it is hoped, would avoid any single branch from lording its principle of separation of powers and is thus
power over the other branches or the citizenry.169 To achieve unconstitutional."177 It must be clarified, however, that since
this purpose, the divided power must be wielded by co-equal the restriction only pertains to "any role in the implementation
branches of government that are equally capable of or enforcement of the law," Congress may still exercise its
independent action in exercising their respective mandates. oversight function which is a mechanism of checks and balances
Lack of independence would result in the inability of one that the Constitution itself allows. But it must be made clear
branch of government to check the arbitrary or self-interest that Congress‘ role must be confined to mere oversight. Any
assertions of another or others.170 post-enactment-measure allowing legislator participation
beyond oversight is bereft of any constitutional basis and
Broadly speaking, there is a violation of the separation of hence, tantamount to impermissible interference and/or
powers principle when one branch of government unduly assumption of executive functions. As the Court ruled in
encroaches on the domain of another. US Supreme Court Abakada:178
decisions instruct that the principle of separation of powers
may be violated in two (2) ways: firstly, "one branch may Any post-enactment congressional measure x x x should be
interfere impermissibly with the other’s performance of its limited to scrutiny and investigation.1âwphi1 In particular,
constitutionally assigned function";171 and "alternatively, the congressional oversight must be confined to the following:
doctrine may be violated when one branch assumes a function
that more properly is entrusted to another."172 In other words, (1) scrutiny based primarily on Congress‘ power of
there is a violation of the principle when there is impermissible appropriation and the budget hearings conducted in connection
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with it, its power to ask heads of departments to appear before implementing agencies from which the legislator may make his
and be heard by either of its Houses on any matter pertaining choice. The same provision further authorizes legislators to
to their departments and its power of confirmation; and identify PDAF projects outside his district for as long as the
representative of the district concerned concurs in writing.
(2) investigation and monitoring of the implementation of laws Meanwhile, Special Provision 3 clarifies that PDAF projects refer
pursuant to the power of Congress to conduct inquiries in aid of to "projects to be identified by legislators"188 and thereunder
legislation. provides the allocation limit for the total amount of projects
identified by each legislator. Finally, paragraph 2 of Special
Any action or step beyond that will undermine the separation Provision 4 requires that any modification and revision of the
of powers guaranteed by the Constitution. (Emphases supplied) project identification "shall be submitted to the House
Committee on Appropriations and the Senate Committee on
b. Application. Finance for favorable endorsement to the DBM or the
implementing agency, as the case may be." From the foregoing
In these cases, petitioners submit that the Congressional Pork special provisions, it cannot be seriously doubted that
Barrel – among others, the 2013 PDAF Article – "wrecks the legislators have been accorded post-enactment authority to
assignment of responsibilities between the political branches" identify PDAF projects.
as it is designed to allow individual legislators to interfere "way
past the time it should have ceased" or, particularly, "after the Aside from the area of project identification, legislators have
GAA is passed."179 They state that the findings and also been accorded post-enactment authority in the areas of
recommendations in the CoA Report provide "an illustration of fund release and realignment. Under the 2013 PDAF Article, the
how absolute and definitive the power of legislators wield over statutory authority of legislators to participate in the area of
project implementation in complete violation of the fund release through congressional committees is contained in
constitutional principle of separation of powers."180 Further, Special Provision 5 which explicitly states that "all request for
they point out that the Court in the Philconsa case only allowed release of funds shall be supported by the documents
the CDF to exist on the condition that individual legislators prescribed under Special Provision No. 1 and favorably
limited their role to recommending projects and not if they endorsed by House Committee on Appropriations and the
actually dictate their implementation.181 Senate Committee on Finance, as the case may be"; while their
statutory authority to participate in the area of fund
For their part, respondents counter that the separations of realignment is contained in: first , paragraph 2, Special
powers principle has not been violated since the President Provision 4189 which explicitly state s, among others, that "any
maintains "ultimate authority to control the execution of the realignment of funds shall be submitted to the House
GAA‖ and that he "retains the final discretion to reject" the Committee on Appropriations and the Senate Committee on
legislators‘ proposals.182 They maintain that the Court, in Finance for favorable endorsement to the DBM or the
Philconsa, "upheld the constitutionality of the power of implementing agency, as the case may be‖ ; and, second ,
members of Congress to propose and identify projects so long paragraph 1, also of Special Provision 4 which authorizes the
as such proposal and identification are recommendatory."183 "Secretaries of Agriculture, Education, Energy, Interior and
As such, they claim that "everything in the Special Provisions [of Local Government, Labor and Employment, Public Works and
the 2013 PDAF Article follows the Philconsa framework, and Highways, Social Welfare and Development and Trade and
hence, remains constitutional."184 Industry190 x x x to approve realignment from one
project/scope to another within the allotment received from
The Court rules in favor of petitioners. this Fund, subject to among others (iii) the request is with the
concurrence of the legislator concerned."
As may be observed from its legal history, the defining feature
of all forms of Congressional Pork Barrel would be the authority Clearly, these post-enactment measures which govern the
of legislators to participate in the post-enactment phases of areas of project identification, fund release and fund
project implementation. realignment are not related to functions of congressional
oversight and, hence, allow legislators to intervene and/or
At its core, legislators – may it be through project lists,185 prior assume duties that properly belong to the sphere of budget
consultations186 or program menus187 – have been execution. Indeed, by virtue of the foregoing, legislators have
consistently accorded post-enactment authority to identify the been, in one form or another, authorized to participate in – as
projects they desire to be funded through various Guingona, Jr. puts it – "the various operational aspects of
Congressional Pork Barrel allocations. Under the 2013 PDAF budgeting," including "the evaluation of work and financial
Article, the statutory authority of legislators to identify projects plans for individual activities" and the "regulation and release
post-GAA may be construed from the import of Special of funds" in violation of the separation of powers principle. The
Provisions 1 to 3 as well as the second paragraph of Special fundamental rule, as categorically articulated in Abakada,
Provision 4. To elucidate, Special Provision 1 embodies the cannot be overstated – from the moment the law becomes
program menu feature which, as evinced from past PDAF effective, any provision of law that empowers Congress or any
Articles, allows individual legislators to identify PDAF projects of its members to play any role in the implementation or
for as long as the identified project falls under a general enforcement of the law violates the principle of separation of
program listed in the said menu. Relatedly, Special Provision 2 powers and is thus unconstitutional.191 That the said authority
provides that the implementing agencies shall, within 90 days is treated as merely recommendatory in nature does not alter
from the GAA is passed, submit to Congress a more detailed its unconstitutional tenor since the prohibition, to repeat,
priority list, standard or design prepared and submitted by covers any role in the implementation or enforcement of the
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law. Towards this end, the Court must therefore abandon its which similarly allow legislators to wield any form of post-
ruling in Philconsa which sanctioned the conduct of legislator enactment authority in the implementation or enforcement of
identification on the guise that the same is merely the budget, unrelated to congressional oversight, as violative of
recommendatory and, as such, respondents‘ reliance on the the separation of powers principle and thus unconstitutional.
same falters altogether. Corollary thereto, informal practices, through which legislators
have effectively intruded into the proper phases of budget
Besides, it must be pointed out that respondents have execution, must be deemed as acts of grave abuse of discretion
nonetheless failed to substantiate their position that the amounting to lack or excess of jurisdiction and, hence, accorded
identification authority of legislators is only of recommendatory the same unconstitutional treatment. That such informal
import. Quite the contrary, respondents – through the practices do exist and have, in fact, been constantly observed
statements of the Solicitor General during the Oral Arguments – throughout the years has not been substantially disputed here.
have admitted that the identification of the legislator As pointed out by Chief Justice Maria Lourdes P.A. Sereno
constitutes a mandatory requirement before his PDAF can be (Chief Justice Sereno) during the Oral Arguments of these
tapped as a funding source, thereby highlighting the cases:193
indispensability of the said act to the entire budget execution Chief Justice Sereno:
process:192
Now, from the responses of the representative of both, the
Justice Bernabe: Now, without the individual legislator’s DBM and two (2) Houses of Congress, if we enforces the initial
identification of the project, can the PDAF of the legislator be thought that I have, after I had seen the extent of this research
utilized? made by my staff, that neither the Executive nor Congress
frontally faced the question of constitutional compatibility of
Solicitor General Jardeleza: No, Your Honor. how they were engineering the budget process. In fact, the
words you have been using, as the three lawyers of the DBM,
Justice Bernabe: It cannot? and both Houses of Congress has also been using is surprise;
surprised that all of these things are now surfacing. In fact, I
Solicitor General Jardeleza: It cannot… (interrupted) thought that what the 2013 PDAF provisions did was to codify
in one section all the past practice that had been done since
Justice Bernabe: So meaning you should have the identification 1991. In a certain sense, we should be thankful that they are all
of the project by the individual legislator? now in the PDAF Special Provisions. x x x (Emphasis and
underscoring supplied)
Solicitor General Jardeleza: Yes, Your Honor.
Ultimately, legislators cannot exercise powers which they do
xxxx not have, whether through formal measures written into the
law or informal practices institutionalized in government
Justice Bernabe: In short, the act of identification is mandatory? agencies, else the Executive department be deprived of what
the Constitution has vested as its own.
Solictor General Jardeleza: Yes, Your Honor. In the sense that if
it is not done and then there is no identification. 2. Non-delegability of Legislative Power.
Justice Bernabe: Now, would you know of specific instances As an adjunct to the separation of powers principle,194
when a project was implemented without the identification by legislative power shall be exclusively exercised by the body to
the individual legislator? which the Constitution has conferred the same. In particular,
Section 1, Article VI of the 1987 Constitution states that such
Solicitor General Jardeleza: I do not know, Your Honor; I do not power shall be vested in the Congress of the Philippines which
think so but I have no specific examples. I would doubt very shall consist of a Senate and a House of Representatives, except
much, Your Honor, because to implement, there is a need for a to the extent reserved to the people by the provision on
SARO and the NCA. And the SARO and the NCA are triggered by initiative and referendum.195 Based on this provision, it is clear
an identification from the legislator. that only Congress, acting as a bicameral body, and the people,
through the process of initiative and referendum, may
xxxx constitutionally wield legislative power and no other. This
premise embodies the principle of non-delegability of
Solictor General Jardeleza: What we mean by mandatory, Your legislative power, and the only recognized exceptions thereto
Honor, is we were replying to a question, "How can a legislator would be: (a) delegated legislative power to local governments
make sure that he is able to get PDAF Funds?" It is mandatory which, by immemorial practice, are allowed to legislate on
in the sense that he must identify, in that sense, Your Honor. purely local matters;196 and (b) constitutionally-grafted
Otherwise, if he does not identify, he cannot avail of the PDAF exceptions such as the authority of the President to, by law,
Funds and his district would not be able to have PDAF Funds, exercise powers necessary and proper to carry out a declared
only in that sense, Your Honor. (Emphases supplied) national policy in times of war or other national emergency,197
or fix within specified limits, and subject to such limitations and
Thus, for all the foregoing reasons, the Court hereby declares restrictions as Congress may impose, tariff rates, import and
the 2013 PDAF Article as well as all other provisions of law export quotas, tonnage and wharfage dues, and other duties or
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imposts within the framework of the national development 3. Checks and Balances.
program of the Government.198
a. Statement of Principle; Item-Veto Power.
Notably, the principle of non-delegability should not be
confused as a restriction to delegate rule-making authority to The fact that the three great powers of government are
implementing agencies for the limited purpose of either filling intended to be kept separate and distinct does not mean that
up the details of the law for its enforcement (supplementary they are absolutely unrestrained and independent of each
rule-making) or ascertaining facts to bring the law into actual other. The Constitution has also provided for an elaborate
operation (contingent rule-making).199 The conceptual system of checks and balances to secure coordination in the
treatment and limitations of delegated rule-making were workings of the various departments of the government.203
explained in the case of People v. Maceren200 as follows:
A prime example of a constitutional check and balance would
The grant of the rule-making power to administrative agencies be the President’s power to veto an item written into an
is a relaxation of the principle of separation of powers and is an appropriation, revenue or tariff bill submitted to him by
exception to the nondelegation of legislative powers. Congress for approval through a process known as "bill
Administrative regulations or "subordinate legislation" presentment." The President‘s item-veto power is found in
calculated to promote the public interest are necessary because Section 27(2), Article VI of the 1987 Constitution which reads as
of "the growing complexity of modern life, the multiplication of follows:
the subjects of governmental regulations, and the increased
difficulty of administering the law." Sec. 27. x x x.
xxxx xxxx
Nevertheless, it must be emphasized that the rule-making (2) The President shall have the power to veto any particular
power must be confined to details for regulating the mode or item or items in an appropriation, revenue, or tariff bill, but the
proceeding to carry into effect the law as it has been enacted. veto shall not affect the item or items to which he does not
The power cannot be extended to amending or expanding the object.
statutory requirements or to embrace matters not covered by
the statute. Rules that subvert the statute cannot be The presentment of appropriation, revenue or tariff bills to the
sanctioned. (Emphases supplied) President, wherein he may exercise his power of item-veto,
forms part of the "single, finely wrought and exhaustively
b. Application. considered, procedures" for law-passage as specified under the
Constitution.204 As stated in Abakada, the final step in the law-
In the cases at bar, the Court observes that the 2013 PDAF making process is the "submission of the bill to the President
Article, insofar as it confers post-enactment identification for approval. Once approved, it takes effect as law after the
authority to individual legislators, violates the principle of non- required publication."205
delegability since said legislators are effectively allowed to
individually exercise the power of appropriation, which – as Elaborating on the President‘s item-veto power and its
settled in Philconsa – is lodged in Congress.201 That the power relevance as a check on the legislature, the Court, in Bengzon,
to appropriate must be exercised only through legislation is explained that:206
clear from Section 29(1), Article VI of the 1987 Constitution
which states that: "No money shall be paid out of the Treasury The former Organic Act and the present Constitution of the
except in pursuance of an appropriation made by law." To Philippines make the Chief Executive an integral part of the law-
understand what constitutes an act of appropriation, the Court, making power. His disapproval of a bill, commonly known as a
in Bengzon v. Secretary of Justice and Insular Auditor202 veto, is essentially a legislative act. The questions presented to
(Bengzon), held that the power of appropriation involves (a) the the mind of the Chief Executive are precisely the same as those
setting apart by law of a certain sum from the public revenue the legislature must determine in passing a bill, except that his
for (b) a specified purpose. Essentially, under the 2013 PDAF will be a broader point of view.
Article, individual legislators are given a personal lump-sum
fund from which they are able to dictate (a) how much from The Constitution is a limitation upon the power of the
such fund would go to (b) a specific project or beneficiary that legislative department of the government, but in this respect it
they themselves also determine. As these two (2) acts comprise is a grant of power to the executive department. The
the exercise of the power of appropriation as described in Legislature has the affirmative power to enact laws; the Chief
Bengzon, and given that the 2013 PDAF Article authorizes Executive has the negative power by the constitutional exercise
individual legislators to perform the same, undoubtedly, said of which he may defeat the will of the Legislature. It follows
legislators have been conferred the power to legislate which that the Chief Executive must find his authority in the
the Constitution does not, however, allow. Thus, keeping with Constitution. But in exercising that authority he may not be
the principle of non-delegability of legislative power, the Court confined to rules of strict construction or hampered by the
hereby declares the 2013 PDAF Article, as well as all other unwise interference of the judiciary. The courts will indulge
forms of Congressional Pork Barrel which contain the similar every intendment in favor of the constitutionality of a veto in
legislative identification feature as herein discussed, as the same manner as they will presume the constitutionality of
unconstitutional. an act as originally passed by the Legislature. (Emphases
supplied)
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the "special appropriations bill shall specify the purpose for
The justification for the President‘s item-veto power rests on a which it is intended, and shall be supported by funds actually
variety of policy goals such as to prevent log-rolling available as certified by the National Treasurer, or t o be raised
legislation,207 impose fiscal restrictions on the legislature, as by a corresponding revenue proposal therein." Meanwhile, with
well as to fortify the executive branch‘s role in the budgetary respect to discretionary funds, Section 2 5(6), Article VI of the
process.208 In Immigration and Naturalization Service v. 1987 Constitution requires that said funds "shall be disbursed
Chadha, the US Supreme Court characterized the President‘s only for public purposes to be supported by appropriate
item-power as "a salutary check upon the legislative body, vouchers and subject to such guidelines as may be prescribed
calculated to guard the community against the effects of by law."
factions, precipitancy, or of any impulse unfriendly to the public
good, which may happen to influence a majority of that body"; In contrast, what beckons constitutional infirmity are
phrased differently, it is meant to "increase the chances in favor appropriations which merely provide for a singular lump-sum
of the community against the passing of bad laws, through amount to be tapped as a source of funding for multiple
haste, inadvertence, or design."209 purposes. Since such appropriation type necessitates the
further determination of both the actual amount to be
For the President to exercise his item-veto power, it necessarily expended and the actual purpose of the appropriation which
follows that there exists a proper "item" which may be the must still be chosen from the multiple purposes stated in the
object of the veto. An item, as defined in the field of law, it cannot be said that the appropriation law already
appropriations, pertains to "the particulars, the details, the indicates a "specific appropriation of money‖ and hence,
distinct and severable parts of the appropriation or of the bill." without a proper line-item which the President may veto. As a
In the case of Bengzon v. Secretary of Justice of the Philippine practical result, the President would then be faced with the
Islands,210 the US Supreme Court characterized an item of predicament of either vetoing the entire appropriation if he
appropriation as follows: finds some of its purposes wasteful or undesirable, or
approving the entire appropriation so as not to hinder some of
An item of an appropriation bill obviously means an item which, its legitimate purposes. Finally, it may not be amiss to state that
in itself, is a specific appropriation of money, not some general such arrangement also raises non-delegability issues
provision of law which happens to be put into an appropriation considering that the implementing authority would still have to
bill. (Emphases supplied) determine, again, both the actual amount to be expended and
the actual purpose of the appropriation. Since the foregoing
On this premise, it may be concluded that an appropriation bill, determinations constitute the integral aspects of the power to
to ensure that the President may be able to exercise his power appropriate, the implementing authority would, in effect, be
of item veto, must contain "specific appropriations of money" exercising legislative prerogatives in violation of the principle of
and not only "general provisions" which provide for parameters non-delegability.
of appropriation.
b. Application.
Further, it is significant to point out that an item of
appropriation must be an item characterized by singular In these cases, petitioners claim that "in the current x x x
correspondence – meaning an allocation of a specified singular system where the PDAF is a lump-sum appropriation, the
amount for a specified singular purpose, otherwise known as a legislator‘s identification of the projects after the passage of
"line-item."211 This treatment not only allows the item to be the GAA denies the President the chance to veto that item later
consistent with its definition as a "specific appropriation of on."212 Accordingly, they submit that the "item veto power of
money" but also ensures that the President may discernibly the President mandates that appropriations bills adopt line-
veto the same. Based on the foregoing formulation, the existing item budgeting" and that "Congress cannot choose a mode of
Calamity Fund, Contingent Fund and the Intelligence Fund, budgeting which effectively renders the constitutionally-given
being appropriations which state a specified amount for a power of the President useless."213
specific purpose, would then be considered as "line- item"
appropriations which are rightfully subject to item veto. On the other hand, respondents maintain that the text of the
Likewise, it must be observed that an appropriation may be Constitution envisions a process which is intended to meet the
validly apportioned into component percentages or values; demands of a modernizing economy and, as such, lump-sum
however, it is crucial that each percentage or value must be appropriations are essential to financially address situations
allocated for its own corresponding purpose for such which are barely foreseen when a GAA is enacted. They argue
component to be considered as a proper line-item. Moreover, that the decision of the Congress to create some lump-sum
as Justice Carpio correctly pointed out, a valid appropriation appropriations is constitutionally allowed and textually-
may even have several related purposes that are by accounting grounded.214
and budgeting practice considered as one purpose, e.g., MOOE
(maintenance and other operating expenses), in which case the The Court agrees with petitioners.
related purposes shall be deemed sufficiently specific for the
exercise of the President‘s item veto power. Finally, special Under the 2013 PDAF Article, the amount of ₱24.79 Billion only
purpose funds and discretionary funds would equally square appears as a collective allocation limit since the said amount
with the constitutional mechanism of item-veto for as long as would be further divided among individual legislators who
they follow the rule on singular correspondence as herein would then receive personal lump-sum allocations and could,
discussed. Anent special purpose funds, it must be added that after the GAA is passed, effectively appropriate PDAF funds
Section 25(4), Article VI of the 1987 Constitution requires that based on their own discretion. As these intermediate
327
appropriations are made by legislators only after the GAA is The Court agrees in part.
passed and hence, outside of the law, it necessarily means that
the actual items of PDAF appropriation would not have been The aphorism forged under Section 1, Article XI of the 1987
written into the General Appropriations Bill and thus Constitution, which states that "public office is a public trust," is
effectuated without veto consideration. This kind of lump- an overarching reminder that every instrumentality of
sum/post-enactment legislative identification budgeting system government should exercise their official functions only in
fosters the creation of a budget within a budget" which accordance with the principles of the Constitution which
subverts the prescribed procedure of presentment and embodies the parameters of the people‘s trust. The notion of a
consequently impairs the President‘s power of item veto. As public trust connotes accountability,221 hence, the various
petitioners aptly point out, the above-described system forces mechanisms in the Constitution which are designed to exact
the President to decide between (a) accepting the entire accountability from public officers.
₱24.79 Billion PDAF allocation without knowing the specific
projects of the legislators, which may or may not be consistent Among others, an accountability mechanism with which the
with his national agenda and (b) rejecting the whole PDAF to proper expenditure of public funds may be checked is the
the detriment of all other legislators with legitimate power of congressional oversight. As mentioned in
projects.215 Abakada,222 congressional oversight may be performed either
through: (a) scrutiny based primarily on Congress‘ power of
Moreover, even without its post-enactment legislative appropriation and the budget hearings conducted in connection
identification feature, the 2013 PDAF Article would remain with it, its power to ask heads of departments to appear before
constitutionally flawed since it would then operate as a and be heard by either of its Houses on any matter pertaining
prohibited form of lump-sum appropriation above- to their departments and its power of confirmation;223 or (b)
characterized. In particular, the lump-sum amount of ₱24.79 investigation and monitoring of the implementation of laws
Billion would be treated as a mere funding source allotted for pursuant to the power of Congress to conduct inquiries in aid of
multiple purposes of spending, i.e., scholarships, medical legislation.224
missions, assistance to indigents, preservation of historical
materials, construction of roads, flood control, etc. This setup The Court agrees with petitioners that certain features
connotes that the appropriation law leaves the actual amounts embedded in some forms of Congressional Pork Barrel, among
and purposes of the appropriation for further determination others the 2013 PDAF Article, has an effect on congressional
and, therefore, does not readily indicate a discernible item oversight. The fact that individual legislators are given post-
which may be subject to the President‘s power of item veto. enactment roles in the implementation of the budget makes it
difficult for them to become disinterested "observers" when
In fact, on the accountability side, the same lump-sum scrutinizing, investigating or monitoring the implementation of
budgeting scheme has, as the CoA Chairperson relays, "limited the appropriation law. To a certain extent, the conduct of
state auditors from obtaining relevant data and information oversight would be tainted as said legislators, who are vested
that would aid in more stringently auditing the utilization of with post-enactment authority, would, in effect, be checking on
said Funds."216 Accordingly, she recommends the adoption of activities in which they themselves participate. Also, it must be
a "line by line budget or amount per proposed program, activity pointed out that this very same concept of post-enactment
or project, and per implementing agency."217 authorization runs afoul of Section 14, Article VI of the 1987
Constitution which provides that:
Hence, in view of the reasons above-stated, the Court finds the
2013 PDAF Article, as well as all Congressional Pork Barrel Laws Sec. 14. No Senator or Member of the House of
of similar operation, to be unconstitutional. That such Representatives may personally appear as counsel before any
budgeting system provides for a greater degree of flexibility to court of justice or before the Electoral Tribunals, or quasi-
account for future contingencies cannot be an excuse to defeat judicial and other administrative bodies. Neither shall he,
what the Constitution requires. Clearly, the first and essential directly or indirectly, be interested financially in any contract
truth of the matter is that unconstitutional means do not justify with, or in any franchise or special privilege granted by the
even commendable ends.218 Government, or any subdivision, agency, or instrumentality
thereof, including any government-owned or controlled
c. Accountability. corporation, or its subsidiary, during his term of office. He shall
not intervene in any matter before any office of the
Petitioners further relate that the system under which various Government for his pecuniary benefit or where he may be
forms of Congressional Pork Barrel operate defies public called upon to act on account of his office. (Emphasis supplied)
accountability as it renders Congress incapable of checking
itself or its Members. In particular, they point out that the Clearly, allowing legislators to intervene in the various phases
Congressional Pork Barrel "gives each legislator a direct, of project implementation – a matter before another office of
financial interest in the smooth, speedy passing of the yearly government – renders them susceptible to taking undue
budget" which turns them "from fiscalizers" into "financially- advantage of their own office.
interested partners."219 They also claim that the system has an
effect on re- election as "the PDAF excels in self-perpetuation of The Court, however, cannot completely agree that the same
elective officials." Finally, they add that the "PDAF impairs the post-enactment authority and/or the individual legislator‘s
power of impeachment" as such "funds are indeed quite useful, control of his PDAF per se would allow him to perpetuate
‘to well, accelerate the decisions of senators.‘"220 himself in office. Indeed, while the Congressional Pork Barrel
and a legislator‘s use thereof may be linked to this area of
328
interest, the use of his PDAF for re-election purposes is a government structure instituted through a system of
matter which must be analyzed based on particular facts and decentralization with effective mechanisms of recall, initiative,
on a case-to-case basis. and referendum, allocate among the different local government
units their powers, responsibilities, and resources, and provide
Finally, while the Court accounts for the possibility that the for the qualifications, election, appointment and removal, term,
close operational proximity between legislators and the salaries, powers and functions and duties of local officials, and
Executive department, through the former‘s post-enactment all other matters relating to the organization and operation of
participation, may affect the process of impeachment, this the local units.
matter largely borders on the domain of politics and does not
strictly concern the Pork Barrel System‘s intrinsic Pursuant thereto, Congress enacted RA 7160,227 otherwise
constitutionality. As such, it is an improper subject of judicial known as the "Local Government Code of 1991" (LGC), wherein
assessment. the policy on local autonomy had been more specifically
explicated as follows:
In sum, insofar as its post-enactment features dilute
congressional oversight and violate Section 14, Article VI of the Sec. 2. Declaration of Policy. – (a) It is hereby declared the
1987 Constitution, thus impairing public accountability, the policy of the State that the territorial and political subdivisions
2013 PDAF Article and other forms of Congressional Pork Barrel of the State shall enjoy genuine and meaningful local autonomy
of similar nature are deemed as unconstitutional. to enable them to attain their fullest development as self-
reliant communities and make them more effective partners in
4. Political Dynasties. the attainment of national goals. Toward this end, the State
shall provide for a more responsive and accountable local
One of the petitioners submits that the Pork Barrel System government structure instituted through a system of
enables politicians who are members of political dynasties to decentralization whereby local government units shall be given
accumulate funds to perpetuate themselves in power, in more powers, authority, responsibilities, and resources. The
contravention of Section 26, Article II of the 1987 process of decentralization shall proceed from the National
Constitution225 which states that: Government to the local government units.
Sec. 26. The State shall guarantee equal access to opportunities xxxx
for public service, and prohibit political dynasties as may be
defined by law. (Emphasis and underscoring supplied) (c) It is likewise the policy of the State to require all national
agencies and offices to conduct periodic consultations with
At the outset, suffice it to state that the foregoing provision is appropriate local government units, nongovernmental and
considered as not self-executing due to the qualifying phrase people‘s organizations, and other concerned sectors of the
"as may be defined by law." In this respect, said provision does community before any project or program is implemented in
not, by and of itself, provide a judicially enforceable their respective jurisdictions. (Emphases and underscoring
constitutional right but merely specifies guideline for legislative supplied)
or executive action.226 Therefore, since there appears to be no
standing law which crystallizes the policy on political dynasties The above-quoted provisions of the Constitution and the LGC
for enforcement, the Court must defer from ruling on this issue. reveal the policy of the State to empower local government
units (LGUs) to develop and ultimately, become self-sustaining
In any event, the Court finds the above-stated argument on this and effective contributors to the national economy. As
score to be largely speculative since it has not been properly explained by the Court in Philippine Gamefowl Commission v.
demonstrated how the Pork Barrel System would be able to Intermediate Appellate Court:228
propagate political dynasties.
This is as good an occasion as any to stress the commitment of
5. Local Autonomy. the Constitution to the policy of local autonomy which is
intended to provide the needed impetus and encouragement to
The State‘s policy on local autonomy is principally stated in the development of our local political subdivisions as "self -
Section 25, Article II and Sections 2 and 3, Article X of the 1987 reliant communities." In the words of Jefferson, "Municipal
Constitution which read as follows: corporations are the small republics from which the great one
derives its strength." The vitalization of local governments will
ARTICLE II enable their inhabitants to fully exploit their resources and
more important, imbue them with a deepened sense of
Sec. 25. The State shall ensure the autonomy of local involvement in public affairs as members of the body politic.
governments. This objective could be blunted by undue interference by the
national government in purely local affairs which are best
ARTICLE X resolved by the officials and inhabitants of such political units.
The decision we reach today conforms not only to the letter of
Sec. 2. The territorial and political subdivisions shall enjoy local the pertinent laws but also to the spirit of the Constitution.229
autonomy. (Emphases and underscoring supplied)
Sec. 3. The Congress shall enact a local government code which In the cases at bar, petitioners contend that the Congressional
shall provide for a more responsive and accountable local Pork Barrel goes against the constitutional principles on local
329
autonomy since it allows district representatives, who are
national officers, to substitute their judgments in utilizing public With PDAF, a Congressman can simply bypass the local
funds for local development.230 The Court agrees with development council and initiate projects on his own, and even
petitioners. take sole credit for its execution. Indeed, this type of
personality-driven project identification has not only
Philconsa described the 1994 CDF as an attempt "to make equal contributed little to the overall development of the district, but
the unequal" and that "it is also a recognition that individual has even contributed to "further weakening infrastructure
members of Congress, far more than the President and their planning and coordination efforts of the government."
congressional colleagues, are likely to be knowledgeable about
the needs of their respective constituents and the priority to be Thus, insofar as individual legislators are authorized to
given each project."231 Drawing strength from this intervene in purely local matters and thereby subvert genuine
pronouncement, previous legislators justified its existence by local autonomy, the 2013 PDAF Article as well as all other
stating that "the relatively small projects implemented under similar forms of Congressional Pork Barrel is deemed
the Congressional Pork Barrel complement and link the national unconstitutional.
development goals to the countryside and grassroots as well as
to depressed areas which are overlooked by central agencies With this final issue on the Congressional Pork Barrel resolved,
which are preoccupied with mega-projects.232 Similarly, in his the Court now turns to the substantive issues involving the
August 23, 2013 speech on the "abolition" of PDAF and Presidential Pork Barrel.
budgetary reforms, President Aquino mentioned that the
Congressional Pork Barrel was originally established for a C. Substantive Issues on the Presidential Pork Barrel.
worthy goal, which is to enable the representatives to identify
projects for communities that the LGU concerned cannot 1. Validity of Appropriation.
afford.233
Petitioners preliminarily assail Section 8 of PD 910 and Section
Notwithstanding these declarations, the Court, however, finds 12 of PD1869 (now, amended by PD 1993), which respectively
an inherent defect in the system which actually belies the provide for the Malampaya Funds and the Presidential Social
avowed intention of "making equal the unequal." In particular, Fund, as invalid appropriations laws since they do not have the
the Court observes that the gauge of PDAF and CDF "primary and specific" purpose of authorizing the release of
allocation/division is based solely on the fact of office, without public funds from the National Treasury. Petitioners submit that
taking into account the specific interests and peculiarities of the Section 8 of PD 910 is not an appropriation law since the
district the legislator represents. In this regard, the "primary and specific‖ purpose of PD 910 is the creation of an
allocation/division limits are clearly not based on genuine Energy Development Board and Section 8 thereof only created
parameters of equality, wherein economic or geographic a Special Fund incidental thereto.237 In similar regard,
indicators have been taken into consideration. As a result, a petitioners argue that Section 12 of PD 1869 is neither a valid
district representative of a highly-urbanized metropolis gets the appropriations law since the allocation of the Presidential Social
same amount of funding as a district representative of a far- Fund is merely incidental to the "primary and specific" purpose
flung rural province which would be relatively of PD 1869 which is the amendment of the Franchise and
"underdeveloped" compared to the former. To add, what Powers of PAGCOR.238 In view of the foregoing, petitioners
rouses graver scrutiny is that even Senators and Party-List suppose that such funds are being used without any valid law
Representatives – and in some years, even the Vice-President – allowing for their proper appropriation in violation of Section
who do not represent any locality, receive funding from the 29(1), Article VI of the 1987 Constitution which states that: "No
Congressional Pork Barrel as well. These certainly are anathema money shall be paid out of the Treasury except in pursuance of
to the Congressional Pork Barrel‘s original intent which is "to an appropriation made by law."239
make equal the unequal." Ultimately, the PDAF and CDF had
become personal funds under the effective control of each The Court disagrees.
legislator and given unto them on the sole account of their
office. "An appropriation made by law‖ under the contemplation of
Section 29(1), Article VI of the 1987 Constitution exists when a
The Court also observes that this concept of legislator control provision of law (a) sets apart a determinate or
underlying the CDF and PDAF conflicts with the functions of the determinable240 amount of money and (b) allocates the same
various Local Development Councils (LDCs) which are already for a particular public purpose. These two minimum
legally mandated to "assist the corresponding sanggunian in designations of amount and purpose stem from the very
setting the direction of economic and social development, and definition of the word "appropriation," which means "to allot,
coordinating development efforts within its territorial assign, set apart or apply to a particular use or purpose," and
jurisdiction."234 Considering that LDCs are instrumentalities hence, if written into the law, demonstrate that the legislative
whose functions are essentially geared towards managing local intent to appropriate exists. As the Constitution "does not
affairs,235 their programs, policies and resolutions should not provide or prescribe any particular form of words or religious
be overridden nor duplicated by individual legislators, who are recitals in which an authorization or appropriation by Congress
national officers that have no law-making authority except only shall be made, except that it be ‘made by law,‘" an
when acting as a body. The undermining effect on local appropriation law may – according to Philconsa – be "detailed
autonomy caused by the post-enactment authority conferred and as broad as Congress wants it to be" for as long as the
to the latter was succinctly put by petitioners in the following intent to appropriate may be gleaned from the same. As held in
wise:236 the case of Guingona, Jr.:241
330
There is no provision in our Constitution that provides or Sec. 12. Special Condition of Franchise. — After deducting five
prescribes any particular form of words or religious recitals in (5%) percent as Franchise Tax, the Fifty (50%) percent share of
which an authorization or appropriation by Congress shall be the Government in the aggregate gross earnings of the
made, except that it be "made by law," such as precisely the Corporation from this Franchise, or 60% if the aggregate gross
authorization or appropriation under the questioned earnings be less than ₱150,000,000.00 shall be set aside and
presidential decrees. In other words, in terms of time horizons, shall accrue to the General Fund to finance the priority
an appropriation may be made impliedly (as by past but infrastructure development projects and to finance the
subsisting legislations) as well as expressly for the current fiscal restoration of damaged or destroyed facilities due to
year (as by enactment of laws by the present Congress), just as calamities, as may be directed and authorized by the Office of
said appropriation may be made in general as well as in specific the President of the Philippines. (Emphases supplied)
terms. The Congressional authorization may be embodied in
annual laws, such as a general appropriations act or in special Analyzing the legal text vis-à-vis the above-mentioned
provisions of laws of general or special application which principles, it may then be concluded that (a) Section 8 of PD
appropriate public funds for specific public purposes, such as 910, which creates a Special Fund comprised of "all fees,
the questioned decrees. An appropriation measure is sufficient revenues, and receipts of the Energy Development Board from
if the legislative intention clearly and certainly appears from the any and all sources" (a determinable amount) "to be used to
language employed (In re Continuing Appropriations, 32 P. finance energy resource development and exploitation
272), whether in the past or in the present. (Emphases and programs and projects of the government and for such other
underscoring supplied) purposes as may be hereafter directed by the President" (a
specified public purpose), and (b) Section 12 of PD 1869, as
Likewise, as ruled by the US Supreme Court in State of Nevada amended by PD 1993, which similarly sets aside, "after
v. La Grave:242 deducting five (5%) percent as Franchise Tax, the Fifty (50%)
percent share of the Government in the aggregate gross
To constitute an appropriation there must be money placed in a earnings of PAGCOR, or 60%, if the aggregate gross earnings be
fund applicable to the designated purpose. The word less than ₱150,000,000.00" (also a determinable amount) "to
appropriate means to allot, assign, set apart or apply to a finance the priority infrastructure development projects and x x
particular use or purpose. An appropriation in the sense of the x the restoration of damaged or destroyed facilities due to
constitution means the setting apart a portion of the public calamities, as may be directed and authorized by the Office of
funds for a public purpose. No particular form of words is the President of the Philippines" (also a specified public
necessary for the purpose, if the intention to appropriate is purpose), are legal appropriations under Section 29(1), Article
plainly manifested. (Emphases supplied) VI of the 1987 Constitution.
Thus, based on the foregoing, the Court cannot sustain the In this relation, it is apropos to note that the 2013 PDAF Article
argument that the appropriation must be the "primary and cannot be properly deemed as a legal appropriation under the
specific" purpose of the law in order for a valid appropriation said constitutional provision precisely because, as earlier
law to exist. To reiterate, if a legal provision designates a stated, it contains post-enactment measures which effectively
determinate or determinable amount of money and allocates create a system of intermediate appropriations. These
the same for a particular public purpose, then the legislative intermediate appropriations are the actual appropriations
intent to appropriate becomes apparent and, hence, already meant for enforcement and since they are made by individual
sufficient to satisfy the requirement of an "appropriation made legislators after the GAA is passed, they occur outside the law.
by law" under contemplation of the Constitution. As such, the Court observes that the real appropriation made
under the 2013 PDAF Article is not the ₱24.79 Billion allocated
Section 8 of PD 910 pertinently provides: for the entire PDAF, but rather the post-enactment
determinations made by the individual legislators which are, to
Section 8. Appropriations. x x x repeat, occurrences outside of the law. Irrefragably, the 2013
PDAF Article does not constitute an "appropriation made by
All fees, revenues and receipts of the Board from any and all law" since it, in its truest sense, only authorizes individual
sources including receipts from service contracts and legislators to appropriate in violation of the non-delegability
agreements such as application and processing fees, signature principle as afore-discussed.
bonus, discovery bonus, production bonus; all money collected
from concessionaires, representing unspent work obligations, 2. Undue Delegation.
fines and penalties under the Petroleum Act of 1949; as well as
the government share representing royalties, rentals, On a related matter, petitioners contend that Section 8 of PD
production share on service contracts and similar payments on 910 constitutes an undue delegation of legislative power since
the exploration, development and exploitation of energy the phrase "and for such other purposes as may be hereafter
resources, shall form part of a Special Fund to be used to directed by the President" gives the President "unbridled
finance energy resource development and exploitation discretion to determine for what purpose the funds will be
programs and projects of the government and for such other used."243 Respondents, on the other hand, urged the Court to
purposes as may be hereafter directed by the President. apply the principle of ejusdem generis to the same section and
(Emphases supplied) thus, construe the phrase "and for such other purposes as may
be hereafter directed by the President" to refer only to other
Whereas Section 12 of PD 1869, as amended by PD 1993, reads:
331
purposes related "to energy resource development and sufficient standard of the delegating law. This notwithstanding,
exploitation programs and projects of the government."244 it must be underscored that the rest of Section 8, insofar as it
allows for the use of the Malampaya Funds "to finance energy
The Court agrees with petitioners‘ submissions. resource development and exploitation programs and projects
of the government," remains legally effective and subsisting.
While the designation of a determinate or determinable Truth be told, the declared unconstitutionality of the
amount for a particular public purpose is sufficient for a legal aforementioned phrase is but an assurance that the
appropriation to exist, the appropriation law must contain Malampaya Funds would be used – as it should be used – only
adequate legislative guidelines if the same law delegates rule- in accordance with the avowed purpose and intention of PD
making authority to the Executive245 either for the purpose of 910.
(a) filling up the details of the law for its enforcement, known as
supplementary rule-making, or (b) ascertaining facts to bring As for the Presidential Social Fund, the Court takes judicial
the law into actual operation, referred to as contingent rule- notice of the fact that Section 12 of PD 1869 has already been
making.246 There are two (2) fundamental tests to ensure that amended by PD 1993 which thus moots the parties‘
the legislative guidelines for delegated rule-making are indeed submissions on the same.252 Nevertheless, since the
adequate. The first test is called the "completeness test." Case amendatory provision may be readily examined under the
law states that a law is complete when it sets forth therein the current parameters of discussion, the Court proceeds to resolve
policy to be executed, carried out, or implemented by the its constitutionality.
delegate. On the other hand, the second test is called the
"sufficient standard test." Jurisprudence holds that a law lays Primarily, Section 12 of PD 1869, as amended by PD 1993,
down a sufficient standard when it provides adequate indicates that the Presidential Social Fund may be used "to first,
guidelines or limitations in the law to map out the boundaries finance the priority infrastructure development projects and
of the delegate‘s authority and prevent the delegation from second, to finance the restoration of damaged or destroyed
running riot.247 To be sufficient, the standard must specify the facilities due to calamities, as may be directed and authorized
limits of the delegate‘s authority, announce the legislative by the Office of the President of the Philippines." The Court
policy, and identify the conditions under which it is to be finds that while the second indicated purpose adequately
implemented.248 curtails the authority of the President to spend the Presidential
Social Fund only for restoration purposes which arise from
In view of the foregoing, the Court agrees with petitioners that calamities, the first indicated purpose, however, gives him carte
the phrase "and for such other purposes as may be hereafter blanche authority to use the same fund for any infrastructure
directed by the President" under Section 8 of PD 910 project he may so determine as a "priority". Verily, the law does
constitutes an undue delegation of legislative power insofar as not supply a definition of "priority in frastructure development
it does not lay down a sufficient standard to adequately projects" and hence, leaves the President without any guideline
determine the limits of the President‘s authority with respect to to construe the same. To note, the delimitation of a project as
the purpose for which the Malampaya Funds may be used. As it one of "infrastructure" is too broad of a classification since the
reads, the said phrase gives the President wide latitude to use said term could pertain to any kind of facility. This may be
the Malampaya Funds for any other purpose he may direct and, deduced from its lexicographic definition as follows: "the
in effect, allows him to unilaterally appropriate public funds underlying framework of a system, especially public services
beyond the purview of the law. That the subject phrase may be and facilities (such as highways, schools, bridges, sewers, and
confined only to "energy resource development and water-systems) needed to support commerce as well as
exploitation programs and projects of the government" under economic and residential development."253 In fine, the phrase
the principle of ejusdem generis, meaning that the general "to finance the priority infrastructure development projects"
word or phrase is to be construed to include – or be restricted must be stricken down as unconstitutional since – similar to the
to – things akin to, resembling, or of the same kind or class as above-assailed provision under Section 8 of PD 910 – it lies
those specifically mentioned,249 is belied by three (3) reasons: independently unfettered by any sufficient standard of the
first, the phrase "energy resource development and delegating law. As they are severable, all other provisions of
exploitation programs and projects of the government" states a Section 12 of PD 1869, as amended by PD 1993, remains legally
singular and general class and hence, cannot be treated as a effective and subsisting.
statutory reference of specific things from which the general
phrase "for such other purposes" may be limited; second, the D. Ancillary Prayers. 1.
said phrase also exhausts the class it represents, namely energy
development programs of the government;250 and, third, the Petitioners’ Prayer to be Furnished Lists and Detailed Reports.
Executive department has, in fact, used the Malampaya Funds
for non-energy related purposes under the subject phrase, Aside from seeking the Court to declare the Pork Barrel System
thereby contradicting respondents‘ own position that it is unconstitutional – as the Court did so in the context of its
limited only to "energy resource development and exploitation pronouncements made in this Decision – petitioners equally
programs and projects of the government."251 Thus, while pray that the Executive Secretary and/or the DBM be ordered
Section 8 of PD 910 may have passed the completeness test to release to the CoA and to the public: (a) "the complete
since the policy of energy development is clearly deducible schedule/list of legislators who have availed of their PDAF and
from its text, the phrase "and for such other purposes as may VILP from the years 2003 to 2013, specifying the use of the
be hereafter directed by the President" under the same funds, the project or activity and the recipient entities or
provision of law should nonetheless be stricken down as individuals, and all pertinent data thereto" (PDAF Use
unconstitutional as it lies independently unfettered by any Schedule/List);254 and (b) "the use of the Executive‘s lump-
332
sum, discretionary funds, including the proceeds from the x x x Although citizens are afforded the right to information and,
Malampaya Funds and remittances from the PAGCOR x x x from pursuant thereto, are entitled to "access to official records,"
2003 to 2013, specifying the x x x project or activity and the the Constitution does not accord them a right to compel
recipient entities or individuals, and all pertinent data custodians of official records to prepare lists, abstracts,
thereto"255 (Presidential Pork Use Report). Petitioners‘ prayer summaries and the like in their desire to acquire information on
is grounded on Section 28, Article II and Section 7, Article III of matters of public concern.
the 1987 Constitution which read as follows:
It must be stressed that it is essential for a writ of mandamus to
ARTICLE II issue that the applicant has a well-defined, clear and certain
legal right to the thing demanded and that it is the imperative
Sec. 28. Subject to reasonable conditions prescribed by law, the duty of defendant to perform the act required. The
State adopts and implements a policy of full public disclosure of corresponding duty of the respondent to perform the required
all its transactions involving public interest. act must be clear and specific Lemi v. Valencia, G.R. No. L-
20768, November 29,1968,126 SCRA 203; Ocampo v. Subido,
ARTICLE III Sec. 7. G.R. No. L-28344, August 27, 1976, 72 SCRA 443.
The right of the people to information on matters of public The request of the petitioners fails to meet this standard, there
concern shall be recognized. Access to official records, and to being no duty on the part of respondent to prepare the list
documents and papers pertaining to official acts, transactions, requested. (Emphases supplied)
or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen, In these cases, aside from the fact that none of the petitions are
subject to such limitations as may be provided by law. in the nature of mandamus actions, the Court finds that
petitioners have failed to establish a "a well-defined, clear and
The Court denies petitioners‘ submission. certain legal right" to be furnished by the Executive Secretary
and/or the DBM of their requested PDAF Use Schedule/List and
Case law instructs that the proper remedy to invoke the right to Presidential Pork Use Report. Neither did petitioners assert any
information is to file a petition for mandamus. As explained in law or administrative issuance which would form the bases of
the case of Legaspi v. Civil Service Commission:256 the latter‘s duty to furnish them with the documents
requested. While petitioners pray that said information be
While the manner of examining public records may be subject equally released to the CoA, it must be pointed out that the
to reasonable regulation by the government agency in custody CoA has not been impleaded as a party to these cases nor has it
thereof, the duty to disclose the information of public concern, filed any petition before the Court to be allowed access to or to
and to afford access to public records cannot be discretionary compel the release of any official document relevant to the
on the part of said agencies. Certainly, its performance cannot conduct of its audit investigations. While the Court recognizes
be made contingent upon the discretion of such agencies. that the information requested is a matter of significant public
Otherwise, the enjoyment of the constitutional right may be concern, however, if only to ensure that the parameters of
rendered nugatory by any whimsical exercise of agency disclosure are properly foisted and so as not to unduly hamper
discretion. The constitutional duty, not being discretionary, its the equally important interests of the government, it is
performance may be compelled by a writ of mandamus in a constrained to deny petitioners‘ prayer on this score, without
proper case. prejudice to a proper mandamus case which they, or even the
CoA, may choose to pursue through a separate petition.
But what is a proper case for Mandamus to issue? In the case
before Us, the public right to be enforced and the concomitant It bears clarification that the Court‘s denial herein should only
duty of the State are unequivocably set forth in the cover petitioners‘ plea to be furnished with such schedule/list
Constitution. and report and not in any way deny them, or the general public,
access to official documents which are already existing and of
The decisive question on the propriety of the issuance of the public record. Subject to reasonable regulation and absent any
writ of mandamus in this case is, whether the information valid statutory prohibition, access to these documents should
sought by the petitioner is within the ambit of the not be proscribed. Thus, in Valmonte, while the Court denied
constitutional guarantee. (Emphases supplied) the application for mandamus towards the preparation of the
list requested by petitioners therein, it nonetheless allowed
Corollarily, in the case of Valmonte v. Belmonte Jr.257 access to the documents sought for by the latter, subject,
(Valmonte), it has been clarified that the right to information however, to the custodian‘s reasonable regulations,viz.:259
does not include the right to compel the preparation of "lists,
abstracts, summaries and the like." In the same case, it was In fine, petitioners are entitled to access to the documents
stressed that it is essential that the "applicant has a well - evidencing loans granted by the GSIS, subject to reasonable
defined, clear and certain legal right to the thing demanded and regulations that the latter may promulgate relating to the
that it is the imperative duty of defendant to perform the act manner and hours of examination, to the end that damage to
required." Hence, without the foregoing substantiations, the or loss of the records may be avoided, that undue interference
Court cannot grant a particular request for information. The with the duties of the custodian of the records may be
pertinent portions of Valmonte are hereunder quoted:258 prevented and that the right of other persons entitled to
inspect the records may be insured Legaspi v. Civil Service
Commission, supra at p. 538, quoting Subido v. Ozaeta, 80 Phil.
333
383, 387. The petition, as to the second and third alternative implementing agency concerned, the PDAF funds covered by
acts sought to be done by petitioners, is meritorious. the same are already "beyond the reach of the TRO because
they cannot be considered as ‘remaining PDAF.‘" They conclude
However, the same cannot be said with regard to the first act that this is a reasonable interpretation of the TRO by the
sought by petitioners, i.e., DBM.262
"to furnish petitioners the list of the names of the Batasang The Court agrees with petitioners in part.
Pambansa members belonging to the UNIDO and PDP-Laban
who were able to secure clean loans immediately before the At the outset, it must be observed that the issue of whether or
February 7 election thru the intercession/marginal note of the not the Court‘s September 10, 2013 TRO should be lifted is a
then First Lady Imelda Marcos." matter rendered moot by the present Decision. The
unconstitutionality of the 2013 PDAF Article as declared herein
The Court, therefore, applies the same treatment here. has the consequential effect of converting the temporary
injunction into a permanent one. Hence, from the promulgation
2. Petitioners’ Prayer to Include Matters in Congressional of this Decision, the release of the remaining PDAF funds for
Deliberations. 2013, among others, is now permanently enjoined.
Petitioners further seek that the Court "order the inclusion in The propriety of the DBM‘s interpretation of the concept of
budgetary deliberations with the Congress of all presently, off- "release" must, nevertheless, be resolved as it has a practical
budget, lump sum, discretionary funds including but not limited impact on the execution of the current Decision. In particular,
to, proceeds from the x x x Malampaya Fund, remittances from the Court must resolve the issue of whether or not PDAF funds
the PAGCOR and the PCSO or the Executive‘s Social Funds."260 covered by obligated SAROs, at the time this Decision is
promulgated, may still be disbursed following the DBM‘s
Suffice it to state that the above-stated relief sought by interpretation in DBM Circular 2013-8.
petitioners covers a matter which is generally left to the
prerogative of the political branches of government. Hence, lest On this score, the Court agrees with petitioners‘ posturing for
the Court itself overreach, it must equally deny their prayer on the fundamental reason that funds covered by an obligated
this score. SARO are yet to be "released" under legal contemplation. A
SARO, as defined by the DBM itself in its website, is "aspecific
3. Respondents’ Prayer to Lift TRO; Consequential Effects of authority issued to identified agencies to incur obligations not
Decision. exceeding a given amount during a specified period for the
purpose indicated. It shall cover expenditures the release of
The final issue to be resolved stems from the interpretation which is subject to compliance with specific laws or regulations,
accorded by the DBM to the concept of released funds. In or is subject to separate approval or clearance by competent
response to the Court‘s September 10, 2013 TRO that enjoined authority."263
the release of the remaining PDAF allocated for the year 2013,
the DBM issued Circular Letter No. 2013-8 dated September 27, Based on this definition, it may be gleaned that a SARO only
2013 (DBM Circular 2013-8) which pertinently reads as follows: evinces the existence of an obligation and not the directive to
pay. Practically speaking, the SARO does not have the direct
3.0 Nonetheless, PDAF projects funded under the FY 2013 GAA, and immediate effect of placing public funds beyond the
where a Special Allotment Release Order (SARO) has been control of the disbursing authority. In fact, a SARO may even be
issued by the DBM and such SARO has been obligated by the withdrawn under certain circumstances which will prevent the
implementing agencies prior to the issuance of the TRO, may actual release of funds. On the other hand, the actual release of
continually be implemented and disbursements thereto funds is brought about by the issuance of the NCA,264 which is
effected by the agencies concerned. subsequent to the issuance of a SARO. As may be determined
from the statements of the DBM representative during the Oral
Based on the text of the foregoing, the DBM authorized the Arguments:265
continued implementation and disbursement of PDAF funds as
long as they are: first, covered by a SARO; and, second, that Justice Bernabe: Is the notice of allocation issued
said SARO had been obligated by the implementing agency simultaneously with the SARO?
concerned prior to the issuance of the Court‘s September 10,
2013 TRO. xxxx
Petitioners take issue with the foregoing circular, arguing that Atty. Ruiz: It comes after. The SARO, Your Honor, is only the go
"the issuance of the SARO does not yet involve the release of signal for the agencies to obligate or to enter into
funds under the PDAF, as release is only triggered by the commitments. The NCA, Your Honor, is already the go signal to
issuance of a Notice of Cash Allocation [(NCA)]."261 As such, the treasury for us to be able to pay or to liquidate the amounts
PDAF disbursements, even if covered by an obligated SARO, obligated in the SARO; so it comes after. x x x The NCA, Your
should remain enjoined. Honor, is the go signal for the MDS for the authorized
government-disbursing banks to, therefore, pay the payees
For their part, respondents espouse that the subject TRO only depending on the projects or projects covered by the SARO and
covers "unreleased and unobligated allotments." They explain the NCA.
that once a SARO has been issued and obligated by the
334
Justice Bernabe: Are there instances that SAROs are cancelled be to deprive the law of its quality of fairness and justice then,
or revoked? if there be no recognition of what had transpired prior to such
adjudication."267 "In the language of an American Supreme
Atty. Ruiz: Your Honor, I would like to instead submit that there Court decision: ‘The actual existence of a statute, prior to such
are instances that the SAROs issued are withdrawn by the DBM. a determination of unconstitutionality, is an operative fact and
may have consequences which cannot justly be ignored.‘"268
Justice Bernabe: They are withdrawn?
For these reasons, this Decision should be heretofore applied
Atty. Ruiz: Yes, Your Honor x x x. (Emphases and underscoring prospectively.
supplied)
Conclusion
Thus, unless an NCA has been issued, public funds should not
be treated as funds which have been "released." In this respect, The Court renders this Decision to rectify an error which has
therefore, the disbursement of 2013 PDAF funds which are only persisted in the chronicles of our history. In the final analysis,
covered by obligated SAROs, and without any corresponding the Court must strike down the Pork Barrel System as
NCAs issued, must, at the time of this Decision’s promulgation, unconstitutional in view of the inherent defects in the rules
be enjoined and consequently reverted to the unappropriated within which it operates. To recount, insofar as it has allowed
surplus of the general fund. Verily, in view of the declared legislators to wield, in varying gradations, non-oversight, post-
unconstitutionality of the 2013 PDAF Article, the funds enactment authority in vital areas of budget execution, the
appropriated pursuant thereto cannot be disbursed even system has violated the principle of separation of powers;
though already obligated, else the Court sanctions the dealing insofar as it has conferred unto legislators the power of
of funds coming from an unconstitutional source. appropriation by giving them personal, discretionary funds
from which they are able to fund specific projects which they
This same pronouncement must be equally applied to (a) the themselves determine, it has similarly violated the principle of
Malampaya Funds which have been obligated but not released non-delegability of legislative power ; insofar as it has created a
– meaning, those merely covered by a SARO – under the phrase system of budgeting wherein items are not textualized into the
"and for such other purposes as may be hereafter directed by appropriations bill, it has flouted the prescribed procedure of
the President" pursuant to Section 8 of PD 910; and (b) funds presentment and, in the process, denied the President the
sourced from the Presidential Social Fund under the phrase "to power to veto items ; insofar as it has diluted the effectiveness
finance the priority infrastructure development projects" of congressional oversight by giving legislators a stake in the
pursuant to Section 12 of PD 1869, as amended by PD 1993, affairs of budget execution, an aspect of governance which they
which were altogether declared by the Court as may be called to monitor and scrutinize, the system has equally
unconstitutional. However, these funds should not be reverted impaired public accountability ; insofar as it has authorized
to the general fund as afore-stated but instead, respectively legislators, who are national officers, to intervene in affairs of
remain under the Malampaya Funds and the Presidential Social purely local nature, despite the existence of capable local
Fund to be utilized for their corresponding special purposes not institutions, it has likewise subverted genuine local autonomy ;
otherwise declared as unconstitutional. and again, insofar as it has conferred to the President the
power to appropriate funds intended by law for energy-related
E. Consequential Effects of Decision. purposes only to other purposes he may deem fit as well as
other public funds under the broad classification of "priority
As a final point, it must be stressed that the Court‘s infrastructure development projects," it has once more
pronouncement anent the unconstitutionality of (a) the 2013 transgressed the principle of non-delegability.
PDAF Article and its Special Provisions, (b) all other
Congressional Pork Barrel provisions similar thereto, and (c) the For as long as this nation adheres to the rule of law, any of the
phrases (1) "and for such other purposes as may be hereafter multifarious unconstitutional methods and mechanisms the
directed by the President" under Section 8 of PD 910, and (2) Court has herein pointed out should never again be adopted in
"to finance the priority infrastructure development projects" any system of governance, by any name or form, by any
under Section 12 of PD 1869, as amended by PD 1993, must semblance or similarity, by any influence or effect.
only be treated as prospective in effect in view of the operative Disconcerting as it is to think that a system so constitutionally
fact doctrine. unsound has monumentally endured, the Court urges the
people and its co-stewards in government to look forward with
To explain, the operative fact doctrine exhorts the recognition the optimism of change and the awareness of the past. At a
that until the judiciary, in an appropriate case, declares the time of great civic unrest and vociferous public debate, the
invalidity of a certain legislative or executive act, such act is Court fervently hopes that its Decision today, while it may not
presumed constitutional and thus, entitled to obedience and purge all the wrongs of society nor bring back what has been
respect and should be properly enforced and complied with. As lost, guides this nation to the path forged by the Constitution so
explained in the recent case of Commissioner of Internal that no one may heretofore detract from its cause nor stray
Revenue v. San Roque Power Corporation,266 the doctrine from its course. After all, this is the Court‘s bounden duty and
merely "reflects awareness that precisely because the judiciary no other‘s.
is the governmental organ which has the final say on whether
or not a legislative or executive measure is valid, a period of WHEREFORE, the petitions are PARTLY GRANTED. In view of the
time may have elapsed before it can exercise the power of constitutional violations discussed in this Decision, the Court
judicial review that may lead to a declaration of nullity. It would hereby declares as UNCONSTITUTIONAL: (a) the entire 2013
335
PDAF Article; (b) all legal provisions of past and present The Court also DENIES petitioners prayer to order the inclusion
Congressional Pork Barrel Laws, such as the previous PDAF and of the funds subject of these cases in the budgetary
CDF Articles and the various Congressional Insertions, which deliberations of Congress as the same is a matter left to the
authorize/d legislators – whether individually or collectively prerogative of the political branches of government.
organized into committees – to intervene, assume or
participate in any of the various post-enactment stages of the Finally, the Court hereby DIRECTS all prosecutorial organs of the
budget execution, such as but not limited to the areas of government to, within the bounds of reasonable dispatch,
project identification, modification and revision of project investigate and accordingly prosecute all government officials
identification, fund release and/or fund realignment, unrelated and/or private individuals for possible criminal offenses related
to the power of congressional oversight; (c) all legal provisions to the irregular, improper and/or unlawful
of past and present Congressional Pork Barrel Laws, such as the disbursement/utilization of all funds under the Pork Barrel
previous PDAF and CDF Articles and the various Congressional System.
Insertions, which confer/red personal, lump-sum allocations to
legislators from which they are able to fund specific projects This Decision is immediately executory but prospective in
which they themselves determine; (d) all informal practices of effect.
similar import and effect, which the Court similarly deems to be
acts of grave abuse of discretion amounting to lack or excess of 123. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
jurisdiction; and (e) the phrases (1) "and for such other vs.P/SUPT. ARTEMIO E. LAMSEN, PO2 ANTHONY D.
purposes as may be hereafter directed by the President" under ABULENCIA, and SPO1 WILFREDO L. RAMOS, Accused-
Section 8 of Presidential Decree No. 910 and (2) "to finance the Appellants.
priority infrastructure development projects" under Section 12
of Presidential Decree No. 1869, as amended by Presidential The Court hereby resolves the Motions for Reconsideration1
Decree No. 1993, for both failing the sufficient standard test in filed by accused-appellants SPO 1 Wilfredo L. Ramos and PO2
violation of the principle of non-delegability of legislative Anthony D. Abulencia and the Motion for New Trial Due to.
power. Newly Discovered Evidence and for Reconsideration of the
February 20, 2013 Resolution2 filed by accused-appellant
Accordingly, the Court‘s temporary injunction dated September P/Supt. Artemio E. Lamsen (Motions). The foregoing Motions
10, 2013 is hereby declared to be PERMANENT. Thus, the assail the Court's Resolution3 dated February 20, 2013, which
disbursement/release of the remaining PDAF funds allocated upheld the conviction of accused-appellants of the crime of
for the year 2013, as well as for all previous years, and the robbery with homicide and sentenced them to suffer the
funds sourced from (1) the Malampaya Funds under the phrase penalty of reclusion. perpetua and to jointly .and severally pay:
"and for such other purposes as may be hereafter directed by [a] the heirs of victim Fernando Sy the amount of Pl 00,000.00
the President" pursuant to Section 8 of Presidential Decree No. as actual damages, ₱4,968,320.l 0 as loss of earning capacity,
910, and (2) the Presidential Social Fund under the phrase "to ₱50,000.00 as civil indemnity, and 1 50,000.00 as moral
finance the priority infrastructure development projects" damages; [b] the heirs of victim Arturo Mariado the amount of
pursuant to Section 12 of Presidential Decree No. 1869, as ₱150,000.00 as stipulated damages; [c] Equitable PCI Bank the
amended by Presidential Decree No. 1993, which are, at the amount of ₱2,707,400.77 as the amount taken during the
time this Decision is promulgated, not covered by Notice of robbery; and [d] costs of suit.4
Cash Allocations (NCAs) but only by Special Allotment Release
Orders (SAROs), whether obligated or not, are hereby In their respective Motions, accused-appellants state, inter alia
ENJOINED. The remaining PDAF funds covered by this that they obtained affidavits from prosecution witnesses Amel
permanent injunction shall not be disbursed/released but F. Reyes5 (Reyes) and Domingo Marcelo6 (Marcelo) whose
instead reverted to the unappropriated surplus of the general testimonies implicated accused-appellants of the crime of
fund, while the funds under the Malampaya Funds and the robbery with homicide. In their affidavits, the aforesaid
Presidential Social Fund shall remain therein to be utilized for prosecution witnesses claim that they made their testimonies
their respective special purposes not otherwise declared as under duress as they were forced by elements of the Philippine
unconstitutional. National Police, the National Bureau of Investigation, and the
former mayor of San Carlos City, Pangasinan, Julian Resuello, to
On the other hand, due to improper recourse and lack of point at accused-appellants as perpetrators of the aforesaid
proper substantiation, the Court hereby DENIES petitioners‘ crime. They equally claim that they did not actually see who
prayer seeking that the Executive Secretary and/or the committed the crime and that they only testified against
Department of Budget and Management be ordered to provide accused-appellants out of fear of their own lives.7
the public and the Commission on Audit complete
lists/schedules or detailed reports related to the availments and The Court is not convinced.
utilization of the funds subject of these cases. Petitioners‘
access to official documents already available and of public Reyes’ and Marcelo’s affidavits partake of a recantation which
record which are related to these funds must, however, not be is aimed to renounce their earlier testimonies and withdraw
prohibited but merely subjected to the custodian‘s reasonable them formally and publicly.8 Verily, recantations are viewed
regulations or any valid statutory prohibition on the same. This with suspicion and reservation. The Court looks with disfavor
denial is without prejudice to a proper mandamus case which upon retractions of testimonies previously given in court. It is
they or the Commission on Audit may choose to pursue settled that an affidavit of desistance made by a witness after
through a separate petition. conviction of the accused is not reliable, and deserves only
scant attention. The rationale for the rule is obvious: affidavits
336
of retraction can easily be secured from witnesses, usually After a careful scrutiny of the records, the Court sees no
through intimidation or for a monetary consideration.9 sufficient reason to disturb its Resolution dated February 20,
Recanted testimony is exceedingly unreliable.10 There is always 2013. In the case at bar, the trial court gave great weight and
the probability that it will later be repudiated.11 Only when credence to the collective statements of the four (4)
there exist special circumstances in the case which when prosecution witnesses, including those of Reyes and Marcelo,
coupled with the retraction raise doubts as to the truth of the as their testimonies were candid, straightforward, and
testimony or statement given, can retractions be considered categorical. It is likewise worthy to mention that their
and upheld.12 As aptly pointed out by the Court in Firaza v. respective testimonies were deemed credible as they withstood
People,13 viz: extensive cross-examination, and possibly, even re-direct and
re-cross examinations. Absent any special circumstances
Indeed, it is a dangerous rule to set aside a testimony which has attendant to this case, Reyes’ and Marcelo’s recantations fail to
been solemnly taken before a court of justice in an open and cast doubt to the truth and veracity of their earlier testimonies,
free trial and under conditions precisely sought to discourage and to the collective statements of all of the prosecution
and forestall falsehood simply because one of the witnesses witnesses as a whole.
who had given the testimony later on changed his mind. Such a
rule will make solemn trials a mockery and place the Moreover, it should be noted that Reyes and Marcelo only
investigation of the truth at the mercy of unscrupulous executed their respective affidavits of recantation after the
witnesses. Court issued its Resolution dated February 20, 2013 upholding
accused-appellants’ conviction of the crime of robbery with
x x x. homicide, or more than a decade after they gave their
testimonies in open court. These affidavits should be seen as
This Court has always looked with disfavor upon retraction of nothing but a last-minute attempt to save accused-appellants
testimonies previously given in court. The asserted motives for from punishment.15
the repudiation are commonly held suspect, and the veracity of
the statements made in the affidavit of repudiation are Finally, the Court need not discuss the other issues raised in the
frequently and deservedly subject to serious doubt. accused-appellants Motions as they were already exhaustively
passed upon in its Resolution dated February 20, 2013.
x x x. Especially when the affidavit of retraction is executed by a
prosecution witness after the judgment of conviction has WHEREFORE, the Court hereby DENIES with FINALITY the
already been rendered, "it is too late in the day for his Motions for Reconsideration filed by accused-appellants SPO1
recantation without portraying himself as a liar." At most, the Wilfredo L. Ramos and PO2 Anthony D. Abulencia and the
retraction is an afterthought which should not be given Motion for New Trial Due to Newly Discovered Evidence and for
probative value. Reconsideration of the February 20, 2013 Resolution filed by
accused-appellant P/Supt. Artemio E. Lamsen. Accordingly, the
Mere retraction by a prosecution witness does not necessarily Court’s Resolution dated February 20, 2013 is AFFIRMED.
vitiate the original testimony if credible.1âwphi1 The rule is
settled that in cases where previous testimony is retracted and 124. GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,
a subsequent different, if not contrary, testimony is made by vs.PRUDENTIAL GUARANTEE AND ASSURANCE, INC.,
the same witness, the test to decide which testimony to believe DEVELOPMENT BANK OF THE PHILIPPINES and LAND BANK OF
is one of comparison coupled with the application of the THE PHILIPPINES, Respondents.
general rules of evidence. A testimony solemnly given in court
should not be set aside and disregarded lightly, and before this x-----------------------x
can be done, both the previous testimony and the subsequent
one should be carefully compared and juxtaposed, the G.R. No. 176982 GOVERNMENT SERVICE INSURANCE SYSTEM,
circumstances under which each was made, carefully and Petitioner, vs.PRUDENTIAL GUARANTEE AND ASSURANCE,
keenly scrutinized, and the reasons or motives for the change, INC., Respondent.
discriminatingly analyzed. The unreliable character of the
affidavit of recantation executed by a complaining witness is Assailed in these consolidated petitions for review on
also shown by the incredulity of the fact that after going Certiorari1 are separate issuances of the Court of Appeals (CA)
through the burdensome process of reporting to and/or having in relation to the complaint for sum of money filed by
the accused arrested by the law enforcers, executing a criminal Prudential Guarantee and Assurance, Inc. (PGAI) against the
complaint-affidavit against the accused, attending trial and Government Service Insurance System (GSIS) before the
testifying against the accused, the said complaining witness Regional Trial Court of Makati City, Branch 149 (RTC), docketed
would later on declare that all the foregoing is actually a farce as Civil Case No. 01-1634.
and the truth is now what he says it to be in his affidavit of
recantation. And in situations, like the instant case, where In particular, the petition in G.R. No. 165585 assails the
testimony is recanted by an affidavit subsequently executed by Decision2 dated May 26, 2004 and Resolution3 dated October
the recanting witness, we are properly guided by the well- 6, 2004 of the CA in CA-G.R. SP No. 69289 which affirmed the
settled rules that an affidavit is hearsay unless the affiant is Order4 dated February 14, 2002, as well as the Order,5 Notices
presented on the witness stand and that affidavits taken ex- of Garnishment,6 and Writ of Execution,7 all dated February 19,
parte are generally considered inferior to the testimony given in 2002, issued by the RTC authorizing execution pending appeal.
open court.14 (Emphases and underscoring supplied)
337
On the other hand, the petition in G.R. No. 176982 assails the insured, NEA, to pay the insurance premium;31 and (c) PGAI’s
Decision8 dated October 30, 2006 and Resolution9 dated cause of action lies against NEA since GSIS merely acted as a
March 12, 2007 of the CA in CA-G.R. CV No. 73965 which conduit.32 By way of counterclaim, GSIS prayed that PGAI be
dismissed the appeal filed by GSIS, affirming with modification ordered to pay exemplary damages, including litigation
the Order10 dated January 11, 2002 of the RTC rendering expenses, and costs of suit.33
judgment on the pleadings.
On December 18, 2001, PGAI filed a Motion for Judgment on
The Facts the Pleadings34 averring that GSIS essentially admitted the
material allegations of the complaint, such as: (a) the existence
Sometime in March 1999, the National Electrification of the MOA between NEA and GSIS; (b) the existence of the
Administration (NEA) entered into a Memorandum of reinsurance binder between GSIS and PGAI; (c) the remittance
Agreement11 (MOA) with GSIS insuring all real and personal by GSIS to PGAI of the first three quarterly reinsurance
properties mortgaged to it by electrical cooperatives under an premiums; and (d) the failure/refusal of GSIS to remit the
Industrial All Risks Policy (IAR policy).12 The total sum insured fourth and last reinsurance premium.35 Hence, PGAI prayed
under the IAR policy was ₱16,731,141,166.80, out of which, that the RTC render a judgment on the pleadings pursuant to
95% or ₱15,894,584,108.40 was reinsured by GSIS with PGAI for Section 1, Rule 34 of the Rules of Court (Rules). GSIS opposed36
a period of one year or from March 5, 1999 to March 5, the foregoing motion by reiterating the allegations and
2000.13 As reflected in Reinsurance Request Note No. 99- defenses in its Answer.
15014 (reinsurance cover) and the Reinsurance Binder15 dated
April 21, 1999 (reinsurance binder), GSIS agreed to pay PGAI On January 11, 2002, the RTC issued an Order37 (January 11,
reinsurance premiums in the amount of ₱32,885,894.52 per 2002 Order) granting PGAI’s Motion for Judgment on the
quarter or a total of ₱131,543,578.08.16 While GSIS remitted to Pleadings. It observed that the admissions of GSIS that it paid
PGAI the reinsurance premiums for the first three quarters, it, the first three quarterly reinsurance premiums to PGAI affirmed
however, failed to pay the fourth and last reinsurance premium the validity of the contract of reinsurance between them. As
due on December 5, 1999 despite demands. This prompted such, GSIS cannot now renege on its obligation to remit the last
PGAI to file, on November 15, 2001, a Complaint17 for sum of and remaining quarterly reinsurance premium.38 It further
money (complaint) against GSIS before the RTC, docketed as pointed out that while it is true that the payment of the
Civil Case No. 01-1634. premium is a requisite for the validity of an insurance contract
as provided under Section 77 of Presidential Decree No. (PD)
In its complaint, PGAI alleged, among others, that: (a) after it 612,39 otherwise known as "The Insurance Code," it was held in
had issued the IAR policy, it further reinsured the risks covered Makati Tuscany Condominium Corp. v. CA40 (Makati Tuscany)
under the said reinsurance with reputable reinsurers worldwide that insurance policies are valid even if the premiums were paid
such as Lloyds of London, Copenhagen Re, Cigna Singapore, in installments, as in this case.41 Thus, in view of the foregoing,
CCR, Generali, and Arig;18 (b) the first three reinsurance the RTC ordered GSIS to pay PGAI the last quarter reinsurance
premiums were paid to PGAI by GSIS and, in the same vein, NEA premium in the sum of ₱32,885,894.52, including interests
paid the first three reinsurance premiums due to GSIS;19 (c) amounting to ₱6,519,515.91 as of July 31, 2000 until full
GSIS failed to pay PGAI the fourth and last reinsurance premium payment, attorney’s fees, and costs of suit.42 Dissatisfied, GSIS
due on December 5, 1999;20 (d) the IAR policy remained in full filed a notice of appeal.43
force and effect for the entire insurable period and, in fact, the
losses/damages on various risks reinsured by PGAI were paid Meanwhile, PGAI filed a Motion for Execution Pending
and accordingly settled by it;21 (e) PGAI is under continuous Appeal44 based on the following reasons: (a) GSIS’ appeal was
pressure from its reinsurers in the international market to patently dilatory since it already acknowledged the validity of
settle the matter;22 and (f) GSIS acknowledged its obligation to PGAI’s claim;45 (b) GSIS posted no valid defense as its Answer
pay the last reinsurance premium as it, in turn, demanded from raised no genuine issues;46 and (c) PGAI would suffer serious
NEA the fourth and last reinsurance premium.23 and irreparable injury as it may be blacklisted as a consequence
of the non-payment of premiums due.47 PGAI also manifested
In its Answer,24 GSIS admitted, among others, that: (a) its its willingness to post a sufficient surety bond to answer for any
request for reinsurance cover was accepted by PGAI in a resulting damage to GSIS.48 The latter opposed49 the motion
reinsurance binder;25 (b) it remitted to PGAI the first three asserting that there lies no sufficient ground or urgency to
reinsurance premiums which were paid by NEA;26 and (c) it justify execution pending appeal. It also claimed that all its
failed to remit the fourth and last reinsurance premium to funds and properties are exempted from execution citing
PGAI.27 It, however, denied, inter alia, that: (a) it had Section 39 of Republic Act No. (RA) 8291,50 otherwise known
acknowledged its obligation to pay the last quarter’s as "The Government Service Insurance System Act of 1997."51
reinsurance premium to PGAI;28 and (b) the IAR policy
remained in full force and effect for the entire insurable period On February 14, 2002, the RTC issued an Order52 (February 14,
of March 5, 1999 to March 5, 2000.29 GSIS also proffered the 2002 Order) granting PGAI’s Motion for Execution Pending
following affirmative defenses: (a) the complaint states no Appeal, conditioned on the posting of a bond. It further held
cause of action against GSIS because the non-payment of the that only the GSIS Social Insurance Fund is exempt from
last reinsurance premium only renders the reinsurance contract execution. Accordingly, PGAI duly posted a surety bond which
ineffective, and does not give PGAI a right of action to the RTC approved through an Order53 dated February 19,
collect;30 (b) pursuant to the regulations issued by the 2002, resulting to the issuance of a writ of execution54 and
Commission on Audit, GSIS is prohibited from advancing notices of garnishment55 (February 19, 2002 issuances), all of
payments to PGAI occasioned by the failure of the principal even date, against GSIS.
338
GSIS given that RA 8291 exempts the same from levy, execution
The CA Proceedings Antecedent to G.R. No. 165585 and garnishment.69
Aggrieved by the RTC’s February 14, 2002 Order, as well as the For its part, PGAI maintained that: (a) the judgment on the
February 19, 2002 issuances, GSIS – without first filing a motion pleadings was in order given that GSIS never disputed the facts
for reconsideration (from the said order of execution) or a as alleged in its complaint; (b) the discretionary execution was
sufficient supersedeas bond56 – filed on February 26, 2002 a proper in view of the dilatory methods employed by GSIS in
petition for certiorari57 before the CA, docketed as CA-G.R. SP order to evade the payment of a valid obligation; and (c) the
No. 69289, against the RTC and PGAI. It also impleaded in the general insurance fund of GSIS, which was attached and
said petition the Land Bank of the Philippines (LBP) and the garnished by the RTC, is not exempt from execution.70
Development Bank of the Philippines (DBP) as nominal parties
so as to render them subject to the writs and processes of the In a Decision71 dated October 30, 2006, the CA sustained the
CA.58 RTC’s January 11, 2002 Order but deleted the awards of
interest and attorney’s fees for lack of factual and legal basis.72
In its petition, GSIS argued that: (a) none of the grounds
proffered by PGAI justifies the issuance of a writ of execution The CA ruled that judgment on the pleadings was proper since
pending appeal;59 and (b) all funds and assets of GSIS are GSIS did not specifically deny the genuineness, due execution,
exempt from execution and levy in accordance with RA 8291.60 and perfection of its reinsurance contract with PGAI.73 In fact,
PGAI even settled reinsurance claims during the covering period
On April 4, 2002, the CA issued a temporary restraining order rendering the reinsurance contract not only perfected but
(TRO)61 enjoining the garnishment of GSIS’ funds with LBP and partially executed as well.74
DBP. Nevertheless, since the TRO’s effectivity lapsed, GSIS’
funds with the LBP were eventually garnished.62 Passing on the issue of the exemption from execution of GSIS
funds, the CA, citing Rubia v. GSIS75 (Rubia), held that the
On May 26, 2004, the CA rendered a Decision63 dismissing exemption provided for by RA 8291 is not absolute since it only
GSIS’ petition, upholding, among others, the validity of the pertains to the social security benefits of its members; thus,
execution pending appeal pursuant to the RTC’s February 14, funds used by the GSIS for business investments and
2002 Order as well as the February 19, 2002 issuances. It found commercial ventures, as in this case, may be attached and
that the impending blacklisting of PGAI constitutes a good garnished.76
reason for allowing the execution pending appeal (also known
as "discretionary execution") considering that the imposition of GSIS’ motion for reconsideration77 was denied by the CA in a
international sanctions on any single local insurance company Resolution78 dated March 12, 2007. Hence, the present
puts in grave and immediate jeopardy not only the viability of petition for review on certiorari in G.R. No. 176982.79
that company but also the integrity of the entire local insurance
system including that of the state insurance agency. It pointed The Issues Before the Court
out that the insurance business thrives on credibility which is
maintained by honoring financial commitments. In these consolidated petitions, the essential issues are the
following: (a) in G.R. No. 165585, whether the CA erred in (1)
On the claimed exemption of GSIS funds from execution, the CA upholding the RTC’s February 14, 2002 Order authorizing
held that such exemption only covers funds under the Social execution pending appeal, and (2) ruling that only the Social
Insurance Fund which remains liable for the payment of Insurance Fund and not the General Fund of the GSIS is exempt
benefits like retirement, disability and death compensation and from garnishment; and (b) in G.R. No. 176982, whether the CA
not those covered under the General Insurance Fund, as in this erred in sustaining the RTC’s January 11, 2002 Order rendering
case, which are meant for investment in the business of judgment on the pleadings.
insurance and reinsurance.64
The Court’s Ruling
GSIS’ motion for reconsideration65 was denied by the CA in a
Resolution66 dated October 6, 2004. Hence, the petition for The petitions are partly meritorious.
review on certiorari in G.R. No. 165585.67
A. Good reasons to allow execution pending appeal and the
The CA Proceedings Antecedent to G.R. No. 176982 nature of the exemption under Section 39 of RA 8291.
Separately, GSIS also assailed the RTC’s January 11, 2002 Order The execution of a judgment pending appeal is an exception to
which granted PGAI’s Motion for Judgment on the Pleadings the general rule that only a final judgment may be executed.80
through an appeal68 filed on October 7, 2002, docketed as CA In order to grant the same pursuant to Section 2,81 Rule 39 of
G.R. CV No. 73965. the Rules, the following requisites must concur: (a) there must
be a motion by the prevailing party with notice to the adverse
GSIS averred that the RTC gravely erred in: (a) rendering party; (b) there must be a good reason for execution pending
judgment on the pleadings since it specifically denied the appeal; and (c) the good reason must be stated in a special
material allegations in PGAI’s complaint; (b) ordering execution order.82
pending appeal since there are no justifiable reasons for the
same; and (c) effecting execution against funds and assets of Good reasons call for the attendance of compelling
circumstances warranting immediate execution for fear that
339
favorable judgment may yield to an empty victory. In this Nor can it deny contracting parties, in our view, the right of
regard, the Rules do not categorically and strictly define what redress and the enforcement of a claim, particularly as it arises
constitutes "good reason," and hence, its presence or absence from a purely contractual relationship of a private character
must be determined in view of the peculiar circumstances of between an individual and the GSIS.89 (Emphases supplied and
each case. As a guide, jurisprudence dictates that the "good citations omitted)
reason" yardstick imports a superior circumstance that will
outweigh injury or damage to the adverse party.83 Corollarily, Thus, the petition in G.R. No. 165585 is partly granted.
the requirement of "good reason" does not necessarily entail
unassailable and flawless basis but at the very least, an B. Propriety of judgment on the pleadings.
invocation thereof must be premised on solid footing.84
Judgment on the pleadings is appropriate when an answer fails
In the case at bar, the RTC, as affirmed by the CA, granted to tender an issue, or otherwise admits the material allegations
PGAI’s motion for execution pending appeal on the ground that of the adverse party’s pleading. The rule is stated in Section 1,
the impending sanctions against it by foreign Rule 34 of the Rules which reads as follows:
underwriters/reinsurers constitute good reasons therefor. It
must, however, be observed that PGAI has not proffered any Sec. 1. Judgment on the pleadings. – Where an answer fails to
evidence to substantiate its claim, as it merely presented bare tender an issue, or otherwise admits the material allegations of
allegations thereon. It is hornbook doctrine that mere the adverse party’s pleading, the court may, on motion of that
allegations do not constitute proof. As held in Real v. Belo,85 "it party, direct judgment on such pleading. x x x.
is basic in the rule of evidence that bare allegations,
unsubstantiated by evidence, are not equivalent to proof. In In this relation, jurisprudence dictates that an answer fails to
short, mere allegations are not evidence."86 Hence, without tender an issue if it does not comply with the requirements of a
any sufficient basis to support the existence of its alleged "good specific denial as set out in Sections 890 and 10,91 Rule 8 of the
reasons," it cannot be said that the second requisite to allow an Rules, resulting in the admission of the material allegations of
execution pending appeal exists. To reiterate, the requirement the adverse party’s pleadings.92
of "good reasons" must be premised on solid footing so as to
ensure that the "superior circumstance" which would impel As such, it is a form of judgment that is exclusively based on the
immediate execution is not merely contrived or based on submitted pleadings without the introduction of evidence as
speculation. This, however, PGAI failed to demonstrate in the the factual issues remain uncontroverted.93
present case. In fine, the Court therefore holds that the CA’s
affirmance of the RTC’s February 14, 2002 Order authorizing In this case, records disclose that in its Answer, GSIS admitted
execution pending appeal, as well as the February 19, 2002 the material allegations of PGAI’s complaint warranting the
issuances related thereto, was improper. grant of the relief prayed for. In particular, GSIS admitted that:
(a) it made a request for reinsurance cover which PGAI
Nevertheless, while an execution pending appeal should not lie accepted in a reinsurance binder effective for one year;94 (b) it
in view of the above-discussed reasons, it must be noted that remitted only the first three reinsurance premium payments to
the funds and assets of GSIS may – after the resolution of the PGAI;95 (c) it failed to pay PGAI the fourth and final reinsurance
appeal and barring any provisional injunction thereto – be premium installment;96 and (d) it received demand letters
subject to execution, attachment, garnishment or levy since the from PGAI.97 It also did not refute the allegation of PGAI that it
exemption under Section 39 of RA 829187 does not operate to settled reinsurance claims during the reinsured period. On the
deny private entities from properly enforcing their contractual basis of these admissions, the Court finds that the CA did not
claims against GSIS.88 This has been established in the case of err in affirming the propriety of a judgment on the pleadings.
Rubia wherein the Court held as follows:
GSIS’ affirmative defense that the non-payment of the last
The declared policy of the State in Section 39 of the GSIS reinsurance premium merely rendered the contract ineffective
Charter granting GSIS an exemption from tax, lien, attachment, pursuant to Section 7798 of PD 612 no longer involves any
levy, execution, and other legal processes should be read factual issue, but stands solely as a mere question of law in the
together with the grant of power to the GSIS to invest its light of the foregoing admissions hence allowing for a judgment
"excess funds" under Section 36 of the same Act. Under Section on the pleadings. Besides, in the case of Makati Tuscany, the
36, the GSIS is granted the ancillary power to invest in business Court already ruled that the non-payment of subsequent
and other ventures for the benefit of the employees, by using installment premiums would not prevent the insurance
its excess funds for investment purposes. In the exercise of such contract from taking effect; that the parties intended to make
function and power, the GSIS is allowed to assume a character the insurance contract valid and binding is evinced from the
similar to a private corporation. Thus, it may sue and be sued, fact that the insured paid – and the insurer received – several
as also explicitly granted by its charter. reinsurance premiums due thereon, although the former
refused to pay the remaining balance, viz:
Needless to say, where proper, under Section 36, the GSIS may
be held liable for the contracts it has entered into in the course We hold that the subject policies are valid even if the premiums
of its business investments. For GSIS cannot claim a special were paid on installments. The records clearly show that
immunity from liability in regard to its business ventures under petitioner and private respondent intended subject insurance
said Section. policies to be binding and effective notwithstanding the
staggered payment of the premiums. The initial insurance
contract entered into in 1982 was renewed in 1983, then in
340
1984. In those three (3) years, the insurer accepted all the Prudential Guarantee and Assurance, Inc.’s execution pending
installment payments. Such acceptance of payments speaks appeal. In this respect, the Order dated February 14, 2002 of
loudly of the insurer’s intention to honor the policies it issued the Regional Trial Court of Makati, Branch 149 as well as all
to petitioner. Certainly, basic principles of equity and fairness other issuances related thereto are set aside.
would not allow the insurer to continue collecting and
accepting the premiums, although paid on installments, and On the other hand, the petition in G.R. No. 176982 is DENIED.
later deny liability on the lame excuse that the premiums were The Decision dated October 30, 2006 and Resolution dated
not prepaid in full. March 12, 2007 in CA-G.R. CV No. 73965 are hereby AFFIRMED.
We therefore sustain the Court of Appeals. We quote with 125. BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG
approval the well-reasoned findings and conclusion of the (formerly BIRKENSTOCK ORTHOPAEDIE GMBH), Petitioner,
appellate court contained in its Resolution denying the motion vs.PHILIPPINE SHOE EXPO MARKETING CORPORATION,
to reconsider its Decision — Respondent.
While the import of Section 77 is that prepayment of premiums Assailed in this Petition for Review on Certiorari1 are the Court
is strictly required as a condition to the validity of the contract, of Appeals (CA) Decision2 dated June 25, 2010 and Resolution3
We are not prepared to rule that the request to make dated October 27, 2010 in CA-G.R. SP No. 112278 which
installment payments duly approved by the insurer, would reversed and set aside the Intellectual Property Office (IPO)
prevent the entire contract of insurance from going into effect Director General’s Decision4 dated December 22, 2009 that
despite payment and acceptance of the initial premium or first allowed the registration of various trademarks in favor of
installment . Section 78 of the Insurance Code in effect allows petitioner Birkenstock Orthopaedie GmbH & Co. KG.
waiver by the insurer of the condition of prepayment by making
an acknowledgment in the insurance policy of receipt of The Facts
premium as conclusive evidence of payment so far as to make
the policy binding despite the fact that premium is actually Petitioner, a corporation duly organized and existing under the
unpaid. Section 77 merely precludes the parties from laws of Germany, applied for various trademark registrations
stipulating that the policy is valid even if premiums are not before the IPO, namely: (a) "BIRKENSTOCK" under Trademark
paid, but does not expressly prohibit an agreement granting Application Serial No. (TASN) 4-1994-091508 for goods falling
credit extension, and such an agreement is not contrary to under Class 25 of the International Classification of Goods and
morals, good customs, public order or public policy (De Leon, Services (Nice Classification) with filing date of March 11, 1994;
the Insurance Code, at p. 175). So is an understanding to allow (b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING
insured to pay premiums in installments not so proscribed. At OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT,
the very least, both parties should be deemed in estoppel to CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods
question the arrangement they have voluntarily accepted. falling under Class 25 of the Nice Classification with filing date
of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN
[I]n the case before Us, petitioner paid the initial installment & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
and thereafter made staggered payments resulting in full REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
payment of the 1982 and 1983 insurance policies.1âwphi1 For TASN 4-1994-095043 for goods falling under Class 10 of the
the 1984 policy, petitioner paid two (2) installments although it Nice Classification with filing date of September 5, 1994
refused to pay the balance. (subject applications).5
It appearing from the peculiar circumstances that the parties However, registration proceedings of the subject applications
actually intended to make three (3) insurance contracts valid, were suspended in view of an existing registration of the mark
effective and binding, petitioner may not be allowed to renege "BIRKENSTOCK AND DEVICE" under Registration No. 56334
on its obligation to pay the balance of the premium after the dated October 21, 1993 (Registration No. 56334) in the name of
expiration of the whole term of the third policy (No. AH-CPP- Shoe Town International and Industrial Corporation, the
9210651) in March 1985. Moreover, as correctly observed by predecessor-in-interest of respondent Philippine Shoe Expo
the appellate court, where the risk is entire and the contract is Marketing Corporation.6 In this regard, on May 27, 1997
indivisible, the insured is not entitled to a refund of the petitioner filed a petition for cancellation of Registration No.
premiums paid if the insurer was exposed to the risk insured for 56334 on the ground that it is the lawful and rightful owner of
any period, however brief or momentary.99 (Emphases the Birkenstock marks (Cancellation Case).7 During its
supplied and citation omitted) pendency, however, respondent and/or its predecessor-in-
interest failed to file the required 10th Year Declaration of
Thus, owing to the identical complexion of Makati Tuscany with Actual Use (10th Year DAU) for Registration No. 56334 on or
the present case, the Court upholds PGAI’s right to be paid by before October 21, 2004,8 thereby resulting in the cancellation
GSIS the amount of the fourth and last reinsurance premium of such mark.9 Accordingly, the cancellation case was dismissed
pursuant to the reinsurance contract between them. All told, for being moot and academic.10
the petition in G.R. No. 176982 is denied.
The aforesaid cancellation of Registration No. 56334 paved the
WHEREFORE, the petition in G.R. No. 165585 is PARTLY way for the publication of the subject applications in the IPO e-
GRANTED. The Decision dated May 26, 2004 and Resolution Gazette on February 2, 2007.11 In response, respondent filed
dated October 6, 2004 of the Court of Appeals in CA-G.R. SP No. three (3) separate verified notices of oppositions to the subject
69289 are MODIFIED only insofar as it upheld the validity of applications docketed as Inter Partes Case Nos. 14-2007-00108,
341
14-2007-00115, and 14-2007-00116,12 claiming, inter alia, that:
(a) it, together with its predecessor-in-interest, has been using In its Decision21 dated June 25, 2010, the CA reversed and set
Birkenstock marks in the Philippines for more than 16 years aside the ruling of the IPO Director General and reinstated that
through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks of the BLA. It disallowed the registration of the subject
covered by the subject applications are identical to the one applications on the ground that the marks covered by such
covered by Registration No. 56334 and thus, petitioner has no applications "are confusingly similar, if not outright identical"
right to the registration of such marks; (c) on November 15, with respondent’s mark.22 It equally held that respondent’s
1991, respondent’s predecessor-in-interest likewise obtained a failure to file the 10th Year DAU for Registration No. 56334 "did
Certificate of Copyright Registration No. 0-11193 for the word not deprive petitioner of its ownership of the ‘BIRKENSTOCK’
"BIRKENSTOCK" ; (d) while respondent and its predecessor-in- mark since it has submitted substantial evidence showing its
interest failed to file the 10th Yea r DAU, it continued the use of continued use, promotion and advertisement thereof up to the
"BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to present."23 It opined that when respondent’s predecessor-in-
record its continued ownership and exclusive right to use the interest adopted and started its actual use of "BIRKENSTOCK,"
"BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a " there is neither an existing registration nor a pending
re-application " of its old registration, Registration No. application for the same and thus, it cannot be said that it acted
56334.13 On November 13, 2007, the Bureau of Legal Affairs in bad faith in adopting and starting the use of such mark.24
(BLA) of the IPO issued Order No. 2007-2051 consolidating the Finally, the CA agreed with respondent that petitioner’s
aforesaid inter partes cases (Consolidated Opposition Cases).14 documentary evidence, being mere photocopies, were
submitted in violation of Section 8.1 of Office Order No. 79,
The Ruling of the BLA Series of 2005 (Rules on Inter Partes Proceedings).
In its Decision15 dated May 28, 2008, the BLA of the IPO Dissatisfied, petitioner filed a Motion for Reconsideration25
sustained respondent’s opposition, thus, ordering the rejection dated July 20, 2010, which was, however, denied in a
of the subject applications. It ruled that the competing marks of Resolution26 dated October 27, 2010. Hence, this petition.27
the parties are confusingly similar since they contained the
word "BIRKENSTOCK" and are used on the same and related Issues Before the Court
goods. It found respondent and its predecessor-in-interest as
the prior user and adopter of "BIRKENSTOCK" in the Philippines, The primordial issue raised for the Court’s resolution is whether
while on the other hand, petitioner failed to present evidence or not the subject marks should be allowed registration in the
of actual use in the trade and business in this country. It opined name of petitioner.
that while Registration No. 56334 was cancelled, it does not
follow that prior right over the mark was lost, as proof of The Court’s Ruling
continuous and uninterrupted use in trade and business in the
Philippines was presented. The BLA likewise opined that The petition is meritorious.
petitioner’s marks are not well -known in the Philippines and
internationally and that the various certificates of registration A. Admissibility of Petitioner’s Documentary Evidence.
submitted by petitioners were all photocopies and, therefore,
not admissible as evidence.16 In its Comment28 dated April 29, 2011, respondent asserts that
the documentary evidence submitted by petitioner in the
Aggrieved, petitioner appealed to the IPO Director General. Consolidated Opposition Cases, which are mere photocopies,
are violative of Section 8.1 of the Rules on Inter Partes
The Ruling of the IPO Director General Proceedings, which requires certified true copies of documents
and evidence presented by parties in lieu of originals.29 As
In his Decision17 dated December 22, 2009, the IPO Director such, they should be deemed inadmissible.
General reversed and set aside the ruling of the BLA, thus
allowing the registration of the subject applications. He held The Court is not convinced.
that with the cancellation of Registration No. 56334 for
respondent’s failure to file the 10th Year DAU, there is no more It is well-settled that "the rules of procedure are mere tools
reason to reject the subject applications on the ground of prior aimed at facilitating the attainment of justice, rather than its
registration by another proprietor.18 More importantly, he frustration. A strict and rigid application of the rules must
found that the evidence presented proved that petitioner is the always be eschewed when it would subvert the primary
true and lawful owner and prior user of "BIRKENSTOCK" marks objective of the rules, that is, to enhance fair trials and expedite
and thus, entitled to the registration of the marks covered by justice. Technicalities should never be used to defeat the
the subject applications.19 The IPO Director General further substantive rights of the other party. Every party-litigant must
held that respondent’s copyright for the word "BIRKENSTOCK" be afforded the amplest opportunity for the proper and just
is of no moment since copyright and trademark are different determination of his cause, free from the constraints of
forms of intellectual property that cannot be interchanged.20 technicalities."30 "Indeed, the primordial policy is a faithful
observance of [procedural rules], and their relaxation or
Finding the IPO Director General’s reversal of the BLA suspension should only be for persuasive reasons and only in
unacceptable, respondent filed a petition for review with the meritorious cases, to relieve a litigant of an injustice not
CA. commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed."31 This is especially
Ruling of the CA true with quasi-judicial and administrative bodies, such as the
342
IPO, which are not bound by technical rules of procedure.32 On Section 23637 of the IP Code which pertains to intellectual
this score, Section 5 of the Rules on Inter Partes Proceedings property rights obtained under previous intellectual property
provides: laws, e.g., RA 166, precisely because it already lost any right or
interest over the said mark.
Sec. 5. Rules of Procedure to be followed in the conduct of
hearing of Inter Partes cases. – The rules of procedure herein Besides, petitioner has duly established its true and lawful
contained primarily apply in the conduct of hearing of Inter ownership of the mark "BIRKENSTOCK."
Partes cases. The Rules of Court may be applied suppletorily.
The Bureau shall not be bound by strict technical rules of Under Section 238 of RA 166, which is also the law governing
procedure and evidence but may adopt, in the absence of any the subject applications, in order to register a trademark, one
applicable rule herein, such mode of proceedings which is must be the owner thereof and must have actually used the
consistent with the requirements of fair play and conducive to mark in commerce in the Philippines for two (2) months prior to
the just, speedy and inexpensive disposition of cases, and which the application for registration. Section 2-A39 of the same law
will give the Bureau the greatest possibility to focus on the sets out to define how one goes about acquiring ownership
contentious issues before it. (Emphasis and underscoring thereof. Under the same section, it is clear that actual use in
supplied) commerce is also the test of ownership but the provision went
further by saying that the mark must not have been so
In the case at bar, while petitioner submitted mere photocopies appropriated by another. Significantly, to be an owner, Section
as documentary evidence in the Consolidated Opposition Cases, 2-A does not require that the actual use of a trademark must be
it should be noted that the IPO had already obtained the within the Philippines. Thus, under RA 166, one may be an
originals of such documentary evidence in the related owner of a mark due to its actual use but may not yet have the
Cancellation Case earlier filed before it. Under this right to register such ownership here due to the owner’s failure
circumstance and the merits of the instant case as will be to use the same in the Philippines for two (2) months prior to
subsequently discussed, the Court holds that the IPO Director registration.40
General’s relaxation of procedure was a valid exercise of his
discretion in the interest of substantial justice.33 It must be emphasized that registration of a trademark, by
itself, is not a mode of acquiring ownership.1âwphi1 If the
Having settled the foregoing procedural matter, the Court now applicant is not the owner of the trademark, he has no right to
proceeds to resolve the substantive issues. apply for its registration. Registration merely creates a prima
facie presumption of the validity of the registration, of the
B. Registration and ownership of "BIRKENSTOCK." registrant’s ownership of the trademark, and of the exclusive
right to the use thereof. Such presumption, just like the
Republic Act No. (RA) 166,34 the governing law for Registration presumptive regularity in the performance of official functions,
No. 56334, requires the filing of a DAU on specified periods,35 is rebuttable and must give way to evidence to the contrary.41
to wit:
Clearly, it is not the application or registration of a trademark
Section 12. Duration. – Each certificate of registration shall that vests ownership thereof, but it is the ownership of a
remain in force for twenty years: Provided, That registrations trademark that confers the right to register the same. A
under the provisions of this Act shall be cancelled by the trademark is an industrial property over which its owner is
Director, unless within one year following the fifth, tenth and entitled to property rights which cannot be appropriated by
fifteenth anniversaries of the date of issue of the certificate of unscrupulous entities that, in one way or another, happen to
registration, the registrant shall file in the Patent Office an register such trademark ahead of its true and lawful owner. The
affidavit showing that the mark or trade-name is still in use or presumption of ownership accorded to a registrant must then
showing that its non-use is due to special circumstance which necessarily yield to superior evidence of actual and real
excuse such non-use and is not due to any intention to abandon ownership of a trademark.
the same, and pay the required fee.
The Court’s pronouncement in Berris Agricultural Co., Inc. v.
The Director shall notify the registrant who files the above- Abyadang42 is instructive on this point:
prescribed affidavits of his acceptance or refusal thereof and, if
a refusal, the reasons therefor. (Emphasis and underscoring The ownership of a trademark is acquired by its registration and
supplied) its actual use by the manufacturer or distributor of the goods
made available to the purchasing public. x x x A certificate of
The aforementioned provision clearly reveals that failure to file registration of a mark, once issued, constitutes prima facie
the DAU within the requisite period results in the automatic evidence of the validity of the registration, of the registrant’s
cancellation of registration of a trademark. In turn, such failure ownership of the mark, and of the registrant’s exclusive right to
is tantamount to the abandonment or withdrawal of any right use the same in connection with the goods or services and
or interest the registrant has over his trademark.36 those that are related thereto specified in the certificate. x x x
In other words, the prima facie presumption brought about by
In this case, respondent admitted that it failed to file the 10th the registration of a mark may be challenged and overcome in
Year DAU for Registration No. 56334 within the requisite an appropriate action, x x x by evidence of prior use by another
period, or on or before October 21, 2004. As a consequence, it person, i.e. , it will controvert a claim of legal appropriation or
was deemed to have abandoned or withdrawn any right or of ownership based on registration by a subsequent user. This is
interest over the mark "BIRKENSTOCK." Neither can it invoke because a trademark is a creation of use and belongs to one
343
who first used it in trade or commerce.43 (Emphasis and SANDUETA VELASCO, RONALD SANDUETA, and NAPOLEON
underscoring supplied) SANDUETA, Petitioners, vs.DOMINGO ROBLES, HEIRS OF
TEODORO ABAN, namely: NERIO ABAN, VIRGINIO ABAN,
In the instant case, petitioner was able to establish that it is the SUSANA ABAN, and DAVID ABAN; HEIRS OF EUFRECENA*
owner of the mark "BIRKENSTOCK." It submitted evidence GALEZA, namely: CESAR GALEZA, NESTOR GALEZA, ANGELA
relating to the origin and history of "BIRKENSTOCK" and its use 9ALEZA JUSTO GALEZA, KIA GALEZA PONCE, PORFERIA GALEZA
in commerce long before respondent was able to register the NALZARO, ROSARIO GALEZA VELASCO, HERMINIA GALEZA
same here in the Philippines. It has sufficiently proven that GUERRERO, and NONA GALEZA NACARIO, Respondents.
"BIRKENSTOCK" was first adopted in Europe in 1774 by its
inventor, Johann Birkenstock, a shoemaker, on his line of Assailed in this petition for review on Certiorari1 is the
quality footwear and thereafter, numerous generations of his Decision2 dated April 26, 2012 of the Court of Appeals, Cagayan
kin continuously engaged in the manufacture and sale of shoes de Oro City (CA) in CA-G.R. SP No. 03333 which affirmed DARCO
and sandals bearing the mark "BIRKENSTOCK" until it became Order No. RT-0911-4143 dated November 24, 2009 (November
the entity now known as the petitioner. Petitioner also 24, 2009 DARCO Order) issued by former Department of
submitted various certificates of registration of the mark Agrarian Reform (DAR) Secretary Nasser C. Pangandaman
"BIRKENSTOCK" in various countries and that it has used such (Secretary Pangandaman).
mark in different countries worldwide, including the
Philippines.44 The Facts
On the other hand, aside from Registration No. 56334 which Petitioners are the heirs of Romulo and Isabel Sandueta (Sps.
had been cancelled, respondent only presented copies of sales Sandueta) who died intestate in 1987 and 1996, respectively,
invoices and advertisements, which are not conclusive evidence and accordingly inherited several agricultural lands situated in
of its claim of ownership of the mark "BIRKENSTOCK" as these Dipolog City, Zamboanga del Norte, with a total land area of
merely show the transactions made by respondent involving 18.7433 hectares (has.).4 One of these parcels of land is Lot No.
the same.45 3419, with an area of 13.7554 has.5 covered by Transfer
Certificate of Title (TCT) No. T-5988.6 The 4.6523-hectare
In view of the foregoing circumstances, the Court finds the riceland portion (subject portion) of the foregoing lot was
petitioner to be the true and lawful owner of the mark tenanted by Eufrecena Galeza, Teodoro Aban, and Domingo
"BIRKENSTOCK" and entitled to its registration, and that Pableo7 (tenants) who were instituted as such by the original
respondent was in bad faith in having it registered in its name. owner, Diosdado Jasmin, prior to its sale to Sps. Sandueta.8
In this regard, the Court quotes with approval the words of the
IPO Director General, viz.: The subject portion was placed under the government’s
Operation Land Transfer (OLT) Program pursuant to
The facts and evidence fail to show that [respondent] was in Presidential Decree No. (PD) 279 and consequently awarded to
good faith in using and in registering the mark BIRKENSTOCK. the above-named tenants who were issued the corresponding
BIRKENSTOCK, obviously of German origin, is a highly distinct Emancipation Patents (EPs).10
and arbitrary mark. It is very remote that two persons did coin
the same or identical marks. To come up with a highly distinct The Proceedings Before the DAR
and uncommon mark previously appropriated by another, for
use in the same line of business, and without any plausible On July 7, 2005, petitioners filed before the DAR District Office
explanation, is incredible. The field from which a person may in Dipolog City a petition11 seeking to exercise their right of
select a trademark is practically unlimited. As in all other cases retention over the subject portion pursuant to Section 6 of
of colorable imitations, the unanswered riddle is why, of the Republic Act No. (RA) 6657,12 known as the Comprehensive
millions of terms and combinations of letters and designs Agrarian Reform Law of 1988, and as enumerated in the case of
available, [respondent] had to come up with a mark identical or Ass’n. of Small Landowners in the Phils., Inc. v. Hon. Secretary
so closely similar to the [petitioner’s] if there was no intent to of Agrarian Reform13 (Ass’n. of Small Landowners). They also
take advantage of the goodwill generated by the [petitioner’s] sought to annul the EPs of the tenants as well as compel the
mark. Being on the same line of business, it is highly probable tenants to pay back rentals.14
that the [respondent] knew of the existence of BIRKENSTOCK
and its use by the [petitioner], before [respondent] The Provincial Protest Application and Resolution Unit referred
appropriated the same mark and had it registered in its the case to the Municipal Agrarian Reform Officer of Dipolog
name.46 City who, after investigation, recommended the denial of the
petition.15 On the other hand, the Provincial Agrarian Reform
WHEREFORE, the petition is GRANTED. The Decision dated June Officer (PARO), while similarly recommending the denial of the
25, 2010 and Resolution dated October 27, 2010 of the Court of petition for retention, nevertheless recommended the grant of
Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. a 5-hectare retention area for petitioners to be taken from the
Accordingly, the Decision dated December 22, 2009 of the IPO portion of Lot No. 3419 not covered by the OLT Program.16
Director General is hereby REINSTATED.
On April 5, 2006, the DAR Regional Office No. IX, through
126. HEIRS OF ROMULO D. SANDUETA, namely: GLORIA Regional Director Julita R. Ragandang (Director Ragandang)
SANDUETA ELOPRE HEIRS OF JOSEPHINE S. NADALA, issued an Order17 (April 5, 2006 Order) adopting the PARO’s
represented by ROY S. NADALA, HOFBOWER SANDUETA recommendation. Director Ragandang explained that a
NERISA SANDUETA MICUBO, OSCAR SANDUETA, MARILYN landowner who failed to exercise his right of retention under
344
PD 27 can avail of the right to retain an area not exceeding 5 The right of retention, as protected and enshrined in the
has. pursuant to Section 6 of RA 6657,18 adding that this award Constitution, balances the effects of compulsory land
is different from that which may be granted to the children of acquisition by granting the landowner the right to choose the
the landowner, to the extent of 3 has. each, in their own right area to be retained subject to legislative standards.30
as beneficiaries.19 However, to be entitled thereto, each child Necessarily, since the said right is granted to limit the effects of
must meet the age qualification and requirement of actual compulsory land acquisition against the landowner, it is a
cultivation of the land or direct management of the farm under prerequisite that the land falls under the coverage of the OLT
Section 6, as well as the other conditions under Section 2220 of Program of the government. If the land is beyond the ambit of
RA 6657. As petitioners were absentee landowners who had the OLT Program, the landowner need not – as he should not –
left the cultivation of the subject portion entirely to the apply for retention since the appropriate remedy would be for
tenants, Director Ragandang therefore concluded that they are him to apply for exemption. As explained in the case of Daez v.
not entitled to exercise retention rights thereon21 and, hence, CA31 (Daez):
denied their petition for retention. Despite such denial, Director
Ragandang granted the decedent Romulo Sandueta the right to Exemption and retention in agrarian reform are two (2) distinct
retain 5 has. from the portion of Lot No. 3419 not covered by concepts.
the OLT Program.
P.D. No. 27, which implemented the Operation Land Transfer
Dissatisfied, petitioners filed a motion for reconsideration, (OLT) Program, covers tenanted rice or corn lands. The
essentially arguing that their right to choose the retention area requisites for coverage under the OLT program are the
is guaranteed by Section 6 of RA 6657. In an Order22 dated July following: (1) the land must be devoted to rice or corn crops;
14, 2006, Director Ragandang denied the motion and explained and (2) there must be a system of share-crop or lease-tenancy
that landowners covered by PD 27 who failed to exercise their obtaining therein. If either requisite is absent, a landowner may
right of retention which subsequently led to the distribution of apply for exemption. If either of these requisites is absent, the
the EPs to the tenants, have no right to choose the area to be land is not covered under OLT. Hence, a landowner need not
retained.23 Moreover, she pointed out that under Letter of apply for retention where his ownership over the entire
Instruction No. 474 (LOI 474), landowners who own less than 24 landholding is intact and undisturbed. (Emphasis and
has. of tenanted rice lands but additionally own more than 7 underscoring supplied)
has. of other agricultural lands may not retain their tenanted
rice lands.24 Since petitioners failed to exercise their right or If the land is covered by the OLT Program which hence, renders
manifest their intention of retention prior to the issuance of the right of retention operable, PD 27 – issued on October 21,
their tenants’ EPs and considering further that they own about 1972 – confers in favor of covered landowners who cultivate or
14.0910 has. of other agricultural lands, Director Ragandang intend to cultivate an area of their tenanted rice or corn land
declared them to have no right to choose their retained area of the right to retain an area of not more than seven (7) has.
5 has., which can be accommodated in their other landholdings thereof.32 Subsequently, or on June 10, 1998, Congress passed
not covered under the OLT Program.25 RA 6657 which modified the retention limits under PD 27. In
particular, Section 6 of RA 6657 states that covered landowners
On appeal, Secretary Pangandaman issued the November 24, are allowed to retain a portion of their tenanted agricultural
2009 DARCO Order affirming in toto Director Ragandang’s April land not, however, to exceed an area of five (5) has. and,
5, 2006 Order. further thereto, provides that an additional three (3) has. may
be awarded to each child of the landowner, subject to the
The CA Ruling following qualifications: (1) that he is at least fifteen (15) years
of age; and (2) that he is actually tilling the land or directly
In a Decision26 dated April 26, 2012, the CA (a) held that the managing the farm.33 In the case of Heirs of Aurelio Reyes v.
subject portion was appropriately covered by the OLT Program Garilao34 (Reyes), however, the Court held that a landowner’s
pursuant to LOI 474; (b) declared that petitioners do not have retention rights under RA 6657 are restricted by the conditions
the absolute right to choose their retention area considering set forth in LOI 474 issued on October 21, 1976 which reads:
their ownership of 14.0910 has. of other agricultural lands; and
(c) affirmed Secretary Pangandaman’s dismissal of the petition WHEREAS, last year I ordered that small landowners of
for retention under Section 6 of RA 6657.27 tenanted rice/corn lands with areas of less than twenty-four
hectares but above seven hectares shall retain not more than
On May 31, 2012, petitioners filed a motion for seven hectares of such lands except when they own other
reconsideration28 which was denied by the CA in a agricultural lands containing more than seven hectares or land
Resolution29 dated August 14, 2012.1âwphi1 Hence, the used for residential, commercial, industrial or other urban
instant petition. purposes from which they derive adequate income to support
themselves and their families;
The Issue Before the Court
WHEREAS, the Department of Agrarian Reform found that in
The essential issue in this case is whether or not petitioners are the course of implementing my directive there are many
entitled to avail of any retention right under Section 6 of RA landowners of tenanted rice/corn lands with areas of seven
6657. hectares or less who also own other agricultural lands
containing more than seven hectares or lands used for
The Court’s Ruling residential, commercial, industrial or other urban purposes
345
where they derive adequate income to support themselves and landholding was not shown to be tenanted and hence, outside
their families; the coverage of the OLT Program, there. would be no right of
retention, in its technical sense, to speak of. Keeping with the
WHEREAS, it is therefore necessary to cover said lands under Court s elucidation in Daez retention is an agrarian reform law
the Land Transfer Program of the government to emancipate concept which is only applicable when the land is covered by
the tenant-farmers therein. the OLT Program; this is not, however, the case with respect to
the 14.0910-hectare landholding. Thus, if only to correct any
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the confusion in terminology, Romulo Sandueta s right over the
Philippines, do hereby order the following: 14.0910-hectare landholding should not be deemed to be
pursuant to any retention right but rather to his ordinary right
1. You shall undertake to place under the Land Transfer of ownership as it appears from the findings of the DAR that the
Program of the government pursuant to Presidential Decree landholding is not covered by the OL T Program.
No. 27, all tenanted rice/corn lands with areas of seven
hectares or less belonging to landowners who own other WHEREFORE, the petition is DENIED. Accordingly, the Decision
agricultural lands of more than seven hectares in aggregate dated April 26, 2012 of the Court of Appeals, Cagayan de Oro
areas or lands used for residential, commercial, industrial or City in CA-G.R. SP No. 03333 insofar as it upheld the denial of
other urban purposes from which they derive adequate income the petition for retention in this case is hereby AFFIRMED.
to support themselves and their families.
127.LAURA E. PARAGUYA, Petitioner, vs.SPOUSES ALMA
2. Landowners who may choose to be paid the cost of their ESCUREL-CRUCILLO and EMETRIO CRUCILLO,* and the
lands by the Land Bank of the Philippines shall be paid in REGISTER OF DEEDS OF SORSOGON, Respondents.
accordance with the mode of payment provided in Letter of
Instructions No. 273 dated May 7, 1973.35 (Emphases and Assailed in this petition for review on certiorari1 are the
underscoring supplied) Decision2 dated June 27, 2011 and Resolution3 dated January
9, 2012 of the Court of Appeals (CA) in CA-G.R. CV. No. 94764
Based on the above-cited provisions, it may be readily observed reversing the Decision4 dated April 22, 2009 of the Regional
that LOI 474 amended PD 27 by removing any right of retention Trial Court of Gubat, Sorsogon, Branch 54 (RTC) in Civil Case No.
from persons who own: 1583 which ordered respondents-spouses Alma Escurel-Crucillo
(Escurel) and Emetrio Crucillo (Sps. Crucillo) to surrender
(a) other agricultural lands of more than seven (7) has. in ownership and possession of certain parcels of land located at
aggregate areas; or Maragadao, Villareal, Gubat, Sorsogon (subject properties) in
favor of pettioner Laura E. Paraguya (Paraguya), and for
(b) lands used used for residential, commercial, industrial or respondent Register of Deeds of Sorsogon(RD) to cancel
other urban purposes from which they derive adequate income Original Certificate of Title (OCT) No. P-177295 covering the
to support themselves and their families. foregoing properties.
To clarify, in Santiago v. Ortiz-Luis,36 the Court, citing the cases The Facts
of Ass’n. of Small Landowners37 and Reyes,38 stated that while
landowners who have not yet exercised their retention rights On December 19, 1990, Paraguya filed before the RTC a
under PD 27 are entitled to new retention rights provided for Complaint6 against Sps. Crucillo and the RD for the annulment
by RA 6657, the limitations under LOI 474 would equally apply of OCT No. P-17729 and other related deeds, with prayer for
to a landowner who filed an application under RA 6657. receivership and damages, alleging that Escurel obtained the
aforesaid title through fraud and deceit. Paraguya claimed that
In this case, records reveal that aside from the 4.6523-hectare she is the lawful heir to the subject properties left by her
tenanted riceland covered by the OLT Program, i.e. the subject paternal grandfather, the late Ildefonso Estabillo7 (Estabillo),
portion, petitioners predecessors-in-interest, Sps. Sandueta, while Escurel was merely their administrator and hence, had no
own other agricultural lands with a total area of 14.0910 has. right over the same.8
which therefore triggers the application of the first disqualifying
condition under LOI 474 as above-highlighted. As such,
petitioners, being mere successors-in-interest, cannot be said On January 18, 1991, the RD files its answer and denied
to have acquired any retention right to the subject portion. anyinvolvment in the aforesaid fraud maintaining that its
Accordingly, the subject portion would fall under the complete isuance of OCT No. P-17729 was his minsterial duty.9
coverage of the OL T Program hence, the 5 and 3-hectare
retention limits as well as the landowner s right to choose the Thereafter, or on February 7, 1991, Sps. Crucillo filed their
area to be retained under Section 6 of RA 6657 would not apply answer with motion to dismiss, averring that Paraguya’s
altogether. complaint had already been barred by laches and/or
prescription.10 They further alleged, among others, that
Nevertheless, while the CA properly upheld the denial of the Escurel, through her father, the late Angel Escurel, applied for a
petition for retention, the Court must point out that the free patent over the subject properties, resulting in the
November 24, 2009 DARCO Order inaccurately phrased Romulo issuance of Free Patent No. V-3 005844 under OCT No. P-17792
Sandueta s entitlement to the remaining 14.0910-hectare in her name.
landholding, outside of the 4.6523-hectare subject portion, as a
vestige of his retention right. Since the 14.0910-hectare
346
During pre-trial, the parties stipulated on the following: (a) the In a Decision18 dated June 27, 2011, the CA reversed the RTC’s
identity of the subject propwerties which are covered by OCT ruling and ordered the dismissal of Paraguya’s complaint.
No. P-17729 in the name of Escurel; (b) the fact that the subject
properties were originally owned by Estabillo, the common Citing Section 32 of Presidential Decree No. (PD) 1529,19
ancestor of Paraguya and Escurel, being the former’s otherwise known as the "Property Registration Decree." It held
grandfather and the latter’s great-grandfather; and (c) the fact that OCT No. P-17729 became indefeasible and incontrovertible
that Sps. Crucillo are in actual possession of the subject after the lapse of one (1) year from its issuance on August 24,
properties.11 1979, thus barring Paraguya’s complaint.20 Moreover, it found
that the express trust relationship between Escurel and
During trial, Paraguya testified as to how she came about Estabillo was not sufficiently established. Finally, it pointed out
owning the subject properties, presenting a document entitled that Paraguya was not real-party-interest since she has not
Recognition of Ownership and Possession dated December 1, proven her title over the subject properties, stating that the
1972 executed by her siblings, as well as a titulo posesorio titulo posesorio she held could no longer be used as evidence of
issued sometime in 1983 or 1985 in the name of Estabillo. A ownership.
representative of the Community Environment and Naural
Resources Office (CENRO), by the name of Ramon Escanilla, also Aggrieved Paraguya moved for reconsideration21 which for
testified in Paraguya’s favor, stating that aside from an affidavit reconsideration21 which was however, denied on January 9,
dated December 17, 197612 executed by Escurel’s brother, 2012.22 Hence, this petition.
Adonis Escurel (adonis), there were no other documents of
ownership presented before the Bureau of Lands in support of Issue Before the Court
Escurel’s application for title.13
The sole issue in this case is whether or not the CA correctly
For their part, Sps. Crucillo presented several witnesses who dismissed Paraguya’s complaint for annulment of title.
testified that Escurel had been in possession of the subject
properties in the concept of an owner as early as 1957. Escurel The Court’s Ruling
then admitted that her brother, Adonis, executed an affidavit
dated December 17, 1976 in her favor. She likewise admitted The petition has no merit.
that she executed an affidavit, entitled Ratification of
Ownership (affidavit of adjudication), on the same date, in It is an established rule that a Torrens certificate of title is
support of the free patent application with the Bureau of conclusive proof of ownership. Verily, a party may seek its
Lands.14 annulment on the basis of fraud or misrepresentation.
However, such action must be seasonably filed, else the same
The RTC Ruling would be barred.23
In a Decision15 date April 22, 2009, the RTC granted Paraguya’s In this relation, Section 32 of PD 1529 provides that the period
complaint, ordering theannulment of OCT No. P-17729. to contest a decree of registration shall be one (1) year from
Accordingly, it directed the RD to cancel the said title and Sps. the date of its entry and that , after the lapse of the said period,
Escurillo to surrender ownership and possession of the subject The Torrens certificate of title issued thereon becomes
propwerties to Paraguya. incontrovertible and indefeasible, viz.:
It found that there was a discrepancy in the area of the subject Sec. 32 Review of decree of registrationl Innocent purchaser for
properties applied for registration, as Adonis’s affidavit – which value.1âwphi1 The decree of registration shall not be reopened
was made as the basis of Escurel’s affidavit of adjudication – or revised by the reason of absence, minority, or other
stated that the actual area thereof was only 8,392 square disability of any person adversely affected thereby, nor by any
meters (sq. m.) whereas OCT No. P-17729 indicated that the proceeding in any court by reversing judgments, subject,
foregoing properties had an area of 30,862 sq. m. In this regard, however, to the right of any person, including the government
the RTC concluded that the requisites for the application for and the branches thereof, deprived of land or of any estate or
registration were not complied with. Likewise, it observed that interest therein by such adjudication or confirmation of title
Escurel’s ownership over the subject properties was not obtained by actual fraud, to file in the proper Court of First
proven, adding that the affidavit of adjudication made by her Instance a pettiton for reopnening and review of the decree of
and submitted to the CENRO was self-serving. Based on its registartion not later than one year from and after the date of
findings, it then concluded tha there was fraud in Escurel’s the entry of such deceree of resgistration, but in no case shall
acquisition of the above-mentioned title.16 such petition be entertained by the court where an innocent
purchaser for value has acquired the land or an interest therein,
On May 15, 2009, a motion for reconsideration was fixed by the whose rights may be prejudiced. Whenever the phrase
Heirs of Sps. Crucillo, who had substituted the letter due to "innocent purchaser for value" or an equivalent phrase occurs
their supervening death. The said motion was, however, in this Decree, it shall be deemed to include an innocent lessee,
denbied on December 16, 2009, prompting them to elevate the mortgagee, or other encumbracer for value.
case to the CA.17
Upon the expiration of said period of one year, the decree of
The CA Ruling registration and the certificate of title issued shall become
inconvertible. Any person aggrieved by such decree of
registration in any case may pursue his remedy by action for
347
damages against the applicant or any other persons responsible 128. FELIPE C. DAGALA, Complainant, vs.ATTY. JOSE C.
for the fraud. (Emphases and underscoring supplied) QUESADA, JR. and ATTY. AMADO T. ADQUILEN,*
Respondents.
In view of the foregoing , the Ocurt is impelled to sustain the
CA’s dismissal of Paraguya’s complaint for annulment of CT No. For the Court’s resolution is an asministrative complaint1 filed
P-1772924 since it was filed only on December 19, 1990, or by complainant Felipe C. Dagala (complainant) against
more than eleven (11) years from the title’s date of entry on respondents Atty. Jose C. Quesada, Jr. (atty. Quesada) and Atty.
August 24, 1979.25 Based on Section 32 of PD 1529, aid title Amado T. Adquilen (Atty. Adquilen), charging them for gross
had become inconvertible and indefeasible after the lapse of negligence in handling his labor complaints.
one (1) year from the date of its entry, thus barring Paraguya’s
action for annulment of title. The facts
The Court likewise takes note that Paraguya’s complaint is On November 8, 1994 complainant, assisted by Atty. Quesada,
likewise in the nature of an action for reconveyance because it filed before the National Labor Relations Commission (NLRC),
also prayed for the trial copurt to order Sps. Crucillo to Regional Arbitration Branch No. 1, San Fernando City, La Union
"surrender ownership and possession of the properties in (NLRC-RAB) Complaint2 for illegal dismissal, overtime pay,
question to [Paraguya], vacating them altogether x x x. 26 separation pay, damages and attorney’s fees against Capitol
Despite this, Paraguya’s complaint remains dismissible on the Allied Trading & Transport (Capitol), and owner and General
same ground because the prescriptive period for actions for Manager, Lourdes Gutierrez, as well as its Personnel Manager,
reconveyance is ten (10) years reckoned from the date of Joseph G. De Jesus, docketed as NLRC Case No. RAB-I-1??1123-
issuance of the certificate of title, except when the owner is in 94. The said case was, however, dismissed without prejudice,
possession of the property in which case the action for through an Order3 dated December 13, 1994 (December 13,
reconveyance becomes imprescriptible.27 Such exception is, 1994 Order), for failure of complainant and Atty. Quesada to
howevee, Crucillo, and Paraguya, who are in possession of the appear during the two (2) scheduled mandatory conference
land covered by OCT No. P-17729. hearings despite due notice. Thereafter, complainant engaged
the services of Atty. Adquilen, a former Labor Arbiter (LA) of the
As a final point, it is well to note that even if the barring effect NLRC-RAB, who re-filed his labor case, re-docketed as NLRC
of Section 32 and the above-stated prescriptive period for Case No. RAB-I-10-1091-95 (LU).4
reconveyance are discounted, Paraguya’s comlaint for
annulment of title should be dismissed altogether since she Similarly, the case was dismissed without prejudice on June 28,
merely relied on the titulo posesorio issued in favor Estabillo 1996, this time due to the parties' failure to submit their
sometime in 1983 or 1985. Based on Section 1 of PD 892, respective position papers.5
entitled "Discontinuance of the Spanish Mortgage System of
Registration and of the Use of Spanish Titles as Evidence in Land Complainant and Atty. Adquilen re-filed the case for a third
Registration Proceedings," Spanish titles can no longer be used time on August 27, 1996, docketed as NLRC Case No. RAB-I-08-
as evidence of ownership after six (6) months from the 1191-96 (LU).6
effectivity of the law, or starting August 16, 1976.28 viz.:
During its pendency, the representative of Capitol purportedly
Section 1. The system of Registration under the Spanish offered the amount of ₱74,000.00 as settlement of
Mortgage Las is discontinued, and all lands recorded under said complainant's claim, conditioned on the submission of the
system which are not yet covered by Torrens title shall be latter’s position paper.7
considered as unregistered lands.
Atty. Adquilen, however, failed to submit one, resulting in the
All holders of Spanish titles or grants should apply for dismissal of the complaint "for lack of interest and failure to
registration of their lands under Act. 496, otherwise known as prosecute" as stated in an Order8 dated February 27, 1997
the Land Registration Act, within six (6) months from the (February 27, 1997 Order). Atty. Adquilen and complainant
effectivity of this decree. Thereafter, Spanish titles cannot be received notice of the said order on March 11, 1997 and March
used as evidence of land ownership in any registartion 24, 1997,9 respectively. On July 11, 1997, complainant – this
proceeding under the Torrens system. (Emphasis and time assisted by Atty. Imelda L. Picar (Atty. Picar) – filed a
underscoring supplied) motion for reconsideration10
xxxx from the February 27, 1997 Order, which was treated as an
appeal and transmitted to the NLRC-National Capital Region
Hence, since Paraguya only presented the titulo posesorio (NLRC-NCR).11
during the pendency of the instant case, or during the 1990’s
onwards, the CA was correct in not giving any credence to it at However, the NLRC-NCR dismissed the same in a Resolution12
all. dated June 17, 1998 for having been filed out of time, adding
that the negligence of counsel binds the client.13
WHEREFORE, the petition is DENIED. Accordingly, the Court of
Appeal’s Decision dated June 27, 2011 and Resolution dated Due to the foregoing, Atty. Picar sent separate letters14 dated
January 9, 2012 in CA-G.R. CV. No. 94764 are hereby AFFIRMED. November 18, 1998 to respondents, informing them that
complainant is in the process of pursuing administrative cases
against them before the Court. Nevertheless, as complainant
348
remains open to the possibility of settlement, respondents the December 5, 1998 MoA to pay the amount of ₱68,000.00,
were invited to discuss the matter at Atty. Picar’s office. Only with legal interest from January 20, 1999 until fully settled;
Atty. Quesada responded to the said letter and subsequently, while Atty. Adquilen was ordered to pay the amount of
through a Memorandum of Agreement15 dated December 5, ₱6,000.00, representing the difference between the ₱74,000.00
1998 (December 5, 1998 MoA), undertook to compensate the settlement offered by Capitol and the above-stated settlement
damages sustained by complainant in consideration of the non- amount, with legal interest from date of notice of the order of
filing of an administrative complaint against him. Atty. dismissal on March 25, 199733 until fully paid. The IBP Board of
Quesada, however, reneged on his promise, thus prompting Governors adopted and approved the afore-stated report and
complainant to proceed with the present complaint.16 recommendation in Resolution No. XX-2011-262 dated
November 19, 2011 (November 19, 2011 Resolution), finding
In a Resolution17 dated June 21, 1999, the Court directed the same to be fully supported by the evidence on record and
respondents to comment on the Complaint within ten (10) days the applicable laws and rules. Consequently, it directed
from notice. However, despite notices18 and the extension respondents to pay complainant the total amount of
granted,19 ₱74,000.00 within thirty (30) days from notice.34
Atty. Adquilen failed to comply with the directive and the In a Resolution35 dated September 12, 2012, the Court noted
subsequent show-cause resolutions.20 Accordingly, a fine in the the Notice36 of the IBP’s November 19, 2011 Resolution, and
amount of ₱500.00 was imposed21 against him, which he duly thereafter sent notices to the parties as well as the IBP-CBD,
paid on September 19, 2005.22 On the other hand, Atty. the Office of the Bar Confidant and the Public Information
Quesada, in his Comment,23 admitted having accepted and Office. However, the notice sent to Atty. Adquilen was returned
filed the initial labor case for complainant. He, however, unserved with the notation "Return to Sender, Deceased."37
explained that he was unable to file the required position paper
due to complainant's failure to furnish him with the Thus, in the Resolutions dated February 20, 201338 and June
employment records and other relevant documents. He also 10, 2013,39 the IBP was required to furnish the Court with the
claimed that when he was informed of the dismissal of the case death certificate of Atty. Adquilen.
without prejudice, he advised complainant to re-file the case
with the assistance of another lawyer as he had to attend to his On August 30, 2013, the IBP filed its compliance,40 attaching
duties as Chairman of the Laban ng Demokratikong Pilipino for therewith the Certificate of Death41 of Atty. Adquilen which
the Second District of La Union Province.24 Anent the indicates that the latter passed away on June 22, 2008 due to
December 5, 1998 MoA, Atty. Quesada alleged that he was cardiac arrhythmia.1âwphi1 In view of Atty. Adquilen's death
merely prevailed upon to sign the same for fear of losing his prior to the promulgation of this Decision,42 the Court, bearing
means of livelihood and license to practice law, and that he had in mind the punitive nature of administrative liabilities,43
no intention of reneging on his promise to pay. Nonetheless, hereby dismisses the case against him. Hence, what is left for
despite earnest efforts, he still failed to come up with the resolution is the complaint against Atty. Quesada.
agreed-upon amount.25
The Issue Before the Court
In a Resolution26 dated March 27, 2006, the Court resolved to
refer the instant administrative case to the Integrated Bar of The essential issue in this case is whether or not Atty. Quesada
the Philippines (IBP) for evaluation, report and should be held administratively liable for gross negligence in
recommendation or decision. handling complainant’s labor case.
The IBP Commission on Bar Discipline (IBP-CBD) set the case for The Court concurs with and affirms the findings of the IBP
mandatory conference on August 25, 2006 and required the anent Atty. Quesada’s administrative liability, but deems it
parties to submit their respective briefs.27 proper to delete the recommended order for the return of the
amount of ₱74,000.00. The Court has repeatedly emphasized
Complainant was duly represented28 by his counsel at the that the relationship between a lawyer and his client is one
hearing,29 while respondents filed separate motions to reset, imbued with utmost trust and confidence. In this regard, clients
only to subsequently waive their respective appearances. Atty. are led to expect that lawyers would be ever-mindful of their
Adquilen attributed the waiver to his medical condition;30 on cause and accordingly exercise the required degree of diligence
the other hand, in a complete turnaround, Atty. Quesada in handling their affairs. For his part, the lawyer is required to
denied the existence of any lawyer-client relationship between maintain at all times a high standard of legal proficiency, and to
him and complainant.31 devote his full attention, skill, and competence to the case,
regardless of its importance and whether he accepts it for a fee
On March 25, 2009, Investigating IBP Commissioner Pedro A. or for free.44
Magpayo, Jr. issued a Report and Recommendation,32 finding
that respondents were grossly negligent in handling He is likewise expected to act with honesty in all his dealings,
complainant's case in violation of Rule 18.03, Canon 18 of the especially with the courts.45
Code of Professional Responsibility (Code). As such, he
recommended that each of them be suspended from the These principles are embodied in Rule 1.01 of Canon 1, Rule
practice of law for a period of one (1) year. Moreover, Atty. 10.01 of Canon 10, Canon 17 and Rule 18.03 of Canon 18 of the
Quesada was directed to comply with his undertaking under Code which respectively read as follows:
349
the prescriptions under Rule 1.01, Canon 1 and Rule 10.01,
CANON 1 – A LAWYER SHALL UPHOLD THE CONSTITUTION, Canon 10 of the Code.53
OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR
LAW AND LEGAL PROCEDURES. The appropriate penalty on an errant lawyer depends on the
exercise of sound judicial discretion based on the surrounding
Rule 1.01 – A lawyer shall not engage in unlawful, dishonest, facts.54
immoral or deceitful conduct. x x x x CANON 10 – A LAWYER
OWES CANDOR, FAIRNESS AND GOOD FAITH TO THE COURT. In Conlu v. Aredonia, Jr.,55 a lawyer was suspended from the
Rule 10.01 – A lawyer shall not do any falsehood, nor consent practice of law for a period of one (1) year for inexcusable
to the doing of any in court; nor shall he mislead, or allow the negligence that resulted in the dismissal of complainant’s
Court to be misled by any artifice. x x x x appeal and for misrepresentations committed before the CA, in
violation of Rule 1.01, Canon 1, Rule 10.01, Canon 10 and Rule
CANON 17 – A LAWYER OWES FIDELITY TO THE CAUSE OF HIS 18.03, Canon 18 of the Code. In the cases of Cheng v. Atty.
CLIENT AND HE SHALL BE MINDFUL OF THE TRUST AND Agravante56 and Perea v. Atty. Almadro,57 respondent-lawyers
CONFIDENCE REPOSED IN HIM. CANON 18 – A LAWYER SHALL were similarly punished for their negligence in the discharge of
SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE. x x x x their duties to their client and for misrepresentation committed
Rule 18.03 – A lawyer shall not neglect a legal matter entrusted before the Court, in violation of Rule 10.01, Canon 10 and Rule
to him, and his negligence in connection therewith shall render 18.03, Canon 18 of the Code. Hence, consistent with existing
him liable. jurisprudence, the Court adopts the penalty recommended by
the IBP and accordingly suspends Atty. Quesada for a period of
In the present case, the Court finds Atty. Quesada to have one (1) year. The Court must, however, clarify that the
violated the foregoing Rules and Canons. Primarily, Atty, foregoing resolution should not include a directive to return the
Quesada failed to exercise the required diligence in handling amount of ₱74,000.00 as ordered by the IBP in its November
complainant’s case by his failure to justify his absence on the 19, 2011 Resolution which represents the settlement initially
two (2) mandatory conference hearings in NLRC Case No. RAB-I- offered by Capitol in the dismissed labor case. The return of the
11-1123-94 despite due notice, which thus resulted in its said amount partakes the nature of a purely civil liability which
dismissal. It bears stressing that a retained counsel is expected should not be dealt with during an administrative-disciplinary
to serve the client with competence and diligence and not to sit proceeding such as this case. In Tria-Samonte v. Obias,58 the
idly by and leave the rights of his client in a state of uncertainty. Court recently illumined that disciplinary proceedings against
To this end, he is oblige to attend scheduled hearings or lawyers are only confined to the issue of whether or not the
conferences, prepare and file the required pleadings, prosecute respondent-lawyer is still fit to be allowed to continue as a
the handled cases with reasonable dispatch, and urge their member of the Bar and that the only concern is his
termination without waiting for the client or the court to prod administrative liability. Thus, matters which have no intrinsic
him or her to do so.46 link to the lawyer's professional engagement, such as the
liabilities of the parties which are purely civil in nature, should
Atty. Quesada’s failure to attend the scheduled conference be threshed out in a proper proceeding of such nature, and not
hearings, despite due notice and without any proper during administrative-disciplinary proceedings, as in this case.
justification, exhibits his inexcusable lack of care and diligence
in managing his client’s cause in violation of Canon 17 and Rule WHEREFORE, respondent Atty. Jose C. Quesada, Jr. is found
18.03, Canon 18 of the Code. Moreover, Atty. Quesada acted GUILTY of violating Rule 1.01 of Canon 1, Rule 10.01 of Canon
with less candor and good faith in the proceedings before the 10, Canon 17, and Rule 18.03 of Canon 18 of the Code of
IBP-CBD when he denied the existence of any lawyer-client Professional Responsibility, and is accordingly SUSPENDED from
relationship between him and complainant, and claimed that the practice of law for one (1) year, effective upon his receipt of
the labor case was handled by another lawyer,47 despite his this Decision, with a stern warning that a repitition of the same
previous admission48 before the Court of having accepted or similar acts will be dealt with more severely.
complainant's case. To add a perusal of the complaint49 dated
November 8, 1994 in NLRC Case No. RAB-I-11-1123-94 reveals On the other hand, the admnistrative complaint respondent
that Atty. Quesada signed the same as counsel for Atty. Amado Adquilen is hereby DIMISSED in view of his
complainant.50 supervening death.
While the IBP-CBD is not a court, the proceedings therein are Let a copy of this Resolution be furnished the Office of the Bar
nonetheless part of a judicial proceeding, a disciplinary action Confidant, the Integrated Bar of the Philippines, and the Office
being in reality an investigation by the Court into the of the Court Administrator for circulation to all the courts.
misconduct of its officers or an examination into his
character.51 130. METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S.
DYCHIAO AND TIUOH YAN, SPOUSES GUILLERMO AND
Besides, Atty. Quesada failed to rebut the allegation that MERCEDES DYCHIAO, AND SPOUSES VICENTE AND FILOMENA
complainant's corresponding failure to appear during the DYCHIAO, Petitioners, vs.ALLIED BANK CORPORATION,
mandatory conference hearings in NLRC Case No. RAB-I-11- Respondent.
1123-94 was upon his counsel’s advice.52
Assailed in this petition for review on certiorari1 are the
Under the premises, it is therefore reasonable to conclude that Decision2 dated February 12, 2007 and the Resolution3 dated
Atty. Quesada had indulged in deliberate falsehood, contrary to May 10, 2007 of the Court of Appeals (CA) in CA-G.R. CV No.
350
86896 which reversed and set aside the Decision4 dated under which Peakstar obligated itself to purchase the scrap
January 17, 2006 of the Regional Trial Court of Makati, Branch metal for a total consideration of ₱34,000,000.00, payable as
57 (RTC) in Civil Case No. 00-1563, thereby ordering petitioners follows:
Metro Concast Steel Corporation (Metro Concast), Spouses Jose
S. Dychiao and Tiu Oh Yan, Spouses Guillermo and Mercedes (a) ₱4,000,000.00 by way of earnest money – ₱2,000,000.00 to
Dychiao, and Spouses Vicente and Filomena Duchiao (individual be paid in cash and the other ₱2,000,000.00 to be paid in two
petitioners) to solidarily pay respondent Allied Bank (2) post-dated checks of ₱1,000,000.00 each;26 and
Corporation (Allied Bank) the aggregate amount of
₱51,064,094.28, with applicable interests and penalty charges. (b) the balance of ₱30,000,000.00 to be paid in ten (10)
monthly installments of ₱3,000,000.00, secured by bank
The Facts guarantees from Bankwise, Inc. (Bankwise) in the form of
separate post-dated checks.27
On various dates and for different amounts, Metro Concast, a
corporation duly organized and existing under and by virtue of Unfortunately, Peakstar reneged on all its obligations under the
Philippine laws and engaged in the business of manufacturing MoA.1âwphi1 In this regard, petitioners asseverated that:
steel,5 through its officers, herein individual petitioners,
obtained several loans from Allied Bank. These loan (a) their failure to pay their outstanding loan obligations to
transactions were covered by a promissory note and separate Allied Bank must be considered as force majeure ; and
letters of credit/trust receipts, the details of which are as
follows: (b) since Allied Bank was the party that accepted the terms and
conditions of payment proposed by Peakstar, petitioners must
The interest rate under Promissory Note No. 96-21301 was therefore be deemed to have settled their obligations to Allied
pegged at 15.25% per annum (p.a.), with penalty charge of 3% Bank. To bolster their defense, petitioner Jose Dychiao (Jose
per month in case of default; while the twelve (12) trust Dychiao) testified28 during trial that it was Atty. Saw himself
receipts uniformly provided for an interest rate of 14% p.a. and who drafted the MoA and subsequently received29 the
1% penalty charge. By way of security, the individual petitioners ₱2,000,000.00 cash and the two (2) Bankwise post-dated
executed several Continuing Guaranty/Comprehensive Surety checks worth ₱1,000,000.00 each from Camiling. However,
Agreements19 in favor of Allied Bank. Petitioners failed to Atty. Saw turned over only the two (2) checks and
settle their obligations under the aforementioned promissory ₱1,500,000.00 in cash to the wife of Jose Dychiao.30
note and trust receipts, hence, Allied Bank, through counsel,
sent them demand letters,20 all dated December 10, 1998, Claiming that the subject complaint was falsely and maliciously
seeking payment of the total amount of ₱51,064,093.62, but to filed, petitioners prayed for the award of moral damages in the
no avail. Thus, Allied Bank was prompted to file a complaint for amount of ₱20,000,000.00 in favor of Metro Concast and at
collection of sum of money21 (subject complaint) against least ₱25,000,000.00 for each individual petitioner,
petitioners before the RTC, docketed as Civil Case No. 00-1563. ₱25,000,000.00 as exemplary damages, ₱1,000,000.00 as
In their second22 Amended Answer,23 petitioners admitted attorney’s fees, ₱500,000.00 for other litigation expenses,
their indebtedness to Allied Bank but denied liability for the including costs of suit.
interests and penalties charged, claiming to have paid the total
sum of ₱65,073,055.73 by way of interest charges for the The RTC Ruling
period covering 1992 to 1997.24
After trial on the merits, the RTC, in a Decision31 dated January
They also alleged that the economic reverses suffered by the 17, 2006, dismissed the subject complaint, holding that the
Philippine economy in 1998 as well as the devaluation of the "causes of action sued upon had been paid or otherwise
peso against the US dollar contributed greatly to the downfall extinguished." It ruled that since Allied Bank was duly
of the steel industry, directly affecting the business of Metro represented by its agent, Atty. Saw, in all the negotiations and
Concast and eventually leading to its cessation. Hence, in order transactions with Peakstar – considering that Atty. Saw
to settle their debts with Allied Bank, petitioners offered the
sale of Metro Concast’s remaining assets, consisting of (a) drafted the MoA,
machineries and equipment, to Allied Bank, which the latter,
however, refused. Instead, Allied Bank advised them to sell the (b) accepted the bank guarantee issued by Bankwise, and
equipment and apply the proceeds of the sale to their
outstanding obligations. Accordingly, petitioners offered the (c) was apprised of developments regarding the sale and
equipment for sale, but since there were no takers, the disposition of the scrap metal – then it stands to reason that
equipment was reduced into ferro scrap or scrap metal over the the MoA between Metro Concast and Peakstar was binding
years. In 2002, Peakstar Oil Corporation (Peakstar), represented upon said bank.
by one Crisanta Camiling (Camiling), expressed interest in
buying the scrap metal. During the negotiations with Peakstar, The CA Ruling
petitioners claimed that Atty. Peter Saw (Atty. Saw), a member
of Allied Bank’s legal department, acted as the latter’s agent. Allied Bank appealed to the CA which, in a Decision32 dated
Eventually, with the alleged conformity of Allied Bank, through February 12, 2007, reversed and set aside the ruling of the RTC,
Atty. Saw, a Memorandum of Agreement25 dated November 8, ratiocinating that there was "no legal basis in fact and in law to
2002 (MoA) was drawn between Metro Concast, represented declare that when Bankwise reneged its guarantee under the
by petitioner Jose Dychiao, and Peakstar, through Camiling, [MoA], herein [petitioners] should be deemed to be discharged
351
from their obligations lawfully incurred in favor of [Allied said contracts should be treated separately and distinctly from
Bank]."33 each other, such that the existence, performance or breach of
one would not depend on the existence, performance or breach
The CA examined the MoA executed between Metro Concast, of the other. In the foregoing respect, the issue on whether or
as seller of the ferro scrap, and Peakstar, as the buyer thereof, not Allied Bank expressed its conformity to the assets sale
and found that the same did not indicate that Allied Bank transaction between Metro Concast and Peakstar (as evidenced
intervened or was a party thereto. It also pointed out the fact by the MoA) is actually irrelevant to the issues related to
that the post-dated checks pursuant to the MoA were issued in petitioners’ loan obligations to the bank. Besides, as the CA
favor of Jose Dychiao. Likewise, the CA found no sufficient pointed out, the fact of Allied Bank’s representation has not
evidence on record showing that Atty. Saw was duly and legally been proven in this case and hence, cannot be deemed as a
authorized to act for and on behalf of Allied Bank, opining that sustainable defense to exculpate petitioners from their loan
the RTC was "indulging in hypothesis and speculation"34 when obligations to Allied Bank. Now, anent petitioners’ reliance on
it made a contrary pronouncement. While Atty. Saw received force majeure, suffice it to state that Peakstar’s breach of its
the earnest money from Peakstar, the receipt was signed by obligations to Metro Concast arising from the MoA cannot be
him on behalf of Jose Dychiao.35 classified as a fortuitous event under jurisprudential
formulation. As discussed in Sicam v. Jorge:39
It also added that "[i]n the final analysis, the aforesaid checks
and receipts were signed by [Atty.] Saw either as representative Fortuitous events by definition are extraordinary events not
of [petitioners] or as partner of the latter’s legal counsel, and foreseeable or avoidable.1âwphi1 It is therefore, not enough
not in anyway as representative of [Allied Bank]."36 that the event should not have been foreseen or anticipated, as
is commonly believed but it must be one impossible to foresee
Consequently, the CA granted the appeal and directed or to avoid. The mere difficulty to foresee the happening is not
petitioners to solidarily pay Allied Bank their corresponding impossibility to foresee the same. To constitute a fortuitous
obligations under the aforementioned promissory note and event, the following elements must concur: (a) the cause of the
trust receipts, plus interests, penalty charges and attorney’s unforeseen and unexpected occurrence or of the failure of the
fees. Petitioners sought reconsideration37 which was, however, debtor to comply with obligations must be independent of
denied in a Resolution38 dated May 10, 2007. Hence, this human will; (b) it must be impossible to foresee the event that
petition. constitutes the caso fortuito or, if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to
The Issue Before the Court render it impossible for the debtor to fulfill obligations in a
normal manner; and (d) the obligor must be free from any
At the core of the present controversy is the sole issue of participation in the aggravation of the injury or loss.40
whether or not the loan obligations incurred by the petitioners (Emphases supplied)
under the subject promissory note and various trust receipts
have already been extinguished. While it may be argued that Peakstar’s breach of the MoA was
unforseen by petitioners, the same us clearly not
The Court’s Ruling "impossible"to foresee or even an event which is independent
of human will." Neither has it been shown that said occurrence
Article 1231 of the Civil Code states that obligations are rendered it impossible for petitioners to pay their loan
extinguished either by payment or performance, the loss of the obligations to Allied Bank and thus, negates the former’s force
thing due, the condonation or remission of the debt, the majeure theory altogether. In any case, as earlier stated, the
confusion or merger of the rights of creditor and debtor, performance or breach of the MoA bears no relation to the
compensation or novation. performance or breach of the subject loan transactions, they
being separate and distinct sources of obligations. The fact of
In the present case, petitioners essentially argue that their loan the matter is that petitioners’ loan obligations to Allied Bank
obligations to Allied Bank had already been extinguished due to remain subsisting for the basic reason that the former has not
Peakstar’s failure to perform its own obligations to Metro been able to prove that the same had already been paid41 or,
Concast pursuant to the MoA. Petitioners classify Peakstar’s in any way, extinguished. In this regard, petitioners’ liability, as
default as a form of force majeure in the sense that they have, adjudged by the CA, must perforce stand. Considering,
beyond their control, lost the funds they expected to have however, that Allied Bank’s extra-judicial demand on
received from the Peakstar (due to the MoA) which they would, petitioners appears to have been made only on December 10,
in turn, use to pay their own loan obligations to Allied Bank. 1998, the computation of the applicable interests and penalty
They further state that Allied Bank was equally bound by Metro charges should be reckoned only from such date.
Concast’s MoA with Peakstar since its agent, Atty. Saw, actively
represented it during the negotiations and execution of the said WHEREFORE, the petition is DENIED. The Decision dated
agreement. Petitioners’ arguments are untenable. At the February 12, 2007 and Resolution dated May 10, 2007 of the
outset, the Court must dispel the notion that the MoA would Court of Appeals in CA-G.R. CV No. 86896 are hereby AFFIRMED
have any relevance to the performance of petitioners’ with MODIFICATION reckoning the applicable interests and
obligations to Allied Bank. The MoA is a sale of assets contract, penalty charges from the date of the extrajudicial demand or
while petitioners’ obligations to Allied Bank arose from various on December 10, 1998. The rest of the appellate court’s
loan transactions. Absent any showing that the terms and dispositions stand.
conditions of the latter transactions have been, in any way,
modified or novated by the terms and conditions in the MoA,
352
131. OPTIMUM DEVELOPMENT BANK, Petitioner, vs.SPOUSES for non-payment of the stipulated monthly installment
BENIGNO V. JOVELLANOS and LOURDES R. JOVELLANOS, payments. As such, their "rights of possession over the subject
Respondents. property necessarily terminated or expired and hence, their
continued possession thereof constitute[d] unlawful
Assailed in this petition for review on certiorari1 are the detainer."16
Decision2 dated May 29, 2009 and Resolution 3 dated August
10, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 104487 Dissatisfied, Sps. Jovellanos appealed to the RTC, claiming that
which reversed the Decision4 dated December 27, 2007 of the Optimum counsel made them believe that a compromise
Regional Trial Court of Caloocan City, Branch 128 (RTC) in Civil agreement was being prepared, thus their decision not to
Case No. C-21867 that, in turn, affirmed the Decision5 dated engage the services of counsel and their concomitant failure to
June 8, 2007 of the Metropolitan Trial Court, Branch 53 of that file an answer.17
same city (MeTC) in Civil Case No. 06-28830 ordering
respondents-spouses Benigno and Lourdes Jovellanos (Sps.
Jovellanos) to, inter alia, vacate the premises of the property They also assailed the jurisdiction of the MeTC, claiming that
subject of this case. the case did not merely involve the issue of physical possession
but rather, questions arising from their rights under a contract
The Facts to sell which is a matter that is incapable of pecuniary
estimation and, therefore, within the jurisdiction of the RTC.18
On April 26, 2005, Sps. Jovellanos entered into a Contract to
Sell6 with Palmera Homes, Inc. (Palmera Homes) for the The RTC Ruling
purchase of a residential house and lot situated in Block 3, Lot
14, Villa Alegria Subdivision, Caloocan City (subject property) In a Decision19 dated December 27, 2007, the RTC affirmed the
for a total consideration of ₱1,015,000.00. Pursuant to the MeTC’s judgment, holding that the latter did not err in refusing
contract, Sps. Jovellanos took possession of the subject to admit Sps. Jovellanos’ s belatedly filed answer considering
property upon a down payment of ₱91,500.00, undertaking to the mandatory period for its filing. It also affirmed the MeTC’s
pay the remaining balance of the contract price in equal finding that the action does not involve the rights of the
monthly installments of ₱13,107.00 for a period of 10 years respective parties under the contract but merely the recovery
starting June 12, 2005.7 of possession by Optimum of the subject property after the
spouses’ default.20
On August 22, 2006, Palmera Homes assigned all its rights, title
and interest in the Contract to Sell in favor of petitioner Aggrieved, Sps. Jovellanos moved for reconsideration which
Optimum Development Bank (Optimum) through a Deed of was, however, denied in a Resolution21 dated June 27, 2008.
Assignment of even date.8 Hence, the petition before the CA reiterating that the RTC erred
in affirming the decision of the MeTC with respect to:
On April 10, 2006, Optimum issued a Notice of Delinquency and
Cancellation of Contract to Sell9 for Sps. Jovellanos’s failure to (a) the non-admission of their answer to the complaint; and
pay their monthly installments despite several written and
verbal notices.10 (b) the jurisdiction of the MeTC over the complaint for unlawful
detainer.22
In a final Demand Letter dated May 25, 2006,11 Optimum
required Sps. Jovellanos to vacate and deliver possession of the The CA Ruling
subject property within seven (7) days which, however,
remained unheeded. Hence, Optimum filed, on November 3, In an Amended Decision23 dated May 29, 2009, the CA
2006, a complaint for unlawful detainer12 before the MeTC, reversed and set aside the RTC’s decision, ruling to dismiss the
docketed as Civil Case No. 06-28830. Despite having been complaint for lack of jurisdiction. It found that the controversy
served with summons, together with a copy of the does not only involve the issue of possession but also the
complaint,13 Sps. Jovellanos failed to file their answer within validity of the cancellation of the Contract to Sell and the
the prescribed reglementary period, thus prompting Optimum determination of the rights of the parties thereunder as well as
to move for the rendition of judgment.14 the governing law, among others, Republic Act No. (RA)
6552.24
Thereafter, Sps. Jovellanos filed their opposition with motion to
admit answer, questioning the jurisdiction of the court, among Accordingly, it concluded that the subject matter is one which is
others. Further, they filed a Motion to Reopen and Set the Case incapable of pecuniary estimation and thus, within the
for Preliminary Conference, which the MeTC denied. jurisdiction of the RTC.25
The MeTC Ruling Undaunted, Optimum moved for reconsideration which was
denied in a Resolution26 dated August 10, 2009. Hence, the
In a Decision15 dated June 8, 2007, the MeTC ordered Sps. instant petition, submitting that the case is one for unlawful
Jovellanos to vacate the subject property and pay Optimum detainer, which falls within the exclusive original jurisdiction of
reasonable compensation in the amount of ₱5,000.00 for its the municipal trial courts, and not a case incapable of pecuniary
use and occupation until possession has been surrendered. It estimation cognizable solely by the regional trial courts.
held that Sps. Jovellanos’s possession of the said property was
by virtue of a Contract to Sell which had already been cancelled The Court’s Ruling
353
examine the bases for petitioners’ claim of ownership that
The petition is meritorious. What is determinative of the nature entailed interpretation of the Deed of Sale with Assumption of
of the action and the court with jurisdiction over it are the Mortgage."32 Also, in Union Bank of the Philippines v. Maunlad
allegations in the complaint and the character of the relief Homes, Inc.33 (Union Bank), citing Sps. Refugia v. CA,34 the
sought, not the defenses set up in an answer.27 Court declared that MeTCs have authority to interpret
contracts in unlawful detainer cases, viz.:35
A complaint sufficiently alleges a cause of action for unlawful
detainer if it recites that: The authority granted to the MeTC to preliminarily resolve the
issue of ownership to determine the issue of possession
(a) initially, possession of the property by the defendant was by ultimately allows it to interpret and enforce the contract or
contract with or by tolerance of the plaintiff; agreement between the plaintiff and the defendant. To deny
the MeTC jurisdiction over a complaint merely because the
(b) eventually, such possession became illegal upon notice by issue of possession requires the interpretation of a contract will
plaintiff to defendant of the termination of the latter's right of effectively rule out unlawful detainer as a remedy. As stated, in
possession; an action for unlawful detainer, the defendant’s right to
possess the property may be by virtue of a contract, express or
(c) thereafter, defendant remained in possession of the implied;
property and deprived plaintiff of the enjoyment thereof; and
corollarily, the termination of the defendant’s right to possess
(d) within one year from the last demand on defendant to would be governed by the terms of the same contract.
vacate the property, plaintiff instituted the complaint for
ejectment.28 Interpretation of the contract between the plaintiff and the
defendant is inevitable because it is the contract that initially
Corollarily, the only issue to be resolved in an unlawful detainer granted the defendant the right to possess the property; it is
case is physical or material possession of the property involved, this same contract that the plaintiff subsequently claims was
independent of any claim of ownership by any of the parties violated or extinguished, terminating the defendant’s right to
involved.29 possess. We ruled in Sps. Refugia v. CA that – where the
resolution of the issue of possession hinges on a determination
In its complaint, Optimum alleged that it was by virtue of the of the validity and interpretation of the document of title or any
April 26, 2005 Contract to Sell that Sps. Jovellanos were allowed other contract on which the claim of possession is premised,
to take possession of the subject property. However, since the the inferior court may likewise pass upon these issues.
latter failed to pay the stipulated monthly installments,
notwithstanding several written and verbal notices made upon The MeTC’s ruling on the rights of the parties based on its
them, it cancelled the said contract as per the Notice of interpretation of their contract is, of course, not conclusive, but
Delinquency and Cancellation dated April 10, 2006. When Sps. is merely provisional and is binding only with respect to the
Jovellanos refused to vacate the subject property despite issue of possession. (Emphases supplied; citations omitted)
repeated demands, Optimum instituted the present action for
unlawful detainer on November 3, 2006, or within one year In the case at bar, the unlawful detainer suit filed by Optimum
from the final demand made on May 25, 2006. against Sps. Jovellanos for illegally withholding possession of
the subject property is similarly premised upon the cancellation
While the RTC upheld the MeTC’s ruling in favor of Optimum, or termination of the Contract to Sell between them. Indeed, it
the CA, on the other hand, declared that the MeTC had no was well within the jurisdiction of the MeTC to consider the
jurisdiction over the complaint for unlawful detainer, reasoning terms of the parties’ agreement in order to ultimately
that the case involves a matter which is incapable of pecuniary determine the factual bases of Optimum’s possessory claims
estimation – i.e., the validity of the cancellation of the Contract over the subject property. Proceeding accordingly, the MeTC
to Sell and the determination of the rights of the parties under held that Sps. Jovellanos’s non-payment of the installments due
the contract and law – and hence, within the jurisdiction of the had rendered the Contract to Sell without force and effect, thus
RTC. The Court disagrees. Metropolitan Trial Courts are depriving the latter of their right to possess the property
conditionally vested with authority to resolve the question of subject of said contract.36 The foregoing disposition aptly
ownership raised as an incident in an ejectment case where the squares with existing jurisprudence. As the Court similarly held
determination is essential to a complete adjudication of the in the Union Bank case, the seller’s cancellation of the contract
issue of possession.30 Concomitant to the ejectment court’s to sell necessarily extinguished the buyer’s right of possession
authority to look into the claim of ownership for purposes of over the property that was the subject of the terminated
resolving the issue of possession is its authority to interpret the agreement.37
contract or agreement upon which the claim is premised. Thus,
in the case of Oronce v. CA,31 wherein the litigants’ opposing Verily, in a contract to sell, the prospective seller binds himself
claims for possession was hinged on whether their written to sell the property subject of the agreement exclusively to the
agreement reflected the intention to enter into a sale or merely prospective buyer upon fulfillment of the condition agreed
an equitable mortgage, the Court affirmed the propriety of the upon which is the full payment of the purchase price but
ejectment court’s examination of the terms of the agreement in reserving to himself the ownership of the subject property
question by holding that, "because metropolitan trial courts are despite delivery thereof to the prospective buyer.38
authorized to look into the ownership of the property in
controversy in ejectment cases, it behooved MTC Branch 41 to
354
The full payment of the purchase price in a contract to sell is a examines Optimum’s compliance with Section 4 of RA 6552, as
suspensive condition, the non-fulfillment of which prevents the above-quoted and highlighted, which is the provision applicable
prospective seller’s obligation to convey title from becoming to buyers who have paid less than two (2) years-worth of
effective,39 as in this case. Further, it is significant to note that installments. Essentially, the said provision provides for three
given that the Contract to Sell in this case is one which has for (3) requisites before the seller may actually cancel the subject
its object real property to be sold on an installment basis, the contract: first, the seller shall give the buyer a 60-day grace
said contract is especially governed by – and thus, must be period to be reckoned from the date the installment became
examined under the provisions of – RA 6552, or the "Realty due; second, the seller must give the buyer a notice of
Installment Buyer Protection Act", which provides for the rights cancellation/demand for rescission by notarial act if the buyer
of the buyer in case of his default in the payment of succeeding fails to pay the installments due at the expiration of the said
installments. Breaking down the provisions of the law, the grace period; and third, the seller may actually cancel the
Court, in the case of Rillo v. CA,40 explained the mechanics of contract only after thirty (30) days from the buyer’s receipt of
cancellation under RA 6552 which are based mainly on the the said notice of cancellation/demand for rescission by
amount of installments already paid by the buyer under the notarial act. In the present case, the 60-day grace period
subject contract, to wit:41 automatically operated42 in favor of the buyers, Sps.
Jovellanos, and took effect from the time that the maturity
Given the nature of the contract of the parties, the respondent dates of the installment payments lapsed. With the said grace
court correctly applied Republic Act No. 6552. Known as the period having expired bereft of any installment payment on the
Maceda Law, R.A. No. 6552 recognizes in conditional sales of all part of Sps. Jovellanos,43 Optimum then issued a notarized
kinds of real estate (industrial, commercial, residential) the Notice of Delinquency and Cancellation of Contract on April 10,
right of the seller to cancel the contract upon non-payment of 2006. Finally, in proceeding with the actual cancellation of the
an installment by the buyer, which is simply an event that contract to sell, Optimum gave Sps. Jovellanos an additional
prevents the obligation of the vendor to convey title from thirty (30) days within which to settle their arrears and
acquiring binding force. It also provides the right of the buyer reinstate the contract, or sell or assign their rights to
on installments in case he defaults in the payment of another.44
succeeding installments, viz.:
It was only after the expiration of the thirty day (30) period did
(1) Where he has paid at least two years of installments, Optimum treat the contract to sell as effectively cancelled –
making as it did a final demand upon Sps. Jovellanos to vacate
(a) To pay, without additional interest, the unpaid installments the subject property only on May 25, 2006. Thus, based on the
due within the total grace period earned by him, which is foregoing, the Court finds that there was a valid and effective
hereby fixed at the rate of one month grace period for every cancellation of the Contract to Sell in accordance with Section 4
one year of installment payments made: of RA 6552 and since Sps. Jovellanos had already lost their right
to retain possession of the subject property as a consequence
Provided, That this right shall be exercised by the buyer only of such cancellation, their refusal to vacate and turn over
once in every five years of the life of the contract and its possession to Optimum makes out a valid case for unlawful
extensions, if any. (b) If the contract is cancelled, the seller shall detainer as properly adjudged by the MeTC.
refund to the buyer the cash surrender value of the payments
on the property equivalent to fifty per cent of the total WHEREFORE, the petition is GRANTED. The Decision dated May
payments made and, after five years of installments, an 29, 2009 and Resolution dated August 10, 2009 of the Court of
additional five per cent every year but not to exceed ninety per Appeals in CA-G.R. SP No. 104487 are SET ASIDE. The Decision
cent of the total payments made: dated June 8, 2007 of Metropolitan Trial Court, Branch 53,
Caloocan City in Civil Case No. 06-28830 is hereby REINSTATED.
Provided, That the actual cancellation of the contract shall take
place after cancellation or the demand for rescission of the 132. SANGWOO PHILIPPINES, INC. and/or SANG IK JANG,
contract by a notarial act and upon full payment of the cash JISSO JANG, WISSO JANG and NORBERTO TADEO,
surrender value to the buyer. Petitioners,vs.SANGWOO PHILIPPINES, INC. EMPLOYEE UNION
- OLALIA, represented by PORFERIA SALIBONGCOGON,1,
Down payments, deposits or options on the contract shall be Respondents.
included in the computation of the total number of installments
made. x---------------x
(2) Where he has paid less than two years in installments, Sec. G.R. No. 173229 SANGWOO PHILIPPINES, INC. EMPLOYEES
4. x x x the seller shall give the buyer a grace period of not less UNION - OLALIA, represented by PORFERIA SALIBONGCOGON,
than sixty days from the date the installment became due. If Petitioners,vs.SANGWOO PHILIPPINES, INC. and/or SANG IK
the buyer fails to pay the installments due at the expiration of JANG, JISSO JANG, WISSO JANG, and NOREBERTO TADEO,
the grace period, the seller may cancel the contract after thirty Respondents.
days from receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act. Before the Court are consolidated petitions for review on
(Emphasis and underscoring supplied) certiorari2 assailing the Decision3 dated January 12, 2006 and
Resolution4 dated June 14, 2006 of the Court of Appeals(CA)in
Pertinently, since Sps. Jovellanos failed to pay their stipulated CA-G.R. SP No. 88965 that set aside the Resolutions5 dated
monthly installments as found by the MeTC, the Court January 26, 2005 and March 31, 2005 of the National Labor
355
Relations Commission(NLRC), deleted the award of separation
pay, and ordered the payment of financial assistance of In a Resolution18 dated January 26, 2005, the NLRC sustained
₱15,000.00 each to its employees. the ruling of the LA, albeit with modification. While it upheld
SPI’s closure due to serious business losses, it ruled that the
The Facts members of SPEU are entitled to payment of separation pay
equivalent to one-half (½) month pay for every year of service.
On July 25, 2003, during the collective bargaining agreement In this relation, the NLRC opined that since SPI already gave
(CBA)negotiations between Sangwoo Philippines, Inc. separation benefits to 234 of its employees, the minority
Employees Union – Olalia (SPEU) and Sangwoo Philippines, employees should not be denied of the same. Dissatisfied, SPI
Inc.(SPI), the latter filed with the Department of Labor and filed a petition for certiorari19 before the CA, praying for, inter
Employment (DOLE) a letter-notice6of temporary suspension of alia, the issuance of a temporary restraining order (TRO) and/or
operations for one (1) month, beginning September 15, 2003, a writ of preliminary injunction against the execution of the
due to lack of orders from its buyers.7 SPEU was furnished a aforesaid NLRC resolution.
copy of the said letter. Negotiation son the CBA, however,
continued and on September 10, 2003, the parties signed a The CA Proceedings
handwritten Memorandum of Agreement, which, among
others, specified the employees’ wages and benefits for the In a Resolution20 dated April 12, 2005, the CA issued a TRO,
next two (2) years, and that in the event of a temporary which enjoined the enforcement of the NLRC resolution.
shutdown, all machineries and raw materials would not be Thereafter, in a Resolution21 dated June 3, 2005, the CA issued
taken out of the SPI premises.8 a writ of preliminary injunction against the same.
On September 15, 2003,SPI temporarily ceased operations. Meanwhile, pursuant to the CA’s Resolution22 dated May 19,
Thereafter, it successively filed two (2) letters9 with the DOLE, 2005 which suggested that the parties explore talks of a
copy furnished SPEU, for the extension of the temporary possible compromise agreement, SPI sent a Formal Offer of
shutdown until March 15, 2004.10 Meanwhile, on October 28, Settlement23 dated May 24, 2005 to SPEU, offering the amount
2003, SPEU filed a complaint for unfair labor practice, illegal of ₱15,000.00 as financial assistance to each of the minority
closure, illegal dismissal, damages and attorney’s fees before employees. On May 26, 2005, SPI sent a Reiteration of Formal
the Regional Arbitration Branch IV of the NLRC.11 Offer of Settlement to SPEU, reasserting its previous offer of
Subsequently, or on February 12, 2004, SPI posted, in financial assistance. However, settlement talks broke down as
conspicuous places within the company premises, notices of its SPEU did not accept SPI’s offer.
permanent closure and cessation of business operations,
effective March 16, 2004, due to serious economic losses and In a Decision24 dated January 12, 2006, the CA held that the
financial reverses.12 The DOLE was furnished a copy of said minority employees were not entitled to separation pay
notice on February 13, 2004, together with a separate letter considering that the company’s closure was due to serious
notifying it of the company’s permanent closure.13 SPEU was business losses. It pronounced that requiring an employer to be
also furnished with a copy of the notice of permanent closure. generous when it was no longer in a position to be so would be
Forthwith, SPI offered separation benefits of one-half (½) oppressive and unjust. Nevertheless, the CA still ordered SPI to
month pay for every year of service to each of its employees. pay the minority employees ₱15,000.00 each, representing the
234 employees of SPI accepted the offer, received the said amount of financial assistance as contained in the Formal Offer
sums and executed quitclaims.14 Thosewho refused the offer, of Settlement.
i.e., the minority employees, were nevertheless given until
March 25, 2004 to accept their checks and correspondingly, Both parties filed motions for reconsideration which were,
execute quitclaims. However, the minority employees did not however, denied in a Resolution25 dated June 14, 2006. Hence,
claim the said checks. these petitions.
In a Decision15 dated June 4, 2004, the Labor Arbiter (LA) ruled The issues for the Court’s resolution are as follows: (a) whether
in favor of SPI. The LA found that SPI was indeed suffering from or not the minority employees are entitled to separation pay;
serious business losses–as evidenced by financial statements and (b) whether or not SPI complied with the notice
which were never contested by SPEU –and, as such, validly requirement of Article 297 (formerly Article 283)26 of the Labor
discontinued its operations.16 Consequently, the LA held that Code.
SPI was not guilty of unfair labor practice, and similarly
observed that it duly complied with the requirement of The Court’s Ruling
furnishing notices of closure to its employees and the DOLE.
Lastly, the LA ruled that since SPI’s closure of business was due Both petitions are partly meritorious.
to serious business losses, it was not mandated by law to grant
separation benefits to the minority employees. A. Non-entitlement to Separation Benefits.
Aggrieved, SPEU filed an Appeal Memorandum17 before the Closure of business is the reversal of fortune of the employer
NLRC. whereby there is a complete cessation of business operations
and/or an actual locking-up of the doors of establishment,
The NLRC Ruling usually due to financial losses. Closure of business, as an
356
authorized cause for termination of employment,27 aims to previous notice is to, among others, give the employee some
prevent further financial drain upon an employer who cannot time to prepare for the eventual loss of his job,33 the employer
pay anymore his employees since business has already has the positive duty to inform each and every employee of
stopped.28 In such a case, the employer is generally required to their impending termination of employment. To this end,
give separation benefits to its employees, unless the closure is jurisprudence states that an employer’s act of posting notices
due to serious business losses.29 As explained in the case of to this effect in conspicuous areas in the workplace is not
Galaxie Steel Workers Union (GSWU-NAFLU-KMU) v. enough.1âwphi1 Verily, for something as significant as the
NLRC30(Galaxie): involuntary loss of one’s employment, nothing less than an
individually-addressed notice of dismissal supplied to each
The Constitution, while affording full protection to labor, worker is proper. As enunciated in the case of Galaxie:34
nonetheless, recognizes "the right of enterprises to reasonable
returns on investments, and to expansion and growth." In line Finally, with regard to the notice requirement, the Labor Arbiter
with this protection afforded to business by the fundamental found, and it was upheld by the NLRC and the Court of Appeals,
law, Article [297] of the Labor Code clearly makes a policy that the written notice of closure or cessation of Galaxie’s
distinction. It is only in instances of "retrenchment to prevent business operations was posted on the company bulletin board
losses and in cases of closures or cessation of operations of one month prior to its effectivity. The mere posting on the
establishment or undertaking not due to serious business losses company bulletin board does not, however, meet the
or financial reverses" that employees whose employment has requirement under Article [297] of "serving a written notice on
been terminated as a result are entitled to separation pay. In the workers."The purpose of the written notice is to inform the
other words, Article [297] of the Labor Code does not obligate employees of the specific date of termination or closure of
an employer to pay separation benefits when the closure is due business operations, and must be served upon them at least
to serious losses. To require an employer to be generous when one month before the date of effectivity to give them sufficient
it is no longer in a position to do so, in our view, would be time to make the necessary arrangement. In order to meet the
unduly oppressive, unjust, and unfair to the employer. Ours is a foregoing purpose, service of the written notice must be made
system of laws, and the law in protecting the rights of the individually upon each and every employee of the
working man, authorizes neither the oppression nor the self- company.(Emphasis and underscoring supplied; citations
destruction of the employer. (Emphasis and underscoring omitted)
supplied)
Keeping with these principles, the Court finds that the LA, NLRC,
In this case, the LA, NLRC, and the CA all consistently found that and CA erred in ruling that SPI complied with the notice
SPI indeed suffered from serious business losses which resulted requirement when it merely posted various copies of its notice
in its permanent shutdown and accordingly, held the of closure in conspicuous places within the business premises.
company’s closure to be valid. It is a rule that absent any As earlier explained, SPI was required to serve written notices
showing that the findings of fact of the labor tribunals and the of termination to its employees, which it, however, failed to
appellate court are not supported by evidence on record or the do.It is well to stress that while SPI had a valid ground to
judgment is based on a misapprehension of facts, the Court terminate its employees, i.e., closure of business, its failure to
shall not examine a new the evidence submitted by the comply with the proper procedure for terminationrenders
parties.31 Perforce, without any cogent reason to deviate from itliable to pay the employee nominal damages for such
the findings on the validity of SPI’s closure, the Court thus holds omission. Based on existing jurisprudence, an employer which
that SPI is not obliged to give separation benefits to the has a valid cause for dismissing its employee but conducts the
minority employees pursuant to Article 297 of the Labor Code dismissal with procedural infirmity is liable to pay the employee
as interpreted in the case of Galaxie. As such, SPI should not be nominal damages in the amount of ₱30,000.00 if the ground for
directed to give financial assistance amounting to ₱15,000.00 to dismissal is a just cause, or the amount of ₱50,000.00 if the
each of the minority employees based on the Formal Offer of ground for dismissal is an authorized cause.35 However, case
Settlement. If at all, such formal offer should be deemed only law exhorts that in instances where the payment of such
as a calculated move on SPI’s part to further minimize the damages becomes impossible, unjust, or too burdensome,
expenses that it will be bound to incur should litigation drag on, modification becomes necessary in order to harmonize the
and not as an indication that it was still financially sustainable. disposition with the prevailing circumstances.36 Thus, in the
However, since SPEU chose not to accept, said offer did not case of Industrial Timber Corporation v. Ababon37 (Industrial
ripen into an enforceable obligation on the part of SPI from Timber),the Court reduced the amount of nominal damages
which financial assistance could have been realized by the awarded to employees from ₱50,000.00 to ₱10,000.00 since
minority employees. the authorized cause of termination was the employer’s closure
or cessation of business which was done in good faith and due
B.Insufficient Notice of Closure. to circumstances beyond the employer’s control,viz.:38
Article 297 of the Labor Code provides that before any In the determination of the amount of nominal damages which
employee is terminated due to closure of business, it must give is addressed to the sound discretion of the court, several
a one (1) month prior written notice to the employee and to factors are taken into account: (1) the authorized cause
the DOLE. In this relation, case law instructs that it is the invoked, whether it was a retrenchment or a closure or
personal right of the employee to be personally informed of his cessation of operation of the establishment due to serious
proposed dismissal as well as the reasons therefor; and such business losses or financial reverses or otherwise; (2) the
requirement of notice is not a mere technicality or formality number of employees to be awarded; (3) the capacity of the
which the employer may dispense with.32 Since the purpose of employers to satisfy the awards, taken into account their
357
prevailing financial status as borneby the records; (4) the
employer’s grant of other termination benefits in favor of the Sometime in 1988, De Guzman, then a Postal Inspector at the
employees; and (5) whether there was a bona fide attempt to Postal Services Office,6 was investigated by Regional Postal
comply with the notice requirements as opposed to giving no Inspector Atty. Raul Q. Buensalida (Atty. Buensalida) in view of
notice at all. an anonymous complaint charging him of dishonesty and
conduct grossly prejudicial to the best interest of the service.7
In the case at bar, there was a valid authorized cause As a result thereof, Atty. Buensalid are commended8 that De
considering the closure or cessation of ITC's business which was Guzman be formally charged with twelve (12) counts of the
done in good faith and due to circumstances beyond ITC's same offenses and eventually be relieved from his post to
control. Moreover, ITC had ceased to generate any income protect the employees and witnesses from harassment.
since its closure on August 17, 1990. Several months prior to
the closure, ITC experienced diminished income due to high Since the Postal Services Office was then a line-agency of the
production costs, erratic supply of raw materials, depressed Department of Transportation and Communication(DOTC),
prices, and poor market conditions for its wood products. It Atty. Buensalida’s investigation report was forwarded to the
appears that ITC had given its employees all benefits in accord said department’s Investigation Security and Law Enforcement
with the CBA upon their termination. Staff (ISLES) for further evaluation and approval. Contrary to
the findings of Atty. Buensalida, however, the ISLES, through a
Thus, considering the circumstances obtaining in the case at Memorandum9dated February 26, 1990prepared by Director
bar, we deem it wise and just to reduce the amount of nominal Antonio V. Reyes (Dir. Reyes), recommended that De Guzman
damages to be awarded for each employee to Pl0,000.00 each be exonerated from the charges against him due to lack of
instead of 1!50,000.00 each. (Emphasis and underscoring merit. The said recommendation was later approved by DOTC
supplied) Assistant Secretary Tagumpay R. Jardiniano (Asec. Jardiniano) in
a Memorandum10 dated May 15, 1990.
In this case, considering that SPI closed down its operations due
to serious business losses and that said closure appears to have On February 6, 1992, Republic Act No. (RA)7354,11 otherwise
been done in good faith, the Court -similar to the case of known as the ― ”Postal Service Act of 1992,” was passed.
Industrial Timber -deems it just to reduce the amount of Pursuant to this law, the Postal Services Office under the DOTC
nominal damages to be awarded to each of the minority was abolished, and all its powers, duties, and rights were
employees from ₱50,000.00 to Pl0,000.00. To be clear, the transferred to the PPC.12 Likewise, officials and employees of
foregoing award should only obtain in favor of the minority the Postal Services Office were absorbed by the PPC.13
employees and not for those employees who already received
sums equivalent to separation pay and executed quitclaims Subsequently, or on July 16, 1993, De Guzman, who had by
"releasing [SPI] now and in the future any claims and obligation then become Chief Postal Service Officer, was formally
which may arise as results of [their] employment with the charged14 by the PPC, through Postmaster General Eduardo P.
company."39 For these latter employees who have already Pilapil(PG Pilapil), for the same acts of ―dishonesty, gross
voluntarily accepted their dismissal, their executed quitclaims violation of regulations, and conduct grossly prejudicial to the
practically erased the consequences of infirmities on the notice best interest of the service, and the Anti-graft law, committed
of dismissal,40 at least as to them. as follows”:
WHEREFORE, the petitions are PARTLY GRANTED. The Decision Investigation disclosed that while you were designated as
dated January 12, 2006 and Resolution dated June 14, 2006 of Acting District Postal Inspector with assignment at South
the Court of Appeals in CA-G.R. SP No. 88965 are hereby Cotabato District, Postal Region XI, Davao City, you personally
AFFIRMED with MODIFICATION deleting the award of financial made unauthorized deductions and/or cuttings from the ten
assistance in the amount of ₱15,000.00 to each of the minority (10%) percent salary differential for the months of January-
employees. Instead, Sangwoo Philippines, Inc. is ORDERED to March, 1988,when you paid each of the employees of the post
pay nominal damages in the amount of Pl0,000.00 to each of office at Surallah, South Cotabato, on the last week of April
the minority employees. 1988, and you intentionally failed to give to Postmaster Juanito
D. Dimaup, of the said post office his differential amounting to
133. PHILIPPINE POSTAL CORPORATION, Petitioner, vs.COURT ₱453.91, Philippine currency; that you demanded and required
OF APPEALS and CRISANTO G. DE GUZMAN, Respondents. Letter Carrier Benjamin Salero, of the aforestated post office to
give fifty (₱50.00) pesos out of the aforesaid differential; that
Assailed in this petition for review on certiorari1 are the you personally demanded, take away and encashed the salary
Decision2 dated April 4, 2006 July 19, 2006 of the Court of differential check No. 008695317 in the total amount of
Appeals (CA) in CA-G.R. SP No. 88891 which reversed and set ₱1,585.67, Philippine currency, of Postmaster Benjamin C.
aside the Resolutions dated November 23, 20044 and January Charlon, of the post office at Lake Cebu, South Cotabato, for
6, 20055 of petitioner Philippine Postal Corporation (PPC), your own personal gain and benefit to the damage and
through its then Postmaster General and Chief Executive Officer prejudice of the said postmaster; that you personally
(CEO) Dario C. Rama (PG Rama), finding that the latter gravely demanded, required and received from Postmaster Peniculita
abused its discretion when it revived the administrative charges B. Ledesma, of the post office of Sto. Niño, South Cotabato, the
against respondent Crisanto G. De Guzman (De Guzman) amount of ₱300.00, ₱200.00 and ₱100.00 for hazard pay, COLA
despite their previous dismissal. differential and contribution to the affair "Araw ng Kartero and
Christmas Party," respectively; that you personally demanded
The Facts and required Letter Carrier Feliciano Bayubay, of the post office
358
at General Santos City to give money in the amount of rule on the motion. Thus, in a Resolution25 dated May 10,
₱1,000.00, Philippine Currency, as a condition precedent for his 2005, PG Rama pointed out that, being the third motion for
employment in this Corporation, and you again demanded and reconsideration filed by De Guzman, the same was in gross
personally received from the said letter carrier the amount of violation of the rules of procedure recognized by the PPC, as
₱300.00 Philippine currency, as gift to the employees of the well as of the Civil Service Commission (CSC), which both
Civil Service Commission, Davao City to facilitate the release of allowed only one (1) such motion to be entertained.26 It was
Bayubay’s appointment; that you demanded and forced further held that res judicata was unavailing as the decision
Postmaster Felipe Collamar, Jr.,of the post office at Maitum, exonerating De Guzman was ―”only a ruling after a fact-finding
South Cotabato to contribute and/or produce one (1) whole investigation.” Hence, the same could not be considered as a
Bariles fish for shesami (sic), and you also required and received dismissal on the merits but rather, a dismissal made by an
from the aforesaid postmaster the amount of ₱500.00 investigative body which was not clothed with judicial or quasi-
Philippine currency; that you demanded and required judicial power.27
Postmaster Diosdado B. Delfin to give imported wine and/or
₱700.00, Philippine currency, for gift to the outgoing Regional Meanwhile, before the issuance of the Resolution dated May
Director Escalada; and that you failed to liquidate and return 10, 2005, De Guzman elevated his case on March 12, 200528 to
the substantial amount of excess contributionson April, 1987, the CA via a special civil action for certiorari and mandamus,29
June, 1987 and December, 1987,for Postal Convention at MSU, docketed as CA-G.R. SP No. 88891, imputing grave abuse of
arrival of Postmaster General Banayo and Araw ng Kartero and discretion amounting to lack or excess of jurisdiction in that: (a)
Christmas Party, respectively, for your own personal gain and the case against him was a mere rehash of the previous
benefit to the damage and prejudice of all the employees complaint already dismissed by the DOTC, and therefore, a
assigned at the aforementioned district. clear violation of the rule on res judicata; (b) the assailed PPC
Resolutions did not consider the evidences submitted by De
In a Decision15dated August 15, 1994, De Guzman was found Guzman; (c) the uncorroborated, unsubstantiated and
guilty as charged and was dismissed from the service. contradictory statements contained in the affidavits presented
Pertinently, its dispositive reads that ―”[i]n the interest of the became the bases of the assailed Resolutions; (d) the
service, it is directed that this decision be implemented Resolution dated November 23, 2004 affirmed a non-existent
immediately.”16 decision; (e) Atty. Buensalida was not a credible witness and his
testimony bore no probative value; and(f) the motion for
It appears, however, that the a fore-stated decision was not reconsideration filed by De Guzman of the Resolution dated
implemented until five (5) years later when Regional Director November 23, 2004 is not the third motion for reconsideration
Mama S. Lalanto (Dir. Lalanto) issued a Memorandum17 dated filed by him.
August 17, 1999 for this purpose. De Guzman lost no time in
filing a motion for reconsideration,18 claiming that: (a) the On June 10, 2005, De Guzman appealed30 the Resolution dated
decision sought to be implemented was recalled on August 29, May 10, 2005 before the PPC Board, which resolution was
1994 by PG Pilapil himself; and (b)since the decision had been allegedly received by De Guzman on May 26, 2005. Almost a
dormant for more than five (5)years, it may not be revived year later, the Board issued a Resolution31 dated May 25,
without filing another formal charge. The motion was, however, 2006,denying the appeal and affirming with finality the Decision
denied in a Resolution19 dated May 14, 2003, pointing out that dated August 15, 1994 and the Resolution dated May 14, 2003.
De Guzman failed to produce a copy of the alleged recall order The motion for reconsideration subsequently filed by De
even if he had been directed to do so. Guzman was likewise denied in aResolution32 dated June 29,
2006. On April 4, 2006, the CA rendered a Decision33 in CA-G.R.
Undaunted, De Guzman filed a second motion for SP No. 88891, reversing the PPC Resolutions dated November
reconsideration, which was resolved20 on June 2, 2003 in his 23, 2004 and January 6, 2005, respectively. It held that the
favor in that: (a) the Resolution dated May 14, 2003 denying De revival of the case against De Guzman constituted grave abuse
Guzman’s first motion for Reconsideration was recalled; and (b) of discretion considering the clear and unequivocal content of
a formal hearing of the case was ordered to be conducted as the Memorandum dated May 15, 1990 duly signed by Asec.
soon as possible. After due hearing, the PPC, through PG Rama, Jardiniano that the complaint against De Guzman was already
issued a Resolution21 dated November 23, 2004, finding De dismissed.
Guzman guilty of the charges against him and consequently
dismissing him from the service. It was emphasized therein that Aggrieved, PPC moved for reconsideration which was, however,
when De Guzman was formally charged on July 16, 1993, the denied in a Resolution34 dated July 19, 2006, hence, the instant
complainant was the PPC, which had its own charter and was petition.
no longer under the DOTC. Thus, the ISLES Memorandum dated
February 26, 1990 prepared by Dir. Reyes which endorsed the Meanwhile, on July 26, 2006, De Guzman filed an appeal of the
exoneration of De Guzman and the dismissal of the complaints PPC Board’s Resolutions dated May 25, 2006 and June 29, 2006
against him was merely recommendatory. As such, the filing of with the CSC35 which was, however, dismissedin Resolution
the formal charge on July 16, 1993 was an obvious rejection of No. 08081536 dated May 6, 2008. The CSC equally denied De
said recommendation.22 Guzman’s motion for reconsideration there from in Resolution
No. 09007737 dated January 14, 2009.
De Guzman’s motion for reconsideration was denied initially in
a Resolution23 dated January 6, 2005, but the motion was, at The Issues Before the Court
the same time, considered as an appeal to the PPC Board of
Directors (Board).24 The Board, however, required PG Rama to
359
The essential issues for the Court’s resolution are whether: (a) or controlled corporations with original charters, and, as such,
De Guzman unjustifiably failed to exhaust the administrative is the sole arbiter of controversies relating to the civil service.40
remedies available to him; (b) De Guzman engaged inforum- The PPC, created under RA7354, is a government-owned and
shopping; and (c) the investigation conducted by the DOTC, controlled corporation with an original charter. Thus, being an
through the ISLES, bars the filing of the subsequent charges by employee of the PPC, De Guzman should have, after availing of
PPC. the remedy of appeal before the PPC Board, sought further
recourse before the CSC. Records, however, disclose that while
The Court’s Ruling De Guzman filed on June 10, 2005 a notice of appeal41 to the
PPC Board and subsequently appealed the latter’s ruling to the
The petition is meritorious. CSC on July 26, 2006, the sewere all after he challenged the PPC
Resolution dated November 23, 2004 (wherein he was
A. Exhaustion of administrative remedies. adjudged guilty of the charges against him and consequently
dismissed from the service) in a petition for certiorari and
The thrust of the rule on exhaustion of administrative remedies mandamus before the CA(docketed as CA-G.R. SP No. 88891).
is that the courts must allow the administrative agencies to That the subject of De Guzman’s appeal to the Board was not
carry out their functions and discharge their responsibilities the Resolution dated November 23, 2004 but the Resolution
within the specialized areas of their respective competence. It dated May 10, 2005 denying the motion for reconsideration of
is presumed that an administrative agency, if afforded an the first - mentioned resolution is of no moment. In Alma Jose
opportunity to pass upon a matter, will decide the same v. Javellana,42 the Court ruled that an appeal from an order
correctly, or correct any previous error committed in its forum. denying a motion for reconsideration of a final order or
Furthermore, reasons of law, comity and convenience prevent judgment is effectively an appeal from the final order or
the courts from entertaining cases proper for determination by judgment itself.43 Thus, finding no cogent explanation on
administrative agencies. Hence, premature resort to the courts DeGuzman’s endor any justifiable reason for his premature
necessarily becomes fatal to the cause of action of the resort to a petition for certiorari and mandamus before the CA,
petitioner.38 PPC claims that De Guzman failed to subscribe to the Court holds that he failed to adhere to the rule on
the rule on exhaustion of administrative remedies since he exhaustion of administrative remedies which should have
opted to file a premature certiorari case before the CA instead warranted the dismissal of said petition.
of filing an appeal with the PPC Board, or of an appeal to the
CSC, which are adequate remedies under the law.39 B. Forum-shopping.
The Court agrees with PPC’s submission. PPC further submits that De Guzman violated the rule on
forum-shopping since he still appealed the order of his
Under Section 21(d) of RA7354, the removal by the Postmaster dismissal before the PPC Board, notwithstanding the pendency
General of PPC officials and employees below the rank of of his petition for certiorari before the CA identically contesting
Assistant Postmaster General may be appealed to the Board of the same.44
the PPC, viz.:
The Court also concurs with PPC on this point.
Sec.21.Powers and Functions of the Postmaster General. — as
the Chief Executive Officer, the Postmaster General shall have Aside from violating the rule on exhaustion of administrative
the following powers and functions: remedies, De Guzman was also guilty of forum-shopping by
pursuing two (2) separate remedies –petition for certiorari and
xxxx appeal –that have long been held to be mutually exclusive, and
not alternative or cumulative remedies.45 Evidently, the
(d) to appoint, promote, assign, reassign, transfer and remove ultimate reliefsought by said remedies whichDe Guzmanfiled
personnel below the ranks of Assistant Postmaster General: only within a few months from each other46 is one and the
Provided, That in the case of removal of officials and same – the setting aside of the resolution dismissing him from
employees, the same may be appealed to the Board; the service. As illumined in the case of Sps. Zosa v. Judge
Estrella,47 where in several precedents have been cited on the
xxxx subject matter:48
This remedy of appeal to the Board is reiterated in Section 2(a), The petitions are denied. The present controversy is on all fours
Rule II of the Disciplinary Rules and Procedures of the PPC, with Young v. Sy, in which we ruled that the successive filing of
which providesfurther that the decision of the Board is, in turn, a notice of appeal and a petition for certiorari both to assail the
appeal able to the CSC, viz.: trial court’s dismissal order for non-suit constitutes forum
shopping. Thus,
Section2. DISCIPLINARY JURISDICTION. – (a) The Board of
Directors shall decide upon appeal the decision of the Forum shopping consists of filing multiple suits involving the
Postmaster General removing officials and employees from the same parties for the same cause of action, either
service. (R.A. 7354, Sec. 21 (d)). The decision of the Board of simultaneously or successively, for the purpose of obtaining a
Directors is appeal able to the Civil Service Commission. It is favorable judgment.
well-established that the CSC has jurisdiction over all
employees of government branches, subdivisions, There is forum shopping where there exist: (a) identity of
instrumentalities, and agencies, including government-owned parties, or at least suchparties as represent the same interests
360
in both actions; (b) identity of rights asserted and relief prayed different divisions with the end in view of endorsing which ever
for, the relief being founded on the same facts; and (c) the proceeding would yield favorable consequences. Thus,
identity of the two preceding particulars is such that any following settled jurisprudence, both the appeal and the
judgment rendered in the pending case, regardless of which certiorari petitions should be dismissed.(Emphases supplied;
party is successful would amount to res judicata. citations omitted)
Ineluctably, the petitioner, by filing an ordinary appeal and a Similar thereto, the very evil that the prohibition on forum-
petition for certiorari with the CA, engaged in forum shopping. shopping was seeking to prevent – conflicting decisions
When the petitioner commenced the appeal, only four months rendered by two (2) different tribunals–resulted from De
had elapsed prior to her filing with the CA the Petition for Guzman’s abuse of the processes. Since De Guzman’s appeal
Certiorari under Rule 65 and which eventually came up to this before the PPC Board was denied in its Resolutions49dated
Court by way of the instant Petition (re: Non-Suit). The May 25, 2006 and June 29, 2006, De Guzmans ought the review
elements of lit is pendentia are present between the two suits. of said resolutions before the CSC where he raised yet again the
As the CA, through its Thirteenth Division, correctly noted, both defense of res judicata. Nonetheless, the CSC, in its Resolution
suits are founded on exactly the same facts and refer to the No. 08081550 dated May 6, 2008, affirmed De Guzman’s
same subject matter – the RTC Orders which dismissed Civil dismissal, affirming "the Resolutions of the PPC Board of
Case No. SP-5703 (2000) for failure to prosecute. In both cases, Directors dismissing De Guzman from the service for
the petitioner is seeking the reversal of the RTC orders. The Dishonesty, Gross Violation of Regulations, and Conduct Grossly
parties, the rights asserted, the issues professed, and the reliefs Prejudicial to the Best Interest of the Service."51
prayed for, are all the same. It is evident that the judgment of
one forum may amount to res judicata in the other. De Guzman’s motion for reconsideration of the aforesaid
Resolution was similarly denied by the CSC in its Resolution No.
xxxx 09007752 dated January 14, 2009. On the other hand, the
petition for certiorari, which contained De Guzman’s prayer for
The remedies of appeal and certiorari under Rule 65 are the reversal of Resolutions dated November 23, 2004 and
mutually exclusive and not alternative or cumulative. This is a January 6, 2005 dismissing him from the service, was granted
firm judicial policy. The petitioner cannot hedge her case by by the CA much earlier on April 4, 2006. It should be pointed
wagering two or more appeals, and, in the event that the out that De Guzman was bound by his certification53 with the
ordinary appeal lags significantly behind the others, she cannot CA that if he ―should thereafter learn that a similar action or
post facto validate this circumstance as a demonstration that proceeding has been filed or is pending before the Supreme
the ordinary appeal had not been speedy or adequate enough, Court, the Court of Appeals, or any other tribunal or agency,”
in order to justify the recourse to Rule 65. This practice, if he ―undertake[s]to report that fact within five (5) days
adopted, would sanction the filing of multiple suits in multiple therefrom to [the]Honorable Court.”54 Nothing, however,
fora, where each one, as the petitioner couches it, becomes a appears on record that De Guzman had informed the CA of his
―precautionary measure” for the rest, thereby increasing the subsequent filing of a notice of appeal before the PPC from the
chances of a favorable decision. This is the very evil that the Resolution dated May 10, 2005. By failing to do so, De Guzman
proscription on forum shopping seeks to put right. In committed a violation of his certification against forum-
Guaranteed Hotels, Inc. v. Baltao, the Court stated that the shopping with the CA, which has been held to be a ground for
grave evil sought to be avoided by the rule against forum dismissal of an action distinct from forum-shopping itself.55
shopping is the rendition by two competent tribunals of two
separate and contradictory decisions. Unscrupulous party Moreover, De Guzman’s contention56 that the filing of the
litigants, taking advantage of a variety of competent tribunals, notice of appeal from the said Resolution was only "taken as a
may repeatedly try their luck in several different fora until a matter of precaution"57 cannot extricate him from the effects
favorable result is reached. To avoid the resultant confusion, of forum-shopping. He was fully aware when he filed CA-G.R. SP
the Court adheres strictly to the rules against forum shopping, No. 88891 that PG Ramahad forwarded the records of the case
and any violation of these rules results in the dismissal of the to the PPC Board for purposes of appeal.58 Yet, he decided to
case. bypass the administrative machinery. And this was not the first
time he did so. In his Comment to the instant petition, De
Thus, the CA correctly dismissed the petition for certiorari and Guzman claimed59 that in response to the Memorandum60
the petition for review (G.R. No. 157745) filed with this Court dated August 17, 1999 issued by Dir. Lalanto implementing his
must be denied for lack of merit. dismissal from service, he not only filed a motion for
reconsideration but he likewise challenged the actions of the
We also made the same ruling in Candido v. Camacho, when PPC before the Regional Trial Court of Manila through a petition
the respondent therein assailed identical court orders through for mandamus docketed as Case No. 99-95442. Even when CA-
both an appeal and a petition for an extraordinary writ. G.R. SP No. 88891 was decided in De Guzman’s favor on April 4,
2006, and PPC’s motion for reconsideration was denied on July
Here, petitioners questioned the June 26, 2000 Order, the 19, 2006, De Guzman nonetheless filed on July 26, 2006 an
August 21, 2000 Clarificatory Order, and the November 23, appeal before the CSC from the denial by the PPC Board of his
2000 Omnibus Order of the RTC via ordinary appeal (CA-G.R. CV Notice of Appeal dated June 7, 2005 as pointed out in CSC
No. 69892) and through a petition for certiorari(CA-G.R. SP No. Resolution No. 090077.61 While De Guzman did inform the CSC
62915) in different divisions of the same court. The actions that he previously filed a petition for certiorari with the CA, he
were filed with a month’s interval from each one. Certainly, failed to disclose the fact that the CA had already rendered a
petitioners were seeking to obtain the same relief in two
361
decision thereon resolving the issue of res judicata,62 which 3. Respondents who have pending appealed administrative
was the very same issue before the CSC. cases to the PPC Board of Directors are entitled to report back
to office and receive their respective salary and benefits
Verily, unscrupulous party litigants who, taking advantage of a beginning at the time they reported back to work. No back
variety of competent tribunals, repeatedly try their luck in wages shall be allowed by virtue of the PPC Board Resolution
several different for a until a favorable result is reached63 No. 2005-14;
cannot be allowed to profit from their wrongdoing. The Court
emphasizes strict adherence to the rules against forum- 4. Following the Civil Service Rules and Regulations, back wages
shopping, and this case is no exception. Based on the foregoing, can only be recovered in case the respondent is exonerated of
the CA should have then dismissed the petition for certiorari the administrative charges on appeal; and
filed by De Guzman not only for being violative of the rule on
exhaustion of administrative remedies but also due to forum- 5. PPC Board Resolution No. 2005-14 took effect on 24 February
shopping. 2005. x x x
In addition, it may not be amiss to state that De Guzman’s PPC further claimed that instead of reporting for work while his
petition for certiorari was equally dismissible since one of the motion for reconsideration and, subsequently, his appeal were
requirements for the availment thereof is precisely that there pending, "[De Guzman] voluntarily elected to absent himself."
should be no appeal. It is well-settled that the remedy to obtain Much later, however, De Guzman "finally reported back
reversal or modification of the judgment on the merits is to [to]work and thereby received his salary and benefits in full for
appeal. This is true even if the error, or one of the errors, the covered period."68 De Guzman failed to sufficiently rebut
ascribed to the tribunal rendering the judgment is its lack of these claims, except to say that he was never given any copy of
jurisdiction over the subject matter, or the exercise of power in the aforementioned board resolution and administrative
excess thereof, or grave abuse of discretion in the findings of order.69 Therefore, considering that his dismissal was not to be
fact or of law set out in the decision.64 In fact, under Section executed by PPC immediately (if he had appealed the same), De
30, Rule III (C) of the Disciplinary Rules and Procedures of the Guzman’s contention that an appeal would not be a speedy and
PPC, among the grounds for appeal to the PPC Board from an adequate remedysimilarly deserves no merit.
order or decision of dismissal are: (a) grave abuse of discretion
on the part of the Postmaster General; and (b) errors in the C. Res judicata.
finding of facts or conclusions of law which, if not corrected,
would cause grave and irreparable damage or injury to the De Guzman likewise failed to convince the Court of the
appellant. Clearly, therefore, with the remedy of appeal to the applicability of the doctrine of res judicata for having been
PPC Board and thereafter to the CSC available to De Guzman, charged of the same set of acts for which he had been
certiorari to the CA should not have been permitted. exculpated by the ISLES of the DOTC whose recommendation
for the dismissal of the complaint against De Guzman was
In this relation, it bears noting that PPC has sufficiently subsequently approved by then DOTC Asec. Jardiniano.
addressed De Guzman’s argument that an appeal would not be
a speedy and adequate remedy considering that the resolution The Court agrees with PPC’s argument that there was no formal
dismissing him from service was to be "implemented charge filed by the DOTC against De Guzman and, as such, the
immediately."65 dismissal of the complaint against him by Asec. Jardiniano,
upon the recommendation of the ISLES, did not amount to a
To elucidate, on February 24, 2005, before De Guzman filed the dismissal on the merits that would bar the filing of another
petition for certiorari dated March 12, 2005, the PPC Board had case.
passed Board Resolution66 No. 2005-14 adopting a "Corporate
Policy that henceforth the decision of the Postmaster General While the CA correctly pointed out that it was the DOTC,
in administrative cases when the penalty is removal or through its Department Head, that had disciplinary jurisdiction
dismissal, the same shall not be final and executory pending over employees of the then Bureau of Posts, including De
appeal to the Office of the Board of Directors." Shortly Guzman, it however proceeded upon the presumption that De
thereafter, or on March 8, 2005, PG Rama issued Philpost Guzman had been formally charged. But he was not.
Administrative Order67 No. 05-05 pursuant to the
aforementioned Board Resolution, the pertinent portions of Pertinent is Section 16 of the Uniform Rules on Administrative
which are quoted hereunder: Cases in the Civil Service which reads as follows:
1. Decisions of the Postmaster General in administrative cases Section 16. Formal Charge. – After a finding of a prima facie
where the penalty imposed is removal/dismissal from the case, the disciplining authority shall formally charge the person
service shall not be final and executory pending appeal to the complained of. The formal charge shall contain a specification
Office of the PPC Board of Directors x x x of charge(s), a brief statement of material or relevant facts,
accompanied by certified true copies of the documentary
2. Decisions of the Postmaster General in administrative cases evidence, if any, sworn statements covering the testimony of
where the penalty imposed is removal/dismissal from the witnesses, a directive to answer the charge(s) in writing under
service shall be executory pending appeal to the Civil Service oath in not less than seventy-two (72) hours from receipt
Commission; thereof, an advice for the respondent to indicate in his answer
whether or not he elects a formal investigation of the charge(s),
362
and a notice that he is entitled to be assisted by a counsel of his Guzman "did not make any adjudication regarding the rights of
choice. (Emphasis supplied) the parties."75
The requisite finding of a prima facie case before the Hence, for the reasons above-discussed, the Court holds that
disciplining authority shall formally charge the person PPC did not gravely abuse its discretion when it revived the
complained of is reiterated in Section 9, Rule III (B) of the case against De Guzman despite the previous dismissal thereof
Disciplinary Rules and Procedures of the PPC, to wit: by Asec. Jardiniano. Since said dismissal was not a judgment on
the merits, the doctrine of res judicata does not apply.
Section 9. FORMAL CHARGE. – When the Postmaster General
finds the existence of a prima facie case, the respondent shall In fine, due to the errors of the CA as herein detailed, the Court
be formally charged. He shall be furnished copies of the hereby grants the present petition and accordingly reverses and
complaint, sworn statements and other documents submitted sets aside the farmer's dispositions. The Resolutions dated
by the complainant, unless he had already received the same November 23, 2004 and January 6, 2005 of the PPC ordering De
during the preliminary investigation. The respondent shall be Guzman's dismissal from the service are thus reinstated.
given at least seventy-two (72) hours from receipt of said
formal charge to submit his answer under oath, together with WHEREFORE, the petition is GRANTED. The Decision dated April
the affidavits of his witnesses and other evidences, and a 4, 2006 and the Resolution dated July 19, 2006 of the Court of
statement indicating whether or not he elects a formal Appeals in CA-G.R. SP No. 88891 are REVERSED and SET ASIDE,
investigation. He shall also be informed of his right to the and the Resolutions dated November 23, 2004 and January 6,
assistance of a counsel of his choice. If the respondent already 2005 of petitioner Philippine Postal Corporation are hereby
submitted his comment and counter-affidavits during the REINSTATED.
preliminary investigation, he shall be given the opportunity to
submit additional evidence. (Emphasis supplied) 134. ACE FOODS, INC., Petitioner, vs.MICRO PACIFIC
TECHNOLOGIES CO., LTD.1, Respondent.
The investigation conducted by the ISLES, which "provides,
performs, and coordinates security, intelligence, fact-finding, Assailed in this petition for review on certiorari2are the
and investigatory functions for the Secretary, the Department, Decision3 dated October 21, 2011 and Resolution4 dated
and Department-wide official undertakings,"70 was intended February 8, 2012 of the Court of Appeals (CA) in CA-G.R. CV No.
precisely for the purpose of determining whether or not a 89426 which reversed and set aside the Decision5 dated
prima facie case against De Guzman existed. Due to February 28, 2007 of the Regional Trial Court of Makati, Branch
insufficiency of evidence, however, no formal charge was filed 148 (RTC) in Civil Case No. 02-1248, holding petitioner ACE
against De Guzman and the complaint against him was Foods, Inc. (ACE Foods) liable to respondent Micro Pacific
dismissed by Asst. Secretary Jardiniano. Technologies Co., Ltd. (MTCL) for the payment of Cisco Routers
and Frame Relay Products (subject products) amounting to
In order that res judicata may bar the institution of a ₱646,464.00 pursuant to a perfected contract of sale.
subsequent action, the following requisites must concur: (a) the
former judgment must be final; (b) it must have been rendered The Facts
by a court having jurisdiction over the subject matter and the
parties; (c) it must be a judgment on the merits; and (d) there ACE Foods is a domestic corporation engaged in the trading and
must be between the first and the second actions (i) identity of distribution of consumer goods in wholesale and retail bases,6
parties, (ii) identity of subject matter, and (iii) identity of cause while MTCL is one engaged in the supply of computer hardware
of action.71 and equipment.7
A judgment may be considered as one rendered on the merits On September 26, 2001, MTCL sent a letter-proposal8 for the
when it determines the rights and liabilities of the parties based delivery and sale of the subject products to be installed at
on the disclosed facts, irrespective of formal, technical or various offices of ACE Foods. Aside from the itemization of the
dilatory objections; or when the judgment is rendered after a products offered for sale, the said proposal further provides for
determination of which party is right, as distinguished from a the following terms, viz.:9
judgment rendered upon some preliminary or formal or merely
technical point.72 TERMS : Thirty (30) days upon delivery
In this case, there was no "judgment on the merits" in VALIDITY : Prices are based on current dollar rate and subject to
contemplation of the above-stated definition.1âwphi1 The changes without prior notice.
dismissal of the complaint against De Guzman in the
Memorandum73 dated May 15, 1990 of Asec. Jardiniano was a DELIVERY : Immediate delivery for items on stock, otherwise
result of a fact-finding investigation only for purposes of thirty (30) to forty-five days upon receipt of [Purchase Order]
determining whether a prima facie case exists and a formal
charge for administrative offenses should be filed. This being WARRANTY : One (1) year on parts and services. Accessories
the case, no rights and liabilities of the parties were determined not included in warranty.
therein with finality. In fact, the CA, conceding that the ISLES
was "a mere fact-finding body," pointed out that the On October 29, 2001, ACE Foods accepted MTCL’s proposal and
Memorandum74 dated February 26, 1990 issued by Dir. Reyes accordingly issued Purchase Order No. 10002310 (Purchase
recommending the dismissal of the complaint against De Order) for the subject products amounting to ₱646,464.00
363
(purchase price). Thereafter, or on March 4, 2002, MTCL payment of the purchase price therefor. In this relation, it
delivered the said products to ACE Foods as reflected in Invoice noted that the full payment of the price is a positive suspensive
No. 7733 11 (Invoice Receipt). The fine print of the invoice condition, the non-payment of which prevents the obligation to
states, inter alia, that "[t]itle to sold property is reserved in sell on the part of the seller/vendor from materializing at all.23
MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of Since title remained with MTCL, the RTC therefore directed it to
the terms and conditions of above and payment of the price"12 withdraw the subject products from ACE Foods’s premises.
(title reservation stipulation). After delivery, the subject Also, in view of the foregoing, the RTC found it unnecessary to
products were then installed and configured in ACE Foods’s delve into the allegations of breach since the non-happening of
premises. MTCL’s demands against ACE Foods to pay the the aforesaid suspensive condition ipso jure prevented the
purchase price, however, remained unheeded.13 Instead of obligation to sell from arising.24
paying the purchase price, ACE Foods sent MTCL a Letter14
dated September 19, 2002, stating that it "ha[s] been returning Dissatisfied, MTCL elevated the matter on appeal.25
the [subject products] to [MTCL] thru [its] sales representative
Mr. Mark Anteola who has agreed to pull out the said The CA Ruling
[products] but had failed to do so up to now."
In a Decision26 dated October 21, 2011, the CA reversed and
Eventually, or on October 16, 2002, ACE Foods lodged a set aside the RTC’s ruling, ordering ACE Foods to pay MTCL the
Complaint15 against MTCL before the RTC, praying that the amount of ₱646,464.00, plus legal interest at the rate of 6% per
latter pull out from its premises the subject products since annum to be computed from April 4, 2002, and attorney’s fees
MTCL breached its "after delivery services" obligations to it, amounting to ₱50,000.00.27
particularly, to: (a) install and configure the subject products;
(b) submit a cost benefit study to justify the purchase of the It found that the agreement between the parties is in the
subject products; and (c) train ACE Foods’s technicians on how nature of a contract of sale, observing that the said contract
to use and maintain the subject products. 16 ACE Foods had been perfected from the time ACE Foods sent the Purchase
likewise claimed that the subject products MTCL delivered are Order to MTCL which, in turn, delivered the subject products
defective and not working.17 covered by the Invoice Receipt and subsequently installed and
configured them in ACE Foods’s premises.28 Thus, considering
For its part, MTCL, in its Answer with Counterclaim,18 that MTCL had already complied with its obligation, ACE
maintained that it had duly complied with its obligations to ACE Foods’s corresponding obligation arose and was then duty
Foods and that the subject products were in good working bound to pay the agreed purchase price within thirty (30) days
condition when they were delivered, installed and configured in from March 5, 2002.29 In this light, the CA concluded that it
ACE Foods’s premises. Thereafter, MTCL even conducted a was erroneous for ACE Foods not to pay the purchase price
training course for ACE Foods’s representatives/employees; therefor, despite its receipt of the subject products, because its
MTCL, however, alleged that there was actually no agreement refusal to pay disregards the very essence of reciprocity in a
as to the purported "after delivery services." Further, MTCL contract of sale.30 The CA also dismissed ACE Foods’s claim
posited that ACE Foods refused and failed to pay the purchase regarding MTCL’s failure to perform its "after delivery services"
price for the subject products despite the latter’s use of the obligations since the letter-proposal, Purchase Order and
same for a period of nine (9) months. As such, MTCL prayed Invoice Receipt do not reflect any agreement to that effect.31
that ACE Foods be compelled to pay the purchase price, as well
as damages related to the transaction.19 Aggrieved, ACE Foods moved for reconsideration which was,
however, denied in a Resolution 32 dated February 8, 2012,
The RTC Ruling hence, this petition.
On February 28, 2007, the RTC rendered a Decision, 20 The Issue Before the Court
directing MTCL to remove the subject products from ACE
Foods’s premises and pay actual damages and attorney fees in The essential issue in this case is whether ACE Foods should pay
the amounts of ₱200,000.00 and ₱100,000.00, respectively.21 MTCL the purchase price for the subject products.
At the outset, it observed that the agreement between ACE The Court’s Ruling
Foods and MTCL is in the nature of a contract to sell. Its
conclusion was based on the fine print of the Invoice Receipt The petition lacks merit.
which expressly indicated that "title to sold property is reserved
in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance A contract is what the law defines it to be, taking into
of the terms and conditions of above and payment of the consideration its essential elements, and not what the
price," noting further that in a contract to sell, the prospective contracting parties call it.33 The real nature of a contract may
seller explicitly reserves the transfer of title to the prospective be determined from the express terms of the written
buyer, and said transfer is conditioned upon the full payment of agreement and from the contemporaneous and subsequent
the purchase price.22 Thus, notwithstanding the execution of acts of the contracting parties. However, in the construction or
the Purchase Order and the delivery and installation of the interpretation of an instrument, the intention of the parties is
subject products at the offices of ACE Foods, by express primordial and is to be pursued. The denomination or title
stipulation stated in the Invoice Receipt issued by MTCL and given by the parties in their contract is not conclusive of the
signed by ACE Foods, i.e., the title reservation stipulation, it is nature of its contents.34
still the former who holds title to the products until full
364
The very essence of a contract of sale is the transfer of novated the contract of sale between the parties which, to
ownership in exchange for a price paid or promised. 35 This repeat, already existed at the precise moment ACE Foods
may be gleaned from Article 1458 of the Civil Code which accepted MTCL’s proposal. To be sure, novation, in its broad
defines a contract of sale as follows: concept, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation
Art. 1458. By the contract of sale one of the contracting parties of a new obligation that takes the place of the former; it is
obligates himself to transfer the ownership and to deliver a merely modificatory when the old obligation subsists to the
determinate thing, and the other to pay therefor a price certain extent it remains compatible with the amendatory agreement.
in money or its equivalent. In either case, however, novation is never presumed, and the
animus novandi, whether totally or partially, must appear by
A contract of sale may be absolute or conditional. (Emphasis express agreement of the parties, or by their acts that are too
supplied) clear and unequivocal to be mistaken.38
Corollary thereto, a contract of sale is classified as a consensual In the present case, it has not been shown that the title
contract, which means that the sale is perfected by mere reservation stipulation appearing in the Invoice Receipt had
consent. No particular form is required for its validity. Upon been included or had subsequently modified or superseded the
perfection of the contract, the parties may reciprocally demand original agreement of the parties. The fact that the Invoice
performance, i.e., the vendee may compel transfer of Receipt was signed by a representative of ACE Foods does not,
ownership of the object of the sale, and the vendor may require by and of itself, prove animus novandi since: (a) it was not
the vendee to pay the thing sold.36 shown that the signatory was authorized by ACE Foods (the
actual party to the transaction) to novate the original
In contrast, a contract to sell is defined as a bilateral contract agreement; (b) the signature only proves that the Invoice
whereby the prospective seller, while expressly reserving the Receipt was received by a representative of ACE Foods to show
ownership of the property despite delivery thereof to the the fact of delivery; and (c) as matter of judicial notice, invoices
prospective buyer, binds himself to sell the property exclusively are generally issued at the consummation stage of the contract
to the prospective buyer upon fulfillment of the condition and not its perfection, and have been even treated as
agreed upon, i.e., the full payment of the purchase price. A documents which are not actionable per se, although they may
contract to sell may not even be considered as a conditional prove sufficient delivery. 39 Thus, absent any clear indication
contract of sale where the seller may likewise reserve title to that the title reservation stipulation was actually agreed upon,
the property subject of the sale until the fulfillment of a the Court must deem the same to be a mere unilateral
suspensive condition, because in a conditional contract of sale, imposition on the part of MTCL which has no effect on the
the first element of consent is present, although it is nature of the parties’ original agreement as a contract of sale.
conditioned upon the happening of a contingent event which Perforce, the obligations arising thereto, among others, ACE
may or may not occur.37 Foods’s obligation to pay the purchase price as well as to accept
the delivery of the goods,40 remain enforceable and
In this case, the Court concurs with the CA that the parties have subsisting.1âwphi1
agreed to a contract of sale and not to a contract to sell as
adjudged by the RTC. Bearing in mind its consensual nature, a As a final point, it may not be amiss to state that the return of
contract of sale had been perfected at the precise moment ACE the subject products pursuant to a rescissory action41 is
Foods, as evinced by its act of sending MTCL the Purchase neither warranted by ACE Foods’s claims of breach – either
Order, accepted the latter’s proposal to sell the subject with respect to MTCL’s breach of its purported "after delivery
products in consideration of the purchase price of ₱646,464.00. services" obligations or the defective condition of the products
From that point in time, the reciprocal obligations of the parties - since such claims were not adequately proven in this case. The
– i.e., on the one hand, of MTCL to deliver the said products to rule is clear: each party must prove his own affirmative
ACE Foods, and, on the other hand, of ACE Foods to pay the allegation; one who asserts the affirmative of the issue has the
purchase price therefor within thirty (30) days from delivery – burden of presenting at the trial such amount of evidence
already arose and consequently may be demanded. Article required by law to obtain a favorable judgment, which in civil
1475 of the Civil Code makes this clear: cases, is by preponderance of evidence. 42 This, however, ACE
Foods failed to observe as regards its allegations of breach.
Art. 1475. The contract of sale is perfected at the moment Hence, the same cannot be sustained.
there is a meeting of minds upon the thing which is the object
of the contract and upon the price. WHEREFORE, the petition is DENIED. Accordingly, the Decision
dated October 21, 2011 and Resolution dated February 8, 2012
From that moment, the parties may reciprocally demand of the Court of Appeals in CA-G.R. CV No. 89426 are hereby
performance, subject to the provisions of the law governing the AFFIRMED.
form of contracts.
135. RIVELISA REALTY, INC., represented by RICARDO P.
At this juncture, the Court must dispel the notion that the VENTURINA, Petitioner, vs.FIRST STA. CLARA BUILDERS
stipulation anent MTCL’s reservation of ownership of the CORPORATION, represented by RAMON A. PANGILINAN, as
subject products as reflected in the Invoice Receipt, i.e., the President, Respondent.
title reservation stipulation, changed the complexion of the
transaction from a contract of sale into a contract to sell. Assailed in this petition for review on certiorari1 are the
Records are bereft of any showing that the said stipulation Decision2 dated February 27, 2009, and the Resolutions3 dated
365
May 22, 2009 and September 8, 2009 of the Court of Appeals equivalent amount of ₱10,000,000.00 on the project before
(CA) in CA-G.R. CV No. 67198 which reversed and set aside the being entitled to cash payments.11
Decision4 dated March 30, 2000 of the Regional Trial Court of
Cabanatuan City, Branch 86 (RTC), holding that: (a) the 15-day The RTC Ruling
reglementary period to file a motion for reconsideration is non-
e:xtendible; and (b) the Joint Venture Agreement (JVA) entered In a Decision12 dated March 30, 2000, the RTC dismissed the
into by petitioner Rivelisa Realty, Inc. (Rivelisa Realty) and complaint and ordered First Sta. Clara to instead pay Rivelisa
respondent First Sta. Clara Builders Corporation (First Sta. Clara) Realty on its counterclaims for actual expenses and damages
had been terminated through mutual assent. amounting to ₱300,000.00, and for attorney’s fees of
₱50,000.00, including costs of suit.13 It found that First Sta.
The Facts Clara had agreed to first accomplish several conditions before it
could demand from Rivelisa Realty the performance of the
On January 25, 1995, Rivelisa Realty entered into a JVA5 with latter’s obligations under the JVA, namely: (a) to finish the
First Sta. Clara for the construction and development of a development and construction of the remaining 69% of
residential subdivision located in Cabanatuan City (project). horizontal work in the project within a period of twelve (12)
According to its terms, First Sta. Clara was to assume the months from signing; (b) to spend an initial amount of
horizontal development works in the remaining 69% ₱10,000,000.00 of its own resources for the project; and (c) to
undeveloped portion of the project owned by Rivelisa Realty, accomplish at least 60% of the horizontal work in the remaining
and complete the same within twelve (12) months from signing. undeveloped area.14 As First Sta. Clara stopped working on the
Upon its completion, 60% of the total subdivided lots shall be project halfway into the construction period due to its own lack
transferred in the name of First Sta. Clara. Also, since 31% of of funds, the RTC concluded that it was actually the party that
the project had been previously developed by Rivelisa Realty first violated the JVA.15 Dissatisfied, First Sta. Clara elevated
which was assessed to have an aggregate worth of the matter on appeal.
₱10,000,000.00, it was agreed that First Sta. Clara should
initially use its own resources (in the same aggregate amount of The CA Ruling
₱10,000,000.00) before it can start claiming additional funds
from the pre-sale of the 31% developed lots. 40% of the cost of In a Decision16 dated February 27, 2009 (CA Decision), the CA
additional works not originally part of the JVA was to be found Rivelisa Realty still liable for First Sta. Clara’s actual
shouldered by Rivelisa Realty, while 60% by First Sta. Clara.6 accomplishments in the project amounting to ₱3,000,000.00,
after deducting certain costs it advanced during the
During the course of the project, First Sta. Clara hired a construction period. It held that First Sta. Clara was no longer
subcontractor to perform the horizontal development work as obligated to comply with the terms and conditions of the JVA
well as the additional works on the riprap and the elevation of after Rivelisa Realty agreed that it be dissolved. First Sta. Clara
the road embankment. Since First Sta. Clara ran out of funds was, however, entitled to reimbursement because Rivelisa
after only two (2) months of construction, Rivelisa Realty was Realty agreed to reimburse the former for the value of the work
forced to shoulder part of the payment due to the done on the project.17
subcontractor.7 First Sta. Clara manifested its intention to back
out from the JVA and to discontinue operations when Rivelisa On March 3, 2009, Rivelisa Realty received a copy of the CA
Realty refused to advance any more funds until 60% of the Decision18 and, on March 18, 2009, moved for a fifteen (15)
project had been accomplished. In a letter dated August 24, day extension – from March 18, 2009 to April 2, 2009 – within
1995, Rivelisa Realty readily agreed to release First Sta. Clara which to file its motion for reconsideration (i.e., Motion for
from the JVA and estimated its actual accomplishment at Extension of Time to File a Motion for Reconsideration).19
₱4,000,000.00, which included the payment to the Thereafter, Rivelisa Realty filed its Motion for
subcontractor in the amount of ₱1,258,892.72 and the cash Reconsideration20 by registered mail on April 2, 2009.
advances amounting to ₱319,259.68.8 First Sta. Clara, however,
insisted on a valuation of its accomplished works at P In a Resolution21 dated May 22, 2009, the CA denied Rivelisa
4,578,142.10, which, less the cash advances and Realty’s motion for extension as the 15-day period for filing a
subcontractor’s fees, should leave a net reimbursable amount motion for reconsideration cannot be extended, and merely
of ₱3,000,000.00 in its favor. After several exchanges, Rivelisa noted without action the subsequently filed motion for
Realty agreed to reimburse First Sta. Clara the amount of reconsideration. In a Resolution22 dated September 8, 2009,
₱3,000,000.00, emphasizing in its letter dated October 9, 1995 the CA eventually denied Rivelisa Realty’s motion for
that the amount is actually over and beyond its obligation reconsideration on the ground that the same was filed out of
under the JVA.9 However, the reimbursable amount of P time, hence, the instant petition.
3,000,000.00 remained unpaid despite several demands.
Hence, First Sta. Clara filed a complaint10 for rescission of the The Issues Before the Court
JVA against Rivelisa Realty before the RTC, claiming the
payment of damages for breach of contract and delay in the The essential issues in this case are whether or not the CA erred
performance of an obligation. in finding that: (a) the 15-day reglementary period for the filing
of a motion for reconsideration cannot be extended; and (b)
For its part, Rivelisa Realty asserted that it was not obligated to First Sta. Clara is entitled to be compensated for the
pay First Sta. Clara any amount at all since the latter had even development works it had accomplished on the project.
failed to comply with its obligation to initially spend the
The Court’s Ruling
366
of time to file a motion for new trial or reconsideration may be
The petition is bereft of merit. filed with the Metropolitan or Municipal Trial Courts, the
Regional Trial Courts, and the Intermediate Appellate Court.
The CA Decision subject of the instant petition for review had Such a motion may be filed only in cases pending with the
already attained finality in view of Rivelisa Realty’s failure to file Supreme Court as the court of last resort, which may in its
a motion for reconsideration within the 15-day reglementary sound discretion either grant or deny the extension requested.
period allowed under the CA’s internal rules,23 to wit: (Emphases and underscoring supplied)
Before the Court are consolidated petitions for review on During the preliminary conference held on February 10, 2004,
certiorari1 both assailing the Decision2 dated August 15, 2006 the parties agreed to a Terms of Reference (TOR)17 which was
and Resolution3 dated January 26, 2007 of the Court of Appeals later amended on March 4, 2004.18 Under the amended TOR, it
(CA) in CA-G.R. SP No. 84068 which modified the Decision4 was stipulated that the parties’ relationship with respect to the
dated April 27, 2004 of the Construction Industry Arbitration Medina Project is governed by, among others, the Contract,19
Commission (CIAC), awarding the following amounts: (a) and the General Conditions of the Contract20 (General
₱1,248,179.87 as 10% retention money, and ₱1,612,017.74 as Conditions). They also stipulated that 98% of the said project
unpaid balance of the original contract price in favor of BTL had been completed.
Construction Corporation (BTL); and (b) ₱526,400.00 as cost
overrun, ₱300,533.49 as overpayment for the works taken in The CIAC Ruling
the change orders subject of these cases, and ₱1,800,560.00 as
liquidated damages in favor of the Church of Jesus Christ of In a Decision21 dated April 27, 2004, the CIAC found both
Latter Day Saints5 (COJCOLDS). parties’ claims to be partly meritorious and thus ordered: (a)
COJCOLDS to pay BTL the amount of ₱2,760,838.79 as the
The Facts unpaid balance of the original contract price, plus the unpaid
additional works, and ₱300,000.00 as attorney’s fees; and (b)
On January 10, 2000, COJCOLDS and BTL entered into a BTL to pay COJCOLDS the amount of ₱1,191,920.00 as
Construction Contract6 (Contract) for the latter’s construction liquidated damages, and ₱300,533.49 as reimbursement of the
of the former’s meetinghouse facility at Barangay Cabug, balance of the latter’s direct payments to the former’s
Medina, Misamis Oriental (Medina Project). The contract price suppliers.22
was set at ₱12,680,000.00 (contract price), and the
construction period from January 15 to September 15, 2000.7 Based on the parties’ stipulations, COJCOLDS was found liable
However, due to bad weather conditions, power failures, and only for 98% of the original contract price (i.e., ₱12,680,000.00)
revisions in the construction plans (as per Change Order Nos. 1 in the amount of ₱12,426,400.00. Considering its previous
to 12 agreed upon by the parties),8 among others, the payments in the total amount of ₱10,814,382.26, COJCOLDS
completion date of the Medina Project was extended. was then ordered to pay BTL the unpaid balance of
₱1,612,017.74, as well as the costs of the additional works
On May 18, 2001, BTL informed COJCOLDS that it suffered made on the Medina Project, particularly, ₱804,460.8923 for
financial losses from another project (i.e., the Pelaez Arcade II the concrete retaining wall, and ₱344,360.16 for the unpaid
Project) and thereby requested that it be allowed to: (a) bill balances from the works done under Change Order Nos. 8 to
COJCOLDS based on 95% and 100% completion of the Medina 12.24 On the other hand, BTL was ordered to pay COJCOLDS
Project; and (b) execute deeds of assignment in favor of its liquidated damages at the rate of ₱12,680.00 per day, or a total
suppliers so that they may collect any eventual payments of ₱1,191,920.00, pursuant to Article 3(B) of the Contract as
directly from COJCOLDS.9 COJCOLDS granted said request well as Article 29.04 of the General Conditions, due to the
which BTL, in turn, acknowledged.10 former’s 94-day delay, notwithstanding several extensions (238
days in total).25
On August 13, 2001, BTL ceased its operations in the Medina
Project because of its lack of funds to advance the cost of labor Dissatisfied with the CIAC’s ruling, COJCOLDS elevated the
necessary to complete the said project, as well as the matter to the CA.26
supervening increase in the prices of materials and other items
for construction.11 Consequently, COJCOLDS terminated its The CA Ruling
Contract with BTL12 on August 17, 2001 and, thereafter,
engaged the services of another contractor, Vigor Construction In a Decision27 dated August 15, 2006, the CA modified the
(Vigor), to complete the Medina Project.13 CIAC’s ruling in that it ordered COJCOLDS not only to pay BTL
the amount of ₱1,612,017.74 representing the unpaid portion
368
of 98% of the contract price, but also to return to BTL the 10% The Court’s Ruling
retention money in the amount of ₱1,248,179.87, after
deducting the cost overrun of ₱526,400.00 that BTL was held to COJCOLDS’s petition in G.R. No. 176439 is partly meritorious,
shoulder as per Article 3(E) of the Contract28 (under which while BTL’s petition in G.R. No. 176718 is without merit. The
COJCOLDS was allowed to engage the services of another Court shall resolve the above-mentioned issues in the order
contractor, i.e., Vigor, to complete the Medina Project using the that they are mentioned.
10% retention amount).
I. Liabilities of COJCOLDS to BTL.
Meanwhile, the CA ordered BTL to return to COJCOLDS the
amount of ₱300,533.49 which was found to be an overpayment a. The 10% Retention Money and the
made by the latter pursuant to the change orders.29
b. Unpaid Balance of the Contract Price.
The CA also increased the award of liquidated damages in
COJCOLDS’s favor from ₱1,191,920.00 to ₱1,800,560.00 since In its petition, COJCOLDS concedes that it has yet to pay BTL the
BTL was actually in delay for 142 days (and not 94 days as found unpaid balance of the contract price amounting to
by the CIAC). The CA clarified that pursuant to Article 21.04(A) ₱1,612,017.74 and that it has withheld the 10% retention
of the General Conditions as well as the practice in the money in the amount of ₱1,248,179.87 which should be
construction industry, the architect’s recommendation returned to BTL. It, however, argues that the CA erred in ruling
regarding the grant of extensions should be controlling and that the retention money should be paid in addition to the
thus BTL was only given an extension of 190 days (and not 238 unpaid balance of the contract price. COJCOLDS contends that
days as found by the CIAC).30 treating the retention money as a separate and distinct liability
from the unpaid balance would unduly increase its total liability
Further, the CA deleted the awards for the additional works from the Medina Project (including the amount of
(i.e., ₱804,460.89 for the concrete retaining wall, and ₱10,814,382.26 which it had already paid to BTL) from
₱344,360.16 for the unpaid balances from the works taken ₱12,426,400.00 to ₱13,674,579.87.34
under Change Order Nos. 8 to 12) adjudged by the CIAC in favor
of COJCOLDS because: (a) the retaining wall should be properly The Court agrees with COJCOLDS.
deemed as part of the original works, considering that it was
not covered by any change order, unlike the other additional In H.L. Carlos Construction, Inc. v. Marina Properties Corp.,35
works performed on the Medina Project; and (b) there is no the Court held that in the construction industry, the 10%
basis in saying that COJCOLDS failed to pay the balance for the retention money is a portion of the contract price automatically
works taken under Change Order Nos. 8 to 12, considering that deducted from the contractor’s billings, as security for the
COJCOLDS paid such balance directly to BTL’s suppliers, execution of corrective work – if any – becomes necessary.36
pursuant to BTL’s May 18, 2001 request to COJCOLDS.31
Articles 3(E) and 5 of the Contract and Article 22.14 of the
Finally, the CA deleted the award of attorney’s fees in BTL’s General Conditions govern the application of the 10% retention
favor as COJCOLDS was not in bad faith in refusing to pay the money in these cases, viz.:
former’s claims.
CONSTRUCTION CONTRACT
Dissatisfied, both parties moved for reconsideration, which
were, however, denied in a Resolution32 dated January 26, xxxx
2007, hence, these petitions.33
ARTICLE 3. TIME AND COMPLETION AND SCHEDULE OF
The Issues Before the Court CONSTRUCTION
The issues raised for the Court’s resolution are as follows: (a) xxxx
whether or not the 10% retention money that COJCOLDS was
ordered to release in favor of BTL is separate and distinct from E. The CONTRACTOR’S TEN (10) percent retention under Article
the unpaid balance of the contract price amounting to V hereof shall be retained by the OWNER until all items on the
₱1,612,017.74; (b) whether or not COJCOLDS is liable for the Substantial Inspection are satisfactorily completed and
"additional works" performed by BTL, specifically the concrete accepted by the OWNER. If the CONTRACTOR shall refuse or fail
retaining wall and the works taken under Change Order Nos. 8 to complete the Substantial Inspection punchlist, within the
to 12; (c) whether or not BTL incurred delay in its obligation to time fixed by a written notice, the OWNER shall then have the
complete the Medina Project and thus, must pay COJCOLDS right to hire the services of another contractor to complete the
liquidated damages at the rate of ₱12,680.00 for every day of same using the contractor’s TEN (10) percent retention amount
delay; (d) whether or not BTL is liable to pay COJCOLDS the and the balance, if any, shall be returned to the
value of cost overrun in the amount of ₱526,400.00; (e) CONTRACTOR.37
whether or not BTL received overpayments in the change
orders from COJCOLDS amounting to ₱300,533.49 and thus, xxxx
should be held liable to return the same; and (f ) whether or
not the parties are liable to pay each other’s attorney’s fees, ARTICLE 5. PAYMENTS
arbitration costs, and costs of suit.
369
The OWNER shall make payment on account of this Contract plans and specifications. Based on the same provision, such
based on the value of work accomplished less TEN (10) percent added costs can only be allowed upon the: (a) written authority
retention and Expanded Withholding Tax (One percent of the from the developer or project owner ordering or allowing the
amount due), for the duration of the Contract. The percentage written changes in work; and (b) written agreement of parties
value of work to be paid is in order of 15%, 30%, 45%, 60%, with regard to the increase in price or cost due to the change in
75%, 90% and 100% accomplishments. work or design modification. Case law instructs that compliance
with these two (2) requisites is a condition precedent for
xxxx recovery. The absence of one or the other condition thus bars
the claim of additional costs. Notably, neither the authority for
The full and final payment, together with the ten (10) percent the changes made nor the additional price to be paid therefor
retention shall be paid to the CONTRACTOR as provided for and may be proved by any evidence other than the written
upon compliance of all requisites under Article 22.11 of the authority and agreement as above-mentioned.42
General Conditions.38
In these cases, records reveal that there is neither a written
xxxx authorization nor agreement covering the additional price to be
paid for the concrete retaining wall. This confirms the CA’s
GENERAL CONDITIONS OF THE CONTRACT finding that the construction of the perimeter wall of the
Medina Project, which is included in the original plans and
xxxx specifications for the same, already subsumes the construction
of the concrete retaining wall.43 Accordingly, COJCOLDS should
22.14 RELEASE OF RETENTION not pay the amount of ₱804,460.89 claimed by BTL as
additional cost for the same.
The amount retained by the owner under the provision of the
Contract shall be released within three (3) months after the In similar regard, the COJCOLDS should not be held liable for
date of final payment.39 the costs of the additional works taken under Change Order
Nos. 8 to 12 amounting to ₱344,360.16 as claimed by BTL. As
xxxx correctly observed by the CA, BTL had, in fact, requested
COJCOLDS to make the payments therefor directly to its
A reading of the foregoing contractual provisions would reveal suppliers in view of its financial losses in another project.44
that the nature of the 10% retention money under the parties’ Hence, considering that COJCOLDS’s payment to BTL’s suppliers
Contract is no different from the description laid down by already covered the costs of said additional works upon its own
jurisprudence – that it is a portion of the contract price request and to its own credit,45 BTL maintains no right to
withheld from the contractor to function as a security for any pursue such claim.
corrective work to be performed on the infrastructure covered
by a construction contract. As such, the 10% retention money With BTL’s claims for the costs of additional works herein
should not be treated as a separate and distinct liability of denied, COJCOLDS’s total liability to BTL thus stands in the
COJCOLDS to BTL as it merely forms part of the contract price. amount of ₱1,612,017.74, which represents the unpaid balance
While COJCOLDS is bound to eventually return to BTL the of 98% of the contract price, inclusive of the 10% retention
amount of ₱1,248,179.87 as retention money, the said amount money, as previously stated.
should be automatically deducted from BTL’s outstanding
billings. Ultimately, COJCOLDS’s total liability to BTL should only Having resolved the foregoing issues, the Court now proceeds
be pegged at ₱1,612,017.74, representing the unpaid balance to determine BTL’s liabilities to COJCOLDS.
of 98% of the contract price, inclusive of the 10% retention
money. II. Liabilities of BTL to COJCOLDS.
Due to BTL’s delay which impelled COJCOLDS to terminate the WHEREFORE, the petition in G.R. No. 176439 is PARTLY
Contract and subsequently hire the services of another GRANTED, while the petition in G.R. No. 176718 is DENIED. The
contractor, i.e., Vigor, to finish the Medina Project, the Court Decision dated August 15, 2006 and Resolution dated January
equally agrees with the CA’s finding that COJCOLDS incurred a 26, 2007 of the Court of Appeals (CA) m CA-G.R. SP No. 84068
cost overrun of ₱526,400.00. Conformably with Article 3(E)51 are hereby MODIFIED as follows:
of the Contract and Article 29.0452 of the General Conditions,
BTL should therefore reimburse COJCOLDS the said cost which (a) COJCOLDS is ORDERED to pay BTL the amount of
the latter incurred essentially because of BTL’s failure to ₱1,612,017.74 representing the unpaid balance of 98% of the
complete the project as agreed upon. contract price, inclusive of the 10 retention money;
Arbitration Costs, and Costs of Suit. On October 13, 2000, respondent claimed that while he was
disposing of the garbage in the incinerator room of the vessel,
The general rule is that attorney’s fees cannot be recovered as certain chemicals splashed all over his body because of an
part of damages because of the policy that no premium should explosion.5 He was sent to the Burns Unit of the Prince of
be placed on the right to litigate. They are not to be awarded Wales Hospital on the same day wherein he was found to have
every time a party wins a suit. The power of the court to award suffered deep burns. Eventually, upon his own request,
attorney’s fees under Article 220856 of the Civil Code demands respondent was sent home.6
371
not smoke.21 Finally, petitioners denied respondent’s claim for
On October 21, 2000, he was admitted to the St. Luke’s Medical damages and attorney’s fees for lack of factual and legal
Center.7 Subsequently, he was diagnosed to have sustained bases.22
"thermal burns, upper and lower extremities and abdomen, 2º-
3º, 11%"8 for which he underwent debridement. He was In his Reply to the position paper,23 respondent denied burning
referred to a physical therapist for his subsequent debridement himself, contending that such act was contrary to human
through hydrotherapy. On November 10, 2000, the attending nature and logic and that there was no showing that he was
physician, Dr. Natalio G. Alegre II, reported that the mentally unfit.24 Further, he posited that the affidavits and
respondent’s thermal burns were healing well and that they statements submitted by the vessel’s officers and crew
were estimated to fully heal within a period of 3 to 4 months.9 members have no probative value for being mere hearsay and
self-serving.25 He equally insisted on his claim for moral and
Claiming that the burns rendered him permanently incapable of exemplary damages and attorney’s fees.26
working again as a seaman, respondent demanded10 for the
payment of his full disability benefits under Section 20 (B) in Meanwhile, or on February 29, 2001, petitioner Captain
relation to Sections 30 and 30-A of the Philippine Overseas Sigfredo E. Monterroyo filed a complaint27 for disciplinary
Employment Agency (POEA) Standard Employment Contract action against respondent before the POEA for his various
(POEA-SEC), in the amount of US$60,000.00, which petitioners infractions committed on board the vessel, namely: (a) act of
refused to heed.11 Thus, respondent filed a complaint against dishonesty for stealing the vessel’s supplies on October 10,
petitioners for the same, seeking as well moral and exemplary 2000; (b) act of sabotage committed on October 13, 2000; and
damages, including attorney’s fees. (c) grave misconduct for inflicting the injury to himself.28
The evident conflict between the NLRC’s and CA’s factual Respondent debunked Gile’s claim by merely asserting in his
findings as shown in the records of this case prompts the Court Answer and Rejoinder before the POEA that the latter could not
to sift through their respective factual determinations if only to have been in the room at the time he got burned as he was not
determine if the NLRC committed grave abuse of discretion in the first person to rescue him and concluded that he could not
reaching its disposition, keeping in mind that the latter’s have soaked his hands in a can full of thinner considering the
assessment should only meet the threshold of substantial extent of damage caused to his hands.55 This argument is
evidence. riddled with serious flaws: Gile could have been the second
man in, and still personally know the matters he has alleged.
B. Application Also, that respondent soaked his hands in thinner is not denied
by the fact that the greatest damage was not caused to it since
In view of the above-discussed considerations and after a the fire could have started at some part of his body considering
judicious scrutiny of the facts on record, the Court holds that that his overalls also had flammable chemicals. Reason also
the CA erred in attributing grave abuse of discretion on the part dictates that he could have extinguished the fire on his hands
of the NLRC in affirming the LA’s dismissal of respondent’s sooner than the other parts of his body. In any event, the
complaint. This is based on the Court’s observation that the medical records of respondent, particularly the report56 issued
NLRC had cogent legal bases to conclude that petitioners have by the Prince of Wales Hospital Burns Surgery, show that he
successfully discharged the burden of proving by substantial suffered from "deep burn area" that was distributed over his
evidence that respondent’s injury was directly attributable to left upper limb, right hand, left flank and both thighs.57 To
himself. The reasons therefor are as follows: assert that respondent’s hands should have suffered the
greatest damage is plainly argumentative and records are
First, records bear out circumstances which all lead to the bereft of showing as to the exact degree of burn suffered for
reasonable conclusion that respondent was responsible for the each part.
flooding and burning incidents.
To add, Bejada’s statement that respondent’s burnt overalls
Records show that the LA and NLRC gave credence to the had patches of green paint on the arms and body and strongly
corroborating testimonies of the crewmen pointing to smelled of thinner conforms with Gile’s claim that he soaked his
respondent as the person who deliberately caused the flooding hands in a can of thinner before approaching the incinerator
incident. In particular, respondent was seen alone in the vicinity (thinner may be found in a paint room). Such fact further
of the portside seachest which cover was found to have been fortifies petitioners’ assertion that his injury was self-inflicted as
intentionally removed and thereby caused the flooding. He was a prudent man would not dispose of garbage in the incinerator
also seen disappearing up to the boiler deck just when the bilge under such condition.
level alarm sounded with patches of water left on the floor
plates and on the stairways. Respondent neither denied nor And if only to placate other doubts, the CA’s finding that "some
proffered any explanation on the foregoing claims especially chemicals splashed [on respondent’s] body"58 should not
when all of his fellow engine room staff, except him, responded automatically mean that the "splashing" was caused by pure
to the alarm and helped pump out the water in the engine accident. It is equally reasonable to conclude that the
room.53 As to the burning, respondent failed to successfully "splashing" – as may be inferred from both the LA’s and NLRC"s
controvert Gile’s claim that he saw the former go to the paint findings – was a by-product of respondent’s botched sabotage
room, soak his hands in a can full of thinner and proceed to the attempt.
incinerator door where he was set ablaze. In fact, respondent’s
burnt overalls conform to the aforesaid claim as it had green While respondent contended that the affidavits and statements
paint on the arms and body and smelled strongly of thinner, of the vessel’s officers and his fellow crew members should not
while the open paint tin can that was found in the vicinity be given probative value as they were biased, self-serving, and
contained solvent which had the same green color found on the mere hearsay, he nonetheless failed to present any evidence to
overalls. substantiate his own theory. Besides, as correctly pointed out
by the NLRC, the corroborating affidavits and statements of the
374
vessel’s officers and crew members must be taken as a whole 138. THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A.
and cannot just be perfunctorily dismissed as self-serving SARILI,* MELENCIA** S. MAXIMO, ALBERTO A. SARILI, IMELDA
absent any showing that they were lying when they made the S. HIDALGO, all herein represented by CELSO A. SARILI,
statements therein.59 Petitioners, vs.PEDRO F. LAGROSA, represented in this act by
his Attorney-in-Fact LOURDES LABIOS MOJICA, Respondent.
Third, petitioners’ theory that respondent’s burns were self-
inflicted gains credence through the existence of motive. Assailed in this petition for review on Certiorari1 are the
Decision2 dated May 20, 2010 and Resolution3 dated August
At this juncture, the Court finds it important to examine the 26, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 76258
existence of motive in this case since no one actually saw what which: (a) set aside the Decision4 dated May 27, 2002 of the
transpired in the incinerator room. To this end, the confluence Regional Trial Court of Caloocan City, Branch 131 (RTC) in Civil
of the circumstances antecedent to the burning should be Case No. C-19152; (b) cancelled Transfer Certificate of Title
examined in conjunction with the existing accounts of the crew (TCT) No. 2622185 in the name of Victorino Sarili (Victorino)
members. That said, both the LA and the NLRC made a factual married to Isabel Amparo (Sps. Sarili); (c) reinstated TCT No.
finding that prior to the burning incident, respondent was 559796 in the name of respondent Pedro F. Lagrosa
caught pilfering the vessel’s supplies for which he was told that (respondent); and (d) awarded respondent moral damages,
he was to be relieved from his duties. This adequately supports attorney’s fees and litigation expenses.
the reasonable conclusion that respondent may have harbored
a grudge against the captain and the chief steward who denied The Facts
giving him the questioned items.1âwphi1 At the very least, it
was natural for him to brood over feelings of resentment On February 17, 2000, respondent, represented by his
considering his impending dismissal. These incidents shore up attorney-in-fact Lourdes Labios Mojica (Lourdes) via a special
the theory that he was motivated to commit an act of sabotage power of attorney dated November 25, 19997 (November 25,
which, however, backfired into his own burning. 1999 SPA), filed a complaint8 against Sps. Sarili and the Register
of Deeds of Caloocan City (RD) before the RTC, alleging, among
In this relation, the Court observes that a definitive others, that he is the owner of a certain parcel of land situated
pronouncement on respondent’s mental unfitness need not be in Caloocan City covered by TCT No. 55979 (subject property)
reached since the totality of the above-stated circumstances and has been religiously paying the real estate taxes therefor
already figures into the rational inference that respondent’s since its acquisition on November 29, 1974. Respondent
burning was not a product of an impaired mental disposition claimed that he is a resident of California, USA, and that during
but rather an incident which sprung from his own volition. his vacation in the Philippines, he discovered that a new
Mental impairment connotes the lack of control over one’s certificate of title to the subject property was issued by the RD
action. If the actor is conscious of what he is doing, as in the name of Victorino married to Isabel Amparo (Isabel), i.e.,
respondent was in this case by sabotaging the ship, then a TCT No. 262218, by virtue of a falsified Deed of Absolute Sale9
finding of mental unfitness is not needed. Differing from the CA dated February 16, 1978 (February 16, 1978 deed of sale)
s take on the matter, it is not contrary to human experience or purportedly executed by him and his wife, Amelia U. Lagrosa
logic for a spurned man to resort to tactics of desperation, (Amelia). He averred that the falsification of the said deed of
however ludicrous or extreme those tactics may be, or however sale was a result of the fraudulent, illegal, and malicious acts
untoward or unfortunate its consequences may turn out, as in committed by Sps. Sarili and the RD in order to acquire the
this case. subject property and, as such, prayed for the annulment of TCT
No. 262218, and that Sps. Sarili deliver to him the possession of
All told, petitioners having established through substantial the subject property, or, in the alternative, that Sps. Sarili and
evidence that respondent s injury was self-inflicted and, hence, the RD jointly and severally pay him the amount of
not compensable pursuant to Section 20 (D) of the 1996 POEA- ₱1,000,000.00, including moral damages as well as attorney’s
SEC, no grave abuse of discretion can be imputed against the fees.10
NLRC in upholding the dismissal by the LA of his complaint for
disability benefits. It is well-settled that an act of a court or In their answer,11 Sps. Sarili maintained that they are innocent
tribunal can only be considered to be tainted with grave abuse purchasers for value, having purchased the subject property
of discretion when such act is done in a capricious or whimsical from Ramon B. Rodriguez (Ramon), who possessed and
exercise of judgment as is equivalent to lack of jurisdiction.60 presented a Special Power of Attorney12 (subject SPA) to
For the reasons herein detailed, the Court finds these qualities sell/dispose of the same, and, in such capacity, executed a Deed
of capriciousness or whimsicality wanting in the case at bar and of Absolute Sale13 dated November 20, 1992 (November 20,
thus, holds that the CA erred in ruling that grave abuse of 1992 deed of sale) conveying the said property in their favor. In
discretion exists. WHEREFORE, the petition is GRANTED. The this relation, they denied any participation in the preparation of
Decision dated October 31, 2006 and Resolution dated June 25, the February 16, 1978 deed of sale, which may have been
2007 of the Court of Appeals in CA-G.R. SP No. 84769 are merely devised by the "fixer" they hired to facilitate the
REVERSED and SET ASIDE. Accordingly, the Decision dated issuance of the title in their names.14 Further, they interposed
January 30, 2004 of the National Labor Relation Commission a counterclaim for moral and exemplary damages, as well as
dismissing respondent Alexander L. Moradas s complaint for attorney’s fees, for the filing of the baseless suit.15
permanent total disability benefits and other money claims is
hereby REINSTATED. During the pendency of the proceedings, Victorino passed
away16 and was substituted by his heirs, herein petitioners.17
375
The RTC Ruling conveyance of the subject property to Sps. Sarili who relied on
the authority of Ramos (as per the subject SPA) to sell the
On May 27, 2002, the RTC rendered a Decision18 finding same. They posit that the due execution of the subject SPA
respondent’s signature on the subject SPA as "the same and between respondent and Ramon and, subsequently, the
exact replica"19 of his signature in the November 25, 1999 SPA November 20, 1992 deed of sale between Victorino and Ramon
in favor of Lourdes.20 Thus, with Ramon’s authority having were duly established facts and that from the authenticity and
been established, it declared the November 20, 1992 deed of genuineness of these documents, a valid conveyance of the
sale21 executed by the latter as "valid, genuine, lawful and subject land from respondent to Victorino had leaned upon.32
binding"22 and, as such, had validly conveyed the subject
property in favor of Sps. Sarili. It further found that respondent The Court is not persuaded.
"acted with evident bad faith and malice" and was, therefore,
held liable for moral and exemplary damages.23 Aggrieved, It is well-settled that even if the procurement of a certificate of
respondent appealed to the CA. title was tainted with fraud and misrepresentation, such
defective title may be the source of a completely legal and valid
The CA Ruling title in the hands of an innocent purchaser for value. Where
innocent third persons, relying on the correctness of the
In a Decision24 dated May 20, 2010, the CA granted certificate of title thus issued, acquire rights over the property,
respondent’s appeal and held that the RTC erred in its ruling the court cannot disregard such rights and order the total
since the November 20, 1992 deed of sale, which the RTC found cancellation of the certificate. The effect of such an outright
"as valid and genuine," was not the source document for the cancellation would be to impair public confidence in the
transfer of the subject property and the issuance of TCT No. certificate of title, for everyone dealing with property
262218 in the name of Sps. Sarili25 but rather the February 16, registered under the Torrens system would have to inquire in
1978 deed of sale, the fact of which may be gleaned from the every instance whether the title has been regularly or
Affidavit of Late Registration26 executed by Isabel (affidavit of irregularly issued. This is contrary to the evident purpose of the
Isabel). Further, it found that respondent w as "not only able to law.33
preponderate his claim over the subject property, but [has]
likewise proved that his and his wife’s signatures in the The general rule is that every person dealing with registered
[February 16, 1978 deed of sale] x x x were forged."27 "[A] land may safely rely on the correctness of the certificate of title
comparison by the naked eye of the genuine signature of issued therefor and the law will in no way oblige him to go
[respondent] found in his [November 25, 1999 SPA] in favor of beyond the certificate to determine the condition of the
[Lourdes], and those of his falsified signatures in [the February property. Where there is nothing in the certificate of title to
16, 1978 deed of sale] and [the subject SPA] shows that they indicate any cloud or vice in the ownership of the property, or
are not similar."28 It also observed that "[t]he testimony of any encumbrance thereon, the purchaser is not required to
[respondent] denying the authenticity of his purported explore further than what the Torrens Title upon its face
signature with respect to the [February 16, 1978 deed of sale] indicates in quest for any hidden defects or inchoate right that
was not rebutted x x x."29 In fine, the CA declared the deeds of may subsequently defeat his right thereto.34
sale dated February 16, 1978 and November 20, 1992, as well
as the subject SPA as void, and consequently ordered the RD to However, a higher degree of prudence is required from one
cancel TCT No. 262218 in the name of Victorino married to who buys from a person who is not the registered owner,
Isabel, and consequently reinstate TCT No. 55979 in although the land object of the transaction is registered. In such
respondent’s name. Respondent’s claims for moral damages a case, the buyer is expected to examine not only the certificate
and attorney’s fees/litigation expenses were also granted by of title but all factual circumstances necessary for him to
the CA.30 determine if there are any flaws in the title of the transferor.35
The buyer also has the duty to ascertain the identity of the
Dissatisfied, petitioners moved for reconsideration which was, person with whom he is dealing with and the latter’s legal
however, denied in a Resolution31 dated August 26, 2010, authority to convey the property.36
hence, the instant petition.
The strength of the buyer’s inquiry on the seller’s capacity or
The Issues Before the Court legal authority to sell depends on the proof of capacity of the
seller. If the proof of capacity consists of a special power of
The main issue in this case is whether or not there was a valid attorney duly notarized, mere inspection of the face of such
conveyance of the subject property to Sps. Sarili. The resolution public document already constitutes sufficient inquiry. If no
of said issue would then determine, among others, whether or such special power of attorney is provided or there is one but
not: (a) TCT No. 262218 in the name of Victorino married to there appears to be flaws in its notarial acknowledgment, mere
Isabel should be annulled; and (b) TCT No. 55979 in inspection of the document will not do; the buyer must show
respondent’s name should be reinstated. that his investigation went beyond the document and into the
circumstances of its execution.37
The Court’s Ruling
In the present case, it is undisputed that Sps. Sarili purchased
The petition lacks merit. the subject property from Ramos on the strength of the latter’s
ostensible authority to sell under the subject SPA. The said
Petitioners essentially argue that regardless of the fictitious document, however, readily indicates flaws in its notarial
February 16, 1978 deed of sale, there was still a valid acknowledgment since the respondent’s community tax
376
certificate (CTC) number was not indicated thereon. Under the immigrated to the USA since 1968 and therefore could not have
governing rule on notarial acknowledgments at that time,38 signed the subject SPA due to their absence.49
i.e., Section 163(a) of Republic Act No. 7160, otherwise known
as the "Local Government Code of 1991," when an individual Further, records show that the notary public, Atty. Ramon S.
subject to the community tax acknowledges any document Untalan, failed to justify why he did not require the
before a notary public, it shall be the duty of the administering presentation of respondent’s CTC or any other competent proof
officer to require such individual to exhibit the community tax of the identity of the person who appeared before him to
certificate.39 Despite this irregularity, however, Sps. Sarili failed acknowledge the subject SPA as respondent’s free and
to show that they conducted an investigation beyond the voluntary act and deed despite the fact that he did not
subject SPA and into the circumstances of its execution as personally know the latter and that he met him for the first
required by prevailing jurisprudence. Hence, Sps. Sarili cannot time during the notarization.50 He merely relied on the
be considered as innocent purchasers for value. representations of the person before him51 and the bank
officer who accompanied the latter to his office,52 and further
The defective notarization of the subject SPA also means that explained that the reason for the omission of the CTC was
the said document should be treated as a private document "because in [a] prior document, [respondent] has probably
and thus examined under the parameters of Section 20, Rule given us already his residence certificate."53 This "prior
132 of the Rules of Court which provides that "before any document," was not, however, presented during the
private document offered as authentic is received in evidence, proceedings below, nor the CTC number ever identified.
its due execution and authenticity must be proved either: (a) by
anyone who saw the document executed or written; or (b) by Thus, in light of the totality of evidence at hand, the Court
evidence of the genuineness of the signature or handwriting of agrees with the CA’s conclusion that respondent was able to
the maker x x x." Settled is the rule that a defective notarization preponderate his claims of forgery against the subject SPA.54 In
will strip the document of its public character and reduce it to a view of its invalidity, the November 20, 1992 sale relied on by
private instrument, and the evidentiary standard of its validity Sps. Sarili to prove their title to the subject property is
shall be based on preponderance of evidence.40 therefore void.1âwphi1
The due execution and authenticity of the subject SPA are of At this juncture, it is well to note that it was, in fact, the
great significance in determining the validity of the sale entered February 16, 1978 deed of sale which – as the CA found – was
into by Victorino and Ramon since the latter only claims to be actually the source of the issuance of TCT No. 262218.
the agent of the purported seller (i.e., respondent). Article 1874 Nonetheless, this document was admitted to be also a
of the Civil Code provides that "[w]hen a sale of a piece of land forgery.55 Since Sps. Sarili’s claim over the subject property is
or any interest therein is through an agent, the authority of the based on forged documents, no valid title had been transferred
latter shall be in writing; otherwise, the sale shall be void." In to them (and, in turn, to petitioners). Verily, when the
other words, if the subject SPA was not proven to be duly instrument presented is forged, even if accompanied by the
executed and authentic, then it cannot be said that the owner’s duplicate certificate of title, the registered owner does
foregoing requirement had been complied with; hence, the sale not thereby lose his title, and neither does the assignee in the
would be void. forged deed acquire any right or title to the property.56
Accordingly, TCT No. 262218 in the name of Victorino married
After a judicious review of the case, taking into consideration to Isabel should be annulled, while TCT No. 55979 in the name
the divergent findings of the RTC and the CA on the matter,41 of respondent should be reinstated.
the Court holds that the due execution and authenticity of the
subject SPA were not sufficiently established under Section 20, Anent the award of moral damages, suffice it to say that the
Rule 132 of the Rules of Court as above-cited. dispute over the subject property had caused respondent
serious anxiety, mental anguish and sleepless nights, thereby
While Ramon identified the signature of respondent on the justifying the aforesaid award.57 Likewise, since respondent
subject SPA based on his alleged familiarity with the latter’s was constrained to engage the services of counsel to file this
signature,42 he, however, stated no basis for his identification suit and defend his interests, the awards of attorney’s fees and
of the signatures of respondent’s wife Amelia and the witness, litigation expenses are also sustained.58
Evangeline F. Murral,43 and even failed to identify the other
witness,44 who were also signatories to the said document. In The Court, however, finds a need to remand the case to the
other words, no evidence was presented to authenticate the court a quo in order to determine the rights and obligations of
signatures of the other signatories of the subject SPA outside the parties with respect to the house Sps. Sarili had built59 on
from respondent.45 the subject property in bad faith in accordance with Article 449
in relation to Articles 450, 451, 452, and the first paragraph of
Besides, as the CA correctly observed, respondent’s signature Article 546 of the Civil Code which respectively read as follows:
appearing on the subject SPA is not similar46 to his genuine
signature appearing in the November 25, 1999 SPA in favor of ART. 449. He who builds, plants or sows in bad faith on the land
Lourdes,47 especially the signature appearing on the left of another, loses what is built, planted or sown without right to
margin of the first page.48 indemnity.
Unrebutted too is the testimony of respondent who, during ART. 450. The owner of the land on which anything has been
trial, attested to the fact that he and his wife, Amelia, had built, planted or sown in bad faith may demand the demolition
of the work, or that the planting or sowing be removed, in
377
order to replace things in their former condition at the expense February 26, 2010 of the Court of Appeals (CA) in CA-G.R. SP
of the person who built, planted or sowed; or he may compel No. 93833 which affirmed the Orders4 dated November 9, 2005
the builder or planter to pay the price of the land, and the and January 30, 2006 of the Regional Trial Court of Makati,
sower the proper rent. Branch 585 (RTC) in Civil Case No. 7648 denying the motion to
affirm legal compensation6 filed by petitioner Union Bank of
ART. 451. In the cases of the two preceding articles, the the Philippines (Union Bank) against respondent Development
landowner is entitled to damages from the builder, planter or Bank of the Philippines (DBP).
sower.
The Facts
ART. 452. The builder, planter or sower in bad faith is entitled
to reimbursement for the necessary expenses of preservation Foodmasters, Inc. (FI) had outstanding loan obligations to both
of the land. Union Bank’s predecessor-in-interest, Bancom Development
Corporation (Bancom), and to DBP.
xxxx
On May 21, 1979, FI and DBP, among others, entered into a
ART. 546. Necessary expenses shall be refunded to every Deed of Cession of Property In Payment of Debt7 (dacion en
possessor; but only the possessor in good faith may retain the pago) whereby the former ceded in favor of the latter certain
thing until he has been reimbursed therefor. (Emphases and properties (including a processing plant in Marilao, Bulacan
underscoring supplied) [processing plant]) in consideration of the following: (a) the full
and complete satisfaction of FI’s loan obligations to DBP; and
xxxx (b) the direct assumption by DBP of FI’s obligations to Bancom
in the amount of ₱17,000,000.00 (assumed obligations).8
To be deemed a builder in good faith, it is essential that a
person asserts title to the land on which he builds, i.e. , that he On the same day, DBP, as the new owner of the processing
be a possessor in concept of owner, and that he be unaware plant, leased back9 for 20 years the said property to FI (Lease
that there exists in his title or mode of acquisition any flaw Agreement) which was, in turn, obliged to pay monthly rentals
which invalidates it.60 Good faith is an intangible and abstract to be shared by DBP and Bancom.
quality with no technical meaning or statutory definition, and it
encompasses, among other things, an honest belief, the DBP also entered into a separate agreement10 with Bancom
absence of malice and the absence of design to defraud or to (Assumption Agreement) whereby the former: (a) confirmed its
seek an unconscionable advantage. It implies honesty of assumption of FI’s obligations to Bancom; and (b) undertook to
intention, and freedom from knowledge of circumstances remit up to 30% of any and all rentals due from FI to Bancom
which ought to put the holder upon inquiry.61 As for Sps. Sarili, (subject rentals) which would serve as payment of the assumed
they knew – or at the very least, should have known – from the obligations, to be paid in monthly installments. The pertinent
very beginning that they were dealing with a person who portions of the Assumption Agreement reads as follows:
possibly had no authority to sell the subject property
considering the palpable irregularity in the subject SPA’s WHEREAS, DBP has agreed and firmly committed in favor of
acknowledgment. Yet, relying solely on said document and Bancom that the above obligations to Bancom which DBP has
without any further investigation on Ramos’s capacity to sell assumed shall be settled, paid and/or liquidated by DBP out of
Sps. Sarili still chose to proceed with its purchase and even built a portion of the lease rentals or part of the proceeds of sale of
a house thereon. Based on the foregoing it cannot be seriously those properties of the Assignors conveyed to DBP pursuant to
doubted that Sps. Sarili were actually aware of a flaw or defect the [Deed of Cession of Property in Payment of Debt dated May
in their title or mode of acquisition and have consequently built 21, 1979] and which are the subject of [the Lease Agreement]
the house on the subject property in bad faith under legal made and executed by and between DBP and [FI], the last
contemplation. The case is therefore remanded to the court a hereafter referred to as the "Lessee" to be effective as of July
quo for the proper application of the above-cited Civil Code 31, 1978.
provisions.
xxxx
WHEREFORE, the petition is DENIED. The Decision dated May
20, 2010 and Resolution dated August 26, 2010 of the Court of 4. DBP hereby covenants and undertakes that the amount up to
Appeals in CA-G.R. CV No. 76258 are AFFIRMED. However the 30% of any and all rentals due from the Lessee pursuant to the
case is REMANDED to the court a quo for the proper application Lease Agreement shall be remitted by DBP to Bancom at the
of Article 449 in relation to Articles 450 451 452 and the first latter’s offices at Pasay Road, Makati, Metro Manila within five
paragraph of Article 546 of the Civil Code with respect to the (5) days from due dates thereof, and applied in payment of the
house Spouses Victorino Sarili and Isabel Amparo had built on Assumed Obligations. Likewise, the amount up to 30% of the
the subject property as herein discussed. proceeds from any sale of the Leased Properties shall within the
same period above, be remitted by DBP to Bancom and applied
in payment or prepayment of the Assumed Obligations. x x x.
139. UNION BANK OF THE PHILIPPINES, Petitioner,
vs.DEVELOPMENT BANK OF THE PHILIPPINES, Respondent. Any balance of the Assumed Obligations after application of the
entire rentals and or the entire sales proceeds actually received
Assailed in this petition for review on Certiorari1 are the by Bancom on the Leased Properties shall be paid by DBP to
Decision2 dated November 3, 2009 and Resolution3 dated
378
Bancom not later than December 29, 1998. (Emphases Assumed Obligations after application of the entire rentals
supplied) and/or the entire sales proceeds actually received by [Union
Bank] on the Leased Properties . . . not later than December 29,
Meanwhile, on May 23, 1979, FI assigned its leasehold rights 1998" to mean that the lease rentals must first be applied to
under the Lease Agreement to Foodmasters Worldwide, Inc. the payment of the assumed obligations in the amount of
(FW);11 while on May 9, 1984, Bancom conveyed all its ₱17,000,000.00, and that DBP would have to pay out of its own
receivables, including, among others, DBP’s assumed money only in case the lease rentals were insufficient, having
obligations, to Union Bank.12 only until December 29, 1998 to do so. Nevertheless, the
monthly installments in satisfaction of the assumed obligations
Claiming that the subject rentals have not been duly remitted would still have to be first sourced from said lease rentals as
despite its repeated demands, Union Bank filed, on June 20, stipulated in the assumption agreement.22 In view of the
1984, a collection case against DBP before the RTC, docketed as foregoing, the CA ruled that DBP did not default in its
Civil Case No. 7648.13 In opposition, DBP countered, among obligations to remit the subject rentals to Union Bank precisely
others, that the obligations it assumed were payable only out of because it had yet to receive the rental payments of FW.23
the rental payments made by FI. Thus, since FI had yet to pay
the same, DBP’s obligation to Union Bank had not arisen.14 In Separately, the CA upheld the RTC’s denial of DBP’s motion to
addition, DBP sought to implead FW as third party-defendant in dismiss for the reason that the transfer of its rights, title and
its capacity as FI’s assignee and, thus, should be held liable to interests over the subject matter to the APT occurred pendente
Union Bank.15 lite, and, as such, the substitution of parties is largely
discretionary on the part of the court.
In the interim, or on May 6, 1988, DBP filed a motion to dismiss
on the ground that it had ceased to be a real-party-in-interest At odds with the CA’s ruling, Union Bank and DBP filed separate
due to the supervening transfer of its rights, title and interests petitions for review on certiorari before the Court, respectively
over the subject matter to the Asset Privatization Trust (APT). docketed as G.R. Nos. 115963 and 119112, which were
Said motion was, however, denied by the RTC in an Order dated thereafter consolidated.
May 27, 1988.16
The Court’s Ruling in G.R. Nos. 115963 & 119112
The RTC Ruling in Civil Case No. 7648
The Court denied both petitions in a Resolution24 dated
Finding the complaint to be meritorious, the RTC, in a December 13, 1995. First, it upheld the CA’s finding that while
Decision17 dated May 8, 1990, ordered: (a) DBP to pay Union DBP directly assumed FI’s obligations to Union Bank, DBP was
Bank the sum of ₱4,019,033.59, representing the amount of the only obliged to remit to the latter 30% of the lease rentals
subject rentals (which, again, constitutes 30% of FI’s [now FW’s] collected from FW, from which any deficiency was to be settled
total rental debt), including interest until fully paid; and (b) FW, by DBP not later than December 29, 1998.25 Similarly, the
as third-party defendant, to indemnify DBP, as third- party Court agreed with the CA that the denial of DBP’s motion to
plaintiff, for its payments of the subject rentals to Union Bank. dismiss was proper since substitution of parties, in case of
It ruled that there lies no evidence which would show that transfers pendente lite, is merely discretionary on the part of
DBP’s receipt of the rental payments from FW is a condition the court, adding further that the proposed substitution of APT
precedent to the former’s obligation to remit the subject will amount to a novation of debtor which cannot be done
rentals under the Lease Agreement. Thus, when DBP failed to without the consent of the creditor.26
remit the subject rentals to Union Bank, it defaulted on its
assumed obligations.18 DBP then elevated the case on appeal On August 2, 2000, the Court’s resolution became final and
before the CA, docketed as CA-G.R. CV No. 35866. executory.27
In a Decision19 dated May 27, 1994 (May 27, 1994 Decision), On May 16, 2001, Union Bank filed a motion for execution28
the CA set aside the RTC’s ruling, and consequently ordered: (a) before the RTC, praying that DBP be directed to pay the amount
FW to pay DBP the amount of ₱32,441,401.85 representing the of ₱9,732,420.555 which represents the amount of the subject
total rental debt incurred under the Lease Agreement, including rentals (i.e., 30% of the FW’s total rental debt in the amount of
₱10,000.00 as attorney’s fees; and (b) DBP, after having been ₱32,441,401.85). DBP opposed29 Union Bank’s motion,
paid by FW its unpaid rentals, to remit 30% thereof (i.e., the contending that it sought to effectively vary the dispositive
subject rentals) to Union Bank.20 portion of the CA’s May 27, 1994 Decision in CA-G.R. CV No.
35866. Also, on September 12, 2001, DBP filed its own motion
It rejected Union Bank’s claim that DBP has the direct obligation for execution against FW, citing the same CA decision as its
to remit the subject rentals not only from FW’s rental payments basis.
but also out of its own resources since said claim contravened
the "plain meaning" of the Assumption Agreement which In a Consolidated Order30 dated October 15, 2001 (Order of
specifies that the payment of the assumed obligations shall be Execution), the RTC granted both motions for execution. Anent
made "out of the portion of the lease rentals or part of the Union Bank’s motion, the RTC opined that the CA’s ruling that
proceeds of the sale of those properties of [FI] conveyed to DBP’s payment to Union Bank shall be demandable only upon
DBP."21 It also construed the phrase under the Assumption payment of FW must be viewed in light of the date when the
Agreement that DBP is obligated to "pay any balance of the same was rendered. It noted that the CA decision was
379
promulgated only on May 27, 1994, which was before the Union Bank’s Motion to Affirm Legal Compensation
December 29, 1998 due date within which DBP had to fully pay
its obligation to Union Bank under the Assumption Agreement. On September 13, 2005, Union Bank filed a Manifestation and
Since the latter period had already lapsed, "[i]t would, thus, be Motion to Affirm Legal Compensation,43 praying that the RTC
too strained to argue that payment by DBP of its assumed apply legal compensation between itself and DBP in order to
obligation[s] shall be dependent on [FW’s] ability, if not offset the return of the funds it previously received from DBP.
availability, to pay."31 In similar regard, the RTC granted DBP’s Union Bank anchored its motion on two grounds which were
motion for execution against FW since its liability to Union Bank allegedly not in existence prior to or during trial, namely: (a) on
and DBP remained undisputed. December 29, 1998, DBP’s assumed obligations became due
and demandable;44 and (b) considering that FWI became non-
As a result, a writ of execution32 dated October 15, 2001 operational and non-existent, DBP became primarily liable to
(October 15, 2001 Writ of Execution) and, thereafter, a notice the balance of its assumed obligation, which as of Union Bank’s
of garnishment33 against DBP were issued. Records, however, computation after its claimed set-off, amounted to
do not show that the same writ was implemented against FW. ₱1,849,391.87.45
DBP filed a motion for reconsideration34 from the Execution On November 9, 2005, the RTC issued an Order46 denying the
Order, averring that the latter issuance varied the import of the above-mentioned motion for lack of merit, holding that Union
CA’s May 27, 1994 Decision in CA-G.R. CV No. 35866 in that it Bank’s stated grounds were already addressed by the Court in
prematurely ordered DBP to pay the assumed obligations to the January 13, 2004 Decision in G.R. No. 155838. With Union
Union Bank before FW’s payment. The motion was, however, Bank’s motion for reconsideration therefrom having been
denied on December 5, 2001.35 Thus, DBP’s deposits were denied, it filed a petition for certiorari47 with the CA, docketed
eventually garnished.36 Aggrieved, DBP filed a petition for as CA-G.R. SP No. 93833.
certiorari37 before the CA, docketed as CA-G.R. SP No. 68300.
Pending resolution, Union Bank issued Manager’s Check48 No.
The CA Ruling in CA-G.R. SP No. 68300 099-0003192363 dated April 21, 2006 amounting to
₱52,427,250.00 in favor of DBP, in satisfaction of the Writ of
In a Decision38 dated July 26, 2002, the CA dismissed DBP’s Execution dated September 6, 2005 Writ of Execution. DBP,
petition, finding that the RTC did not abuse its discretion when however, averred that Union Bank still has a balance of
it issued the October 15, 2001 Writ of Execution. It upheld the ₱756,372.39 representing a portion of the garnished funds of
RTC’s observation that there was "nothing wrong in the manner DBP,49 which means that said obligation had not been
how [said writ] was implemented," as well as "in the completely extinguished.
zealousness and promptitude exhibited by Union Bank" in
moving for the same. DBP appealed the CA’s ruling before the The CA Ruling in CA-G.R. SP No. 93833
Court, which was docketed as G.R. No. 155838.
In a Decision50 dated November 3, 2009, the CA dismissed
The Court’s Ruling in G.R. No. 155838 Union Bank’s petition, finding no grave abuse of discretion on
the RTC’s part. It affirmed the denial of its motion to affirm
In a Decision39 dated January 13, 2004 (January 13, 2004 legal compensation considering that: (a) the RTC only
Decision), the Court granted DBP’s appeal, and thereby implemented the Court’s January 13, 2004 Decision in G.R. No.
reversed and set aside the CA’s ruling in CA-G.R. SP No. 68300. 155838 which by then had already attained finality; (b) DBP is
It found significant points of variance between the CA’s May 27, not a debtor of Union Bank; and (c) there is neither a
1994 Decision in CA-G.R. CV No. 35866, and the RTC’s Order of demandable nor liquidated debt from DBP to Union Bank.51
Execution/October 15, 2001 Writ of Execution. It ruled that
both the body and the dispositive portion of the same decision Undaunted, Union Bank moved for reconsideration which was,
acknowledged that DBP’s obligation to Union Bank for however, denied in a Resolution52 dated February 26, 2010;
remittance of the lease payments is contingent on FW’s prior hence, the instant petition.
payment to DBP, and that any deficiency DBP had to pay by
December 29, 1998 as per the Assumption Agreement cannot The Issue Before the Court
be determined until after the satisfaction of FW’s own rental
obligations to DBP. Accordingly, the Court: (a) nullified the The sole issue for the Court’s resolution is whether or not the
October 15, 2001 Writ of Execution and all related issuances CA correctly upheld the denial of Union Bank’s motion to affirm
thereto; and (b) ordered Union Bank to return to DBP the legal compensation.
amounts it received pursuant to the said writ.40 Dissatisfied,
Union Bank moved for reconsideration which was, however, The Court’s Ruling
denied by the Court in a Resolution dated March 24, 2004 with
finality. Thus, the January 13, 2004 Decision attained finality on The petition is bereft of merit. Compensation is defined as a
April 30, 2004.41 Thereafter, DBP moved for the execution of mode of extinguishing obligations whereby two persons in their
the said decision before the RTC. After numerous efforts on the capacity as principals are mutual debtors and creditors of each
part of Union Bank proved futile, the RTC issued a writ of other with respect to equally liquidated and demandable
execution (September 6, 2005 Writ of Execution), ordering obligations to which no retention or controversy has been
Union Bank to return to DBP all funds it received pursuant to timely commenced and communicated by third parties.53 The
the October 15, 2001 Writ of Execution.42 requisites therefor are provided under Article 1279 of the Civil
Code which reads as follows:
380
x x x Construing these three contracts, especially the
Art. 1279. In order that compensation may be proper, it is "Agreement" x x x between DBP and Bancom as providing for
necessary: the payment of DBP’s assumed obligation out of the rentals to
be paid to it does not mean negating DBP’s assumption "for its
(1) That each one of the obligors be bound principally, and that own account" of the ₱17.0 million debt x x x. It only means that
he be at the same time a principal creditor of the other; they provide a mechanism for discharging [DBP’s] liability. This
liability subsists, since under the "Agreement" x x x, DBP is
(2) That both debts consist in a sum of money, or if the things obligated to pay "any balance of the Assumed Obligations after
due are consumable, they be of the same kind, and also of the application of the entire rentals and or the entire sales
same quality if the latter has been stated; proceeds actually received by [Union Bank] on the Leased
Properties … not later than December 29, 1998." x x x It only
(3) That the two debts be due; means that the lease rentals must first be applied to the
payment of the ₱17 million debt and that [DBP] would have to
(4) That they be liquidated and demandable; pay out of its money only in case of insufficiency of the lease
rentals having until December 29, 1998 to do so. In this sense, it
(5) That over neither of them there be any retention or is correct to say that the means of repayment of the assumed
controversy, commenced by third persons and communicated obligation is not limited to the lease rentals. The monthly
in due time to the debtor.1awp++i1 (Emphases and installments, however, would still have to come from the lease
underscoring supplied) rentals since this was stipulated in the "Agreement."
Both the body and the dispositive portion of the [CA’s May 27, A careful reading of the decision shows that the Court of
1994 Decision in CA-G.R. CV No. 35866] correctly construed the Appeals, which was affirmed by the Supreme Court, found that
nature of DBP’s liability for the lease payments under the only the balance or the deficiency of the ₱17 million principal
various contracts, to wit: obligation, if any, would be due and demandable as of
December 29, 1998. Naturally, this deficiency cannot be
381
determined until after the satisfaction of Foodmasters questioned the propriety and/or basis of the aforesaid
obligation to DBP, for remittance to Union Bank in the ₱23,111.71 claim.10
proportion set out in the 1994 Decision. (Emphases and
underscoring supplied; citations omitted) In the interim, petitioner disconnected respondent’s water line
for not paying the adjusted water charges since March 2003 up
xxxx to August 2005.11
In fine, since requisites 3 and 4 of Article 1279 of the Civil Code The MTCC Ruling
have not concurred in this case, no legal compensation could
have taken place between the above-stated debts pursuant to On June 10, 2011, the MTCC rendered a Decision12 holding that
Article 1290 of the Civil Code. Perforce, the petition must be since petitioner was issued a Certificate of Public Convenience
denied, and the denial of Union Bank s motion to affirm legal (CPC)13 by the National Water Resources Board (NWRB) only
compensation sustained. on August 7, 2003, then, it can only charge respondent the
agreed flat rate of ₱75.00 per month prior thereto or the sum
WHEREFORE, the petition is DENIED. The Decision dated of ₱1,050.00 for the period June 1, 2002 to August 7, 2003.
November 3, 2009 and Resolution dated February 26, 2010 of Thus, given that respondent had made total payments
the Court of Appeals in CA-G.R. SP No. 93833 are hereby equivalent to ₱1,685.99 for the same period, she should be
AFFIRMED. considered to have fully paid petitioner.14
140. A.L. ANG NETWORK, INC., Petitioner, vs.EMMA The MTCC disregarded petitioner’s reliance on the Housing and
MONDEJAR, accompanied by her husband, EFREN MONDEJAR, Land Use Regulatory Board’s (HLURB) Decision15 dated August
Respondent. 17, 2000 in HLURB Case No. REM C6-00-001 entitled Nollie B.
Apura, et al. v. Dona Carmen I Subdivision, et al., as source of its
This is a direct recourse1 to the Court from the Decision2 dated authority to impose new water consumption rates for water
November 23, 2011and Order3 dated February 16, 2012 of the consumed from June 1, 2002 to August 7, 2003 in the absence
Regional Trial Court of Bacolod City, Branch 45 (RTC) in RTC of proof (a) that petitioner complied with the directive to
Case No. 11-13833 which dismissed, on the ground of improper inform the HLURB of the result of its consultation with the
remedy, petitioner A.L. Ang Network, Inc.'s (petitioner) petition concerned homeowners as regards the rates to be charged, and
for certiorari from the Decision4 dated June 10, 2011 of the (b) that the HLURB approved of the same.16
Municipal Trial Court in Cities of Bacolod City, Branch 4 (MTCC)
in Civil Case No. SCC-1436, a small claims case for sum of Moreover, the MTCC noted that petitioner failed to submit
money against respondent Emma Mondejar (respondent). evidence showing (a) the exact date when it actually began
imposing the NWRB approved rates; and (b) that the parties
The Facts had a formal agreement containing the terms and conditions
thereof, without which it cannot establish with certainty
On March 23, 2011, petitioner filed a complaint5 for sum of respondent’s obligation.17 Accordingly, it ruled that the earlier
money under the Rule of Procedure for Small Claims Cases6 agreed rate of ₱75.00 per month should still be the basis for
before the MTCC, seeking to collect from respondent the respondent’s water consumption charges for the period August
amount of ₱23,111.71 which represented her unpaid water bills 8, 2003 to September 30, 2005.18 Based on petitioner’s
for the period June 1, 2002 to September 30, 2005.7 computation, respondent had only paid ₱300.00 of her
₱1,500.00 obligation for said period. Thus, it ordered
Petitioner claimed that it was duly authorized to supply water respondent to pay petitioner the balance thereof, equivalent to
to and collect payment therefor from the homeowners of ₱1,200.00 with legal interest at the rate of 6% per annum from
Regent Pearl Subdivision, one of whom is respondent who date of receipt of the extrajudicial demand on October 14, 2010
owns and occupies Lot 8, Block 3 of said subdivision. From June until fully paid.19
1, 2002 until September 30, 2005, respondent and her family
consumed a total of 1,150 cubic meters (cu. m.) of water, which Aggrieved, petitioner filed a petition for certiorari20 under Rule
upon application of the agreed rate of ₱113.00 for every 10 cu. 65 of the Rules of Court before the RTC, ascribing grave abuse
m. of water, plus an additional charge of ₱11.60 for every of discretion on the part of the MTCC in finding that it
additional cu. m. of water, amounted to ₱28,580.09.8 However, (petitioner) failed to establish with certainty respondent’s
respondent only paid the amount of ₱5,468.38, thus, leaving a obligation, and in not ordering the latter to pay the full amount
balance of ₱23,111.71 which was left unpaid despite sought to be collected.
petitioner’s repeated demands.9
The RTC Ruling
In defense, respondent contended that since April 1998 up to
February 2003, she religiously paid petitioner the agreed On November 23, 2011, the RTC issued a Decision21 dismissing
monthly flat rate of ₱75.00 for her water consumption. the petition for certiorari, finding that the said petition was only
Notwithstanding their agreement that the same would be filed to circumvent the non-appealable nature of small claims
adjusted only upon prior notice to the homeowners, petitioner cases as provided under Section 2322 of the Rule of Procedure
unilaterally charged her unreasonable and excessive on Small Claims Cases. To this end, the RTC ruled that it cannot
adjustments (at the average of 40 cu. m. of water per month or supplant the decision of the MTCC with another decision
1.3 cu. m. of water a day) far above the average daily water directing respondent to pay petitioner a bigger sum than that
consumption for a household of only 3 persons. She also which has been awarded.
382
will bring about a revival of the judgment x x x complained of in
Petitioner moved for reconsideration23 but was denied in an the certiorari proceeding, but a remedy which will promptly
Order24 dated February 16, 2012, hence, the instant petition. relieve the petitioner from the injurious effects of that
judgment and the acts of the inferior court or tribunal"
The Issue Before the Court concerned. x x x (Emphasis supplied)
The sole issue in this case is whether or not the RTC erred in In this relation, it may not be amiss to placate the RTC’s
dismissing petitioner’s recourse under Rule 65 of the Rules of apprehension that respondent’s recourse before it (was only
Court assailing the propriety of the MTCC Decision in the filed to circumvent the non-appealable nature of [small claims
subject small claims case. cases], because it asks [the court] to supplant the decision of
the lower [c]ourt with another decision directing the private
The Court’s Ruling respondent to pay the petitioner a bigger sum than what has
been awarded."28 Verily, a petition for certiorari, unlike an
The petition is meritorious. appeal, is an original action29 designed to correct only errors of
jurisdiction and not of judgment. Owing to its nature, it is
Section 23 of the Rule of Procedure for Small Claims Cases therefore incumbent upon petitioner to establish that
states that: jurisdictional errors tainted the MTCC Decision. The RTC, in
turn, could either grant or dismiss the petition based on an
SEC. 23. Decision. — After the hearing, the court shall render its evaluation of whether or not the MTCC gravely abused its
decision on the same day, based on the facts established by the discretion by capriciously, whimsically, or arbitrarily
evidence (Form 13-SCC). The decision shall immediately be disregarding evidence that is material to the controversy.30
entered by the Clerk of Court in the court docket for civil cases
and a copy thereof forthwith served on the parties. In view of the foregoing, the Court thus finds that petitioner
correctly availed of the remedy of certiorari to assail the
The decision shall be final and unappealable. propriety of the MTCC Decision in the subject small claims case,
contrary to the RTC’s ruling.
Considering the final nature of a small claims case decision
under the above-stated rule, the remedy of appeal is not Likewise, the Court finds that petitioner filed the said petition
allowed, and the prevailing party may, thus, immediately move before the proper forum (i.e., the RTC).1âwphi1 To be sure, the
for its execution.25 Nevertheless, the proscription on appeals in Court, the Court of Appeals and the Regional Trial Courts have
small claims cases, similar to other proceedings where appeal is concurrent jurisdiction to issue a writ of certiorari.31 Such
not an available remedy,26 does not preclude the aggrieved concurrence of jurisdiction, however, does not give a party
party from filing a petition for certiorari under Rule 65 of the unbridled freedom to choose the venue of his action lest he ran
Rules of Court. This general rule has been enunciated in the afoul of the doctrine of hierarchy of courts. Instead, a becoming
case of Okada v. Security Pacific Assurance Corporation,27 regard for judicial hierarchy dictates that petitions for the
wherein it was held that: issuance of writs of certiorari against first level courts should be
filed with the Regional Trial Court, and those against the latter,
In a long line of cases, the Court has consistently ruled that "the with the Court of Appeals, before resort may be had before the
extraordinary writ of certiorari is always available where there Court.32 This procedure is also in consonance with Section 4,
is no appeal or any other plain, speedy and adequate remedy in Rule 65 of the Rules of Court.33
the ordinary course of law." In Jaca v. Davao Lumber Co., the
Court ruled: Hence, considering that small claims cases are exclusively
within the jurisdiction of the Metropolitan Trial Courts,
x x x Although Section 1, Rule 65 of the Rules of Court provides Municipal Trial Courts in Cities, Municipal Trial Courts, and
that the special civil action of certiorari may only be invoked Municipal Circuit Trial Courts,34 certiorari petitions assailing its
when "there is no appeal, nor any plain, speedy and adequate dispositions should be filed before their corresponding Regional
remedy in the course of law," this rule is not without exception. Trial Courts. This petitioner complied with when it instituted its
The availability of the ordinary course of appeal does not petition for certiorari before the RTC which, as previously
constitute sufficient ground to prevent a party from making use mentioned, has jurisdiction over the same. In fine, the RTC
of the extraordinary remedy of certiorari where appeal is not an erred in dismissing the said petition on the ground that it was
adequate remedy or equally beneficial, speedy and sufficient. It an improper remedy, and, as such, RTC Case No. 11-13833 must
is the inadequacy – not the mere absence – of all other legal be reinstated and remanded thereto for its proper disposition.
remedies and the danger of failure of justice without the writ
that usually determines the propriety of certiorari. WHEREFORE, the petition is GRANTED. The Decision dated
November 23, 2011 and Resolution dated February 16, 2012 of
This ruling was reiterated in Conti v. Court of Appeals: the Regional Trial Court of Bacolod City, Branch 45 are
REVERSED and SET ASIDE. RTC Case No. 11-13833 is hereby
Truly, an essential requisite for the availability of the REINSTATED and the court a quo is ordered to resolve the same
extraordinary remedies under the Rules is an absence of an with dispatch.
appeal nor any "plain, speedy and adequate remedy" in the
ordinary course of law, one which has been so defined as a 141. SPOUSES NICASIO C. MARQUEZ AND ANITA J. MARQUEZ,
"remedy which (would) equally (be) beneficial, speedy and Petitioners, vs.SPOUSES CARLITO ALINDOG AND CARMEN
sufficient not merely a remedy which at some time in the future ALINDOG, Respondents.
383
In their defense,16 Sps. Marquez disputed Sps. Alindog’s
Assailed in this petition for review on certiorari1 are the ownership over the subject property, arguing that the
Decision2 dated February 29, 2008 and Resolution3 dated purported sale in the latter’s favor was never registered and
August 6, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. therefore, not binding upon them. Further, they insisted that
97744 finding no grave abuse of discretion on the part of the their certificate of title, TCT No. T-41939, was already
Regional Trial Court of Tagaytay City, Branch 18 (RTC) in issuing indefeasible, and cannot be attacked collaterally.
the Orders dated November 14, 20054 and January 17, 2007[[5
]] in SCA No. TG-05-2521. Based on these orders, a writ of Meanwhile, on March 16, 2005, Anita filed an ex-parte petition
preliminary injunction was issued against petitioners-spouses for the issuance of a writ of possession17 (ex-parte petition)
Nicasio C. Marquez and Anita J. Marquez (Sps. Marquez), before the RTC, docketed as LRC Case No. TG-05-1068, claiming
enjoining them from taking possession of the property subject that the same is ministerial on the court’s part following the
of this case despite the consolidation of their title over the consolidation of her and her husband’s title over the subject
same. property. Impleaded in said petition are Sps. Gutierrez,
including all persons claiming rights under them.
The Facts
The RTC Rulings and Subsequent Proceedings
Records show that sometime in June 1998, petitioner Anita J.
Marquez (Anita) extended a loan in the amount of ₱500,000.00 In an Order18 dated August 1, 2005, the RTC granted Anita’s ex-
to a certain Benjamin Gutierrez (Gutierrez). As security parte petition and thereby directed the issuance of a writ of
therefor, Gutierrez executed a Deed of Real Estate Mortgage6 possession in her favor. Consequently, a notice to vacate19
dated June 16, 1998 over a parcel of land located in Tagaytay dated September 23, 2005 was issued by Acting Sheriff
City with an area of 660 square meters, more or less, covered Teodorico V. Cosare (Sheriff Cosare) against Sps. Gutierrez and
by Transfer Certificate of Title (TCT) No. T-134437 (subject all persons claiming rights under them. Sps. Alindog were
property), registered under the name of Benjamin A. Gutierrez, served with a copy of the said notice to vacate on September
married to Liwanag Camerin (Sps. Gutiererez). The mortgage 27, 2005.20
was duly annotated on the dorsal portion of TCT No. T-13443,
which Sps. Marquez had verified as clean prior to the Claiming that they would suffer irreparable injury if the
mortgage.8 implementation of the writ of possession in favor of Sps.
Marquez would be left unrestrained, Sps. Alindog sought the
Since Gutierrez defaulted in the payment of his loan obligation, issuance of a temporary restraining order (TRO) and/or writ of
Anita sought the extra-judicial foreclosure of the subject preliminary injunction with prayer for damages,21 in a separate
property. At the public auction sale held on January 19, 2000, case docketed as SCA No. TG-05-252122 (injunction case) which
Anita emerged as the highest bidder for the amount of was raffled to the same court.
₱1,171,000.00.9 Upon Gutierrez’s failure to redeem the same
property within the prescribed period therefor, title was While it appears that the RTC issued a 72-hour TRO on
consolidated under TCT No. T-4193910 on November 5, 2001 September 29, 2005 in Sps. Alindog’s favor, records
(in the name of Anita J. Marquez, married to Nicasio C. nonetheless show that said order was not extended to a full 20-
Marquez) which, however, bore an annotation of adverse day TRO.23 To this end, the Sheriff’s Return24 dated November
claim11 dated March 2, 2000 in the names of respondents- 14, 2005 shows that Sheriff Cosare was able to implement the
spouses Carlito and Carmen Alindog (Sps. Alindog). Said writ of possession on November 11, 2005, turning over the
annotation was copied from an earlier annotation on TCT No. T- possession of the subject property to Sps. Marquez.
13443 made only after the subject property’s mortgage to Sps.
Marquez. After further proceedings on the injunction case, the RTC,
through an Order25 dated November 14, 2005, issued a writ of
Subsequently, or on March 21, 2000, Sps. Alindog filed a civil preliminary injunction enjoining Sps. Marquez from taking
case for annulment of real estate mortgage and certificate of possession of the subject property until after the controversy
sale with prayer for damages against Sps. Marquez and a has been fully resolved on the merits. The said issuance was
certain Agripina Gonzales (Gonzales) before the RTC, docketed based on the RTC’s appreciation of the initial evidence adduced
as Civil Case No. TG-1966 (annulment case). In their by Sps. Alindog, concluding that they appear to have a right to
complaint,12 Sps. Alindog alleged that they purchased13 the be protected. Thus, notwithstanding the consolidation of Sps.
subject property from Gutierrez way back in September 1989, Marquez’s title over the subject property, the RTC granted Sps.
but were unable to secure a certificate of title in their names Alindog’s prayer for injunctive relief, holding that any further
because Gonzales – to whom they have entrusted said task – dispossession on their part would cause them irreparable
had deceived them in that they were assured that the said injury.26
certificate was already being processed when such was not the
case.14 Eventually, they found out that the property had Aggrieved, Sps. Marquez moved for reconsideration,27
already been mortgaged to Sps. Marquez, and that when they essentially pointing out that, as the confirmed and registered
tried to contact Gonzales for an explanation, she could no owners of the subject property, they are entitled to its
longer be found. Separately, Sps. Alindog averred that when the possession as a matter of right. They argued that pursuant to
mortgage was executed in favor of Sps. Marquez, Gutierrez was Sections 728 and 829 of Act No. 3135,30 as amended by Act No.
already dead.15 4118,31 the RTC was legally bound to place them in possession
of the subject property pending resolution of the annulment
case. Further, it is their position that the purpose for the
384
issuance of the injunctive writ – i.e., to restrain the
implementation of the writ of possession – had already been SEC. 7. In any sale made under the provisions of this Act, the
rendered moot and academic by its actual enforcement in the purchaser may petition the Court of First Instance of the
interim. province or place where the property or any part thereof is
situated, to give him possession thereof during the redemption
For their part, Sps. Alindog filed a Motion for Approval of Cash period, furnishing bond in an amount equivalent to the use of
Bond and to Regain Possession32 of the subject property. the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without
In an Order33 dated January 17, 2007, the RTC denied the violating the mortgage or without complying with the
motion of Sps. Marquez, while granted that of Sps. Alindog. requirements of this Act. Such petition shall be made under
Unperturbed, Sps. Marquez elevated the case to the CA on oath and filed in form or an ex parte motion in the registration
certiorari.34 or cadastral proceedings if the property is registered, or in
special proceedings in the case of property registered under the
The CA Ruling Mortgage Law or under section one hundred and ninety-four of
the Administrative Code, or of any other real property
In a Decision35 dated February 29, 2008, the CA denied Sps. encumbered with a mortgage duly registered in the office of
Marquez’s petition as it found no grave abuse of discretion on any register of deeds in accordance with any existing law, and
the RTC’s part when it issued the injunctive writ that enjoined in each case the clerk of court shall, upon the filing of such
Sps. Marquez from taking possession of the subject property. It petition, collect the fees specified in paragraph eleven of
observed that Sps. Alindog had indeed "adduced prima facie section one hundred and fourteen of Act Numbered Four
proof of their right to possess the subject property"36 while the hundred and ninety six as amended by Act Numbered Twenty-
annulment case was pending, adding that the latter’s "right to eight hundred and sixty-six, and the court shall, upon approval
remain in possession"37 proceeds from the fact of the subject of the bond, order that a writ of possession issue addressed to
property’s earlier sale to them. Thus, while Sps. Marquez the sheriff of the province in which the property is situated,
concededly had a right to possess the subject property on who shall execute said order immediately.
account of the consolidation of the title in their names, the CA
nonetheless found no fault on the part of the RTC for The Court expounded on the application of the foregoing
"proceeding with caution"38 in weighing the conflicting claims provision in De Gracia v. San Jose, thus:
of the parties and subsequently issuing the writ of preliminary
injunction in Sps. Alindog’s favor. As may be seen, the law expressly authorizes the purchaser to
petition for a writ of possession during the redemption period
Dissatisfied, Sps. Marquez moved for reconsideration39 which by filing an ex parte motion under oath for that purpose in the
was, however, denied in a Resolution40 dated August 6, 2008, corresponding registration or cadastral proceeding in the case
hence, this petition. of property with Torrens title; and upon the filing of such
motion and the approval of the corresponding bond, the law
The Issue Before the Court also in express terms directs the court to issue the order for a
writ of possession. Under the legal provisions above copied, the
The essential issue in this case is whether or not the CA erred in order for a writ of possession issues as a matter of course upon
finding no grave abuse of discretion on the part of the RTC the filing of the proper motion and the approval of the
when it issued the injunctive writ which enjoined Sps. Marquez corresponding bond. No discretion is left to the court. And any
from taking possession of the subject property. question regarding the regularity and validity of the sale (and
the consequent cancellation of the writ) is left to be
The Court’s Ruling determined in a subsequent proceeding as outlined in section
8. Such question is not to be raised as a justification for
The petition is meritorious. opposing the issuance of the writ of possession, since, under
the Act, the proceeding for this is ex parte.
It is an established rule that the purchaser in an extra-judicial
foreclosure sale is entitled to the possession of the property Strictly, Section 7 of Act No. 3135, as amended, refers to a
and can demand that he be placed in possession of the same situation wherein the purchaser seeks possession of the
either during (with bond) or after the expiration (without bond) foreclosed property during the 12-month period for
of the redemption period therefor. To this end, the Court, in redemption. Upon the purchaser’s filing of the ex parte petition
China Banking Corp. v. Sps. Lozada41 (China Banking Corp.), and posting of the appropriate bond, the RTC shall, as a matter
citing several cases on the matter, explained that a writ of of course, order the issuance of the writ of possession in the
possession duly applied for by said purchaser should issue as a purchaser’s favor.
matter of course, and thus, merely constitutes a ministerial
duty on the part of the court, viz.:42 In IFC Service Leasing and Acceptance Corporation v. Nera, the
Court reasoned that if under Section 7 of Act No. 3135, as
The procedure for extrajudicial foreclosure of real estate amended, the RTC has the power during the period of
mortgage is governed by Act No. 3135, as amended. The redemption to issue a writ of possession on the ex parte
purchaser at the public auction sale of an extrajudicially application of the purchaser, there is no reason why it should
foreclosed real property may seek possession thereof in not also have the same power after the expiration of the
accordance with Section 7 of Act No. 3135, as amended, which redemption period, especially where a new title has already
provides: been issued in the name of the purchaser. Hence, the
385
procedure under Section 7 of Act No. 3135, as amended, may extra-judicial foreclosure unless a third party is actually holding
be availed of by a purchaser seeking possession of the the property by adverse title or right. In the recent case of Rural
foreclosed property he bought at the public auction sale after Bank of Sta. Barbara (Iloilo), Inc. v. Centeno,46 citing the case of
the redemption period has expired without redemption having China Banking Corp., the Court illumined that "the phrase ‘a
been made. third party who is actually holding the property adversely to the
judgment obligor’ contemplates a situation in which a third
xxxx party holds the property by adverse title or right, such as that
of a co-owner, tenant or usufructuary. The co-owner,
It is thus settled that the buyer in a foreclosure sale becomes agricultural tenant, and usufructuary possess the property in
the absolute owner of the property purchased if it is not their own right, and they are not merely the successor or
redeemed during the period of one year after the registration transferee of the right of possession of another co-owner or the
of the sale. As such, he is entitled to the possession of the said owner of the property. Notably, the property should not only
property and can demand it at any time following the be possessed by a third party, but also held by the third party
consolidation of ownership in his name and the issuance to him adversely to the judgment obligor."47 In other words, as
of a new transfer certificate of title. The buyer can in fact mentioned in Villanueva v. Cherdan Lending Investors
demand possession of the land even during the redemption Corporation,48 the third person must therefore claim a right
period except that he has to post a bond in accordance with superior to that of the original mortgagor.
Section 7 of Act No. 3135, as amended. No such bond is
required after the redemption period if the property is not In this case, it is clear that the issuance of a writ of possession
redeemed. Possession of the land then becomes an absolute in favor of Sps. Marquez, who had already consolidated their
right of the purchaser as confirmed owner. Upon proper title over the extra-judicially foreclosed property, is merely
application and proof of title, the issuance of the writ of ministerial in nature. The general rule as herein stated – and
possession becomes a ministerial duty of the court. (Emphases not the exception found under Section 33, Rule 39 of the Rules
and underscoring supplied; citations and emphases in the – should apply since Sps. Alindog hinged their claim over the
original omitted) subject property on their purported purchase of the same from
its previous owner, i.e., Sps. Gutierrez (with Gutierrez being the
In the case of Spouses Espiridion v. CA,43 the Court expounded original mortgagor). Accordingly, it cannot be seriously doubted
on the ministerial nature of the foregoing issuance as that Sps. Alindog are only the latter’s (Sps. Gutierrez)
follows:44 successors-in-interest who do not have a right superior to
them.
The issuance of a writ of possession to a purchaser in a public
auction is a ministerial act.1âwphi1 After the consolidation of That said, the RTC therefore gravely abused its discretion when
title in the buyer’s name for failure of the mortgagor to redeem it issued the injunctive writ which enjoined Sps. Marquez from
the property, the writ of possession becomes a matter of right. taking possession of the subject property. To be sure, grave
Its issuance to a purchaser in an extrajudicial foreclosure sale is abuse of discretion arises when a lower court or tribunal
merely a ministerial function. The trial court has no discretion patently violates the Constitution, the law or existing
on this matter. Hence, any talk of discretion in connection with jurisprudence.49 Here, while the RTC had initially issued a writ
such issuance is misplaced. of possession in favor of Sps. Marquez, it defied existing
jurisprudence when it effectively rescinded the said writ by
A clear line demarcates a discretionary act from a ministerial subsequently granting Sps. Alindog's prayer for injunctive relief.
one. Thus: The RTC's finding anent the initial evidence adduced by Sps.
Alindog constitutes improper basis to justify the issuance of the
The distinction between a ministerial and discretionary act is writ of preliminary injunction in their favor since, in the first
well delineated. A purely ministerial act or duty is one which an place, it had no authority to exercise any discretion in this
officer or tribunal performs in a given state of facts, in a respect. Jurisprudence is clear on the matter: without the
prescribed manner, in obedience to the mandate of a legal exception under Section 33, Rule 39 of the Rules availing, the
authority, without regard to or the exercise of his own issuance of a writ of possession in favor of the purchaser of an
judgment upon the propriety or impropriety of the act done. If extra-judicially foreclosed property - such as Sps.
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 Marquez in this case - should come as a matter of course, and,
duty is discretionary and not ministerial. The duty is ministerial in such regard, constitutes only a ministerial duty on the part of
only when the discharge of the same requires neither the the court. Besides, it was improper for the RTC to have issued a
exercise of official discretion or judgment. writ of preliminary injunction since the act sought to be
enjoined, i.e., the implementation of the writ of possession,
Clearly, the use of discretion and the performance of a had already been accomplished in the interim and thus,
ministerial act are mutually exclusive. (Emphases and rendered the matter moot. Case law instructs that injunction
underscoring supplied; citations omitted) would not lie where the acts sought to be enjoined had already
become fait accompli (meaning, an accomplished or
The ministerial issuance of a writ of possession in favor of the consummated act).50 Hence, since the consummation of the
purchaser in an extra-judicial foreclosure sale, however, admits act sought to be restrained had rendered Sps. Alindog's
of an exception. Section 33,45 Rule 39 of the Rules of Court injunction petition moot, the issuance of the said injunctive writ
(Rules) pertinently provides that the possession of the was altogether improper.
mortgaged property may be awarded to a purchaser in an
386
All told, by acting averse to well-settled jurisprudential rules
and resultantly depriving Sps. Marquez of their right of
possession over the subject property, the Court therefore
concludes that the RTC gravely abused its discretion in this
case. In effect, the CA's contrary ruling thereto is hereby
reversed and set aside, which consequentially leads to the
nullification of the writ of preliminary injunction issued by the
RTC in favor of Sps. Alindog, and the reinstatement of the writ
of possession issued by the same court in favor of Sps.
Marquez. It must, however, be noted that these
pronouncements are without prejudice to any separate action
which Sps. Alindog may file in order to recover ownership of
the subject property.
387